HC Deb 12 July 1916 vol 84 cc393-404

(1) The Table Water Duty charged under Section four of the Finance (New Duties) Act, 1916, and the duty of Customs on table waters charged under this Act, shall be reduced in the case of herb beer so as to be at the rate of twopence per gallon.

(2) "Herb beer" means the beverage usually known as herb beer on botanic beer, but does not include ginger beer.—[Mr. McKenna.]

Clause brought up, and read the first time.

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

Mr. GLYN-JONES

This Clause is clearly in response to or in fulfilment of an undertaking given by the Financial Secretary to the Treasury. In Committee there was a proposal to have the tax on table waters in regard to herb beer and the then Financial Secretary said, We are now seeking a method of differentiating herb beer scientifically from ginger beer and all other similar beverages. If we get that definition we propose, on the Report stage, to reduce the tax on such herb beers to 2d. from 4d. About that time I did not think it was possible to provide any definition which would do that, but apparently the Government think it can be done, and this Clause purports to do it, as follows: "'Herb beer' means the beverage usually known as herb beer or botanic beer, but does not include ginger beer." I have a proposal later on which asks for a reduction of the tax on other beverages which come within the definition of table waters. When the Finance (New Duties) Bill was going through the House the then Financial Secretary saw a deputation of the trade on the morning that the Clauses were going through the House and made an arrangement, first, in regard to the collection of the duties, and then as to what articles should be included within the definition. He said that he would consider what alterations were necessary, both as to the incidence and as to the articles to be taxed, and he gave an undertaking that he would deal with the matter in the Finance Bill which he would bring in later on in the Session. Acting on behalf of a representative committee of the trade, recognised by the Government as representatives, I saw the Government and they told me that this Bill we are now considering was a Bill in which this matter could not be touched at all. He explained that the Bill had been in print in April and that it was no good for the trade to ask them to do anything in this Bill. In Committee on this Bill I asked the Chancellor whether the pledge given by the Financial Secretary, that he would consult with that representative committee and that if he were satisfied that modifications were necessary in the provisions he would introduce them in the subsequent Finance Bill, would be kept, and, as that Bill has now been abandoned, whether he would give that opportunity on a Bill introduced ad hoc. The Chancellor said that that pledge would still be adhered to. One is really surprised now to find that although the Government said they could not deal with the matter in this Bill they are now attempting to deal with one little bit of the trouble and propose to reduce the tax on herb beer. I have read the definition. I do not know what it means and I do not think anybody else can possibly say. I think what has happened is probably this: The Chancellor has heard some case about this particular beverage and he has been told that people in a very small way, widows and others, sell what they call herb beer and that it would be a hardship if they had to pay 4d., and in the goodness of his heart he proposes to reduce it to 2d., without consulting anybody, as far as I can find out, as to what that is going to lead to.

6.0 P.M.

Before the House can be sure what it is they are now going to release of half the duty—namely, herb beer—they have to get to know the articles which the existing duties are imposed upon. The Finance New Duties Bill passed in April imposed a duty upon all beverages—beverage is the definition they gave of table water—and they say table water includes all beverages sold in bottles. By that definition herb beer and anything else which is a beverage sold in bottle is liable to this tax. What the definition says is, "Table waters for the purpose of this Act include any aerated waters and any beverages sold or kept for sale in bottles." It is because herb beer, ginger beer, and these various drinks are beverages sold in bottles that this duty is imposed upon them. The matter is extremely complicated because of the definition of beer itself. If the House is not interested in knowing what the Government means by herb beer, perhaps it is of some interest to know what beer is for the purposes of the revenue. Beer is defined now as an article sold under the description of beer or as an imitation of beer containing more than 2 per cent, of proof spirit." The predecessor of the present Financial Secretary to the Treasury was concerned in taxing these beverages, but now that he is Minister of Munitions he is concerned in producing one himself, namely, the beer which is called auto-shell beer. This beer is produced under the auspices of the Minister of Munitions. What is this shell beer? Is it herb beer? It is a beer; that is quite clear. The position at this moment is this: it is a beer which contains less than 2 per cent, of proof spirit. The result is that if it is brewed in a brewery it is charged as an excisable beer, and pays a duty in proportion to its proof spirit as if it was an excisable beer. That will be much less than the Table Water Duty. But if it is brewed outside a brewery it becomes a table water within the meaning of this Act, and pays Table Water Duty, which is very much higher. The whole thing, I assure the right hon. Gentleman, is in a state of hopeless confusion.

Speaking for a moment for the trade they cannot approve of the Chancellor of the Exchequer going part of the way to meet their demand that the duty on all these kindred things should be reduced to half. They cannot say, " Well, you are going this far, we do not want you to do that." But, speaking personally, I am bound to say that in my view the Chancellor has made a great mistake in doing it in this way apart from the whole question. The difficulty the Government is in is that they are under a pledge, which I am sure they will keep, to consider the whole question of the new duties upon these table waters, and of the definitions that come within them, with a view to making such amendment of the present law in a small ad hoc Bill this Session as they may find to be necessary. I want to make this appeal to the right hon. Gentleman: If, in consequence of an undertaking he is bound to do, he grants this concession with respect to herb beer—that beer which he says is usually known as herb beer—will he also at once set up a Departmental Committee—a Committee of his Department—to go into the whole question of these new duties upon table waters and the question of the definitions? I have Amendments further down on the Paper, which I do not think would need to be discussed in the House if we could get from the Government an undertaking that this Committee would be set up at once, and if they would allow the representative committee of the trade—that is, the committee which they recognise as representing it—to come and place before them all their difficulties in regard to the incidence of these taxes, their methods of collection and the definitions. I am sure it would help the Government and the Department out of the difficulties that they are bound to get into the moment this becomes law if they consented to that.

The hon. Members who have been asking for this concession for beers say that they have been doing it for the little shopkeeper—persons in a very small way of business, who only just sell what they call herb beer. But what is going to happen? All the great men when they find it is possible for them to sell a thing which can be called herb beer at half the duty will, of course, come into this trade, and I think in the end, in all probability, the small people will meet with competition which at present they do not have to meet. I suppose it is too late at this moment—and I am not doing it—to ask the Chancellor to withdraw this concession which he is now about to make, but I am asking, and I think I am entitled to ask, in view of the fact that I am speaking at the moment as the mouthpiece of a Committee which his Department has recognised speaks for the trade—in fact, when he introduced his new Bill he said he was convinced the Committee spoke for 90 per cent. of the trade—I am asking that this Committee should be set up. In view of the fact that he has all along told that Committee it is no good their coming to him on this Bill, and that he is prepared to consider all the difficulties which they have mentioned in a special Bill, he ought to set up a Committee which will at once begin to hear anyone who chooses to come forward and speak of these difficulties. If the Treasury are then satisfied, as I think they will be, that Amendments are necessary, I hope that these Amendments will be embodied in a small Bill, as the Chancellor has promised to deal with the matter this Session.

Mr. DENNISS

I am rather surprised that my hon. Friend the Member for Stepney (Mr. Glyn-Jones) has gone back upon what I understand was arranged yesterday at the Committee that this was not to be opposed. I have a letter to that effect.

Mr. GLYN-JONES

I expressly stated that, whilst I criticised the Bill, I was not prepared to press this particular thing, and I am sorry the hon. Member should have said what he has.

Mr. DENNISS

I think the Chancellor of the Exchequer and those who advise him were quite wise in not attempting a scientific definition of herb beer. You can no more define beer or herb beer than you can define bread. They have taken here what seems to me to be a course which will commend itself to any ordinary person of common sense who is not a lawyer in saying that herb beer means the beverage usually known as herb beer or botanic beer. We all know what bread is. It would be difficult to distinguish it from biscuits scientifically, but we all know what it is, and everybody knows who has ever known it at all what that beverage is which is known as herb beer, and knows what beer is usually known as herb beer. A former Member for Oldham used to drink it. In Lancashire it is very largely drunk by putters in the ironworks. As a rule they buy it in half-gallon and gallon jars at the small price of 3d. and 6d. respectively, and there can be no doubt whatever so far as the Revenue officials are concerned as to what constitutes herb beer. My hon. Friend talks about another Bill being introduced by and by to put all these taxes upon mineral waters upon perhaps a more satisfactory basis. Meanwhile let me remind him that these small businesses for which I originally brought in an Amendment in Committee will be done for altogether. At the present moment the officials of the Customs and Excise know quite w ell that the small businesses have lost from 70 par cent, to 80 per cent. already of their sales on account of this tax, and they cannot wait for another Bill.

Mr. SPEAKER

Will the hon. Member deal with herb beer?

Mr. DENNISS

I was saying that the herb beer sellers have lost 70 to 80 per cent. of their sales, and if there was to be, as the Member for Stepney asks, a Committee set up to inquire and report, of course there would be no occasion to move this Amendment at all, because by the time a further Bill was brought in the herb beer sellers would all have been swept out of existence. The hon. Member says large firms and manufacturers will be able to make herb beer and sell it over the counter in glasses just like ordinary beer, but that would be got rid of if the subsequent Amendment which is put upon the Paper is ultimately passed and also the Amendment which has been handed in to you, Sir. That includes fomented ginger beer sold direct to consumers in stone jars or other receptacles of less than half a gallon. That would stop it being sold over the counter in half-pint glasses.

The FINANCIAL SECRETARY to the TREASURY (Mr. McKinnon Wood)

I must ask the House for a considerable amount of indulgence, because it is obvious I cannot be acquainted with the conferences and the negotiations that have been going on during the past few weeks, and there may be facts in connection with this Bill which are not known to me. But there is no such difficulty in the present case. I think the matter is perfectly simple, and I propose to persevere with the Amendment and to meet the hon. and learned Member who spoke last. I also propose to meet my hon. Friend the Member for Stepney. I can see no objection but a good deal of advantage in what he proposes. We shall keep an eye upon these taxes and watch their effect upon the trade, and see what distinctions can be drawn. In my experience of Acts of Parliament the question of introducing an effective definition in them is one of the most difficult that is attempted by any draftsman and is not very often successful. Very often a common phrase, as the hon. and learned Gentleman says, serves the purpose of an Act of Parliament better than an attempt at a scientific definition. Undoubtedly the hon. Member for Stepney has shown that there are difficulties in this case which one can only discover after some degree of investigation. With these two assurances I hope that this Amendment may be allowed to go through.

Sir J. D. REES

May I inquire whether it would not be possible to charge upon the value of this beverage, whatever it might be, or may be made of? By paying upon the measure instead of upon the value there is no real adjustment.

Mr. McKINNON WOOD

There are considerable difficulties, but this is the sort of question of which the Committee, as it has to consider the whole question, might deal.

Sir F. LOWE

I should like to know whether I am in order in asking the right hon. Gentleman to explain why herb beer should be singled out for a reduction of duty in preference to other table waters? I hear from manufacturers of table waters generally that they have been very hard hit, indeed, by the duty which has been imposed upon them under this new Act. It has had the effect of lessening their trade by 60 per cent. If that is so—and I believe it is the fact—it would be well worth while for the Chancellor of the Exchequer to reduce the duty all round. If there is virtue in what I am saying I think this Clause might be applied to table waters in a very simple manner by simply leaving out—

Mr. SPEAKER

That would alter the new Clause altogether.

Mr. GLYN-JONES

On a point of Order. If this Clause is disposed of will it make out of order the new Clause that I have later on the Order Paper?

Mr. SPEAKER

To what Clause does the hon. Member refer?

Mr. GLYN-JONES

To move that the duties on table waters shall not be charged on milk or non-aerated distilled water.

Question, "That the Clause be now read a second time" put, and agreed to.

Sir J. WALTON

I beg to move, at the end of Subsection (2) to add the words "other than fermented ginger beer sold direct to the consumer in stone jars, or other receptacles, containing not less than half a gallon."

The makers of herb and botanical beers will certainly be grateful to the Chancellor of the Exchequer for the concession already made in reducing the tax on these beers from 4d., as originally proposed, to 2d. The levying of this tax was a most flagrant instance of the unequal incidence of taxation. The right hon. Gentleman proposed to tax table waters, which before the War were sold at 6d. per gallon, and which have already been taxed to the extent of 2d. in connection with sugar and other saccharine materials, a further 50 per cent., or 4d. On the other hand, most expensive table waters, such as the ginger ale manufactured by Schweppes and other firms, the price of which goes up to 10s. per gallon, in small bottles, were only to be 8d., as compared with the 4d. on the cheap table waters used by the working classes of this country. This meant extra taxation of 50 per cent. in the one case and 6 per cent. in the other. One could not conceive a more flagrant example of the unequal incidence of taxation. It is absolutely indefensible. I am sure that the Chancellor of the Exchequer himself recognises that these proposals, as originally made, are indefensible. It is clear to me that the only method of revenue by which we can get equal incidence of taxation is to levy a tax, not on the gallonage, but on the poundage, on the value on the selling price of the different qualities of table waters—

Mr. SPEAKER

The hon. Member must really confine himself to beer. He must not indulge in water at all. The beer, I may add, may be either botanic or ginger beer.

Sir J. WALTON

I rejoice to know that the consumption of botanic, herbal, and ginger beers, and other non-intoxicating drinks, is very considerable indeed in this country. I submit that our object, in the best interests of the nation, ought to be to encourage and increase the consumption of these most wholesome and harmless beverages. No Government ought to ruin that little industry—for it is a small industry. As my hon. Friend the Member for Oldham has already informed the House, while this tax remains unaltered it means absolute ruin to these small manufacturers of botanic and herb beer, and these cheaper distributants of ginger beer. The Government have no right whatever to destroy any industry in the country by excessive taxation, and especially on the most unjust lines proposed by the Government. The Government Amendment covers, probably, about 60 per cent. of the produce of the herb, ginger, and botanic beers of these particular manufacturers, and of the ginger beer possibly a fair estimate would be that it comprises 40 per cent. of their output. Therefore, the Government relief does not extend to more than two-thirds of the various beers that these particular manufacturers produce, and I desire by my Amendment to have the concession extended to the whole of their produce. I hope the Chancellor of the Exchequer will see his way to agree to it. I am informed that it will be quite possible to apply the Amendment and to differentiate between fermented ginger beer sold direct to the consumer, especially when confined to beer sold in stone jars or other receptacles containing not less than half a gallon. That limits it more than I should desire to limit it. I am not speaking against any concession being given to my hon. Friend behind me, but I think that the Government might well extend this concession to the other cheaper kinds of table waters, and I submit that that is a perfectly fair demand to make.

Mr. SPEAKER

The hon. Member must keep to the terms of his Amendment.

Sir J. WALTON

I apologise for my unintentional transgression. I have only to urge, in the interests of just finance and taxation, that the concession now asked for should be granted.

Mr. G. THORNE

I beg to second the Amendment. I desire to give the House some of the information which has been supplied to me by herbalists and botanical beer brewers in my Constituency. This information they have personally handed to me, and I believe it to be true. It does seem to me that the effects of the proposed taxation must be to tax these businesses entirely out of existence. I cannot see how that is a fair thing to do to the individual, nor how it is good for the nation. It certainly cannot produce profit to the State. I may make my position clear by just giving the figures which have been furnished to me, and by my keeping, Mr. Speaker, rigidly within your ruling. In the case of one firm I am told that in May their decrease in sales from their four branches was 75 per cent. on last year, whereas for June the decrease was 84 per cent., this leaving only 16 per cent. This means absolutely closing the business. The second firm have given me these figures for May-not a hot month in either year. In May, 1915, the gallonage was 11,529, while in May, 1916, it was only 2,954. The disastrous effect of the taxation is therefore manifest. Those concerned are very grateful for the concession made, but it only goes to a certain extent. I am told that the concession will only apply to about one-third of this trade, and therefore, unless the Amendment moved by my hon. Friend is accepted, it must be disastrous to the trade. That I cannot conceive the Government desire. Therefore, I sincerely hope they will accept the Amendment.

Mr. DENNISS

I know that the Movers of this Amendment have the sympathy of the Treasury in this matter. It is not a matter which will in any way be to the detriment of the Treasury so far as money is concerned if this is passed. The Treasury know the facts. They know that everything stated by the Mover and Seconder of the Amendment is quite true. They are very anxious to meet them in the matter in order not to wipe out of existence these very admirable small traders, who perform such a very useful function in certain parts of the country, and particuarly in Lancashire. These people sell one-third herb beer, while two-thirds of their sale is ginger beer. That ginger beer is totally different to the ginger beer of which ordinary people know—that is, that which in sold by Schweppes and Caileys. It is a nonaerated ginger beer formed by a herbal decoction of ginger root. It is sold in not less than half-gallon jars, generally in gallon jars, at 3d. per half-gallon, or 6d. per gallon. It is generally consumed by miners, iron-workers and others, all the year round, in the winter time as well as in the summer time, not merely in the hot weather, for it is not a seasonal drink like ginger beer, soda water, and what are called summer drinks. I hope the right hon. Gentleman will be able to give us this concession, although we are very grateful to him for the new Clause which he has accepted. I am afraid, however, it will not save the businesses to which I have referred, 'which will only have one-third of their business left, with two-thirds gone, and that is the trouble! I do not know whether the right hon. Gentleman is aware that the words "direct to the consumer" have been brought in to meet the views of the Treasury itself and the Customs, because it might be, as we gathered from the hon. Member for Stepney earlier in the evening, that some of the big manufacturers might make this and sell it over the counter in pint or half-pint glasses, so that that class of business not meant to be exempted from the Act would be able to get out of paying the tax. I do hope the right hon. Gentleman will be able to see his way to accept the Amendment, which I know has the sympathy of the Treasury and the officials, and I know it will do all that the Treasury can possibly do to keep these little businesses alive during the War.

Mr. GLYN-JONES

The form of this Amendment is to improve the definition of "herb beer" in the Bill, and if the Amendment be carried this is what the Act of Parliament will say:

"'Herb beer' means the beverage usually known as herb beer or botanic beer, but does not include ginger beer other than fermented ginger beer sold direct to the consumer in stone jars or other receptacles containing not less than half a gallon."

Does anyone want to do more than read a definition of that sort to the House to see that obviously it cannot be accepted? In substance what the hon. Gentlemen who are moving this Amendment are seeking is to get rid of the words "but does not include ginger beer," so that "herb beer means the beverage usually known as herb beer." That would be all right but they do not do that at all. They say that the definition includes ginger beer, but not if it is fermented and in a stone jar. I do suggest to the Government, in view of the undertaking they have now given, that they will at once set up this Committee who will go into the whole question, because really the people for whom the hon. Members are now speaking cannot be satisfied with this. It is a perfectly hopeless thing in practice. Why should ginger beer in a jar not be herb beer, but ginger beer in cask be herb beer? Why should ginger beer in a bottle be herb beer, but if you put it in a gallon or half-gallon jar be not herb beer? [HON. MEMBERS: "It is the other way!"] Or the other way; I do not think it makes the least difference. My hon. Friends are represented on the representative committee of the trade I spoke about, and what I would ask them to do is to join hands with them to show to the Government that what they have to do is to get rid of these differences, and reduce the tax all round on ginger beer as well as herb beer. But I hope the Government will not make confusion worse confounded by adding this to the definition.

Sir F. LOWE

I wish to support the Amendment. I should like to include many other forms of table water, but if we cannot include any others, I think we might include fermented ginger beer. I say the more mineral water is reduced to 2d. the better I shall be pleased, but I understand there are two sorts of ginger beer, the one fermented and the other not fermented. The fermented is a kind of beer just the same as herb beer, and should be included in any provisions dealing with herb beer; therefore I support the Amendment of my hon. Friend.

Mr. McKINNON WOOD

This is a very technical matter, and my technical advisers think there is considerable difficulty in being assured that they can define the particular kinds of ginger beer and other drinks, and difficulty in preventing large manufacturers from making something which might escape taxation. I would appeal to my hon. Friends to leave this matter to the investigation I have already promised. The hon Member for Edgbaston (Sir F. Lowe) has pointed out the real danger. If you include one thing after another there is no particular reason why you should ever stop. I think it would be better not to try to distinguish between ginger beers until we have had a little more experience of the working of the tax The hon. Baronet the Member for Barnsley (Sir J. Walton) has made some very severe strictures on the tax. In time of peace a case might be put forward, but, after all, it is a time of war, and our taxes are altogether exceptional. You cannot criticise them without bearing that in mind. You have to spread the burden over all classes of the community, and you have to take in things you would not trouble to tax in ordinary times of peace. This matter will be considered with the other matters. I hope my hon. Friends will accept that, and I can assure them the investigators will be perfectly open-minded and will look at the matter as fairly as possible when they have the information.

Sir G. YOUNGER

I do not want to say a single word against any desire on the part of the Treasury to reduce the tax on either fermented or unfermented ginger beer. I only hope it will be noted that it has been suggested that fermented ginger beer ought to be placed on the level of herb beer, and charged at a lower rate of duty. Why should it be so? Does the House know that fermented ginger beer may be in many cases stronger alcoholically than ordinary beer? An hon. Friend of mine has seen the effects. of it already on a particular individual. [HON MEMBERS: "Name!"] And he will bear out what I say. I am only concerned to suggest that that particular phase of this question has not been noticed in the Debate to-day, and the Treasury, when considering the matter, should bear in mind that if this is not artificially aerated it is an alcoholic drink, and gives off carbonic acid gas when corked up in bottles.

Amendment negatived.

Question, "That the Clause be added to the Bill," put, and agreed to.

Clause added to the Bill.