Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 9:35 pm on 16 March 1988.

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Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames 9:35, 16 March 1988

As my right hon. Friend the Chancellor explained, the married couple's allowance will go in the first instance to the married man. However, it will be transferable to the wife if the married man does not have the income necessary to absorb the full allowance. The new system will be a step forward because it will mean that married women who work and who, at the moment, may have an allowance, but none the less have their income aggregated with that of their husband, will no longer have their income so aggregated.

The hon. Lady— and other Opposition Members — have suggested that the married couple's allowance is wrong, but if we did not have it, the threshold for married men would be lowered and considerable numbers of people would lose from the change. That is why we have designed the married couple's allowance in this way. This will allow incomes to be disaggregated, which was a point that the hon. Member for Redcar (Ms. Mowlam) addressed. However, she was wrong to suggest that this was an insignificant reform, primarily of interest and importance only to rich couples or rich women. Those who will benefit will not only be the well-off—three quarters of the benefit will go to basic rate taxpayers and non-taxpayers.

Another major beneficiary group will be the elderly. Large numbers of elderly wives earn their pensions on the basis of their husbands' contributions. They, too, will be major gainers — those who have category B pensions — and half the cost in the first year will go to elderly couples. That clearly shows that this tax reform does not only benefit the better off.

It is an important principle that there should be independence and privacy in taxation matters. That has been requested for a long time, and at long last my right hon. Friend has devised a system that will achieve all these objectives.