Repayment of Dividend Tax Credit to Non-Taxpayers

Orders of the Day — Finance (No. 2) Bill – in the House of Commons at 3:44 pm on 30th June 1998.

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'.—Section 30(5)(b) of the Finance (No. 2) Act 1997 shall cease to have effect.'.—[Mr. Fallon.]

Brought up, and read the First time.

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks

I beg to move, That the clause be read a Second time.

New clause 1 is an attempt to put right an injustice that was raised in Committee. I pay tribute to my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) and to Age Concern, who have highlighted the issue. Very simply, before the abolition of dividend tax credits, non-taxpayers could claim back the tax credits up to 20 per cent. of the dividends that they received. From next April, they cannot.

These are, perhaps, relatively small amounts of money, but they are extremely significant for non-taxpayers who are pensioners. They may be pensioners on very low fixed incomes of £4,000 or £5,000 a year who now stand to lose £100, £200 or £400—sums of that order. It is just dawning on those pensioners exactly what injustice they face.

Miss Geraldine Deery, from St. James road, Sevenoaks, came to see me at my surgery and pointed out that she is 76, has no occupational pension and is entirely dependent—apart from the state pension—on dividends from the investments that were made from the savings she had made from her salary. Next April, she stands to lose between £150 and £160 a year. After coming to see me, she wrote to me and said: This may seem peanuts to Mr. Robinson but it pays, for example, for my one short annual holiday which is all I can afford after paying everyday household bills. Mrs. Pendleton has also written to me, pointing out that the change does not affect the amount of tax paid by taxpayers. Anybody who has an income sufficient to pay tax will not, under this change, have to pay more tax. The only people to suffer under the change are pensioners who are too impoverished to pay tax at all. That seems a double injustice.

To be fair to the Paymaster General, when we raised the issue in Committee, he recognised the problem and undertook to pursue a solution. He was spurred on in that not only by my hon. Friends but by the hon. Member for Dudley, North (Mr. Cranston), who was also rightly concerned about the particular problem of pensioners on very low incomes and the injustice that they will face next April. I understand that, through the good offices of the Paymaster General, the matter was further considered last week. I hope that he will be able to report to the House, as he undertook to do, on the progress that he has made.

4 pm

It may be that the change was rushed through the House and was an inadvertent consequence of the speed with which last July's Finance Bill was considered, but no Member should be in any doubt about the consequences. Next April, around 300,000 pensioners, who, in the financial year 1995–96 claimed on average £75—in many cases, the sum was higher or lower—will lose that entire amount. In your constituency, Madam Speaker, about 400 pensioners will be affected. The change will affect about 400 pensioners in each constituency. They will soon be asking why that change was made and who authorised it. It is late in our deliberations on the Bill, but it is not too late for the Paymaster General to put right this injustice. In moving the new clause, we give him the opportunity to do so.

Photo of Edward Davey Edward Davey Opposition Whip (Commons), Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury), Liberal Democrat Whip

I do not want to detain the House for too long because I know that many hon. Members want to speak on the new clause. I set out my views in Committee last July, and my party's views were reiterated by my hon. Friend the Member for Twickenham (Dr. Cable) in Committee this May. I, too, congratulate the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) on the way in which he has pursued the matter and the hon. Member for Dudley, North (Mr. Cranston), whose intervention in Committee was important in getting the Paymaster General to promise to reconsider the change.

We have come a long way since the Government's first Finance Bill last July, when the Economic Secretary had a much less flexible attitude to interventions by Liberal Democrat and Conservative Members on this issue. I am glad that the Paymaster General was present in Committee to hear our argument, which is one of social justice. It is patently absurd that non-taxpayer pensioners, who are, by definition, the poorest pensioners in our society, should be singled out by the Government for tax increases that, as we have heard, average £75, but in some cases will be significantly higher.

As we have heard from the hon. Member for Sevenoaks (Mr. Fallon), more than 300,000 pensioners will be affected, which is more than 400 in every constituency. This is a major issue, and it is right that the House should be debating it.

We should remember that pensioners may have received shares not because they have been long-term investors in the stock market, but because they were made redundant or inherited them. They may have had a little flutter and bought privatisation shares issued under the previous Government. These pensioners will have received their shares not because they are sophisticated investors but by dint of happenstance and good luck. The dividend income from those shares makes a huge difference to their incomes. The average amount received, £75 a year, equates to one week's pension.

The Government's arguments in favour of the change were rehearsed many times in Committee, but have not stood up to analysis. Their main argument is that pensioners will be protected when individual savings accounts come in towards the end of the century. We have argued strongly against that defence; it is very clear to us that the pensioners affected may be infirm and may have real worries about dealing with complicated financial affairs. They are unlikely to read the financial press or to follow the Chancellor's every move so as to know when to switch their savings to the new ISAs. When they wake up in two or three years' time to the fact that their dividend credits have not been given to them, they will realise just how badly they have been affected.

The House should stand up for these unsophisticated savers and say no to the Government's proposals. These people deserve defending.

Photo of Professor Ross Cranston Professor Ross Cranston Labour, Dudley North

As the hon. Members for Sevenoaks (Mr. Fallon) and for Kingston and Surbiton (Mr. Davey) have mentioned, I raised this issue in Committee. I was especially concerned about the poorest pensioners—non-taxpaying pensioners—who might have received a small number of shares from employers or from a privatisation issue. The income from the shares gives them a small supplement to their basic pension.

Earlier this week, the Minister received a deputation comprising the hon. Members for Bognor Regis and Littlehampton (Mr. Gibb) and for Twickenham (Dr. Cable), two representatives from Age Concern and me. He gave us a sympathetic hearing and is fully aware of the problem. I realise that there may be technical reasons why my hon. Friend cannot accept the new clause today; I realise that there are difficulties with identifying the pensioners who will be worse off as a result of the changes. I should like the Minister to give the matter his closest attention even if he cannot announce any improvements today.

Photo of Nick Gibb Nick Gibb Shadow Spokesperson (Treasury)

The issue goes back to last July's Budget, which prevented non-taxpayers from reclaiming dividend tax credits from the Inland Revenue. The new clause would undo the damage done then.

There are in this country 630,000 non-taxpayers who claim back some form of tax credit on their share income every year. They include children. Of the 630,000, 300,000 are non-tax-paying pensioners who claim an average £75 a year. Of that 300,000, 80,000 claim more than £100 a year—and many thousands claim much more than that.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

Although these sums are not significant to us, will my hon. Friend acknowledge that they certainly are significant to the elderly pensioners among our constituents—precisely the sort of people for whom the Labour party used to care?

Photo of Nick Gibb Nick Gibb Shadow Spokesperson (Treasury)

That is an important point. A non-taxpayer is, by definition, a person on a very low income. After the essential bills—rent, telephone, heat, food—have been paid, the residual income is even lower; so tax refunds on dividend income constitute a high proportion of such pensioners' disposable incomes. From April 1999, that will be removed from them.

The Exchequer will save about £50 million a year by the measure, but, even if it were to continue to allow people to reclaim their tax credit, the amount would be halved in April 1999 in any case, because the Finance (No. 2) Act 1997 reduced the tax credit from 20 to 10 per cent. As a result, even if the Government were to accept new clause 1, pensioners and other non-tax-paying individuals would suffer a halving of the tax credit on their dividends. Therefore, the cost to the Treasury of reversing this measure would be only about £25 million.

As it is, the Government are continuing the policy of tax-back, where non-tax-paying individuals can reclaim income tax deducted on interest income in bank accounts when the bank or building society deducts the interest at source. If the Government are continuing that scheme, it seems odd that they are not allowing pensioners, and other non-tax-paying individuals who have shares, to reclaim the tax back on that income. Age Concern, which has vigorously supported this campaign, has said: Older people who have not had the opportunity to contribute to private pensions are particularly reliant on savings and investments. The loss of the tax credit will penalise them unfairly. Every hon. Member has received considerable correspondence on the issue from constituents. I have had an especially large number of letters from constituents of other hon. Members throughout the country. One letter, from Mr. Geoffrey Pugh of Cheshire, was published in The Times at the beginning of June. He says that, between them, he and his wife have an income of less than £10,000. He continues: we own our house, drive a car, live modestly…we do not qualify for Government handouts, nor do we wish to. But the prospect of losing 20 per cent. of our modest investment income makes us wonder how we shall manage. I have received many letters from my constituents. Mr. Caffyn, who lives in Pagham, just outside Bognor Regis, says: Apart from War Service, myself in the 8th Hussars, and my wife served as a Nurse, we have paid our taxes regularly through the media of PAYE, and to the National Pension fund…We have saved". That is consistent with the statement by the hon. Member for Kingston and Surbiton (Mr. Davey) that it is not by luck that people have amassed a small share portfolio; they have saved hard. The letter continues: now it appears we are going to lose 20 per cent. (that we have been claiming back over the last few years.)'Gobbler' Brown (as he is beginning to be known in this area) really should get himself organised, and not expect people in the no tax bracket to pay tax. The Treasury has received many letters on the issue. A gentleman from Cornwall says: I have just received a payment from the Inland Revenue for £310 which under the new proposals would not be paid after April 99. I think this is grossly unfair when Standard rate taxpayers lose nothing. A lady from South Wirral says: I am a 70 year old widow and have only my late husband's National Insurance contributions for my pension, so rely on my investment for income.This year I reclaimed £213.56 tax credit and still my income was less than the personal allowance. There must be many more pensioners in the same position. Many thousands of pensioners are in that position.

A gentleman from Keighley in West Yorkshire said: My wife aged 77 has received a small repayment of tax credit on her limited investments as she is a non-tax payer. Her retirement pension as a married woman is £38.70 per week…Last year she received a repayment of tax credits in the region of £250. As her annual pension amounts to only £2,012.40 this sum of £250 is a very welcome addition.I am 81 years of age and the shares held by us jointly are the result of steps to save for our old age. No luck in their share portfolio; they have worked hard for it, they have sacrificed and they have saved.

A lady in Nuneaton in Warwickshire wrote to me: As a 'non taxpaying pensioner' partly dependent upon share dividends I really am disgusted at this proposal". A lady in Harrogate in West Yorkshire says: My own income, together with interest from investments and savings, amounts to the total 1997/98 allowance of £5,400…I have been able to reclaim £473 on a dividend tax credit. The lady continues: The interest on Investments and Savings are the result of careful planning, modest living standards, and wise investments, and represents a 'private pension' built up over many years.I am appalled to think that the Government is prepared to penalise senior citizens to this extent when we ourselves have done everything possible to protect ourselves from the demands old age can bring. A gentleman in Ruislip in Middlesex writes: The wife and I stand to lose £500. When almost every day we read of certain spendings of tax on wallpaper, tables and a certain gentleman that forgets a £200,000 fee. I have no idea what the last point refers to.

A lady from Solihull in the west midlands states: As a 67 year old…I have a mentally ill son of 44, and when I knew how severely ill he was and would never be able to work I set out to try and put a small nestegg away for him for his later years, and I stayed at work for an extra five years just because of it.As a consequence he has about £120 a year tax refund, which I use to replace things like shoes and clothing. A gentleman in Dudley in the west midlands writes: I am 78 years old and a war veteran…Thirty years ago I started to invest in Unit Trusts and later in Equities. Although I never earned a large wage I managed to build up a modest investment. That gentleman will now lose £622 as a result of the measure.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

Will my hon. Friend confirm that, in addition to that penalisation, when the full measure is in operation in 2004 people who do not pay income tax will also not benefit under the new ISA arrangement? The Bill was supposed to make it more tax attractive for low-income groups to save, but it makes saving less attractive on two counts—by ending tax credits and by not replacing them with an ISA scheme from which those groups will benefit.

Photo of Nick Gibb Nick Gibb Shadow Spokesperson (Treasury) 4:15 pm, 30th June 1998

My hon. Friend makes a good point. When justifying the measure in Committee, the Government said that ISAs were the vehicle that such people could use, once the dividend tax credit repayment was abolished. However, for basic rate taxpayers, low rate taxpayers or non-taxpayers, there is no advantage in holding equities through an ISA. Low and basic rate taxpayers generally do not pay capital gains tax anyway, because they are unlikely to use up the annual capital gains allowance. The 20 per cent. tax credit reduced to 10 per cent. and repaid only until the year 2004, as we have heard, is hardly likely even to cover the charges. After 2004, even that small benefit from holding equities in an ISA will be abolished.

I shall mention two more people briefly. A gentleman in Burwood in Dorset states: In the case of my wife and self the total amount which we shall be unable to reclaim is £886 per annum. As our combined annual income is approximately £11,500, this new ruling is catastrophic to us. A couple in Dorset say: The reason we are non-Tax payers is because we are pensioners and on a low income (hence the Non-Tax payers).The thought of losing the ability to reclaim Tax Credits has really upset us…Last year the total reclaim between the two of us only amounted to £118.16p, but even this small amount makes a big difference to us, we use it to help the payment of bills. That is a small sample of the correspondence that I have received, and an even smaller sample of the correspondence that I know the Paymaster General and other members of the Treasury team have received. I should have thought that that would prompt the Government into taking action before now.

The only response from the Inland Revenue is a callous letter, which states: It would have been anomalous to allow individuals to continue to claim payment of tax credits when such tax credits are being removed from all other investors. The anomaly is that basic rate taxpayers, lower rate taxpayers and higher rate taxpayers will all benefit from the dividend tax credit, but the only people who will not benefit from it are those who do not pay tax. For some reason, the Government—inadvertently, incompetently or deliberately—have decided that non-taxpayers should pay tax on their dividends, whereas every other section of society should not.

We went to see the Paymaster General last week. I am grateful to him for sparing the time to meet us. Both in Committee and at the meeting, he raised the difficulty over sovereign immunity—the fact that non-UK residents who have sovereign immunity would be able to continue to reclaim the tax credit.

I am surprised that the Government cannot find a way around this technical problem. The Revenue is full of technical specialists who I am sure could find a way of dealing with that loss of revenue. Despite the fact that the Government have not tabled an amendment, I hope that the Paymaster General will give an absolute commitment—with no dilutions and no caveat attached—that the Government will move an amendment to the next Finance Bill to reverse this measure. It will take effect in April 1999, which means that tax reclaims will begin to be submitted to the Revenue after April 2000 in the run-up to the general election. The political imperatives are there and, if the Government were to give such a commitment now, it would set at rest the minds of many hundreds of thousands of non-tax-paying individuals, who could be secure in the knowledge that they will continue to be able to reclaim important income from their dividend tax credits.

Photo of Helen Southworth Helen Southworth Labour, Warrington South

The Government are already taking serious action to ensure that poor pensioners receive the help that they need. We recognise that that assistance is very important. My experience before coming to the House showed quite clearly that there are far too many poor pensioners in Britain, and that their number increased under the previous Government.

We have taken action to reduce value added tax on fuel and have given every pensioner household winter fuel payments. I was privileged to contribute recently to policy that reduces VAT on insulation for poor pensioners. We are looking urgently at ways of reaching the 1 million pensioners on low incomes who are not claiming the benefits to which they are entitled and that they should be receiving.

I have spoken to Ministers about this issue. I understand that there are complexities involved in identifying individual pensioners on low incomes who are affected, but I ask my hon. Friend the Paymaster General to consider seriously taking action on this matter as soon as possible.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Health)

I add my congratulations to my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) and to Age Concern on raising public awareness of this issue. It will affect large numbers of relatively poor pensioners from next April, and many of them were not aware of it until the press coverage that accompanied my hon. Friend's campaign in Committee.

The Paymaster General was clearly rattled by the points that my hon. Friend raised in Committee and, assisted by the intervention of the hon. Member for Dudley, North (Mr. Cranston), he gave us cause to hope that he would introduce a measure at this stage of the Bill's progress to ameliorate the impact on very poor pensioners. We are extremely disappointed that no Government amendment or new clause has been tabled to give effect to the implication of the Paymaster General's comments in Committee that he was sympathetic to our concerns.

As my hon. Friend said, many hon. Members on both sides of the House have received correspondence from pensioners who will be affected by the measure. That correspondence makes pretty heart-rending reading. In many cases, we are talking about people who stand to lose perhaps £200 or £300 a year. Those people view that money, which they have habitually reclaimed in the form of dividend credits, as the means of running a car or having a modest annual holiday. They are the small luxuries of life that those people will now have to forgo.

The fact that hundreds of thousands of people are prepared to fill in the relatively complex paperwork required to reclaim sums averaging only £75 a year is testimony to the importance that they attach to this money. Those sums may seem small to us—and even smaller to the Paymaster General—but they are clearly very significant to those who stand to lose them. It is clear from reading the correspondence that great confusion, concern and distress have been caused.

Even I, cynical as I may wish to be, cannot believe that it was the Government's intention openly to penalise the poorest, the non-tax-paying pensioners, by discriminating against them and putting them in a worse position than those paying standard rate or higher rates of income tax.

I was surprised that the Paymaster General did not take the opportunity to back down gracefully. In fact, the Government's reaction has been to dig in and, despite initially showing sympathy in Committee, the Government have given no ground at all.

In Committee, we heard that it is inconvenient and expensive for the Inland Revenue to process these many small claims, but I suggest that this is an example of the tax-collecting tail wagging the tax-paying dog. It is not good enough that this mean-minded measure should go through simply for the convenience of Inland Revenue officials.

Photo of Edward Davey Edward Davey Opposition Whip (Commons), Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury), Liberal Democrat Whip

Is the hon. Gentleman aware that the Government drafted the Finance Act 1997 in such a way as to ensure that there was no increase in the tax burden of higher rate taxpayers as a result of the move? Does the hon. Gentleman wish to comment on that?

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Health)

The point that my hon. Friends and I would like to emphasise is that the measure discriminates against the poorest members of our society. In Committee, Labour Members, failing to understand the concerns raised by Conservative Members, attempted to paint this as some kind of fat-cats charter, but, by definition, the measure affects only those who are too poor to pay income tax. I cannot understand how a new Labour Government can believe that they are enhancing their political credentials by forcing through such a measure, creating 250,000 or so angry, disfranchised pensioners as a result of the loss of a vital chunk of income.

The measure is not simply mean-minded, but politically incompetent. The Government put up the Paymaster General, with all the baggage that he carries, to tell the poorest pensioners that they must give up, on average, £75 each for the convenience of the Inland Revenue and because it would be too tricky for the Government to find a way of allowing them that little extra bit of income without allowing foreign potentates, who benefit from sovereign immunity, to slip through a loophole.

In Committee, the Paymaster General raised our hopes when he appeared to be sympathetic to the suggestion of my hon. Friend the Member for Bognor Regis and Littlehampton. He has now dashed those hopes and, with them, the hopes of many hundreds of thousands of pensioners throughout Britain. It is not part of my brief to recommend to the Government ways to avoid alienating 250,000 voters, but the matter is far more important than narrow party political advantage and I urge the Government, even at this late stage, not to commit this ludicrous act of mean-minded political suicide in penalising the very people whom they claim to be helping and whom it is the function of all hon. Members to seek to protect.

Photo of Mr John Burnett Mr John Burnett Liberal Democrat, Torridge and West Devon

Considerable credit goes to the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) and Age Concern for highlighting the matter, and I am happy again to pay tribute to both.

The impact of the abolition of dividend tax credits on nil taxpayers, the poorest and most vulnerable, marked one of the low points in the Finance (No. 2) Bill. I cannot understand whether officials briefed Ministers on the consequences. By any objective assessment, the poorest and most vulnerable should pay the least tax. It is just and equitable that non-taxpayers who hold shares are not brought into taxation by the denial of the ability to recover tax credits on the meagre dividends that are paid to them. Therefore, what possible reasons do the Government have for denying this relief?

During the debate in Committee on 14 May, the Paymaster General, who is, I believe, convinced of the argument for change, said that he would reconsider the matter which has been discussed in today's debate. Will he give the House an up-to-date account of exactly what the Government propose to overcome such a mean and unnecessary consequence of their advance corporation tax change? Is it not time to hear first hand exactly what measures they will take to relieve this unjust and unfair consequence?

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham 4:30 pm, 30th June 1998

This morning, I received in the post yet another letter from a constituent on this subject. We have heard from my hon. Friends how postbags have been deluged with correspondence from constituents who are only now waking up to the implications of the measure. Along with every hon. Member, I congratulate my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) on his sterling work on the new clause, without wishing to make his head swell even more than it has already.

A constituent in Worthing listened to "Money Box" on Radio 4 only a few weeks ago. He heard: They said that the people most affected would be those on low incomes who had perhaps inherited shares. This applies to me and to my disabled sister—both of us inherited shares from our father. My constituent and his sister feel very angry that the present Government who profess to help the not so well off, should bring about the exact opposite. He went on to refer to a pamphlet that they received from Saga, which stated: Tax changes punish the poor. The letter could equally have been written by someone who had shares because of redundancy and had invested the payment in a small number of investments, or by any of the millions of people, many thousands of whom would have been of pensionable age, who bought a modest number of shares in the privatisations.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

There seems to be a received wisdom that people who hold shares as a means of saving are somehow financially sophisticated and able to take care of themselves. Does my hon. Friend acknowledge that many such people who have written to me, and who may have written to him, cottoned on to the change only as a consequence of the campaign that has been mounted by our hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb)? Such is their level of financial sophistication.

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham

To pour further praise on my hon. Friend the Member for Bognor Regis and Littlehampton, my hon. Friend the Member for New Forest, West (Mr. Swayne) is right. Our hon. Friend and Age Concern brought the matter to the attention of the media, which resulted in mass publicity in the newspapers and on the radio, and probably on satellite television as well.

Photo of John Bercow John Bercow Conservative, Buckingham

I am grateful to my hon. Friend for his characteristic courtesy in giving way. I hope that he will understand if I momentarily turn from praise, justified though it is, to blame. Our hon. Friend the Member for Bognor Regis and Littlehampton referred to a callous letter from the Inland Revenue, dated 11 February, which defended current Government policy. Although the Paymaster General is legitimately attacked on this matter, does my hon. Friend agree that the Financial Secretary should also be attacked on it? She is the Minister responsible for the Revenue: is it not about time that we were told whether she is in office or in power, and whether she is told what to do or whether she has the slightest influence on Government policy?

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham

My hon. Friend is right: the entire Treasury team should be ashamed of that act of callousness of the worst order. To put the record straight, I should point out that the article in Age Concern's magazine referring to the callousness of the measure contained a photograph of my hon. Friend the Member for Bognor Regis and Littlehampton with the word "callous" underneath it. Of course, that referred not to my hon. Friend, but to the culprits and perpetrators of the crime, who sit on the Labour Benches. It is worth putting the record straight, because we do not want his reputation blemished for the entirely pure and philanthropic measures that he promoted so ably.

May I return to my speech? As my hon. Friends have said, only now are people waking up to what has happened, yet the legislation was passed a year ago. Many of my hon. Friends who are here today and I were on the Finance Bill Standing Committee last year. They will remember that it was guillotined through in just five days, compared with the six and a half weeks of luxury indulgence which we have enjoyed this year. The Budget announced on 2 July passed into law by the end of July, so organisations such as Age Concern had no time to get their act together and make proper representations to help us publicise that highly damaging measure. The measure was rushed through with undue haste, and only now are the victims of that callous act waking up to the fact that in April 1999 they will be substantially less well off.

The measure affects more than 300,000 people of pensionable age earning less than £5,400. The cost to the Exchequer is relatively small—some £25 million to £30 million, perhaps a little more, next year. Thus it affects the poorest pensioners. I represent an area of Worthing with the highest number of pensioners in the entire country, so I feel particularly aggrieved that yet another blatant measure is discriminating against good pensioner folk. Few of the pensioners in my constituency live in comfortable luxury, and many make their way on little more than the basic pension. The poorest people are hit the hardest.

I am sorry that the Financial Secretary would not take an intervention when she spoke a moment ago. She was dangling yet another red herring—goodness knows, we have had so many during the stages of the Finance Bill—when she said that the Government were enabling more pensioners to take advantage of more benefits. Our proposal would be much better because it would enable pensioners to stand on their own two feet and support themselves from their own investments. They could take advantage of dividends and dividend tax credits which are rightfully theirs, rather than having to rely on the welfare state. They are entitled to do that, but, if more people can make preparations for their own retirement and stand on their own feet, that is to be encouraged. This measure takes away yet another leg of support. It is a shame that the Financial Secretary did not accept that point.

In Committee, we had an awful lot of red herrings from the Paymaster General. In replying to an amendment on this very subject, he started talking about individual savings accounts. If he is absolutely honest with himself, ISAs are of minimal, if any, attraction to that class of investor because none of them will get anywhere near the annual capital gains tax allowance. Moreover, ISAs hold few income attractions, if any, for those on low incomes. Even if there were any, they would all be gobbled up by costs. It was a real red herring—another desperate attempt to justify ISAs replacing a far better scheme. The Paymaster General should come clean on that.

As I said in Committee, one option open to pensioners, if they are sophisticated enough to take investment advice, is to switch into bonds that pay gross dividends or into bank or building society accounts that pay interest gross. However, why should we condemn pensioners to capital growth in those accounts when we know the much greater attractions of capital growth in the equity market? Why should they be condemned to a fairly pedestrian investment portfolio of fixed interest stocks or cash investments? Their choice will be limited if the new clause is not accepted.

We have all received many representations. I pay tribute to the bravery of the hon. Member for Dudley, North (Mr. Cranston), who did not realise that he was fundamentally undermining the Government's stance at the time and did a wonderful U-turn with great aplomb to support the amendment in Committee.

At one point in Committee, we were greatly cheered. The Paymaster General said: Combined with the abolition of ACT, we have made a major improvement of the corporate taxation system. We are getting rid of the in-built bias towards paying dividends". He did not get off to a very good start. He then said: I shall deal with ISAs. That was such a red herring that it was ruled out of order, and I hope that he does not repeat that error when he replies to the debate. Then things started getting better. After we had impressed on him the merits of the amendments, he said: The calculations that were made by the Opposition Members and by my hon. Friend the Member for Dudley, North are pretty much correct. Things were looking up. We thought, "Golly, will this be the first amendment that we get accepted by the Government?" He went on: Perhaps a case can be made for an overall limit on payable tax credits, which might be in the region that Age Concern described in its very good paper. That sounded as though the Paymaster General and his team were on the verge of accepting that sensible, common-sense amendment to prevent discrimination against the poorest people in the investment community. But then it all went wrong. He said: I see at this critical moment that my right hon. Friend the Chief Secretary is invigilating. At that point, the Chief Secretary, who alas is not present today, appeared, and all the promises evaporated. The guarantees were suddenly not guarantees, and the promises were no longer promises. He ended up by saying: I make no promises, other than to revert to the matter on Report."—[Official Report, Standing Committee E, 14 May 1998; c. 191–94.] What an enormous anti-climax that was.

I hope that the Paymaster General, without the presence in the Chamber of the Chief Secretary—although the Whip is here on his behalf—will have the courage to accept this common-sense new clause, and will show that the Government are concerned about the poorest in our society. It is very late in the day, but the Government have tabled scores of amendments to their own legislation, so it would not hurt them to promise to redraft this new clause to make it acceptable.

I hope that we are given better reasons than those given by the hon. Member for Dudley, North, who said that the amendments were unacceptable for technical reasons. We deserve better than that, and the pensioner investment community demands better. If the Paymaster General is not prepared to accept the new clause, we demand a proper explanation of why the Government continue to hit the poorest hardest.

Photo of Quentin Davies Quentin Davies Conservative, Grantham and Stamford

For all the Government's failings, shortcomings, incompetence and insensitivity, for which I and many Opposition Members have berated them in the past year, I never expected that they would get into this mess. I hesitated before trying to catch your eye, Mr. Deputy Speaker, because I expected the Paymaster General to pre-empt the debate by declaring that the Government had come up with a solution that would protect the interests of the poorest savers. The Government may feel that I have been unfairly critical of them, but even I gravely overestimated them.

It is clear that the Paymaster General has no intention of announcing that the Government will come up with a solution to this problem. It is a human problem, and, ultimately, that is what is important. The hon. Gentleman and the Financial Secretary have constituents, and I cannot believe that they have not seen the shine in the eyes of a poor pensioner who has received a cheque from the Inland Revenue for a small amount of money, which to some people on the Treasury Bench may be a derisory amount, but which to that pensioner is of enormous consequence.

Unless the Government change their mind or we succeed in defeating them on the new clause, the pleasure and happiness that very poor people derive from receiving such an exciting and unexpected bonus—they live on the margin and have only £100 or £200 in hand—will be replaced by tears. Labour Members will see those people in their surgeries, as we will in ours. No doubt they are more hard-hearted than we are and will be less moved when that happens, but happen it most certainly will.

4.45 pm

I shall move from human appeals to the more rigorous analysis that we are used to when discussing fiscal matters. I ask for a little more rigour in the Government's analysis, too. When the Paymaster General replies to the debate, he should not use the three arguments that I understand he used in Committee, none of which will wash. First, he should not talk about the feasibility and desirability of relieving the poorest savers from the need to pay tax, because that would not be the effect of the new clause.

Unfortunately, such is the effect of the abolition of advance corporation tax and the dividend tax credit that everyone who holds shares in British companies, directly or indirectly, will now pay tax. The argument is about whether the poorest pensioners and savers should pay double tax. The rest of us, whether we hold shares directly or through institutions and pension funds, will now pay double tax. The companies of which we are shareholders will pay corporation tax, and we will be taxed on the distributed profits. The issue is not whether, by means of the new clause, we should relieve the poorest savers from paying tax; t is whether we should relieve them of the burden of paying double tax.

The second point that I hope the hon. Gentleman will not make is that, for technical reasons, it is impossible to accept the new clause or to devise an equivalent measure to relieve the poorest savers—who are so poor that their incomes do not reach the income tax threshold—from the need to pay double tax on dividends from their investments. That cannot be true, because the Government have already introduced such a measure giving charities precisely the relief that we want for the poorest pensioners and savers. It will not wash to argue that there is no effective means of providing such relief, because the Government have condemned themselves by protecting charities from the abolition of the dividend tax credit.

The third argument, which has already been effectively demolished by some of my hon. Friends, is that the poorest savers can switch into the Government's new individual savings account. That argument will not wash either. As my hon. Friends have already said, the small savers involved are most unlikely to be able to benefit from the capital gains tax provisions of ISAs, because their capital gains will probably not exceed the individual allowance in any one year.

The major benefit of ISAs is the relief from capital gains tax liability. ISAs are not a solution to the problem of paying tax on dividends, because people will have to pay a management fee, and other commissions and charges, for the privilege of having an ISA. People will have to pay a fee to the intermediary who holds the franchise and who sets up the ISA: that is what these tax-advantaged savings vehicles are all about.

For people who pay tax at the standard rate of 23 per cent. or at the higher marginal rate of 40 per cent., it may be sensible to pay the fees required to join an ISA and to shelter part of their portfolio. Let me make the arithmetic simple. Let us say that the average dividend yield of the equities in an ISA is 4 per cent., and that tax is being paid at a marginal rate of 23 per cent. Roughly one of those four percentage points will be lost in tax. Someone who joins an ISA will probably pay 1 per cent. of the value of the fund by way of a management fee. In other words, what that person is not paying to the Revenue he will be paying to the financial intermediary who set up the ISA.

Opposition Members, at least, are concerned with the interests of poor savers. I am extremely sorry that that concern is not shared by Labour Members—apart from the hon. Member for Dudley, North (Mr. Cranston), to whom I pay tribute for his individuality and courage. By definition, poor savers are not currently paying tax. For them, the choice will be between paying a tax that they do not currently pay—and, in my view, ought not to pay—and paying the same amount to an intermediary for the privilege of putting their shares into an ISA. Either way, they lose, and whether the Revenue or the manager of the ISA gains is a somewhat academic question for them. As I said earlier, an apparently small financial loss may be disproportionately grave in terms of the sum of such people's happiness.

I hope that we shall hear none of those three arguments this afternoon. I hope that we can now concentrate on whether it is fair, and economically sensible, to penalise the poorest savers—those who may begin to save modest amounts from the lowest incomes—by imposing a double taxation regime on them. That is what the new clause is about. If the Government reject it—notwithstanding all the unpleasant, cruel and callous things that they have done so far, and the many more that they will no doubt do in future—their action will be written high up on their tombstone. It will remain in the minds of the electorate—not just those on the lowest incomes who will be directly affected, but all in our country who believe that taxation should be fair and just, and that those with the lowest incomes should be expected to pay proportionately the lowest share of the country's collective tax costs.

Photo of Andrew Tyrie Andrew Tyrie Conservative, Chichester

I cannot do better than say how much I agree with what I have just heard from my hon. Friend the Member for Grantham and Stamford (Mr. Davies). It was a typically eloquent and impressive exposition of the arguments, referring to all the key points, including those which I hope we shall not hear later from the Paymaster General—who, I must say, has looked rather bored during our proceedings so far. He has looked at his watch no fewer than three times, and has sat with his arms folded in a rather uninterested manner for most of the debate.

Let me begin by praising my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), who is a neighbour of mine down in West Sussex and who first alerted me to this issue. Had he not done so, I would not have twigged—at least, not for a long time—that this change was in the Finance Bill. It was, of course, hidden away. It is a hidden consequence of the decision to make a grab on pension funds. The Labour party, which pushed the measure through at the time of the last Budget, had not thought it through at all. Many aspects of the legislation have had to be repaired: the sticking plaster has had to come out, and the Government have had to make emergency adjustments so that it looks right.

I have wondered why that is, and I think that the resignation of Sir Terry Burns gives us at least a bit of the answer. Sir Terry Burns is one of the best and most senior advisers in the Treasury. I would not mind betting that the policy on the pensions grab was thought out when Labour was in opposition, and was foisted on the Treasury without its having the opportunity to think it through carefully. That is why all the unintended consequences are now coming out of the woodwork—consequences that need to be dealt with.

I hope that Treasury Ministers will now begin to learn that it really does help to use the official machine rather than trying to bypass it. The press reports stating that the Chancellor works without properly consulting his official advisers, using an inner coterie instead, appear to have some credibility when we consider the effects of legislation such as this.

What exactly are those unintended consequences? My hon. Friend the Member for Bognor Regis and Littlehampton spelled them out very eloquently. They are very bad news for non-taxpayers, the people whom Labour purports to want to help most. We know that Labour does not help taxpayers, but we now also know that it does not want to help non-taxpayers either.

As I understand it, non-taxpayers used to be able to claim tax credits on dividend income, but they will soon be unable to do so. There are 300,000 people over 65 in that category—some are my constituents—and they will be deeply angered by the change. One of them came to see me about it before I understood the issue. Until he sat down and described it to me, I did not have a clue what it was about: I had not grasped the significance of the change. Several more people have written to me expressing their concern.

Incidentally, when I write to the Paymaster General, I rarely receive answers to my letters inside two to three months. He is not listening now, as is so often the case when people try to make points to him. I have a whole batch of letters—

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Health)

My hon. Friend may be interested to know that some members of the Standing Committee are still waiting for letters that the Paymaster General promised to write to them during the Committee stage.

Photo of Andrew Tyrie Andrew Tyrie Conservative, Chichester

That does not surprise me at all. I am flabbergasted by the time it takes to get a reply from the Paymaster General on this or any other issue.

As my hon. Friend the Member for Bognor Regis and Littlehampton pointed out, the average amount involved may seem small—£75, although it may be appreciably more in some instances—but it is a significant sum for non-taxpayers, to whom such small amounts matter a great deal. That is why Age Concern, among other organisations, has decided to make such an issue of the change. We have heard at least one quotation from an Age Concern document this afternoon. Age Concern is right to be worried, because the poor will be hit hardest. As I understand it, taxpayers will continue to obtain the benefit of the tax credit, but non-taxpayers will not. That will be the fundamental anomaly and injustice in the legislation, unless the Government make a last-minute decision to find a way out of this hole.

At present, the vast majority of those who will be affected—two thirds of a million altogether, including 300,000 pensioners—do not know about the measure. They have no reason to know, and no way of finding out whether the change will happen. They do not follow the Finance Bill. I am sure that those who drafted the Bill did not know about it at the time. How, then, can those people be expected to know? The time will come, however, when they will know, and they will resent it very much.

I said that the change was unintended. That may be a charitable view, but it is probably accurate. I gave an explanation of why it was unintended: Treasury Ministers do not listen to their own officials, although I think they are beginning to listen to them a little more than they did when they first arrived. Some of their best officials pushed off immediately; others waited a year out of politeness.

This afternoon, we shall find out whether this is an unintended measure that the Government want to put right, or a measure for which they should henceforth be squarely blamed. If they refuse to accept the new clause, we will know that this is something that they intend and want to do. They will have had ample time to reverse it and to think through what to do. They will be judged on the decision that they take.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Conservative, Cotswold

Is my hon. Friend aware that anyone earning up to the new personal allowance threshold of £4,195, or just £80 a week, will be hit by this measure, which will thus affect some of the poorest in the land? Does he not think that that is highly reprehensible?

Photo of Andrew Tyrie Andrew Tyrie Conservative, Chichester

I did not know the exact numbers. I do find it highly reprehensible. I find it highly reprehensible, too, that Treasury Ministers are not even bothering to listen to the points that are being made to them.

If Treasury Ministers ignore and sweep away the new clause, we—and hundreds of thousands of people throughout the land—will know that it was their intention effectively to reduce the income of some of the poorest people, including pensioners.

5 pm

Photo of Geoffrey Robinson Geoffrey Robinson Paymaster General (HM Treasury)

There has been a good deal of cross-party support on this matter. I think that that was evidenced at the meeting that I was pleased to have with Age Concern, with the hon. Members for Torridge and West Devon (Mr. Burnett) and for Bognor Regis and Littlehampton (Mr. Gibb), and with my hon. Friend the Member for Dudley, North (Mr. Cranston). I think that they made a powerful case. I think that the case in the country, and the feelings that have been conveyed, are considerable. I am sympathetic to that case. I have listened hard to it, but hon. Members will obviously be aware that we have not tabled a new clause at this stage and that, from our point of view, the matter is still under review. I am taking a deep personal interest in it.

Most hon. Members have made pretty much the same points during this debate as were made in Committee. I do not think there are any new points that particularly require addressing by me. As always, I welcome the hon. Member for Grantham and Stamford (Mr. Davies) to our debates. I am pleased that he is not deterred by his new onerous responsibilities from attending them. He is always a welcome figure.

Some points were quite irrelevant. The hon. Member for Chichester (Mr. Tyrie) made some remarks regarding some senior civil servants leaving early and others leaving now. Nothing could be further from the truth. We work extreme closely with civil servants. All the policies are worked out with civil servants in the Treasury, in Customs and Excise and at the Inland Revenue itself, so the hon. Gentleman need not worry about that. There is plenty of contact, and I am happy to have such good relations with the most senior and the most junior officials in the Department.

Photo of Quentin Davies Quentin Davies Conservative, Grantham and Stamford

The hon. Gentleman is trying to muffle my fire by throwing up a smokescreen of compliments in my direction; in all honesty, that will not work. May I ask him to address the specific point about charities? If it is possible to devise a solution to protect charities, why is it so technically difficult to devise a solution to protect the poorest savers?

Photo of Geoffrey Robinson Geoffrey Robinson Paymaster General (HM Treasury)

That is a fair point. We have had good responses from the charities for what we did there, which was, as the hon. Gentleman knows, unprecedentedly generous: when the Conservatives removed tax credits, they gave a much shorter period. With regard to pensioners and non-taxpayers, the matter is more complicated. I say this to Conservative Members, including the hon. Member for Bognor Regis and Littlehampton, who has led the campaign from the Opposition Benches: it will not be issues of sovereign immunity that will stop us doing this. It is not a question of the convenience of the Inland Revenue. There are certain things that we are looking at. We are looking at alternatives, as we did when we went into the consultation period following the initial ending of tax credits, and deciding which way to go on company taxation policy overall with regard to ACT.

I can give no commitment today and I have not brought a solution to the House; we would not be having this sort of debate if I had. I am aware also of the growing anxiety among poorer non-taxpayers who have been hit by the measure, so I know that we need to make our position utterly clear as quickly as possible. I am working to that end.

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks

May I reply to the debate and thank all those who have participated? I think almost everyone who has spoken has shown some sympathy with the new clause. I am particularly grateful for the support from the Liberal Democrat Benches. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), with the eloquence and precision that we have come to expect of him, made the case again: in this matter, he is the pensioners' champion. My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) pointed out that the sums involved make a difference to the quality of life for some of our poorest pensioners. I am grateful, too, for the support of my hon. Friends the Members for East Worthing and Shoreham (Mr. Loughton), for Grantham and Stamford (Mr. Davies) and for Chichester (Mr. Tyrie).

No one defended the Government's position on the new clause. The hon. Member for Dudley, North (Mr. Cranston) gave us his usual cameo of the Paymaster General's learned junior and said that there was something defective about the new clause, but I think he has some sympathy with, and is perhaps a secret supporter of, the new clause.

Then we heard, most surprisingly of all, from the hon. Member for Warrington, South (Ms Southworth). I am told that she was a member of the Standing Committee and that she sat upstairs with us for six weeks. She was certainly silent for six weeks, yet now she suddenly appears in the House and tells us that she has had a word with the Paymaster General. That parliamentary effort seems to have exhausted her—she has now disappeared—but we wait to see what effect that will have. We shall be judging the effort that is put in by Labour Members on this matter.

To the Paymaster General, I would say, "We expected a bit more than that." He has had six weeks to correct this injustice and to come up with an amendment of his own. Yesterday, there were amendments on the Order Paper to help the casinos. Perhaps he is more interested in the casinos than in the lives of our poorest pensioners. He has had six weeks to draft an amendment. He has admitted tonight that drafting such an amendment is not impossible—that there may be technical difficulties, but that they can be overcome. Indeed, he has said that he has listened sympathetically and has the matter under review.

The Government brought about this injustice a year ago. They have had plenty of time to review it. This was slipshod, inadvertent drafting, for which the Financial Secretary was responsible a year ago. Little wonder that she was not put up to answer the debate, and that it was left up to the Paymaster General instead.

There are two choices before the House. We can—at one point I was considering doing this—give the Paymaster General the benefit of the doubt, as we have done quite a lot, on quite a number of matters, over the past few months, or we can place on record our opposition to one of the meanest tax increases of all. We could put a marker down now, while he works away on his amendment, to the effect that we are opposed to the measure on behalf of 300,000 of the poorest pensioners—people who have put something aside, who have not claimed benefit, who have saved for their old age and who now find a Labour Government are robbing them of sums of £75 or £100. It is right that we press the new clause, and I invite my hon. Friends to support it.

Question put, That the clause be read a Second time:—

The House divided: Ayes 171, Noes 284.

Division No. 318][5.8 pm
Ainsworth, Peter (E Surrey)Hamilton, Rt Hon Sir Archie
Allan, RichardHammond, Philip
Amess, DavidHancock, Mike
Arbuthnot, JamesHarris, Dr Evan
Ashdown, Rt Hon PaddyHarvey, Nick
Atkinson, David (Bour'mth E)Hawkins, Nick
Baker, NormanHayes, John
Ballard, JackieHeald, Oliver
Beggs, RoyHeath, David (Somerton & Frome)
Bercow, JohnHeathcoat-Amory, Rt Hon David
Beresford, Sir PaulHogg, Rt Hon Douglas
Body, Sir RichardHoram, John
Boswell, TimHoward, Rt Hon Michael
Bottomley, Peter (Worthing W)Hughes, Simon (Southwark N)
Brady, GrahamHunter, Andrew
Brake, TomJack, Rt Hon Michael
Brand, Dr PeterJackson, Robert (Wantage)
Brazier, JulianJenkin, Bernard
Browning, Mrs AngelaJohnson Smith, Rt Hon Sir Geoffrey
Bruce, Ian (S Dorset)
Bruce, Malcolm (Gordon)Jones, Nigel (Cheltenham)
Burnett, JohnKennedy, Charles (Ross Skye)
Burns, SimonKey, Robert
Cash, WilliamKirkbride, Miss Julie
Chapman, Sir Sydney (Chipping Barnet)Kirkwood, Archy
Laing, Mrs Eleanor
Chope, ChristopherLait, Mrs Jacqui
Clappison, JamesLeigh, Edward
Clark, Rt Hon Alan (Kensington)Letwin, Oliver
Clarke, Rt Hon Kenneth (Rushcliffe)Lewis, Dr Julian (New Forest E)
Lidington, David
Clifton-Brown, GeoffreyLilley, Rt Hon Peter
Collins, TimLivsey, Richard
Colvin, MichaelLloyd, Rt Hon Sir Peter (Fareham)
Cormack, Sir PatrickLlwyd, Elfyn
Cotter, BrianLoughton, Tim
Cran, JamesLuff, Peter
Curry, Rt Hon DavidMacGregor, Rt Hon John
Dafis, CynogMcIntosh, Miss Anne
Davey, Edward (Kingston)MacKay, Andrew
Davies, Quentin (Grantham)McLoughlin, Patrick
Davis, Rt Hon David (Haltemprice)Major, Rt Hon John
Dorrell, Rt Hon StephenMaples, John
Duncan, AlanMaude, Rt Hon Francis
Duncan Smith, IainMay, Mrs Theresa
Emery, Rt Hon Sir PeterMichie, Mrs Ray (Argyll & Bute)
Evans, NigelMoore, Michael
Ewing, Mrs MargaretMorgan, Alasdair (Galloway)
Faber, DavidMoss, Malcolm
Fallon, MichaelNicholls, Patrick
Fearn, RonnieNorman, Archie
Flight, HowardÖpik, Lembit
Forth, Rt Hon EricOttaway, Richard
Foster, Don (Bath)Paice, James
Fowler, Rt Hon Sir NormanPaterson, Owen
Fox, Dr LiamPickles, Eric
Fraser, ChristopherPrior, David
Garnier, EdwardRedwood, Rt Hon John
George, Andrew (St Ives)Rendel, David
Gibb, NickRobathan, Andrew
Gill, ChristopherRobertson, Laurence (Tewk'b'ry)
Gillan, Mrs CherylRowe, Andrew (Faversham)
Goodlad, Rt Hon Sir AlastairRuffley, David
Gorman, Mrs TeresaRussell, Bob (Colchester)
Gorrie, DonaldSt Aubyn, Nick
Green, DamianSanders, Adrian
Greenway, JohnSayeed, Jonathan
Grieve, DominicShephard, Rt Hon Mrs Gillian
Gummer, Rt Hon JohnShepherd, Richard
Simpson, Keith (Mid-Norfolk)Wallace, James
Soames, NicholasWalter, Robert
Spicer, Sir MichaelWardle, Charles
Stanley, Rt Hon Sir JohnWaterson, Nigel
Streeter, GaryWebb, Steve
Stunell, AndrewWhittingdale, John
Swayne, DesmondWigley, Rt Hon Dafydd
Swinney, JohnWilkinson, John
Syms, RobertWilletts, David
Tapsell, Sir PeterWillis, Phil
Taylor, Ian (Esher & Walton)Wilshire, David
Taylor, John M (Solihull)Winterton, Mrs Ann (Congleton)
Taylor, Matthew (Truro)Winterton, Nicholas (Macclesfield)
Taylor, Sir TeddyWoodward, Shaun
Tonge, Dr JennyYeo, Tim
Townend, JohnYoung, Rt Hon Sir George
Trend, Michael
Tyler, PaulTellers for the Ayes:
Tyrie, AndrewSir David Madel and
Viggers, PeterMr. Stephen Day.
Ainger, NickColeman, Iain
Ainsworth, Robert (Cov'try NE)Connarty, Michael
Alexander, DouglasCook, Frank (Stockton N)
Anderson, Janet (Rossendale)Corbett, Robin
Armstrong, Ms HilaryCorbyn, Jeremy
Ashton, JoeCorston, Ms Jean
Atkins, CharlotteCousins, Jim
Austin, JohnCranston, Ross
Banks, TonyCrausby, David
Bayley, HughCummings, John
Beard, NigelCunliffe, Lawrence
Begg, Miss AnneCunningham, Jim (Cov'try S)
Benn, Rt Hon TonyDalyell, Tam
Bennett, Andrew FDarling, Rt Hon Alistair
Benton, JoeDarvill, Keith
Berry, RogerDavey, Valerie (Bristol W)
Betts, CliveDavidson, Ian
Blears, Ms HazelDavies, Rt Hon Denzil (Llanelli)
Blizzard, BobDavies, Geraint (Croydon C)
Boateng, PaulDavies, Rt Hon Ron (Caerphilly)
Borrow, DavidDavis, Terry (B'ham Hodge H)
Bradley, Keith (Withington)Dawson, Hilton
Bradley, Peter (The Wrekin)Dean, Mrs Janet
Bradshaw, BenDenham, John
Brinton, Mrs HelenDismore, Andrew
Brown, Rt Hon Nick (Newcastle E)Dobbin, Jim
Brown, Russell (Dumfries)Donaldson, Jeffrey
Browne, DesmondDonohoe, Brian H
Buck, Ms KarenDoran, Frank
Burden, RichardDrew, David
Burgon, ColinEagle, Maria (L'pool Garston)
Byers, StephenEllman, Mrs Louise
Campbell, Alan (Tynemouth)Ennis, Jeff
Campbell, Mrs Anne (C'bridge)Etherington, Bill
Campbell, Ronnie (Blyth V)Fatchett, Derek
Cann, JamieField, Rt Hon Frank
Caplin, IvorFitzpatrick, Jim
Casale, RogerFlint, Caroline
Caton, MartinFlynn, Paul
Chapman, Ben (Wirral S)Foster, Rt Hon Derek
Chaytor, DavidFoster, Michael Jabez (Hastings)
Chisholm, MalcolmFoster, Michael J (Worcester)
Clapham, MichaelGapes, Mike
Clark, Rt Hon Dr David (S Shields)Gardiner, Barry
Clark, Dr Lynda (Edinburgh Pentlands)George, Bruce (Walsall S)
Gerrard, Neil
Clark, Paul (Gillingham)Gibson, Dr Ian
Clarke, Charles (Norwich S)Gilroy, Mrs Linda
Clarke, Tony (Northampton S)Godman, Dr Norman A
Clelland, DavidGoggins, Paul
Clwyd, AnnGolding, Mrs Llin
Coaker, VernonGordon, Mrs Eileen
Coffey, Ms AnnGrant, Bernie
Cohen, HarryGriffiths, Jane (Reading E)
Griffiths, Nigel (Edinburgh S)Marshall, David (Shettleston)
Grocott, BruceMarshall, Jim (Leicester S)
Grogan, JohnMarshall-Andrews, Robert
Gunnell, JohnMartlew, Eric
Hain, PeterMeacher, Rt Hon Michael
Hall, Mike (Weaver Vale)Meale, Alan
Hamilton, Fabian (Leeds NE)Merron, Gillian
Hanson, DavidMichael, Alun
Harman, Rt Hon Ms HarrietMilburn, Alan
Heal, Mrs SylviaMiller, Andrew
Healey, JohnMitchell, Austin
Henderson, Ivan (Harwich)Moffatt, Laura
Heppell, JohnMorgan, Ms Julie (Cardiff N)
Hewitt, Ms PatriciaMorgan, Rhodri (Cardiff W)
Hill, KeithMorris, Ms Estelle (B'ham Yardley)
Hinchliffe, DavidMudie, George
Hodge, Ms MargaretMullin, Chris
Hoey, KateMurphy, Jim (Eastwood)
Home Robertson, JohnO'Brien, Bill (Normanton)
Hood, JimmyOlner, Bill
Hoon, GeoffreyO'Neill, Martin
Howarth, Alan (Newport E)Organ, Mrs Diana
Hoyle, LindsayOsborne, Ms Sandra
Hughes, Ms Beverley (Stretford)Palmer, Dr Nick
Hughes, Kevin (Doncaster N)Pearson, Ian
Humble, Mrs JoanPendry, Tom
Iddon, Dr BrianPickthall, Colin
Illsley, EricPike, Peter L
Jackson, Ms Glenda (Hampstead)Plaskitt, James
Jackson, Helen (Hillsborough)Pope, Greg
Jenkins, BrianPound, Stephen
Johnson, Alan (Hull W & Hessle)Powell, Sir Raymond
Jones, Mrs Fiona (Newark)Prentice, Ms Bridget (Lewisham E)
Jones, Ieuan Wyn (Ynys Môn)Prentice, Gordon (Pendle)
Jones, Jon Owen (Cardiff C)Primarolo, Dawn
Jones, Dr Lynne (Selly Oak)Prosser, Gwyn
Jones, Martyn (Clwyd S)Purchase, Ken
Jowell, Ms TessaQuinn, Lawrie
Kaufman, Rt Hon GeraldRadice, Giles
Keeble, Ms SallyRammell, Bill
Keen, Alan (Feltham & Heston)Reed, Andrew (Loughborough)
Keen, Ann (Brentford & Isleworth)Reid, Dr John (Hamilton N)
Kennedy, Jane (Wavertree)Robertson, Rt Hon George (Hamilton S)
Khabra, Piara S
Kidney, DavidRobinson, Geoffrey (Cov'try NW)
Kilfoyle, PeterRoche, Mrs Barbara
King, Andy (Rugby & Kenilworth)Rooker, Jeff
Kingham, Ms TessRoss, Ernie (Dundee W)
Kumar, Dr AshokRowlands, Ted
Ladyman, Dr StephenRoy, Frank
Lawrence, Ms JackieRuddock, Ms Joan
Lepper, DavidRussell, Ms Christine (Chester)
Leslie, ChristopherRyan, Ms Joan
Lewis, Terry (Worsley)Salter, Martin
Liddell, Mrs HelenSavidge, Malcolm
Linton, MartinSedgemore, Brian
Livingstone, KenShaw, Jonathan
Lloyd, Tony (Manchester C)Sheerman, Barry
Lock, DavidSheldon, Rt Hon Robert
Love, AndrewSimpson, Alan (Nottingham S)
McAllion, JohnSingh, Marsha
McAvoy, ThomasSkinner, Dennis
McCabe, SteveSmith, Miss Geraldine (Morecambe & Lunesdale)
McCafferty, Ms Chris
McDonagh, SiobhainSmith, Llew (Blaenau Gwent)
McDonnell, JohnSmyth, Rev Martin (Belfast S)
McFall, JohnSoley, Clive
McGuire, Mrs AnneSouthworth, Ms Helen
McKenna, Mrs RosemarySpellar, John
McNulty, TonySteinberg, Gerry
MacShane, DenisStevenson, George
Mactaggart, FionaStewart, Ian (Eccles)
McWilliam, JohnStoate, Dr Howard
Mahon, Mrs AliceStott, Roger
Marek, Dr JohnStrang, Rt Hon Dr Gavin
Marsden, Paul (Shrewsbury)Stringer, Graham
Stuart, Ms GiselaWareing, Robert N
Sutcliffe, GerryWatts, David
Taylor, Rt Hon Mrs Ann (Dewsbury)White, Brian
Whitehead, Dr Alan
Temple-Morris, PeterWicks, Malcolm
Thomas, Gareth R (Harrow W)Williams, Alan W (E Carmarthen)
Touhig, DonWinnick, David
Trickett, JonWood, Mike
Truswell, PaulWoolas, Phil
Turner, Dennis (Wolverh'ton SE)Wright, Anthony D (Gt Yarmouth)
Turner, Dr Desmond (Kemptown)Wright, Dr Tony (Cannock)
Turner, Dr George (NW Norfolk)Wyatt, Derek
Twigg, Derek (Halton)
Vaz, Keith Tellers for the Noes:
Vis, Dr RudiMr. David Jamieson and
Walley, Ms JoanMr. Jim Dowd.

Question accordingly negatived.