BEER (CUSTOMS). (Hansard, 1 May 1918)

§ Colonel GRETTON
The House, I am sure, realises that the increase in the Beer Duty is an extraordinarily high one. The duty on beer is doubled by this Resolution, and I am sure that it will be recognised that it can only be borne by the brewery trades because of the very exceptional and artificial conditions to which the Chancellor of the Exchequer has already drawn the attention of the House. The price of the greater proportion of the beer which is brewed is fixed by Order of the Food Controller, and for that reason the brewery trade and the licensed victuallers are limited as to the amount which they will be able to recover from the public in respect of this enormous duty. Then the gravity of beer is fixed at an average gravity in Great Britain, that is to say England, Scotland, and Wales, at 1.030 degrees, so that the greater quantity of beer which can be produced under present restrictions must be of the low gravity and at prices fixed by the Food Controller. The inequality about these Regulations is that in Ireland the gravity of the beer is fixed at 1.045 degrees, so that the whole of the beer brewed in Ireland is brewed at the gravity which escapes the Food Controller's Regulations, although a great deal of that beer is sent into Great Britain and sold to the public free of these restrictions and prices, so that a considerable proportion of this duty can be recovered by Irish brewers, whereas English brewers have not the same advantage.
Still, the brewery trade has made up its mind to bear this burden. Brewers generally at all stages of the War and at present have been and are willing to sacrifice their personal and private interests to support the public cause, and they are determined to offer no opposition to this enormous increase in the duty. But at 1588 the same time it should be said that as a permanent tax this duty would be unbearable, and it can only be borne now because the public under present conditions are willing to pay an extraordinarily high price for beer and because of the generally artificial conditions under which beer is now being brewed and sold. The licensed victualler will have to pay his share of this enormous impost, because in many cases the brewers are not able to bear these taxes; few of them will be able to do so, and they are therefore obliged to cast a portion of the duty on to the licensed victualler, who will not be able to recover it from the public owing to the restrictions of the prices. But the retail trade also has made up its mind to use its best endeavours to meet the situation and to comply with the desires of the Chancellor of the Exchequer in this direction. At the same time, the retail trade is faced with the same difficulty as the brewers, and they are only able to do this owing to the highly artificial conditions under which the trade is being carried on.
There is one other matter to which I would like to draw the attention of the House, and that is the inequality with which these burdens rest upon the different portions of the trade. The brewer whose trade is a free trade, and who has not tied houses on which to rely, is at much greater expense in the production and distribution of his beer than is the brewer who has tied houses and who, from the management of these houses, takes a very large proportion of the retail profit. Therefore he has profits brought into his business which are not brewing profits, and in fact many of the brewery companies of that description might be better described as public-house companies than as brewery companies.
The Chancellor of the Exchequer has tried to meet this situation by undertaking that excess profits will be available to repay the earnings of brewers which may fall below the pre-war standard, but I would remind the House that this is a limited undertaking, that all the brewery companies have not and may not make large excess profits or excess profits at all, and so the excess profits may easily and rapidly become exhausted. Therefore, with regard to this undertaking, it may, and probably will, be found that it is not an inexhaustible or indeed a deep fund from which the lack of earnings may be recouped. I do not wish to labour 1589 these questions, but it is right that the attention of the House should be drawn, while considering this enormous increase in that duty, to the conditions under which this great increase can be paid, and that it clearly cannot be a permanent one, because the public, under normal conditions, will not be content to pay so high a price for the very weak beer which the Government now allows to be sold —except for a very small proportion which some brewers may be able to produce. I am not opposing this tax, as the House will realise, but it is an enormous burden which it will take a great effort to bear, and in some cases the brewers will have the greatest possible difficulties and will have to fall back on the undertaking of the Chancellor of the Exchequer that their deficiencies in earnings below the pre-war standard shall be repaid to them out of the excess profits taxation.

§ Mr. BONAR LAW
I only rise to say that it is a great relief to me to hear, as I do for the first time, that the brewers as a whole are going to accept this taxation without any opposition. I was not aware that they were going to do so until now, and I am very glad to hear that so large a source of revenue is going through without any opposition.

§ Colonel GRETTON
If I may interrupt the right hon. Gentleman, I have no official intimation to that effect, and I am giving the House my own opinion from such information as I have at my disposal.

§ Mr. BONAR LAW
I am quite sure my hon. and gallant Friend will understand that I did not mean that he was speaking in that official sense, but it was a relief to me to know that there is not going to be any organised opposition to a tax of this kind. I would like to say one thing more. Everything my hon. and gallant Friend has said about the inequalities as between one brewer and another was impressed upon me very strongly, and I felt the greatest difficulty in coming to a figure which under the circumstances seemed fair. I have had the opportunity of consulting a number of men representative of the trade, and I found in their case, as I have found and as I am sure every other representative of the Government has found in similar circumstances, that when you call in anyone from a trade, patricularly an accountant, and ask his advice he will 1590 give it in the interests of the Government and not in the interests of the trade. I admit and I may say so to the House, that there was not one of those gentlemen whom I consulted who did not think I was going to the extreme limit of what was possibly in doubling the duty. They did not tell me it was unfair, but they told me I was going to the extreme limit. I would not, therefore, have been, the least surprised if there was a great deal of opposition from the trade, and it is only right that I should say, on behalf of the Government, that that trade, like every other trade which we have found it necessary to approach in the same way, has treated the Government in a manner which would have been impossible if they had not been conscious of the position under which the nation stands and of the urgent necessity for raising this money.

§ Sir FREDERICK BANBURY
I do not wish to oppose the tax, but I would like to ask one or two questions in regard to it. The tax as the Chancellor of the Exchequer has just told us is double that of the old tax, and it means an enormous burden upon the trade. What I want to know is this. First of all, beer is considered to be a food to a certain extent —there are nourishing qualities in beer, though, perhaps, the right hon. Gentleman the Member for the Rushcliffe Division, who has had to leave the House, would not admit it. But I understand there are such nourishing qualities in beer, and it is also evident that the brewers must get some profit. Is it to be assumed that the value of the beer will or can be reduced by the adding of cold water, and if so what is the working man going to say to it? I am appearing at the moment as a champion of the working man, a rôle which is always assumed by the hon. Members below the Gangway. I do know that if a working man likes anything, he likes his beer fairly strong, and it is no secret that some years ago the Government had some difficulties in dealing with the working men on their finding that they could not get a sufficient quantity of beer. It is absolutely necessary for a man who is doing hard manual work, work which causes perspiration for instance, that he should have something to replace what goes from him. I believe that the price is restricted by the Food Controller?

§ Mr. BONAR LAW
That is so.

§ Sir F. BANBURY
It is quite impossible for me or any other person not connected with the trade or with the Treasury to know whether the difference between the price as restricted by the Food Controller and the cost of making the beer is sufficient to give an adequate profit to the brewer, without the necessity of his diluting the beer and reducing its strength to an undesirable point. I should like to know from my hon. Friend the Financial Secretary to the Treasury whether that has been considered by the Government?

§ Mr. BONAR LAW
It has been considered by the Government, and the result is in the Order.

§ Sir F. BANBURY
And is there a fair margin of profit left to the brewer? I am not a brewer, but I think the Chancellor of the Exchequer will agree with me that if you put taxation on industry to such an extent that the industries cannot live you do great advantage to the nation as a whole and you prevent that contribution to taxation or to National War Bonds, which is absolutely essential.

	£	s.	d.
For every thirty-six gallons where the worts thereof are or were before fermentation of a specific gravity—
Not exceeding one thousand two hundred and fifteen degrees, a duty of	5	0	0
Exceeding one thousand two hundred and fifteen degrees, a duty of	6	17	2

	£	s.	d.
In the case of every description of beer other than that above specified —
For every thirty-six gallons where the worts thereof were before fermentation of a specific gravity of one thousand and fifty-five degrees, a duty of	1	5	0