HC Deb 03 July 1923 vol 166 cc270-81

As from the first day of May, nineteen hundred and twenty-three, the Excise Duty now chargeable under Section four of the Finance (New Duties) Act, 1916, at the rate of fourpence per gallon on certain table waters sold or kept for sale in Great Britain or Northern Ireland, shall be charged at the reduced rate of twopence per gallon.


I beg to move, after the word "twenty-three," to insert the words until the first day of August, nineteen hundred and twenty-three. The questions raised by this Amendment have been already fully discussed on former stages of the Bill, and I do not propose to again repeat the arguments then put forward as to why this tax should be remitted. The Amendment as it appears on the Paper would have the effect that on the first day of August the tax now levied on these particular commodities would cease to apply. It will be remembered by the House that in the discussion on the first occasion when the matter was raised the Paymaster-General, who was then acting as Financial Secretary to the Treasury, gave something in the nature of a promise that the whole matter should be considered and a statement made upon it at a subsequent stage of the Bill. Then when the matter came up for discussion again other matters were raised by the hon. Member for West Woolwich (Sir K. Wood) which created a difference of opinion between the hon. Member for Central Edinburgh (Mr. W. Graham), myself, and several hon. Memebrs opposite. On that, the right hon. Gentleman in charge of the Bill said he would go further into the matter and have some discussion upon it with persons directly concerned with the trade. The position was that, on the one side, it was suggested that the remission of taxation provided for in the Bill was so small that it was impossible to pass it on to the consumer. On the other hand, it was contended that if that were so there was no case for the remission of taxation. Against that it was argued that the tremendous fall in the product of this particular industry and the comparatively small amount of revenue realised by the taxation justified a claim for a remission of the whole tax. It was shown that the product of the industry had fallen by 63 per cent., and that ancillary trades connected with it had almost disappeared. The proposed remission was so small that it would be impossible to pass it on to the conumer, and any loss of revenue could be more than recouped by the increased trade in the raw products used in the manufacture. I do not know the result of the right hon. Gentleman's conference with the members of the trade, but I am hoping it was such that he will be able to meet us in some respect on this matter. At a former stage of the discussion the hon. Member for Thanet (Mr. Harmsworth) put a question to me which I was unable to answer as to the amount of profit made by one particular firm dealing in this particular commodity. I now find out that that particular firm specialises in supplying the commodity to the licensed trade. But the rest of the trade are dependent on the consumption by large masses of the population, mainly working people and children. It would be idle to suggest that the fall in the trade is due to the tax, although in large measure the burden may be responsible for it. Undoubtedly climatic conditions of weather have also been responsible for a good deal of the falling off in the consumption of this particular commodity. I hope the right hon. Gentleman, having discussed this matter with the trade, will now be able to announce that he has arrived at some agreed policy which will be acceptable to all.


I beg to second the Amendment.

4.0 P.M.


My hon. Friend who has just spoken has stated, as he generally does, perfectly fairly the position which some of us have taken up with reference to this proposal of the Government. He has, however, made one omission. When the Financial Secretary came to reply to the observation which I made—namely, that if there were a remission of taxation the House was bound to see that the consumer would benefit—he stated that, at any rate, so far as one section of the trade at Manchester was concerned they had already made arrangements by which the consumers would benefit, and therefore it was a little difficult thing to understand how the other members of the trade represented by my hon. Friend opposite could come to the House and say that it was impossible to give such benefit to the consumers. It was upon that that many of us on this side of the House, and, I think, in all quarters of the House, urged my right hon. Friend to see the representa- tives of the trade, because we took the view that there was a large sum of money involved—£400,000—and that, unless he was able to make definite and businesslike arrangements with the trade, it was not fair to the taxpayers of the country that this remission should be made. I am sure that the House will await with interest the statement of my right hon. Friend. I want to point out to him that, whatever the result of his negotiations may be, I, at any rate, received this morning—I suppose in common with a good many other hon. Members—a leaflet entitled "Important Facts Concerning the Table Waters Duty." It is issued apparently by the Scottish Federation of Aerated Waters Manufacturers' Associations at Perth. Apart from the interesting chapters that are provided for Members of this House, I looked to see what undertaking they were going to give that the consumer would benefit by the remission of the tax, and I cannot imagine that my hon. Friends will be very satisfied if all that the trade are going to do is embodied in the last page of the leaflet, because all it says is this: Pre-War conditions can only he obtained by the price of goods being brought within the compass of the purchasing power of the general public, and the whole interest of those engaged in the trade is obviously in that direction. That is a short, simple statement in this leaflet, which has a very nice title, as a good many of these documents often have—"Consumers Bound to Benefit." I hope my right hon. Friend the Financial Secretary to the Treasury—as I am sure he will, because we have every confidence in him—will be able to state to the House this afternoon exactly what definite undertaking this trade has given. I do not think I am unreasonable if I say that, if no undertaking has been given by the trade that the consumer will benefit by this remission of taxation, it is a fair and right attitude to take that this remission of taxation should not be made. As my hon. Friends opposite know, it is in no antagonistic spirit to the trade that I take up this attitude. There is a good deal in their argument that if anything is to be done at all, the whole of the tax should be remitted, but, inasmuch as the Government do not see their way to do that, I ask my right hon. Friend what undertaking the trade has given, and in what way this remission is going to benefit the consumers.


I will not detain the House more than a few moments on this controversy, which has reached its last stage, so far as the present Finance Bill is concerned. Suffice it to say that at least 500 manufacturers in this industry, out of about 3,000 pre-War, have gone out of business, and undoubtedly the high taxation since 1917, which was, certainly, a War proposal, has contributed to the difficulty in which the industry now finds itself. This afternoon I propose to leave all argument of that kind on one side, because the consideration, which we have to face at this stage, turns really on the question as to whether, if this duty be taken off, it will be passed on definitely to the consumer. Realising the difficulties of this industry, the Government have already made a concession of 2d. a gallon on sweetened waters. We are pleading for the remission of the surviving 2d., making 4d., on sweetened waters, and our contention is that the complete removal of the 4d. is necessary in order to enable us to get a unit which can be passed on by way of reduced price to the consumers. The present reduction of 2d. is about four-sixteenths of a penny on a 20-ounce bottle. That is a large bottle and is not a bottle in general use. Therefore, it is quite clear that the trade finds great difficulty in passing on the remission. Our plea is that the removal of the 4d., as against the 2d., would enable us to get a unit which would, beyond all question, reach the consumer.

Let me again remind the House that the whole case which this trade has put forward has turned upon a reduced price to the consumer. They have said that there is no hope unless they can give that lower price, because they believe that it is the high price at which the commodity is now sold that is killing the trade and paralysing its recovery. There need, therefore, be no doubt or confusion in the mind of any hon. Member on that point. On the last occasion on which this matter was debated I recognised quite frankly and fully acknowledged the friendly and sympathetic attitude of the Financial Secretary. He agreed to meet representatives of the trade and to see what further steps could be taken in order to consider this claim for the remission of the 4d. on sweetened waters. May I remind hon. Members that if this 4d. is remitted those mineral waters will still remain exposed to very heavy taxation. There is, of course, the taxation on the spirit which is used in their manufacture; there is the very heavy taxation of 25s. 8d. per cwt. on the sugar which is the predominating raw material; and there is the taxation on the other branches of the industry of which the sweetened waters are only a part. All that must be kept clearly in mind.

The representatives of the trade and some of us who are interested in this matter from the Parliamentary point of view discussed the matter at great length with the Financial Secretary at a recent meeting. My hon. Friend the Member for West Woolwich (Sir K. Wood) has asked a perfectly fair question. What offer was made by the trade that they would pass on the whole of this concession, if it were given, to the consumer? Let me, as clearly and as simply as I possibly can, try to reply on that point. Under date, 19th June, the trade, following that interview at the Treasury, gave a written undertaking to the Government, in which they made a statement that they would guarantee, as regards the wholesale trade, that the whole remission of the duty of 4d. on sweetened waters would be passed on to the consumers; and, in the second place, that they would exert every influence with the retail trade—and it is very considerable—to see that the price was reduced to 3d. per half pint. They went beyond that and in that written guarantee, which is in the possession of my right hon. Friend opposite, they said that they would do everything in their power, by poster and advertisement and other trade regulations which are open to them, to see that that policy was carried out. I beg the House, before we pass from this controversy in its final stage, to look at the very heavy sacrifice that this trade has made and the sacrifice which it is now prepared to make in order to get the remission of the full 4d. from the sweetened waters. Wages have been very largely reduced, overhead charges have been brought down to the lowest possible point, only one-third of the machinery is in operation, and a very large percentage of the people engaged in the trade are now in receipt of the unemployment benefit. They have done everything in their power by sacrifice on their part to contribute to any concession which the Government might see their way to make. They have gone beyond that and they have said, "If you will allow the remission of the 4d. on sweetened waters we will stand in to the tune of a sum that cannot be less than £200,000 or £300,000 and do everything in our power to see that this remsision reaches the consumers." I venture to ask the House whether any proposal could be fairer. I do not want to overstate the case for this industry in any shape or form, but at the moment this tax is really the balancing factor between the recovery of the industry on the one hand and I am afraid its continued stagnation on the other.

They are making that offer to the Government at the present time, and they are pleading for a remission of the surviving 2d. I anticipate that the reply of the Government may be that they have already made a concession of 2d. on sweetened waters this year, and in the existing financial circumstances they do not see their way to go further. May I say that I believe the remission of the remaining 2d. would not involve much more than £250,000, and, even if it involved that sum, I am perfectly satisfied that the Government would save that money, partly from the return they would get from the recovery of the trade, and partly from the saving of the unemployment allowance to which the Government have to make their contribution. We have analysed this position very carefully indeed, and I think that is an understatement and not an over-statement of the case. We in Scotland are familiar with what we sometimes call alternative pleas, and I venture into that realm very briefly as applicable here. It may be that the right hon. Gentleman will resist us to the last ditch in this matter. May I ask this question by way of alternative. He himself has appreciated the great difficulty under which this industry labours. Will he say that, having regard to the condition of this industry and the small amount involved by this remission of the surviving 2d. on sweetened waters, the Government will be prepared to give this preferential treatment when another Finance Bill comes to be considered? I believe the case for that is beyond dispute, but I very much hope that the Government will now agree to our request and give us the remission of the surviving 2d. on sweetened waters.


I do not want to go into the whole question of the duty on table waters which was debated 10 days ago and which earned me the unenviable name of "Ginger-pop Minister," according to a cartoon which I saw. The Government do not accept in any way the suggestion that this duty is the cause of the very serious condition in which the mineral water trade finds itself at the present time. There is one fact which, I think, conclusively disposes of that. In 1917–18, before the addition was made to the taxation on the ingredients, the consumption of these waters was 56½ million gallons, and in 1918–19, after the higher taxation had been put on, the consumption rose to 65 million gallons. It was only last year that it fell to 30 million gallons, and I am quite convinced in my own mind—and I have discussed the matter fully with the hon. Member for Central Edinburgh (Mr. W. Graham) and the deputation from the trade which called upon me—that, although the tax may be a factor in the decreased consumption, it is nothing like the whole cause. One has only to look at the weather to-day to find a far more complete reason than any tax of a small fraction such as ½d. or ¼d. on a bottle of ginger beer or other sweetened mineral water. In the case of mineral waters sold at 3d. a bottle, this very small tax cannot be the cause of the falling off in consumption. I do not want to argue the matter at length, but I think I must say that from the point of view of the Government.

The appeals that have been made to me come from two quarters. The first is from the hon. Member for Central Edinburgh, that the tax should be taken oft altogether, and the other is from my hon. Friends on this side, who ask me to revoke the concession that has already been made, unless the House is convinced that the concession will be passed on to the consumer. A very important deputation was good enough to wait upon me at the Treasury. I saw them, and discussed the matter with them at as great length as they desired, but I was not convinced by them upon the point of which I have just spoken, namely, that the whole cause of the trouble was the tax. I think there are many other causes, which I need not go into now. I told them I feared that it would be impossible to make the further conces- sion for which they asked, and then I devoted myself to the point which has been raised by the hon. Member for West Woolwich (Sir K. Wood), as to whether this concession would be passed on to the consumer. I put it very frankly to them that the House of Commons was not at all satisfied, that it took great cave to ensure as far as possible that the concession regarding the Beer Duty would be passed on to the consumer, and that it desired to be fully informed that this remission of taxation would also be passed on to the consumer in the same way. After that meeting, I wrote to the chairman of the National Union of Mineral Water Manufacturers' Associations, pointing out that I was afraid I could not make any further reduction in the duty this year, and that I was still not quite satisfied that the reduction which had been made was being passed on to the consumer; and I asked them to write me a letter, when they had fully considered the matter, in order that I might be able to assure the House of Commons that that would be done. The difficulty, I understand, was that one or two manufacturers, out of a very large number, were not inclined at first to make this concession. However, I received a letter, dated the 22nd June, from Mr. Albert Shaw, the president of the association, as follows: Sir,—I beg to acknowledge and thank you for your letter of the 21st instant in further reference to Sweetened Table Water Duty, and, while I still hope that you may be able to see your way to wholly remit the duty, I now, on behalf of the National Union and Scottish Federation, and as an addendum to our letter of the 19th instant, definitely state that as nearly all the manufacturers have reduced their price to 2s. per dozen, every manufacturer will use his best endeavours to see that the ordinary type of mineral waters is retailed to the public at 3d. per bottle. The hon. Member for Central Edinburgh has borne that out by giving to the House an undertaking, as far as he can give it on behalf of his friends, that they really mean to carry this out, and I think that they do. They were very frank indeed when they came to see me, and, as I have said, with one or two exceptions, all are prepared to give the undertaking, and, indeed, the president of the association has given it on their behalf. I think and hope, therefore, that the remission will follow through to the consumer, and, personally, I hope to find, when I take my evening bottle of ginger beer to-night, that the price has come done even in this House. There is only one other question which the hon. Member raised, namely, as to whether I could give an undertaking that the balance of the duty, amounting, as he said, to between £200,000 and £300,000, would be remitted in the next Budget. The hon. Gentleman, of course, knows, and the House knows, that it is impossible for me in my position to give any pledge as to what the Chancellor of the Exchequer will do next year. There may be a different Chancellor of the Exchequer, and there may be quite different circumstances. We cannot tell what the circumstances may be. All I can say is that we cannot reduce it this year. I have not barred out any reduction next year; the matter is left entirely open, without any pledge either one way or the other.


May I ask whether the right hon. Gentleman has considered the very serious effect which this tax is having, not merely upon the mineral water manufacturers, but upon the bottle manufacturers in this country? Does he know that it is a fact that, as a result of this tax, and the consequent economy in bottles, at least 20,000 men are out of employment in this country, while the bottles required are obtained from the Continent, where there is no tax, and whence they can be imported into this country to-day at 6s. per gross less than they cost here? The tax is really responsible for that.


I am afraid that the hon. Member cannot put the impartation of Czechoslovakian bottles down to the ginger beer tax. That raises quite another question, and I am not quite sure that the hon. Member and I would not be on the same side in regard to the question of the importation of bottles from Czechoslovakia. I regret that I cannot add to the concession which the Government has made, but, in consequence of the declaration made by the manufacturers, I am not prepared to withdraw the concession, and I hope, therefore, that the House will allow it to be carried.


In my constituency there is a large mineral water manufacture, and I have a letter here, arising out of inquiries that I myself have made into the matter, which gives an assurance that, if the tax be taken off, it will be remitted to the consumer absolutely and in full. The right hon. Gentleman has told us that he cannot take it off this year, or do anything further than he has now done. In my constituency also, as in that of my hon. Friend the Member for St. Helens (Mr. Sexton), there are glass works. The people at those glass works are only working one week in five or six, owing to the non-purchase of this particular drink, and, whatever the Parliamentary Secretary may think, I consider that that is a matter of importance. Even if the duty is not very much, it all has a tendency to prevent people from purchasing. This tax originated in 1916. Prior to the Budget of last year, a case was established in this House for the assessment of herb beer at a lower rate than other table waters, and, as a matter of fact, while other table waters were charged at 4d. per gallon, the tax on herb beer was reduced to 2d. if a case was made out then for a distinction between herb beer and other mineral table waters, it surely is entitled to that distinction now, and I think that, since 2d. has been aken off other table waters, herb beer ought to be entirely free. I hope the Minister will take that point into consideration.


As I spoke on this matter during the Committee stage, I should like to point out that these taxes have effects which, in my opinion, the Minister here in this House does not understand. For many years the carbonic acid gas trade was in the hands of the Dutch, but in my constituency we have a works making carbonic acid gas for this industry, and that trade is being crippled completely. As the hon. Member for St. Helens (Mr. Sexton) has pointed out, when an industry is hindered or hampered by a tax, subsidiary industries are also crippled, and that causes unemployment. I also pointed out during the Committee stage, that the conditions of the trade in Liverpool and the district are entirely different from what they are here, and of course it was the large association which conducted the negotiations to which reference has been made. For the benefit of the hon. Member for West Woolwich (Sir K. Wood) I saw the President of the Liverpool Botanic Brewers' Association again, and he told me that the reduction that was going to be made by the trade was from 2½d. to 2d. I should like to ask the Parliamentary Secretary one question with regard to a matter which has already been mentioned by an hon. Member on the other side—namely, what is the authority which compels these poor shopkeepers to put in a meter, costing £6 6s., in order to collect a tax amounting to about half-a-crown a month? It seems a large imposition to put upon these small shopkeepers for the purpose of collecting this tax. They have asked me under what authority that was done, for they cannot understand why a taxpayer should be forced to put in such an expensive instrument in connection with such a small tax. I thought, also, that the Financial Secretary might consult his officials with regard to this tax, because I should have thought that the collection of such a tax from the soda fountain trade must be a very expensive matter, and that the returns must be very small in comparison with the cost of collection. In Liverpool and the district it is the poor people who consume these drinks. Cheap mineral waters are not rich men's drinks, and I am sure the decision of the Financial Secretary will be regretted.


I should like to thank the Financial Secretary for his statement. I am sure the House will appreciate the efforts he has made to find a reasonable settlement, and I feel sure that the trade will honourably fulfil the undertaking they have given.

Amendment negatived.