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Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 11th April 1957.

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Photo of Mr Enoch Powell Mr Enoch Powell , Wolverhampton South West 12:00 am, 11th April 1957

The hon. Member will realise that apart from the alterations in the standard rate of Income Tax all the improvements made in allowances and earned income relief have by-passed the recipient of over£2,000 a year. In the last five years the whole weight of taxation reduction has been concentrated upon those earning less than£2,000 a year, and the special position of and discrimination against the taxpayer earning more than that sum has not been altered at all until now.

The last but by no means least important form of relief in direct taxation has been the age relief and, in particular, the removal altogether from taxation of the single aged person receiving up to£250 a year and the married couple receiving up to£400. These maxima are the highest points to which this relief could be pushed without reaching the indefensible position in which more relief was given to an aged couple than to a couple with children. They have been pushed up to the limit at which there is still some differentiation between a couple with a dependent child and a couple without. Up to that limit my right hon. Friend has fully relieved of taxation these who are living upon small incomes in their old age.

This will be a benefit to the person living up a small pension, to the person living upon a small return from investments, and, what is more common than either case, the person living upon a very small pension, eked out by the return from his life's saving. As my hon. Friend the Member for Harrogate (Mr. Ramsden) said in the debate yesterday, and I know that this is within the experience of hon. Members on both sides of the Committee, some of the most heart-rending and tragic cases of hardship in old age occur precisely among these people, who are trying to get along upon the reduced yield of exiguous savings.

Naturally, the point has been made: what about the elderly who are already below the level of taxation? Of course, it is a facet of the old problem of how one relieves of taxation a person who is not paying it. Repeatedly, suggestions have been made from hon. Members opposite that the Budget should have been used as a vehicle for increasing retirement pensions. No doubt there will be many opportunities for debating the proper time for an increase in contributions and in retirement benefits under the National Insurance scheme. But I am surprised that hon. Members opposite should have felt justified in raising this criticism.

I need not deal at very great length with this point, because my hon. Friend the Member for Ormskirk (Mr. Glover) dealt with it effectively in his speech yesterday. He pointed out that today the purchasing power of the retirement pension under the National Insurance scheme is higher than in 1948 when the full scheme came into force; and higher than it was when the party opposite left office in October, 1951.

Year after year, Budget after Budget, from 1948 onwards, hon. Members opposite stood by, whoever was to be relieved of tax, and watched the value of the retirement pension falling sharply in 1948, 1949 and 1950. And then, in 1951, on the eve of the General Election, they relieved not pensioners generally, but only the pensioners who would be able to vote in October, by increasing their retirement pensions. Yet even the purchasing power which they gave to that psephologically selected fraction of the retirement pensioners was much lower than the present day value of the retirement pension which is in payment. That brings us on to the ambiguity of the position of hon. Members opposite in relation to this Budget.