HC Deb 21 June 1926 vol 197 cc57-73

As from the thirty-first day of August, nineteen hundred and twenty-six, the duties chargeable upon sugar, molasses, glucose, and saccharin, imposed by Sections four and five of the Finance Act, 1924, and the First Schedule to that Act, shall cease.—[Mr. Stephen.]

Brought up, and read the First time.


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

My reason for moving this Clause is because of our opposition on these benches to these taxes which fall upon the food of the people of this country. When this Clause was moved on a previous occasion, the present Chancellor of the Exchequer said that he did not think the hon. Member who moved the Clause was very sanguine or optimistic about its being accepted. I myself would possibly have been somewhat in the frame of mind of the hon. Member who then moved the Clause, and would have been somewhat pessimistic about its acceptance, but, during the week-end, the Chancellor of the Exchequer disturbed so much gall and wormwood in the speech that he made, that in this House to-day we may, perhaps, expect a little sweetness from him, since he has evidently got rid of so much of his grouse at the week-end. I want to point out, in connection with this Clause, that the Labour Government, when they were in office, made, through their Chancellor of the Exchequer, a reduction in this duty from 25s. 8d. to lls. 8d., that is to say, a reduction from 3¾d. to l¼d. per lb. I also want to point out that the Sugar Duty in 1923 was 14 times what it was in 1913. I am, therefore, moving this Clause to-day in the hope that the Chancellor of the Exchequer, having got rid of his bile at the week-end, may now be in a somewhat sweeter temper, and may be willing to give something that would be of advantage to the large number of people upon whom this tax falls very heavily in this country—the poorest people in the country. It falls upon old arid young. I do not know what the passage of this Clause would cost the Chancellor of the Exchequer, but I am quite confident, that, while it might cost the revenue a certain amount, it would be to the advantage of the Chancellor of the Exchequer and other people in the community, and that, if he himself got a little more sugar, he would not be guilty of such an indiscretion as that of which lie was guilty at the week-end. Therefore, in the interest of the Chancellor of the Exchequer, in the interest of old and young, and especially of the poorer sections of the community, I have very great pleasure in moving this Clause.

4.0 P.M

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)

The cost of the proposal which the hon. Member has made to the Committee would be £11,750,000 in the present year, and £19,250,000 in a furl year. I am certainly not in a position to sacrifice any such part of the revenue; indeed, the tendencies of the times all point in an opposite direction and it is getting more and more likely that I shall be forced to ask for a further strengthening of the revenue. I do not, know if, at the present time, one had a large overflowing surplus out of which reductions could be made, and if one were selecting some subject of taxation for remission, that the Sugar Duties are those which would seem to have a prior claim. These duties were not only the subject of a very large reduction only two years ago by the right hon. Gentleman the Member for Colne Valley (Mr. Snowden); but the circumstances in the world's market have led not merely to that reduction reaching the consumers as a whole but to more than corresponding diminutions in price. Sugar is extremely cheap at the present time; and, as I pointed out when opening the Budget, the consumption of sugar has responded to the diminution in price. Last year, for the first time since the War, we consumed per head of population a larger quantity of sugar than in the pre-war days.


How many pounds of sugar per head are now consumed?


I could not say offhand. I stated the exact figure during the opening of the Budget, and I know that this year we are budgeting for a slight improvement even upon that figure. I could not at the moment give my right hon. Friend the exact figure. I know that sugar is not only an article of food and comfort, but is also a raw material of manufacture, and from that point of view any relief would be beneficial; but the finances of the country do not enable me to entertain any such possibility, and, even if they were in such a position, I do not know that this is the direction in which I should first allow the remission to become effective. There are other remissions by which greater relief could be given to the consuming population as a whole. After all, this duty was recently cut by practically half—more than half—and the price has been greatly reduced by the working of general causes. I am afraid, therefore, I cannot accept the Amendment.


I am sure the Committee will not have been impressed with the lament in the Chancellor's speech or with the power of his arguments. I suppose he thought that because my hon. Friend the Member for Camlachie (Mr. Stephen) had not taken a very great deal of time in moving this important Clause, it therefore did not require much answer. The fact, however, is that we do attach a very great deal of importance to the Clause. The Chancellor of the Exchequer, in the course of his reply, pointed to the cost to the revenue if this Clause were accepted. That is one of the reasons why we are moving the Clause. The fact that so much more is being raised for the revenue from the working-classes as compared with pre-War and with what ought to be the case, is the very reason for moving this Clause. Let us look at the figures for a moment or two. After my right hon. Friend the Member for Colne Valley (Mr. Snowden) had taken somewhere about 14s. per cwt. off the duty in 1924, the yield for 1924–25 from the duty was £20,530,000. The pre-War yield of the duty, in 1913–14, was £3,329,000. I do not think it wants a great stretch of imagination to see that, compared with the present rate of Income Tax, which is 4s. in the £ as compared with about ls. before the War, there has been a much heavier increase in the duty upon sugar even after allowing for the very heavy remission made by my right hon. Friend in 1924. Therefore, the very point which the right hon. Gentleman makes as to the cost to the revenue is an additional argument in favour of this relief to the working-class consumers of the community.

The next point which the Chancellor of the Exchequer made was that, even if he had the money to make this remission, he did not think that sugar would have a prior claim. I should like to know—we waited to hear from his lips but the wisdom did not come—what article, in his judgment, was more urgent in its claim for a reduction of duty than sugar; but he did not tell us. I cast my mind round all the dutiable articles used in the main by the working classes, and I cannot find a single commodity which has so large a claim upon the generosity of the Chancellor when he has money to disburse as sugar. It is not only an important foodstuff, but it is a raw material of quite a number of important and, when sugar is cheap, thriving industries, and I am certainly disappointed to hear that the Chancellor of the Exchequer is steeling his heart against such a just claim as we are making to-day.

The third and only remaining point that the Chancellor of the Exchequer made was that the price of sugar had declined and that therefore there was not so urgent a need to make it cheap. I am very glad to hear an admission from the benches opposite that remissions of taxes do, at least in some instances, reach the consumer. Here is a case put by the Chancellor of the Exchequer himself this afternoon that, in spite of the heavy remission of duty in 1924, the consumer is not only getting the full benefit of the whole of the remission but is moreover getting sugar at a cheaper rate without reference to the duty than was the case when the duty was remitted in 1924. I think that destroys once and for all the kind of argument that is put up on other occasions. I remember, when speaking with regard to the duty on tea, that the frequent answer from the opposite benches has been, "Well, when you have any remission of duty upon tea, the full effect of it is not given to the consumer." Here is a commodity in regard to which the Chancellor of the Exchequer can exercise his generosity without any qualms of conscience as to whether the full effect of his generosity will reach the consumer. I hope, therefore, that he will keep that fact in mind when we renew our importunities.

He said that the use of sugar was increasing, and that is true. I have not got the figures of consumption per head, but I have the total tonnage consumed in this country. In 1923, it was 1,530,000 tons, and in 1925 it was 1,686,000 tons, an increase of about 156,000 tons. But that means it is also yielding a greater revenue, and there is in that way a heavier burden of taxation upon the consumer, which is an additional reason why the Chancellor of the Exchequer should be willing to repeal the duty. I had hoped, when he was speaking on the Tea Duty a few weeks ago, that he was beginning to make progress in the right direction, which, by the way, in his case is a backward direction to his better days in 1906, because the other day he said: Our policy is not to increase, but wherever possible to decrease and ultimately to abolish altogether, taxes on articles of food. I had hoped that he was making the right kind of progress in that direction, and I was strengthened in that hope by a declaration from the Prime Minister at the General Election, though, judging by the way some of his declarations have been kept, perhaps I was unwise in placing too much hope upon it. The Prime Minister said: Our urgent needs, in the meantime are more work and cheaper food. I like to say, said the Prime Minister, what I feel and what I believe. Here is a test of the sincerity of the party opposite as to whether they really want cheaper food. There is not any doubt at all in view of the present world position of the production and distribution of sugar that a remission of the duty upon sugar would mean a cheaper article to the consumer. The Chancellor of the Exchequer has admitted that in this case the full benefits of the remission reach the consumer, and here is an opportunity for the Prime Minister to secure cheaper food for the community.

I also want to draw the attention of the Committee to the very great importance of getting cheaper sugar by the remission of the duty for the reason that it is used as a raw material. I am sure the Committee will pardon me using a trade illustration with: which I am familiar, namely, the use of sugar in our own co-operative factories. As soon as the Chancellor of the Exchequer in the Labour Government, in 1924, took 14s. a cwt. off sugar, we got an increased demand—an increased use—and in consequence increased employment.


The crop was better.


Yes, the crop was better, but sugar was cheaper by the whole 14s. duty per cwt. remitted. There is no doubt about that. We found such an increased demand by reason of the immediate cheapening of the produce that our employment in the jam factories—and we have a large output of jam—was better in 1924 as compared with 1923 by over 20 per cent. The same thing applies to production. You can apply that illustration to a large number of industries in which sugar is a very important raw material. We desire for that reason also to press the case we are putting this afternoon.

There was one point to which the Chancellor of the Exchequer did not refer on this occasion, but to which I feel I must refer. In commenting, I think last year, upon the Sugar Duty, the Chancellor of the Exchequer referred to the action of my right hon. Friend the Member for Colne Valley as giving away large sums belonging to the Revenue. At the same time, he said that the reduction of the Sugar Duty in 1924 without any compensating change in the preference had resulted in Empire sugar declining. He stated in the Budget speech that the imports of sugar from the West Indies had in consequence fallen. I was very interested in that statement, and I took it upon myself to make some inquiries in the matter. In case hon. Members opposite are inclined to take the Chancellor's point of view and to desire to keep this tax upon food simply because of the preferential position it gives to Empire sugar, I should like them to know the true facts, not such as the Chancellor of the Exchequer gave to us, but such as are given to us in the official report of the Department of Overseas Trade. This is what the report says: Since the heavy fall in values in 1921 the sugar industry of these Colonies has experienced difficult conditions, and in many cases the position has been aggravated by the over-capitalisation of many of the estates about the year 1919. During the close of the year 1923 and the first two months of 1924 a decided improvement was experienced, but in March, just as planters were beginning to feel that their position was more stable, a severe drop in values took place adversely affecting the estates, which were left with a large quantity of sugar unsold. That was the real reason for the decline in exports of sugar from the West Indies, although the Chancellor of the Exchequer was anxious for us to be assured that it was the action of my right hon. Friend in reducing the duties. The real fact is that if you take into consideration, when proposing to keep on this tax upon sugar, the position of the colonists who are sending the sugar, it is home attention they need and not Empire preference. They need to give their attention to the production per acre and not to getting an artificial subsidy such as the Sugar Duty gives them. Compare, for example, the production per acre in the West Indies, which is about 1.46 tons, with that in Java, which is 4.35 tons. As far as I know, there is no earthly reason why, with proper efficiency and care, there should not be the same development in the West Indies as there is in the Dutch Settlements. Obviously, therefore, the argument that was used last year by The Chancellor of the Exchequer about Preference as part of his reasons for not giving us what we wanted in remission of Sugar Duty does not bear investigation. But in any case the percentage of Empire sugar for use in this country is a very small proportion of the total world production of cane sugar. I think the total production in 1924–5 was 14,500,000 tons, and the total production in the Empire was round about 1,000,000 tons.

I should like to see the Sugar Duty repealed altogether because I am not in love at all with the position created by the duty in regard to the home sugar industry. We are at present giving a subsidy of 19s. 6d. per cwt. together, as I gathered from a reply from the Minister of Agriculture to a question of mine to-day, with the difference between 9s. 8½d. Excise duty and 11s. 8d. Import duty. That is the amount that is allowed as Imperial Preference, so that they are getting as a matter of fact somewhere about 22s. per cwt. in subsidy and preference. I should be very glad to see the Sugar Duty repealed if only to do away with some of the anomalies now existing in regard to home-grown sugar. Even though the Chancellor is not prepared to give us a complete remission I hope he will pay some attention to the way in which the Excise duty at any rate is administered and a subsidy given in connection with it. I find, for example, that in ordinary molasses there is no extractable sugar remaining, and under the subsidy 4s. 3d. per hundredweight is paid upon such molasses. By leaving only 2 per cent. of extractable sugar in the molasses the factory owner can set 5s. 11d. per cwt. I hope the Chancellor is going to have a look at that because if he is going to keep the duty on he might as well get it administered in a fair and impartial manner. What in effect happens there is that by wasting 2 per cent. of sugar the people concerned are able to get a benefit of something like 4s. 8d. per hundredweight on their molasses.

Another reason I would draw the right hon. Gentleman's attention to is that not only is he giving, under the operation of the Sugar Duty, a very great preference to the British producer of beet sugar but he is by the operation of the subsidy at the same time bolstering up in an artificial way an industry which cannot possibly be estimated ultimately to stand upon its own legs. I can understand giving a subsidy, by way of part remission of the duty or by direct subsidy, to a new and growing industry which had a reasonable chance of becoming self-supporting and giving more employment within a very short period, but when I examine the position of the British beet-sugar industry and its prospects in comparison with the world position of sugar, I am forced to conclude that it will not be very long before either the beet-sugar industry has to come to an untimely end or else the Financial Secretary and the Chancellor will be asked either for an extension of the subsidy or for a larger remission of the duty that is now operating. I find that whereas in 1913–14 the total world production of sugar was estimated at 18,400,000 tons, for 1925–26 the esti- mated production is 24,868,000 tons. That is an increase of something like 33⅓ per cent. in the world production of sugar since pre-War times, and it is in circumstances like these that we are making a grant of public money, by way of part remission of the duty and also by direct subsidy, of something like £1,300,000 a year in order to stimulate artificially the production of 50,000 tons of sugar a year in this country. It seems to me that such a policy is perfectly stupid financially and on general economic grounds.


Does the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) agree?


I have never varied from stating this particular opinion on any occasion when the matter has been raised. This is not any news at all to the right hon. Gentleman, who is always tolerant to any advancement of sound economic argument. I am persuaded that, whilst it may be true that Chancellors sometimes have to do things for expediency, on sound economic grounds he would be very largely in accord with what I have said on the matter. There is always something very attractive about the possible immediate employment of a few men here and there by the granting of a subsidy, but in this case it is plain that granting £1,300,000 a year out of public money and by remission of this duty to an industry which does not produce even 3 per cent. of the nation's consumption of sugar, and with the world production of sugar increasing every year, is a policy which cannot in the long run be considered to be sound and in the best interests of the nation. It is a very great pity that men like the right hon. Gentleman, with long and brilliant political careers, should stray so far from their early days of virtue as to be in a position of resisting so logical a case for the remission of a tax which is burdensome alike upon industry and upon the working-class consumer.


The hon. Member who has spoken with a very full knowledge of the sugar industry has made one point in his own close connection with the co-operative movement which cannot be overlooked in this Committee. It is very easy to discuss the Sugar Duty and think of nothing but sugar that is consumed in households. He has made the point, and a thoroughly sound point, that so long as sugar remained expensive there were many manufacturing trades that suffered from its high price, and as the price dropped those industries themselves were benefited and the markets regained to some extent their prosperity. He gave instances from the co-operative manufacturing organisations of the drop in the price of sugar having augmented at once not only the volume of their output, but the number of people who were employed in the manufacture. If we were to examine this duty only in terms of employment a strong case could be made out against it such as to quite overbalance any argument which had ever been produced on behalf of the new beet-sugar subsidy for an increase of employment in agricultural areas or elsewhere. As far as we have been able to ascertain, the whole of the subsidies for the manufacture of beet sugar have at the outside found employment, for some four or five months in the year, for about 6.000 persons. I have no hesitation in saying a drop in the price of sugar by as much as 14s. a cwt. would provide work for far more than 6,000 persons during the whole year in the manufacturing industries of which this is now the basis.

Let me take two instances. If you look at the exports from this country each year under the heading of food, which is, after all, the smallest category of our exports, it is a remarkable fact that biscuits and jams are the two most important items. The export trade in biscuits and in jams has gone up to enormous figures. These products are sent to every country in the world. We know from experience that they are the best of their kind, and they provide employment throughout the year. The jam trade, it is true, is at its height during the season when the fruit is being reaped, but the sugar industry goes on steadily throughout the whole year without any fluctuation in employment. Whenever there is a drop in the price of the imported raw materials in the manufacture of biscuits it enables these trades to compete successfully in the foreign market, to increase their volume, and to increase the number of people employed. Therefore, if you add this duty in the export trade, its effect, undoubtedly, is to diminish employment, whereas its repeal would tend to increase employment. That is true, not in the same degree but to a very large extent, for a good part of the year in the jam trade. There are very few things actually grown in this country which are used in the manufacture of jam. The jam trade in this country is now one of the most important and it has an almost unrivalled position in the world.

There are no foreign jams as good as those made here, and anything that tends to reduce the price of the finished article must also tend to increase the demand for the fruit that is grown. One of the best services the right hon. Gentleman could do to the agricultural industry, particularly in the fruit areas, would be to reduce the cost of this principal article in the raw materials and by that means increase the demand for the fruit to be grown and so absorb more and more of the labour which is necessary in these fruit-growing areas. The Financial Secretary represents one of the most important fruit areas in the Kingdom. I am sure he will bear me out that there is no branch of agriculture that employs a larger number of workers during the season when picking is taking place than the fruit industry. Hops also are grown in that area, but sugar plays an important part in the use that hops are put to. It is certain that if you reduce the price of the raw material in this industry you tend to increase the volume of trade and the number of people employed in it and the amount we get for that very important export trade, and thus do something to help to some extent the economic problems which are pressing very hardly upon us at present.


The right hon Gentleman is no doubt aware that there is a rebate in respect of sugar contents of manufactured goods exported.


I am well aware of that, but anyone connected with the trade knows that if there is no duty at all, you are in a far better position than when a duty is imposed and you have to get a rebate or a drawback. That process is very complicated, difficult and troublesome, and adds to the friction in trade, instead of facilitating trade. For at least 20 years the right hon. Gentleman has heard Debates on the Sugar Duty in this House, at all sorts of time and under all sorts of Governments, and I am sure that he has never overlooked the fact that there is no one single item in our long list of duties that could confer more benefit upon the consumer by its abolition than this duty. Every household consumes large amounts of sugar. I was amazed at the figures which the right hon. Gentleman kindly passed across the Floor of the House to me, which show that we consume 85 lbs. of sugar per head in a year. It is a most amazing amount, giving an average of over 1½ lbs. per week per head.


That is not as much as the pre-War figure.


The figures were 83 lbs. per head in 1913 and 85 lbs. in 1925. We are the largest sugar consuming people in the world. Of every 18 lbs. of sugar consumed in the world, 1 lb. is consumed here we head the list. We consume more sugar than America, where under the Prohibition Laws they have almost a bonus upon the consumption of sweet drinks and sweet articles. A lowering of the Duty would confer a benefit upon every household in proportion to their consumption of sugar, and it could confer a great benefit upon a large number of important industries, and not only food industries. My hon. Friend who introduced the Amendment might have made reference to the paper trade. That trade is to receive a certain amount of Protection under the new Safeguarding proposals. Those branches of the paper trade which use sugar in their manufacture would be far gladder to receive their raw material without this Duty imposed upon it than to receive the paltry benefits that they will get under the sporadic Protection of the Safeguarding of Industries Act. The Chancellor of the Exchequer could through his Budget proposals, this year or next year or as long as he has any control, tend to reduce the cost of living, and there is nothing which would have a more soothing effect upon the people as a whole, and nothing which would contribute more to ease our economic problems, than a reduction in the cost of living. Here he has a good chance to do that. The cost would not be too great. The right hon. Gentleman has gambled with much larger sums than this in his time. I do recommend him to wipe out the Sugar Duty, because I feel that he could do nothing better.

Lieut.-Commander KENWORTHY

I have always supported the abolition of the duty on sugar and have nearly always spoken on the subject. In addition to the industries already mentioned, there is another very important industry affected by this duty, an industry which is in a prosperous condition at the present time, although it will be affected by the Wrapping Paper Duty which has been introduced in this Finance Bill. I refer to the manufacture of chocolates and sweets. That trade is flourishing and does a considerable export trade. It would be a great help to that trade, which gives a great deal of employment, if the Sugar Duty was either removed or lowered. I am particularly interested, because there are prosperous factories in my constituency which give a great deal of employment at good wages and under healthy conditions.

When we move for a reduction or the abolition of the Tea Duty, hon. Members opposite tell us that tea is unwholesome, that it is bad for the nerves and that it is responsible for as much crime as whisky. That argument cannot be made in regard to sugar. I have never heard of anyone committing a crime through eating sugar, and I have never heard of homes being ruined because people eat sugar. On the other hand, sugar is a necessity, especially for children. At the present time there are millions of children, and the numbers are increasing, who, owing to bad trade, are suffering from malnutrition. As unemployment increases, the number of children who are

not getting enough to eat increases. The abolition of the Sugar Duty or a substantial reduction of the duty would do more than any other single step to assist the health of the rising generation. That point of view ought to appeal to hon. Members opposite, who take the Imperialistic view. We must have a healthy rising generation, a healthy child population, to come along to take up the burdens of Empire, to which hon. Members opposite are always ready to add.

We were told that the development of sugar beet would lead to a great deal of employment in the sugar-beet factories. We were told that this was to be a new rural industry, but we find that the very people who ought to benefit by getting employment in the sugar-beet factories are precluded by the action of the Minister of Labour. The agricultural labourers in the worst-paid counties in England are not allowed to take employment in the sugar-beet factories. Men are encouraged to come from the towns. That is a very scandalous thing, and the party opposite ought to have that fact brought home to them in the rural constituencies. They always pose as the friends of the agricultural labourer. They said that this new industry would help the agricultural labourer by giving him employment in the sugar-beet factory; but we find that the doors are closed against him by the Government, through the Ministry of Labour. For these reasons I propose to vote for the Amendment.

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

The Committee divided : Ayes, 105; Noes, 258.