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Restraining and Protection Orders
Bridget Prentice accordingly presented a Bill to empower the courts to make orders which restrain the conduct or movements of a person convicted of certain criminal offences, for the purpose of protecting the victim of the offence; to make similar provision with respect to orders which require statutory agencies to provide services to certain persons; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 7 May, and to be printed [Bill 93].
Orders of the Day
Finance Bill
(Clauses 2, 28 and 99)
Mr. David Heathcoat-Amory (Wells): I beg to move amendment No. 1, in page 14, leave out lines 21 and 22.
The Chairman of Ways and Means (Sir Alan Haselhurst): With this, it will be convenient to discuss amendment No. 2, in page 14, leave out lines 25 to 27.
Mr. Heathcoat-Amory: I ask the Committee to consider these amendments, which make changes to the Government's provisions regarding the married couples allowance. As I think the Committee knows, the Finance Bill will abolish the married couples allowance and replace it in due course with a children's tax credit.
When the Chancellor announced that change in his Budget speech, he rather typically failed to make it clear that the children's tax credit will not come into effect until April 2001. So the Government have the use of about £2 billion in public money for that year. In addition, the children's tax credit will cost the Government about £650 million less than the married couples allowance, which they are abolishing. The Government are removing an allowance that is familiar and upon which many people rely and replacing it a year later with a cheaper allowance.
Moreover, the Treasury Select Committee report describes the new arrangement as "complex". Much of the evidence that the Committee received about this section of the Bill points to problems in administering the children's tax credit, the fact that it will create a high marginal tax rate as it is withdrawn up the income scale, and that it generally represents a further complication in an already over-burdened tax system.
We shall undoubtedly debate the tax credit in greater detail at another time, but it is relevant to discuss it now because of the Government's switch. They are abolishing an allowance that has been a familiar and valued part of the tax system and upon which many people have relied and are replacing it with an untried, complex arrangement that will be less generous and will go to different people.
Mr. John Healey (Wentworth):
Will the right hon. Gentleman comment on the observations of Mr. David Brodie, the director of the charity TaxAid, who, after the Budget, said:
Although people may welcome additional money for children and families, that does not excuse this measure, whereby the Government are taking away money from childless couples and, as I shall now outline, hitting particularly hard people who are coming up to retirement age. That is the subject of the amendments.
In his Budget speech, the Chancellor asserted:
The Red Book, which fleshes out the details of the Budget, contains a section on pensioners and an entire chapter called, "Building a Fairer Society". Nowhere does it explain the unfairness and say why pensioners will not receive the married couples allowance if they reach retirement age after next April. It does not explain also why a one-day difference in birth dates can determine whether one receives a £500 tax credit. That measure is not fair or equitable; it is a good illustration of stealth taxation. The apparent extension of married couples allowance to pensioners will, in fact, apply to a smaller and smaller number of people as they die off or get divorced.
Mr. Geoffrey Clifton-Brown (Cotswold):
Does my right hon. Friend agree that people in their late 50s and early 60s, especially those on low incomes, who were born after that magical date, are being particularly discriminated against because there is virtually no likelihood that they will be able to have children if they have not already got them, so they will not be eligible for the child tax allowance, and nor will they be eligible for the older married couples allowance?
Mr. Heathcoat-Amory:
My hon. Friend makes a good point. Many of those people who are coming up to retirement will have looked forward to relying on the married couples allowance. Almost by definition, they cannot now alter their working arrangements, work overtime or get a different job to make up for the income that they will lose. That is the extent of their vulnerability, and yet, out of the blue, comes a Budget that will remove an important and valued tax allowance which they were looking forward to, when it is already too late for them to make alternative arrangements.
Mr. Geraint Davies (Croydon, Central):
Will the right hon. Gentleman give way?
Mr. Heathcoat-Amory:
I will when I have completed the point.
That blow is the latest in a series of blows that the pensioner and saving communities have suffered at the hands of the Government. In the Government's first Budget, there was a £5 billion a year raid on pension funds as a result of the withdrawal of dividend tax credits. Therefore, the same people who are now coming up to retirement have already seen the value of those pension funds reduced.
Does the hon. Gentleman still wish to intervene?
Mr. Geraint Davies:
My simple argument is that every change in tax interferes with people's tax planning and confounds their plans. That aspect is not limited to the change that the right hon. Gentleman was criticising, or to people over 65. Anyone, such as myself, who might have benefited from the married couples allowance now cannot plan towards that, but that is the nature of changing tax.
Mr. Heathcoat-Amory:
The point that I was making was that pensioners are especially vulnerable. If the hon. Gentleman were to have his tax allowances removed suddenly, he might be able to get a different day job to make up that reduction, but that option is not open to the people who are hit by clause 28.
As I was in the middle of saying, this is not the first blow that those people have suffered. Not only is the withdrawal of dividend tax credits from their pension funds draining £5 billion a year into the Treasury, but many of those people made regular savings into personal equity plans, and all that was stopped from April 1999. PEPs have been replaced by individual savings accounts, which are more expensive, more complicated and less advantageous. Therefore, a series of hammer blows has landed on the very people who are hit by the clause.
Everywhere, the Government have hit pensions and savings, and the next generation of pensioners will now have their personal allowances reduced or abolished as well.
Mr. Christopher Leslie (Shipley):
If the right hon. Gentleman is so concerned about future planning, will he explain the rationale behind his Administration's halving of the value of the married couples allowance over the period when he was a Minister?
Mr. Heathcoat-Amory:
It is one thing to reduce an allowance and quite another to abolish it. Moreover, it is a clearly different thing to reduce an allowance in the context of a tax-reducing strategy. We brought the level of personal and direct taxation down in successive Budgets. Against that background, it is fully justified to reduce some allowances and increase others. However, the Government are relentlessly increasing the burden of direct taxes on, and reducing the allowances of, the most vulnerable people in the tax-paying community.
The Paymaster General (Dawn Primarolo):
Will the right hon. Gentleman tell the Committee the value to that same pensioner group of the cut in the married couples allowance made by the Conservative Government, and will he explain why he thinks that that was worth less?
"The children's tax credit is a generous arrangement, reducing most taxpayers' liabilities by £416 a year or £8 a week, which is double the value of the married couple's allowance"?
Mr. Heathcoat-Amory:
If the hon. Gentleman had told us a little more about what the charity sector is saying,
"Today's pensioner couples will retain the married couples allowance."--[Official Report, 9 March 1999; Vol. 327, c. 183.]
He hoped to convey the impression that, although married couples allowance is being abolished for most taxpayers, it is being retained for pensioner couples, but that is not the case. If people become 65 after 5 April next year, they will not receive the married couples allowance. That date is entirely arbitrary. If people were born on 5 April 1935, they will receive the allowance in old age; if they were born a day later, on 6 April 1935, they will not receive the allowance. Being born a day later makes a difference of £500.
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