'(1) The following section shall be inserted after section 265 of the Taxes Act 1988—
265(B).—(1) Where a disabled person who is self-employed requires the services of a personal assistant or assistants in order to undertake his employment, any payment to that assistant or assistants shall be deducted from or set-off against the income of the said person from that employment.
(2) For the purposes of this section person is a person in receipt of an attendance allowance, a care component of a disability living allowance or a constant attendance allowance under the industrial injuries or war pensions schemes.".'.—[Mr. Alfred Morris.]
I beg to move, That the clause be read a Second time.
The Government's acceptance of new clause 26 would be a small but significant step in enriching the lives of a number of severely disabled people by enabling them to live independently in their own homes.
It is good to see the hon. Member for East Hampshire (Mr. Mates) in his place, and I hope that he will catch your eye, Mr. Deputy Speaker, as the debate proceeds. I understand that it was the issue of principle raised by a case involving a constituent of the hon. Member for East Hampshire that first led the legal and parliamentary committee of the Royal Association for Disability and Rehabilitation to press for the change in the Taxes Act 1988 for which new clause 26 provides.
RADAR has liaised very closely with me over the drafting of the new clause, which has its full support. I refer the House to the details of the case brought to my attention by RADAR to exemplify the need for the new clause. For many years, the disabled person concerned—a mouth artist—was a resident of Le Court Cheshire home. Originally, he was able to pay his fees out of his earnings, but with rising inflation he was unable to continue doing so.
That individual's local authority refused to sponsor him, and consequently the charity had to foot the deficit. Eventually, the health authority agreed to sponsorship—which was more satisfactory, as its rules for the treatment of earned income are more beneficial to him than those of local authorities.
About five years ago, the individual in question—like so many other disabled people—decided that he wanted to leave residential care and to live independently. His work as an artist flourishes, but he has to pay £17,000 a year in fees to a nursing agency, which he believes should be treated as a work expense.
If that individual gave up his work, all his care costs would fall on the state, and the Treasury would receive no income tax. Equally, if the new clause encouraged other disabled people to set up in business, the state would gain considerable sums. For the Treasury to ignore the unavoidable extra costs of disabled living is unjust and self-defeating. For disabled people, hardship is piled on hardship as they try to compete with non-disabled people whose living costs are much lower than their own. The new clause is supported not only by RADAR but by the Disablement Income Group, Arthritis Care and many other admirable organisations of and for disabled people that are held in the highest regard by hon. Members on both sides of the House.
On 12 February, the Chancellor said that he could not then be expected to comment on the case for the change in the law that I am proposing owing to the proximity of his Budget statement. That was five months ago, and the Budget did nothing to remove the injustice to which the new clause is addressed. I urge him now to accept what is—as he must surely agree—a modest but none the less important amendment to the Bill.
I am pleased to be able to support the right hon. Member for Manchester, Wythenshawe (Mr. Morris). I do not feel that this is a party matter; it is, above all, a human matter.
The right hon. Gentleman outlined the case of my constituent, Mr. Albert Baker, who, because of a very severe handicap, has been institutionalised all his life— latterly, during my time as his Member of Parliament, in the excellent Le Court Cheshire home. Five years ago, because he had developed such a tremendous skill in painting with his mouth—he cannot use his hands, his legs are in calipers and he is practically immobile without help—he decided that he wanted to lead an independent life. His income from his painting would just allow that. Accordingly, he moved out, and we all raised a cheer: that was precisely what the Government wanted. He is now on the point of having to return to institutional care, because he simply cannot afford the cost of care, with which he is receiving no help. Moreover, he cannot claim it as an allowance against his income.
Five or six months ago, I spoke to the Financial Secretary about the matter. He promised that he would examine it closely, and he did so. However, he brought back the answer that—alas—we hear so often from the Treasury: "I am full of sympathy, but it is too difficult."
If nothing is done, my constituent will have to go back into institutional care, and then—oddly enough—it will be the Treasury that loses. My constituent is making an income, paying his taxes and doing what we want all disabled people to do—living as much in the community as possible. He has that most precious of things, his independence.
It is not enough simply to say, "It is too difficult. If we make an exception in this instance, we shall open the floodgates to others." There must be a way in which to define those who are so severely disabled that they must have full-time care, thus giving some allowance to people such as my constituent, who is doing his best to make his own way despite his dreadful handicaps. We should help such people, rather than shutting the door on them by making the tax regime under which they suffer much less fair than it is for the rest of us.
I am sure that we all sympathise enormously with the case that has just been described to us. In normal circumstances we would want to encourage those who have the guts to try to look after themselves, and to assist them, but there are difficulties in this instance.
I am afraid that I am going to say exactly what my hon. Friend the Member for East Hampshire (Mr. Mates) says that he is fed up with hearing from Treasury Ministers. There are some rules governing what can be deducted by self-employed people in business—expenses that are wholly and exclusively incurred for the purpose of their trade. If a self-employed person in the circumstances that my hon. Friend has described—whether disabled or not—employed someone wholly and exclusively in connection with his business, any payment made to that person would be deductible, but relief for expenses that are purely personal are not deductible.
However, if a disabled self-employed person employed someone who provided him with assistance—both personal assistance and assistance with his work—and if it was possible to define the proportions in which the expenditure fell, the Inland Revenue would be prepared to allow a deduction for the appropriate proportion when computing the business profits.
I did not raise that argument, because I was trying to be brief. However, according to that argument, people are encouraged to cheat. There is an invitation to deduct 10, 20 or 30 per cent. We do not want to go down that route. We want to be able to define such severe disablement so that care is an essential part of that person's making a living. That care is related to work, because the person to whom I referred cannot work without that care.
To the extent that expenses are incurred in enabling him to do that work, they would be deductible under the normal rules that apply at the moment. I was about to say that the proposal extends wider than the right hon. Member for Manchester, Wythenshawe (Mr. Morris) and my hon. Friend the Member for East Hampshire suggested.
The new clause is confined to people who are self-employed. I am not sure whether that is logical. Why should the proposal not apply to employees as well? Why should it be confined to a personal assistant and the services of an individual who essentially works for the disabled person? Why should it not apply to other forms of expenditure such as special equipment, a car or special adaptations to a home?
The issue of the kind of expenses in which disabled people become involved to enable them to work could range much wider than new clause 26. We would quickly find ourselves in other areas. I wonder whether a tax relief of the kind proposed is the way to address the problem.
The right hon. Member for Wythenshawe and my hon. Friend the Member for East Hampshire should consider the wider issues. I do not believe that it is possible to deal just with the self-employed and personal assistants. If we believe that the tax system can be amended to help those people, we must be prepared to consider a wider group of costs and people. Although I make no commitments, perhaps we could consider that.
I understand that the problem is very important to those involved. However, by definition, perhaps only a relatively small number of people would be able to take advantage of the proposal. If the proposal were available, other people could take advantage of the other things that I said might be made tax deductible and we would no doubt face calls for those. If we were to face the problem, we would want to face the whole issue and not just a part of it, only to find that someone raised another aspect next year.
There are difficulties with trying to deal with the problem through the tax system. On the other hand, no one could fail to be full of admiration for the people referred to by the right hon. Member for Wythenshawe and my hon. Friend the Member for East Hampshire. I invite them to consider whether all the areas that I mentioned could be brought together in some way and I would offer to look at the matter again. There are difficulties, but I cannot offer to accept a proposal focused on the narrow area of a self-employed person employing a personal assistant. I would be prepared, without commitment, to consider the wider aspect to see whether something more generally could be done for disabled people to enable them to work and look after themselves, whether or not they are self-employed and whether the expense was related to personal assistance or otherwise.
The Economic Secretary will not be surprised to learn that we find his response very disappointing. He seems to argue at one and the same time that perhaps the new clause does not go far enough and yet it goes too far. He has agreed to look at what he calls the wider area. I am grateful for any further consideration that he is prepared to give to what is a very important amendment.
I am sure that the House was moved by the statement of the hon. Member for East Hampshire (Mr. Mates) about his constituent.
The Royal Association for Disability and Rehabilitation is well deserving of consultation by the Treasury. I hope that the Minister will consult RADAR and other appropriate organisations.
It is not my intention to press the new clause tonight, but I emphasise again that it is unjust and self-defeating of the Treasury not to help people who are trying as hard as the constituent of the hon. Member for East Hampshire to achieve the dignity of staying as a taxpayer instead of moving towards the dependence of social security payments.