Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 3rd May 1976.

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Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton 12:00 am, 3rd May 1976

The hon. Gentleman could not have been listening. That is precisely the point I am making. We recognise their problems. It is absurd for the Opposition to demand a reduction in taxation for that kind of taxpayer at a comparatively small cost when it is difficult, if not impossible, to make the substantial cuts required to help those at the lower end of the income scale. That absurd point is constantly being made by the Opposition. My hon. Friends the Members for Liverpool, Walton (Mr. Heifer) and Fife, Central (Mr. Hamilton) made the crucial point that what we want is equality of sacrifice, but that is the last thing we are being asked to do by the Opposition.

We have also heard the customary Liberal panacea—although it is really the panacea of the hon. Member for Blaby (Mr. Lawson). My hon. Friend the Member for Bolsover (Mr. Skinner) took the Liberal Party apart in its absence. The case for improving tax allowances to offset the effect of inflation is not denied, but action must be considered in the context of the wider economic situation and it is more sensible to have an annual review of rates and allowances which may be adjusted flexibly in the light of the situation rather than a policy of automatic indexation. Indexation, as the hon. Member for Blaby constantly fails to recognise, would build into the tax system far greater rigidity than anything at present. It presupposes that all tax allowances are or should be indexed by the same proportionate amount every year.

My hon. Friend the Member for Gravesend (Mr. Ovenden) made an eloquent plea for a recasting of the tax system to help widows. He may have overlooked the fact that my right hon. Friend has done a great deal for widows, particularly the widow with young children. The widow today gets an additional personal allowance which is equivalent to the tax allowance for a married man. In addition, this year the Chancellor has increased child tax allowances substantially more than was necessary in order precisely to help that kind of single-parent family and other families with children. What the hon. Member for Blaby seeks to do would build into the system the tax allowances as now exist.