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Mr. Geoffrey Clifton-Brown (Cotswold): Is my hon. Friend aware that anyone earning up to the new personal allowance threshold of £4,195, or just £80 a week, will be hit by this measure, which will thus affect some of the poorest in the land? Does he not think that that is highly reprehensible?

Mr. Tyrie: I did not know the exact numbers. I do find it highly reprehensible. I find it highly reprehensible, too, that Treasury Ministers are not even bothering to listen to the points that are being made to them.

If Treasury Ministers ignore and sweep away the new clause, we--and hundreds of thousands of people throughout the land--will know that it was their intention effectively to reduce the income of some of the poorest people, including pensioners.

5 pm

Mr. Geoffrey Robinson: There has been a good deal of cross-party support on this matter. I think that that was evidenced at the meeting that I was pleased to have with Age Concern, with the hon. Members for Torridge and West Devon (Mr. Burnett) and for Bognor Regis and Littlehampton (Mr. Gibb), and with my hon. Friend the Member for Dudley, North (Mr. Cranston). I think that

30 Jun 1998 : Column 175

they made a powerful case. I think that the case in the country, and the feelings that have been conveyed, are considerable. I am sympathetic to that case. I have listened hard to it, but hon. Members will obviously be aware that we have not tabled a new clause at this stage and that, from our point of view, the matter is still under review. I am taking a deep personal interest in it.

Most hon. Members have made pretty much the same points during this debate as were made in Committee. I do not think there are any new points that particularly require addressing by me. As always, I welcome the hon. Member for Grantham and Stamford (Mr. Davies) to our debates. I am pleased that he is not deterred by his new onerous responsibilities from attending them. He is always a welcome figure.

Some points were quite irrelevant. The hon. Member for Chichester (Mr. Tyrie) made some remarks regarding some senior civil servants leaving early and others leaving now. Nothing could be further from the truth. We work extreme closely with civil servants. All the policies are worked out with civil servants in the Treasury, in Customs and Excise and at the Inland Revenue itself, so the hon. Gentleman need not worry about that. There is plenty of contact, and I am happy to have such good relations with the most senior and the most junior officials in the Department.

Mr. Quentin Davies: The hon. Gentleman is trying to muffle my fire by throwing up a smokescreen of compliments in my direction; in all honesty, that will not work. May I ask him to address the specific point about charities? If it is possible to devise a solution to protect charities, why is it so technically difficult to devise a solution to protect the poorest savers?

Mr. Robinson: That is a fair point. We have had good responses from the charities for what we did there, which was, as the hon. Gentleman knows, unprecedentedly generous: when the Conservatives removed tax credits, they gave a much shorter period. With regard to pensioners and non-taxpayers, the matter is more complicated. I say this to Conservative Members, including the hon. Member for Bognor Regis and Littlehampton, who has led the campaign from the Opposition Benches: it will not be issues of sovereign immunity that will stop us doing this. It is not a question of the convenience of the Inland Revenue. There are certain things that we are looking at. We are looking at alternatives, as we did when we went into the consultation period following the initial ending of tax credits, and deciding which way to go on company taxation policy overall with regard to ACT.

I can give no commitment today and I have not brought a solution to the House; we would not be having this sort of debate if I had. I am aware also of the growing anxiety among poorer non-taxpayers who have been hit by the measure, so I know that we need to make our position utterly clear as quickly as possible. I am working to that end.

Mr. Fallon: May I reply to the debate and thank all those who have participated? I think almost everyone who has spoken has shown some sympathy with the new clause. I am particularly grateful for the support from the Liberal Democrat Benches. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), with the

30 Jun 1998 : Column 176

eloquence and precision that we have come to expect of him, made the case again: in this matter, he is the pensioners' champion. My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) pointed out that the sums involved make a difference to the quality of life for some of our poorest pensioners. I am grateful, too, for the support of my hon. Friends the Members for East Worthing and Shoreham (Mr. Loughton), for Grantham and Stamford (Mr. Davies) and for Chichester(Mr. Tyrie).

No one defended the Government's position on the new clause. The hon. Member for Dudley, North(Mr. Cranston) gave us his usual cameo of the Paymaster General's learned junior and said that there was something defective about the new clause, but I think he has some sympathy with, and is perhaps a secret supporter of, the new clause.

Then we heard, most surprisingly of all, from the hon. Member for Warrington, South (Ms Southworth). I am told that she was a member of the Standing Committee and that she sat upstairs with us for six weeks. She was certainly silent for six weeks, yet now she suddenly appears in the House and tells us that she has had a word with the Paymaster General. That parliamentary effort seems to have exhausted her--she has now disappeared--but we wait to see what effect that will have. We shall be judging the effort that is put in by Labour Members on this matter.

To the Paymaster General, I would say, "We expected a bit more than that." He has had six weeks to correct this injustice and to come up with an amendment of his own. Yesterday, there were amendments on the Order Paper to help the casinos. Perhaps he is more interested in the casinos than in the lives of our poorest pensioners. He has had six weeks to draft an amendment. He has admitted tonight that drafting such an amendment is not impossible--that there may be technical difficulties, but that they can be overcome. Indeed, he has said that he has listened sympathetically and has the matter under review.

The Government brought about this injustice a year ago. They have had plenty of time to review it. This was slipshod, inadvertent drafting, for which the Financial Secretary was responsible a year ago. Little wonder that she was not put up to answer the debate, and that it was left up to the Paymaster General instead.

There are two choices before the House. We can--at one point I was considering doing this--give the Paymaster General the benefit of the doubt, as we have done quite a lot, on quite a number of matters, over the past few months, or we can place on record our opposition to one of the meanest tax increases of all. We could put a marker down now, while he works away on his amendment, to the effect that we are opposed to the measure on behalf of 300,000 of the poorest pensioners--people who have put something aside, who have not claimed benefit, who have saved for their old age and who now find a Labour Government are robbing them of sums of £75 or £100. It is right that we press the new clause, and I invite my hon. Friends to support it.

30 Jun 1998 : Column 177

Question put, That the clause be read a Second time:--

The House divided: Ayes 171, Noes 284.

Division No. 318
[5.8 pm


Ainsworth, Peter (E Surrey)
Allan, Richard
Amess, David
Arbuthnot, James
Ashdown, Rt Hon Paddy
Atkinson, David (Bour'mth E)
Baker, Norman
Ballard, Jackie
Beggs, Roy
Bercow, John
Beresford, Sir Paul
Body, Sir Richard
Boswell, Tim
Bottomley, Peter (Worthing W)
Brady, Graham
Brake, Tom
Brand, Dr Peter
Brazier, Julian
Browning, Mrs Angela
Bruce, Ian (S Dorset)
Bruce, Malcolm (Gordon)
Burnett, John
Burns, Simon
Cash, William
Chapman, Sir Sydney
(Chipping Barnet)
Chope, Christopher
Clappison, James
Clark, Rt Hon Alan (Kensington)
Clarke, Rt Hon Kenneth
Clifton-Brown, Geoffrey
Collins, Tim
Colvin, Michael
Cormack, Sir Patrick
Cotter, Brian
Cran, James
Curry, Rt Hon David
Dafis, Cynog
Davey, Edward (Kingston)
Davies, Quentin (Grantham)
Davis, Rt Hon David (Haltemprice)
Dorrell, Rt Hon Stephen
Duncan, Alan
Duncan Smith, Iain
Emery, Rt Hon Sir Peter
Evans, Nigel
Ewing, Mrs Margaret
Faber, David
Fallon, Michael
Fearn, Ronnie
Flight, Howard
Forth, Rt Hon Eric
Foster, Don (Bath)
Fowler, Rt Hon Sir Norman
Fox, Dr Liam
Fraser, Christopher
Garnier, Edward
George, Andrew (St Ives)
Gibb, Nick
Gill, Christopher
Gillan, Mrs Cheryl
Goodlad, Rt Hon Sir Alastair
Gorman, Mrs Teresa
Gorrie, Donald
Green, Damian
Greenway, John
Grieve, Dominic
Gummer, Rt Hon John
Hamilton, Rt Hon Sir Archie
Hammond, Philip
Hancock, Mike
Harris, Dr Evan
Harvey, Nick
Hawkins, Nick
Hayes, John
Heald, Oliver
Heath, David (Somerton & Frome)
Heathcoat-Amory, Rt Hon David
Hogg, Rt Hon Douglas
Horam, John
Howard, Rt Hon Michael
Hughes, Simon (Southwark N)
Hunter, Andrew
Jack, Rt Hon Michael
Jackson, Robert (Wantage)
Jenkin, Bernard
Johnson Smith,
Rt Hon Sir Geoffrey
Jones, Nigel (Cheltenham)
Kennedy, Charles (Ross Skye)
Key, Robert
Kirkbride, Miss Julie
Kirkwood, Archy
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Leigh, Edward
Letwin, Oliver
Lewis, Dr Julian (New Forest E)
Lidington, David
Lilley, Rt Hon Peter
Livsey, Richard
Lloyd, Rt Hon Sir Peter (Fareham)
Llwyd, Elfyn
Loughton, Tim
Luff, Peter
MacGregor, Rt Hon John
McIntosh, Miss Anne
MacKay, Andrew
McLoughlin, Patrick
Major, Rt Hon John
Maples, John
Maude, Rt Hon Francis
May, Mrs Theresa
Michie, Mrs Ray (Argyll & Bute)
Moore, Michael
Morgan, Alasdair (Galloway)
Moss, Malcolm
Nicholls, Patrick
Norman, Archie
Öpik, Lembit
Ottaway, Richard
Paice, James
Paterson, Owen
Pickles, Eric
Prior, David
Redwood, Rt Hon John
Rendel, David
Robathan, Andrew
Robertson, Laurence (Tewk'b'ry)
Rowe, Andrew (Faversham)
Ruffley, David
Russell, Bob (Colchester)
St Aubyn, Nick
Sanders, Adrian
Sayeed, Jonathan
Shephard, Rt Hon Mrs Gillian
Shepherd, Richard
Simpson, Keith (Mid-Norfolk)
Soames, Nicholas
Spicer, Sir Michael
Stanley, Rt Hon Sir John
Streeter, Gary
Stunell, Andrew
Swayne, Desmond
Swinney, John
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, John M (Solihull)
Taylor, Matthew (Truro)
Taylor, Sir Teddy
Tonge, Dr Jenny
Townend, John
Trend, Michael
Tyler, Paul
Tyrie, Andrew
Viggers, Peter
Wallace, James
Walter, Robert
Wardle, Charles
Waterson, Nigel
Webb, Steve
Whittingdale, John
Wigley, Rt Hon Dafydd
Wilkinson, John
Willetts, David
Willis, Phil
Wilshire, David
Winterton, Mrs Ann (Congleton)
Winterton, Nicholas (Macclesfield)
Woodward, Shaun
Yeo, Tim
Young, Rt Hon Sir George

Tellers for the Ayes:

Sir David Madel and
Mr. Stephen Day.


Ainger, Nick
Ainsworth, Robert (Cov'try NE)
Alexander, Douglas
Anderson, Janet (Rossendale)
Armstrong, Ms Hilary
Ashton, Joe
Atkins, Charlotte
Austin, John
Banks, Tony
Bayley, Hugh
Beard, Nigel
Begg, Miss Anne
Benn, Rt Hon Tony
Bennett, Andrew F
Benton, Joe
Berry, Roger
Betts, Clive
Blears, Ms Hazel
Blizzard, Bob
Boateng, Paul
Borrow, David
Bradley, Keith (Withington)
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brinton, Mrs Helen
Brown, Rt Hon Nick (Newcastle E)
Brown, Russell (Dumfries)
Browne, Desmond
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Byers, Stephen
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Cann, Jamie
Caplin, Ivor
Casale, Roger
Caton, Martin
Chapman, Ben (Wirral S)
Chaytor, David
Chisholm, Malcolm
Clapham, Michael
Clark, Rt Hon Dr David (S Shields)
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Charles (Norwich S)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Coaker, Vernon
Coffey, Ms Ann
Cohen, Harry
Coleman, Iain
Connarty, Michael
Cook, Frank (Stockton N)
Corbett, Robin
Corbyn, Jeremy
Corston, Ms Jean
Cousins, Jim
Cranston, Ross
Crausby, David
Cummings, John
Cunliffe, Lawrence
Cunningham, Jim (Cov'try S)
Dalyell, Tam
Darling, Rt Hon Alistair
Darvill, Keith
Davey, Valerie (Bristol W)
Davidson, Ian
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C)
Davies, Rt Hon Ron (Caerphilly)
Davis, Terry (B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Denham, John
Dismore, Andrew
Dobbin, Jim
Donaldson, Jeffrey
Donohoe, Brian H
Doran, Frank
Drew, David
Eagle, Maria (L'pool Garston)
Ellman, Mrs Louise
Ennis, Jeff
Etherington, Bill
Fatchett, Derek
Field, Rt Hon Frank
Fitzpatrick, Jim
Flint, Caroline
Flynn, Paul
Foster, Rt Hon Derek
Foster, Michael Jabez (Hastings)
Foster, Michael J (Worcester)
Gapes, Mike
Gardiner, Barry
George, Bruce (Walsall S)
Gerrard, Neil
Gibson, Dr Ian
Gilroy, Mrs Linda
Godman, Dr Norman A
Goggins, Paul
Golding, Mrs Llin
Gordon, Mrs Eileen
Grant, Bernie
Griffiths, Jane (Reading E)
Griffiths, Nigel (Edinburgh S)
Grocott, Bruce
Grogan, John
Gunnell, John
Hain, Peter
Hall, Mike (Weaver Vale)
Hamilton, Fabian (Leeds NE)
Hanson, David
Harman, Rt Hon Ms Harriet
Heal, Mrs Sylvia
Healey, John
Henderson, Ivan (Harwich)
Heppell, John
Hewitt, Ms Patricia
Hill, Keith
Hinchliffe, David
Hodge, Ms Margaret
Hoey, Kate
Home Robertson, John
Hood, Jimmy
Hoon, Geoffrey
Howarth, Alan (Newport E)
Hoyle, Lindsay
Hughes, Ms Beverley (Stretford)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Iddon, Dr Brian
Illsley, Eric
Jackson, Ms Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Jenkins, Brian
Johnson, Alan (Hull W & Hessle)
Jones, Mrs Fiona (Newark)
Jones, Ieuan Wyn (Ynys Mon)
Jones, Jon Owen (Cardiff C)
Jones, Dr Lynne (Selly Oak)
Jones, Martyn (Clwyd S)
Jowell, Ms Tessa
Kaufman, Rt Hon Gerald
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Keen, Ann (Brentford & Isleworth)
Kennedy, Jane (Wavertree)
Khabra, Piara S
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
Kingham, Ms Tess
Kumar, Dr Ashok
Ladyman, Dr Stephen
Lawrence, Ms Jackie
Lepper, David
Leslie, Christopher
Lewis, Terry (Worsley)
Liddell, Mrs Helen
Linton, Martin
Livingstone, Ken
Lloyd, Tony (Manchester C)
Lock, David
Love, Andrew
McAllion, John
McAvoy, Thomas
McCabe, Steve
McCafferty, Ms Chris
McDonagh, Siobhain
McDonnell, John
McFall, John
McGuire, Mrs Anne
McKenna, Mrs Rosemary
McNulty, Tony
MacShane, Denis
Mactaggart, Fiona
McWilliam, John
Mahon, Mrs Alice
Marek, Dr John
Marsden, Paul (Shrewsbury)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Martlew, Eric
Meacher, Rt Hon Michael
Meale, Alan
Merron, Gillian
Michael, Alun
Milburn, Alan
Miller, Andrew
Mitchell, Austin
Moffatt, Laura
Morgan, Ms Julie (Cardiff N)
Morgan, Rhodri (Cardiff W)
Morris, Ms Estelle (B'ham Yardley)
Mudie, George
Mullin, Chris
Murphy, Jim (Eastwood)
O'Brien, Bill (Normanton)
Olner, Bill
O'Neill, Martin
Organ, Mrs Diana
Osborne, Ms Sandra
Palmer, Dr Nick
Pearson, Ian
Pendry, Tom
Pickthall, Colin
Pike, Peter L
Plaskitt, James
Pope, Greg
Pound, Stephen
Powell, Sir Raymond
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Primarolo, Dawn
Prosser, Gwyn
Purchase, Ken
Quinn, Lawrie
Radice, Giles
Rammell, Bill
Reed, Andrew (Loughborough)
Reid, Dr John (Hamilton N)
Robertson, Rt Hon George
(Hamilton S)
Robinson, Geoffrey (Cov'try NW)
Roche, Mrs Barbara
Rooker, Jeff
Ross, Ernie (Dundee W)
Rowlands, Ted
Roy, Frank
Ruddock, Ms Joan
Russell, Ms Christine (Chester)
Ryan, Ms Joan
Salter, Martin
Savidge, Malcolm
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheldon, Rt Hon Robert
Simpson, Alan (Nottingham S)
Singh, Marsha
Skinner, Dennis
Smith, Miss Geraldine
(Morecambe & Lunesdale)
Smith, Llew (Blaenau Gwent)
Smyth, Rev Martin (Belfast S)
Soley, Clive
Southworth, Ms Helen
Spellar, John
Steinberg, Gerry
Stevenson, George
Stewart, Ian (Eccles)
Stoate, Dr Howard
Stott, Roger
Strang, Rt Hon Dr Gavin
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Gerry
Taylor, Rt Hon Mrs Ann
Temple-Morris, Peter
Thomas, Gareth R (Harrow W)
Touhig, Don
Trickett, Jon
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Turner, Dr George (NW Norfolk)
Twigg, Derek (Halton)
Vaz, Keith
Vis, Dr Rudi
Walley, Ms Joan
Wareing, Robert N
Watts, David
White, Brian
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Alan W (E Carmarthen)
Winnick, David
Wood, Mike
Woolas, Phil
Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)
Wyatt, Derek

Tellers for the Noes:

Mr. David Jamieson and
Mr. Jim Dowd.

Question accordingly negatived.

30 Jun 1998 : Column 180

New clause 5

Special regard to trading patterns of the retail industry

'.--After section 59DA of the Taxes Management Act 1970 (payment of corporation tax under self-assessment) there shall be inserted--
"59F In making any regulations under section 59E above, the Treasury shall have special regard to the trading patterns and profitability of the retailing industry".'.--[Mr. Heathcoat-Amory.]
Brought up, and read the First time.

Mr. Heathcoat-Amory: I beg to move, That the clause be read a Second time. New clause 5 is an attempt to correct one of the main deficiencies in the Government's corporation tax system, specifically the payment method provided for in the Bill. However, so that I might describe fully the intention behind new clause 5, I hope that it will be in order if I explain to the House some of the problems and--in all fairness--what the Government have tried to achieve in changing the method of taxing companies. In the past year, we have moved away from the imputation system of corporation tax, which has, for some years, been a familiar part of the taxation landscape. The system was a good one, as it avoided double taxation of profits--in the hands both of companies and of shareholders. However, the Government decided--I can appreciate at least in part their motive for doing so--to switch from that system, abolishing dividend tax credits, to a system of periodic payment of corporation tax. Our quarrel with the Government is that they have used the change to introduce very large increases in effective taxation. We witnessed an example of such an increase last year, when the abolition of tax credits dealt an enormous blow to the pensions industry by instituting a £5 billion annual raid on pension funds. Last year was a particularly stupid time to tax savings, as the Government were themselves becoming alarmed at inflationary pressures in the economy. Taxing savings rather than consumption was therefore the most short-sighted action. It was also in conflict with everything that the Government were saying about the need to build up a savings culture in the United Kingdom, to encourage people to provide for their own retirement and generally to increase self-reliance. I think that the Government understood that the only realistic alternative to welfare dependency was private savings. However, as usual with the Government, there

30 Jun 1998 : Column 181

was a huge gap between Ministers' rhetoric and their action. By withdrawing dividend tax credits, they sent a clear message to those who save and have private pensions: "Do not bother to save. If you do, the Government will come along and change all the rules, and tax the very savings and pension funds that you have built up." Withdrawing dividend tax credits was another short-sighted action, as an acknowledged strength of the United Kingdom is the fact that we have an enormous and successful private pensions industry. It has been calculated that the total sum of pension assets under management in the United Kingdom exceeds the sum for the rest of the European Union combined. On the continent, perhaps only the Netherlands has a comparable private pensions industry. Governments in other countries, particularly some southern European ones, have colossal off-balance-sheet debt. When they promise pensions to their electorate, all they are doing is hoping that a future generation of taxpayers will meet those obligations.

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