HC Deb 05 August 1912 vol 41 cc2793-802

(1) In computing the number of gallons of spirits distilled by any person during the year ending on the thirtieth day of June, nineteen hundred and thirteen, or during any subsequent year, for the purposes of Scale 1 of the First Schedule to the Finance (1909–10) Act, 1910, there shall be reckoned only such spirits as are distilled for use as intoxicating liquor for the sale by retail of which a justice's licence is requisite under the Licensing Consolidation Act, 1910, or as an ingredient of such intoxicating liquor.

(2) This Section shall not operate to reduce the licence duty payable by a distiller of spirits below the sum of ten pounds.

Motion made and Question proposed, "That the Clause be read a second time."


This Clause has reference to the duty paid on spirit. The important part of the Clause reads:— There shall be reckoned only such spirits as are distilled for use as intoxicating liquor for the sale by retail of which a justice's licence is requisite. It follows from that that the spirit used for technical purposes will go without paying the duty. I wish to put it to the Committee and to the Chancellor of the Exchequer that with the progress of science alcohol is becoming more and more an absolute requisite in our industrial business, and I want to know if it is not possible for him to accept this proposal in order to encourage our own home industry. The Committee is probably aware that it is not an easy thing for scientists to so denaturalise the spirit, so that it cannot possibly be used as an intoxicating liquor or beverage. There are difficulties with regard to alcoholic spirits being used for solvents in many of our varnish trades and for other businesses where it would be exceedingly valuable. I believe it is possible for the officers of the Chancellor of the Exchequer so to devise safeguards that those spirits could be used in our manufactures without any fear of defrauding the revenue with regard to the ordinary alcohol drank. I might mention one article in which the use of alcohol was found to be exceedingly valuable. The Committee are no doubt aware that there is an enormous business done in this country to-day by importing both nuts and seeds of Eastern and tropical plants. In preparing these oils to render them absolutely odourless and neutral, some such product as alcohol is found necessary, and a great deal of business has been turned away from this country because our chemists have not been free to use alcohol for this purpose. When the Committee remember that during last year 580,000 tons of one commodity alone were imported into Europe, they will have some idea of the volume of business now being transacted in which this alcohol might be used as a refilling agent. I submit that the time has arrived when some system of refining in bond or using alcohol for industrial purposes in bond, should be established. It seems very hard that one solvent, such as turpentine, or the natural gum from which it is distilled, can be used by the manufacturer without duty or licence, because it is not serviceable for alcoholic drinks, while another spirit equally valuable in the varnishing and many other trades, cannot be so used because it affects the duty with regard to liquors sold for beverage purposes. I believe it is quite possible for the matter to be arranged, and I shall be exceedingly grateful if the Chancellor of the Exchequer can accept this new Clause.

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

I have nothing to say against the object that the hon. Gentleman has in view. Quite the reverse; it is a very laudable purpose. The difficulty is purely a practical one. We have considered this matter very carefully, and my advisers tell me that it is absolutely impossible to discriminate between liquors distilled for this purpose and liquors distilled for other purposes. You cannot set up any machinery for following the liquors to their destination and enabling you to discriminate on the basis for the purposes for which they are used. The relief to the taxpayer would be a very small one, amounting, I understand, approximately to one-tenth of a penny per gallon. That is not a very serious matter for the manufacturer.


I think that figure must be a mistake.


I give the figure which has been worked out. Seeing that very elaborate machinery would be required, and it is very doubtful whether you could set up any machinery which would be really effective for the purpose, I regret that I cannot accept the proposed new Clause.

10.0 P.M.


I am glad that the Chancellor of the Exchequer thinks that this is a desirable object if it could be achieved. It is very difficult for one who has not access to official advisers accustomed to deal with these matters, to judge of the difficulty. I hope the advisers of the right hon. Gentleman will not think me unduly critical if I say that in their anxiety to guard the revenue they are sometimes more conscious of the revenue difficulties than of the difficulties or inconveniences of the taxpayers, and that it requires from time to time a little pressure from the political chiefs of the Department to make them realise that, important as it is to guard the revenue, the interests of the taxpayer, or in this case of the manufacturer, cannot be wholly sacrificed to the interests of the revenue. Subject to the modification I have laid down with regard to a speaker on this side of the Table being ignorant of the revenue conditions, I should have thought that the revenue could be sufficiently guarded if you put on the manufacturer the onus of proving that the spirit on which he claimed relief from duty had in fact gone to the purpose which would entitle him to such relief. You might have to charge the duty in the first place and give the relief in the form of rebate, but I should have thought that you could guard the revenue by putting upon the manufacturer the onus of proving that the spirit had been used for these manufacturing purposes instead of putting on the Inland Revenue the onus of proving that it had not. In the meantime the Committee will note that in this case the Chancellor of the Exchequer has done that which is anathema maranatha to himself and all his party. He has put a tax upon industry, and not merely a tax upon industry, but a discriminating tax. It is of no advantage to anybody at home; as far as there is any advantage it appears to be somebody elsewhere. I think when I state that fact the Chancellor of the Exchequer will see that it is well worth his while to devote some portion of his time to trying to remove a grievance which he himself has created.


I think there must be some serious mistake in the figure the Chancellor of the Exchequer has given. One of my friends at Liverpool told me that he himself was paying to the revenue for spirit distilled from molasses, which has to be denaturalised, £5,000 a year. I have worked that out, and at the rate mentioned by the Chancellor of the Exchequer it would mean 120,000,000 gallons. I am sure that my friend does not distil that quantity, so I think that there must be some mistake.


I rather gather that the difficulty applies only to manufacturers' licences and not to the ordinary duties of Customs or Excise. I think that, in regard to the duties of Customs and Excise the difficulty has been met. I remember this very point being raised, not as regards manufacturers' licences, but as regards Customs and Excise duties. A concession was made which met the point—that is to the best of my recollection. I think it was in 1903. Surely, if it is possible as regards the Excise, whether done by rebate or otherwise, it is possible in regard to manufacturers' licences, if the manufacturer can prove how the spirit he makes is used? I might ask the right hon. Gentleman whether we were not in exactly the same or similar difficulties, in regard to Petrol Duty, and the use of petrol used by doctors' cars and so on. A solution was found of these difficulties, and certainly it does not appear on the face of it that the duty in this particular instance would involve more difficulties than in those instances! I know a great deal was made of the fact of the trouble of proving the destination of the petrol; but what surely applies to petrol applies to alcohol used by men of this class. I think that cannot be any insuperable difficulty in the case.


I am advised that this will cost £2,600 a year. It certainly is not a serious matter. I will look into the matter, and make enquiries; but for the moment I cannot accept the motion.


What my hon. Friend behind me said in taking the analogy of petrol was that it is not more difficult to follow the use of spirit of this kind than it is to follow the use of motor spirit. The Revenue officers manage to decide in the case of the petrol tax that goes to the improvement of the roads, and therefore is confined to petrol used in motors driven along the road. Take the case of a man who has a petrol launch on the river at the foot of his garden, and a petrol driven motor in his garage. You do now distinguish between the petrol which he buys, as to how much goes to his launch, and how much to his motorcar. You do distinguish with sufficient accuracy, and you tax him on the one and not on the other. There is even a greater case for giving relief in the case put forward, for though the loss to the Revenue is very slight, the hardship in individual cases of manufacturers is, I think, considerable.


The hon. Member opposite (Mr. Bigland) told us that his friend pays £5,000 a year in duty. The Chancellor of the Exchequer tells us that the loss to the revenue would be £2,600. I should like to know where the £2,400 go which the hon. Member says his friend pays? When these figures are used they ought to be used with great care, because the House is likely to receive a wrong impression.


I am not certain whether the object that my hon. Friend has in view might not be met otherwise than he suggests. IE a rebate was given for the spirit used in industrial work, the difficulty which the Chancellor has referred to might be obviated.


May I just ask the Chancellor whether it is not a fact that manufacturers—not manufacturers of alcohol or alcoholic substances—but manufacturers who use alcohol for the purpose of their manufactures of polish, say, and other matters, get a rebate as it is? The attention of the present Lord Chancellor was directed to this very point, and I understand—


In that case the revenue is not taken. The spirit has to be made absolutely unfit for drink before you get it. But the hon. Member is moving a reduction of the Licence Duty—which is rather a different thing. I would not, I think, be justified in going beyond what I promised, and that is to look into the matter.


You can trace the spirit in the one case; why not in the other? There is an Excise Duty upon alcohol. That duty in the first instance is paid. Then the manufacturer says, "I want a rebate, because I am not using it for the purposes of drinking, but for the purposes of manufacture." The right hon. Gentleman says that the revenue is protected. How? Is some one brought forward and made to see whether he can drink the spirit or not? I presume not. I presume the manufacturer has only to show that a certain amount of alcohol is used by him in the course of his manufacture. Why cannot the one test be applied equally in the case of the manufacturer's licence?


As I understand the Motion which I wish to move covers this Section, for the Section shall not operate to reduce the Licence Duty payable by distillers of spirits below the sum of £10. I understand that £10 is the ordinary Licence Duty. What I am asking for is not an actual reduction in the duty, but that the number of gallons used in a certain way should be counted. With regard to the hon. Member opposite who asked a question, I have no objection to giving the name of the person, though perhaps it would be as well not to give it publicly; I will give it afterwards. My friend told me there was another firm as large as his in this country, so that, so far as I can see, there must be some misunderstanding. It seems to me quite possible that to meet the case the Chancellor of the Exchequer might make some rule where in very large factories he could have his own officers watching the alcohol being used as a solvent in many kinds of paint and so on, and where it would be absolutely impossible afterwards where in the case of the alcohol so used the revenue should be defrauded. Many of these factories are treating enormous quantities of goods. They can be made, if required, to work in bond under the inspection or supervision of one of the officers. I am sure some consideration such as I suggest would be of very valuable assistance to this country, because there are new industries which cannot be born because of this duty. I know of a case of the manufacture of cocoanut oil where one firm started business and the business was killed. I believe there are a number of other industries that could be born in this country if this duty on alcohol was removed.


The principle which is the basis of this Amendment is one that has already been admitted by the Legislature. It is provided by the Act passed about four years ago in consequence of the Committee which inquired into this subject, and which decided that there should be a drawback or rather a present of 4d. a gallon made to manufacturers using alcohol not intended to be used for consumption, but in the arts and manufactures. This compensation was given for the express purpose of helping those engaged in the various trades and manufactures when it was shown that alcohol was not being used simply for drinking purposes; and it was found by that Committee that it was a good thing to give a return of 4d. per gallon in such circumstances as some compensation for all the extra cost that was thrown upon the distiller in contradistinction to the distillers of the Continent of Europe. Since then we have had the famous Budget of the Chancellor of the Exchequer with all its additional duties in regard to spirits. As I understand, the object of this new Clause is to make it plain that the distiller is not to have to pay a higher duty in respect of that proportion of the alcohol he produces which is going to be made use of for commercial purposes. It is exceedingly important that whilst we are raising revenue, and that whilst, at all events for the purposes of the present Government, you must have these duties from alcohol,

we should take care that we do not injure any trade or any industry in the United Kingdom which depends upon alcohol as one of the ingredients used in the course of manufacture. The object of this new Clause is to make it clear that whilst an additional duty is imposed now upon the distiller, the number of gallons distilled for trade purposes, in contradistinction to those distilled for the purpose of drink shall not increase the amount of duty which the distiller has to pay. I think that is an important and a valuable Amendment, in the interests of trade and commerce, and whilst for present purposes we do not question the fact that these increased duties have to be paid on the alcohol consumed, in a regular way, we ought to take care that we do not impose an additional burden upon the trade and the commerce of the country.

Question put, "That the Clause be read a second time."

The Committee divided: Ayes, 156; Noes, 201.

Division No. 198.] AYES. [10.20 p.m.
Agg-Gardner, James Tynte Faber, George D. (Clapham) Mason, James F. (Windsor)
Amery, L. C. M. S. Falle, Bertram Godfray Mildmay, Francis Bingham
Anson, Rt. Hon. Sir William R. Fell, Arthur Mills, Hon, Charles Thomas
Archer-Shee, Major M. Fitzroy, Hon. Edward A. Neville, Reginald J. N.
Ashley, Wilfrid Fleming, Valentine Newdegate, F. A.
Bagot, Lieut.-Col. J. Fletcher, John Samuel (Hampstead) Newman, John R. P.
Baird, J. L. Foster, Philip Staveley Newton, Harry Kottingham
Baker, Sir R. L. (Dorset, N.) Gastrell, Major W. H. Nicholson, Win. G. (Petersfield)
Balcarres, Lord Gibbs, G. A. Nield, Herbert
Banbury, Sir Frederick George Glazebrook, Captain Philip K. Parker, Sir Gilbert (Gravesend)
Banner, John S. Harmood- Goldsmith, Frank Parkes, Ebenezer
Baring, Maj. Hon. Guy V. (Winchester) Gordon, John (Londonderry, South) Pease, Herbert Pike (Darlington)
Barnston, Harry Goulding, E. A. Peel, Capt. R. F. (Woodbridge)
Bathurst, Charles (Wilts, Wilton) Grant, J. A. Peel, Hon. W. R. W. (Taunton)
Beach, Hon. Michael Hugh Hicks Greene, Walter Raymond Perkins, Walter Frank
Benn, Arthur Shirley (Plymouth) Gretton, John Peto, Basil Edward
Benn, Ion Hamilton (Greenwich) Guinness, Hon. W.E. (Bury S. Edmunds) Pollock, Ernest Murray
Bennett-Goldney, Francis Gwynne, R. S. (Eastbourne) Pretyman, E. G.
Beresford, Lord C. Haddock, George B. Pryce-Jones, Colonel E.
Boles, Lieut.-Col. Dennis Fortescue Hall, D. B. (Isle of Wight) Quilter, Sir William Eley G.
Boscawen, Sir Arthur S. T. Griffith- Hall, Fred (Dulwich) Rawlinson, John Frederick Peel
Boyle, W. Lewis (Norfolk, Mid) Hamersley, A. St. George Rawson, Colonel Richard H.
Boyton, James Hamilton, Lord C. J. (Kensington) Rees, Sir J. D.
Brassey, H. Leonard Campbell Harris, Henry Percy Remnant, James Farquharson
Bridgeman, W. Clive Harrison-Broadley, H. B. Roberts, S. (Sheffield, Ecclesall)
Bull, Sir William James Helmsley, Viscount Rolleston, Sir John
Burdett-Coutts, W. Henderson, Major H. (Berks, Abingdon) Ronaldshay, Earl ol
Burgoyne, Alan Hughes Herbert, Hon. A. (Somerset, S.) Royds, Edmund
Burn, Colonel C. R. Hewins, William Albert Samuel Salter, Arthur Clavell
Campion, W. R. Hickman, Col. Thomas E. Sanders, Robert A.
Cassel, Felix Hill, Sir Clement L. (Shrewsbury) Sandys, G. J. (Somerset, Wells)
Castlereagh, Viscount Hills, John Waller (Durham) Sassoon, Sir Philip
Cautley, H. S. Hohler, Gerald Fitzroy Stanier, Beville
Cecil, Evelyn (Aston Manor) Hope, James Fitzalan (Sheffield) Starkey, John Ralph
Cecil, Lord R. (Herts, Hitchin) Hunter, Sir C. R. (Bath) Steel-Maitland, A. D.
Chamberlain, Rt. Hon. J. A. (Worc'r.) Jardine, E. (Somerset, E.) Stewart, Gershom
Chambers, James Jessel, Captain H. M. Swift, Rigby
Chaplin, Rt. Hon. Henry Kerry, Earl of Sykes, Mark (Hull, Central)
Clive, Captain Percy Archer Knight, Captain, E. A. Talbot, Lord Edmund
Coates, Major Sir Edward Feetham Kyffin-Taylor, G. Terrell, George (Wilts, N.W.)
Craig, Norman (Kent, Thanet) Larmor, Sir J. Terrell, Henry (Gloucester)
Craik, Sir Henry Lewisham, Viscount Thomson, W. Mitchell- (Down, N.)
Dalrymple, Viscount Lowe, Sir F. W. (Birm., Edgbaston) Tobin, Alfred Aspinall
Dalziel, Davison (Brixton) Mackinder, Halford J. Touche, George Alexander
Denniss, E. R. B. Macmaster, Donald Walker, Col. William Hall
Du Cros, Arthur Philip McNeill, Ronald (Kent, St. Augustine's) Walrond, Hon. Lionel
Duke, Henry Edward Magnus, Philip Warde, Col. C. E. (Kent, Mid)
Eyres-Monsell, B. M. Malcolm, Ian Wheler, Granville C. H.
White, Major G. D. (Lancs., Southport) Wood, John (Stalybridge) Yerburgh, Robert
Willoughby, Major Hon. Claud Worthington-Evans, L. Younger, Sir George
Wilson, A. Stanley (York, E.R.) Wortley, Rt. Hon. C. B. Stuart-
Winterton, Earl Wright, Henry Fitzherbert TELLERS FOR THE AYES.—Mr.
Wolmer, Viscount Yate, Colonel C. E. Bigland and Mr. Watson Rutherford.
Abraham, William (Dublin Harbour) Harmsworth, Cecil (Luton, Beds) O'Donnell, Thomas
Acland, Francis Dyke Harmsworth, R. L. (Caithness-shire) O'Dowd, John
Alden, Percy Harvey, W. E. (Derbyshire, N.E.) O'Grady, James
Armitage, Robert Haslam, James (Derbyshire) O'Kelly, Edward P. (Wicklow, W.)
Baker, H. T. (Accrington) Havelock-Allan, Sir Henry O'Kelly, James (Roscommon, N.)
Baker, Joseph A. (Finsbury, E.) Hayden, John Patrick O'Malley, William
Barnes, George N. Hayward, Evan O'Neill, Dr. Charles (Armagh, S.)
Beck, Arthur Cecil Henderson, Arthur (Durham) O'Shaughnessy, P. J.
Benn, W. W. (T. H'mts., St. George) Henry, Sir Charles O'Shee, James John
Bentham, George Jackson Higham, John Sharp O'Sullivan, Timothy
Birrell, Rt. Hon. Augustine Hinds, John Outhwaite, R. L.
Black, Arthur W. Hodge, John Parker, James (Halifax)
Boland, John Pius Holmes, Daniel Turner Pearce, Robert (Staffs, Leek)
Booth, Frederick Handel Hope, John Deans (Haddington) Pease, Rt. Hon. Joseph A. (Rotherham)
Bowerman, C. W. Howard, Hon. Geoffrey Phillips, John (Longford, S.)
Boyle, D. (Mayo, N.) Hudson, Walter Pointer, Joseph
Brace, William Hughes, S. L. Ponsonby, Arthur A. W. H.
Brady, Patrick Joseph Isaacs, Rt. Hon. Sir Rufus Power, Patrick Joseph
Brocklehurst, W. B. Jones, Rt. Hon. Sir D. Brynmor (Sw'nsea) Price, C. (Edinburgh, Central)
Bryce, J. Annan Jones, Edgar (Merthyr Tydvil) Primrose, Hon. Neil James
Buckmaster, Stanley O. Jones, H. Haydn (Merioneth) Pringle, William M. R.
Burke, E. Haviland- Jones, William (Carnarvonshire) Raffan, Peter Wilson
Byles, Sir William Pollard Jones, W. S. Glyn- (T. H'mts, Stepney) Rea, Rt. Hon. Russell (South Shields)
Carr-Gomm, H. W. Jowett, F. W. Rea, Walter Russell (Scarborough)
Clancy, John Joseph Joyce, Michael Reddy, Michael
Clough, William Kellaway, Frederick George Redmond, John E. (Waterford)
Clynes, John R. Kennedy, Vincent Paul Redmond, William (Clare, E.)
Collins, G. P. (Greenock) Kilbride, Denis Richardson, Albion (Peckham)
Collins, Stephen (Lambeth) Lambert, Richard (Wilts, Cricklade) Richardson, Thomas (Whitehaven)
Condon, Thomas Joseph Lansbury, George Roberts, Charles H. (Lincoln)
Cornwall, Sir Edwin A. Law, Hugh A. (Donegal, West) Roberts, George H. (Norwich)
Cotton, William Francis Lewis, John Herbert Robertson, Sir G. Scott (Bradford)
Crooks, William Lough, Rt. Hon. Thomas Robertson, John M. (Tyneside)
Crumley, Patrick Lundon, T. Roche, Augustine (Louth)
Cullinan, John Lyell, Charles Henry Roe, Sir Thomas
Davies, E. William (Eifion) Lynch, Arthur Alfred Runciman, Rt. Hon. Walter
Davies, Timothy (Lincs., Louth) Macdonald, J. R. (Leicester) Samuel, Rt. Hon. H. L. (Cleveland)
Dawes, J. A. Macdonald, J. M. (Falkirk Burghs) Samuel, Sir Stuart M. (Whitechapel)
Delany, William MacGhee, Richard Scanlan, Thomas
Denman, Hon. R. D. Maclean, Donald Scott, A. MacCallum (Glas., Bridgeton)
Devlin, Joseph Macnamara, Rt. Hon. Dr. T. J. Seely, Rt. Hon. Col. J. E. B.
Dillon, John MacNeill, John G. S. (Donegal, South) Sheehy, David
Donelan, Captain A. Macpherson, James Ian Shortt, Edward
Duffy, William J. MacVeagh, Jeremiah Simon, Sir John Allsebrook
Duncan, C. (Barrow-in-Furness) McKenna, Rt. Hon. Reginald Smith, Albert (Lancs., Clitheroe)
Elibank, Rt. Hon. Master of Markham, Sir Arthur Basil Smyth, Thomas F. (Leitrim, S.)
Esmonde, Dr. John (Tipperary) Marshall, Arthur Harold Stanley, Albert (Staffs, N.W.)
Esmonde, Sir Thomas (Wexford, N.) Mason, David M. (Coventry) Tennant, Harold
Essex, Richard Walter Masterman, Rt. Hon. C. F. G. Thorne, G. R. (Wolverhampton)
Farrell, James Patrick Meehan, Francis E. (Leitrim, N.) Thorne, William (West Ham)
Ffrench, Peter Molloy, M. Trevelyan, Charles Philips
Field, William Molteno, Percy Alport Ure, Rt. Hon. Alexander
Fitzgibbon, John Mooney, J. J. Wadsworth, J.
Flavin, Michael Joseph Morgan, George Hay Ward, John (Stoke-upon-Trent)
George, Rt. Hon. D. Lloyd Worrell, Philip Wardle, George J.
Gill, A. H. Morison, Hector Webb, H.
Glanville, H. J. Morton, Alpheus Cleophas Wedgwood, Josiah C.
Goddard, Sir Daniel Ford Muldoon, John White, J. Dundas (Glasgow, Tradeston)
Greenwood, Granville G. (Peterborough) Munro, R. White, Patrick (Meath, North)
Greenwood, Hamar (Sunderland) Murray, Captain Hon. A. C. Williams, J. (Glamorgan)
Greig, Col. J. W. Nannetti, Joseph P. Wilson, Hon. G. G. (Hull, W.)
Grey, Rt. Hon. Sir Edward Needham, Christopher T. Wilson, W. T. (Westhougthon)
Hackett, J. Nicholson, Sir Charles N. (Doncaster) Wood, Rt. Hon. T. McKinnon (Glas.)
Hall, Frederick (Normanton) Nolan, Joseph Young, William (Perth, East)
Hancock, J. G. Norman, Sir Henry Yoxall, Sir James Henry
Harcourt, Rt. Hon. L. (Rossendale) O'Brien, Patrick (Kilkenny)
Harcourt, Robert V. (Montrose) O'Connor, John (Kildare, N.) TELLERS FOR THE NOES.—Mr.
Hardie, J. Keir O'Doherty, Philip Illingworth and Mr. Gulland.

, who had given notice to move the following new Clause—

(Repeal of Duty on Sugar.)

From and after the First day of October, nineteen hundred and twelve, the duty on sugar shall cease to be levied:

In view of our withdrawal from the Brussels Sugar Convention, I do not intend to move this new Clause about the Sugar Duty this year, but merely to give notice that I shall move it next year.