§ Among the many suggestions which have exercised the ingenuity of hon. Members and others, I have frequently been advised not to confine my thoughts to the present year, but to look ahead. I shall have something to say about the idea of a three-year Budget, but I should indeed be a very indifferent guardian of the public purse if I did not consider what effect any financial measures of today might have upon the finances of the future. Every tax has to be kept under constant supervision, so that the Chancellor of the Exchequer may judge how far it is able to stand an increase of the rate, or how near it has come to the point at which the law of diminishing returns begins to operate. I am afraid that in my survey of the whole field of taxation I must concede that a good many taxes have reached the limit. There is one case in which it has palpably passed it. A source of revenue which has brought comfort to many of my predecessors has now been seriously undermined. On the information that has reached me from time to time I have an idea that hon. Members are not t unfamiliar with the history of the Beer Duty, but all the same I hope they will allow me to present a few figures to them which seem to me to be relevant to my present predicament.
§ In 1923 the duty, which then stood at 100 shillings per standard barrel, was reduced by a rebate of 20s. per bulk barrel. For some years after that it afforded a yield of over £80,000,000, but by 1929 the yield had fallen to £77,000,000. In 1930 the duty was raised by another three shilling per standard barrel, but the yield fell to something less than £76,000,000. In September, 1931, there was a great rise in the duty of 31s. in the standard barrel, and once again, instead of increasing, the yield fell; and in 1932 it dropped to less than £74,000,000. Between the years 1929 and 1932 the consumption fell from 20.7 to 13.8 million standard barrels, a drop of 33 per cent. Nobody in my position could view that situation without concern. It cannot be said that I have been over-hasty in coming to a decision. Last year I resisted the appeals that were 56 made to me to reduce the duty in the hope that it might still give me the revenue which I then so much required, but its failure to reach my anticipations has convinced me that I cannot afford to wait any longer before taking some measure to safeguard the revenue of the future.
§ I have considered a number of various schemes from the point of view of their probable effect on consumption and also in the light of their probable cost; and I have come to the conclusion that, if my purpose is to be achieved, two things are necessary, first, there must be some reduction in the retail price of beer, and secondly, there must be some improvement in the quality, which, incidentally, would give assistance to agriculture. I could attain the first of these ends by a simple reversion to where we were before the duty was increased in September, 1931, but I am afraid if I merely did that I could not expect any general increase in the gravity of beer. I have made up my mind to sweep away the whole existing plan and substitute for it an entirely new scheme of duties. As from to-morrow beer will be charged at the rate of 24s. per bulk barrel, up to and including a gravity of 1,027 degrees—
There is no greater authority in the House than the hon. Member, but perhaps he will allow me to finish my sentence—with a rise of 2s. per degree over that gravity. The effect of this change, which will be more apparent to those who are more familiar with the trade than the hon. Member and the majority of hon. Members, will be that the retail price of beer will be reduced by one penny per pint and that the quality will be improved. To make sure that the benefit of this proposal shall reach the public, and that the British farmer shall get the maximum benefit from it I have been in communication with the Brewers' Society, upon whom I have urged strongly that they should endeavour to secure that in future a larger proportion. of the barley they require is drawn from British sources. I have received from them a letter which I propose to read to the Committee. It is signed by Mr. F. A. Simonds, Chairman of the Brewers' Society, and is as follows: 57In pursuance of the interview which you were good enough to grant to me and other representatives of the society on the 11th instant, when you discussed with us the possibility of making such a re-arrangement of the Beer Duty as would ensure the production of cheaper and better beer, and at the same time secure the use of a greater proportion of home-grown barley, I give you, on behalf of the Brewers' Society, the following undertaking:That in the event of the Beer Duty in future being based on a scale commencing at 24s. for all beers brewed up to and including 1,027 degrees, with a rise of 2s. per degree above that figure, the Brewers' Society will strongly recommend all brewers to make such arrangements with retailers as will ensure the retail price of beer being reduced by a penny per pint on the day following the Budget statement in Parliament; and the society will also use its influence to induce all brewers to raise the gravity of their beers by at least two degrees.In order to give the maximum assistance to British agriculture the society will recommend all brewers to increase as far as possible the proportion of home-grown barley in the brewing of all classes of beer.In making these recommendations to the brewers the society will make it clear that the concessions in the duty above indicated were granted as the result of the assurance being given to you by the representatives of the society, that the society will take all steps in its power to secure that these recommendations will be honourably carried out.Now what is going to be the cost? It is very difficult to predict with any confidence what the cost of these changes in the Beer Duty will be, because it involves two calculations: First of all, what the duty will be if the concession is made; and, secondly, what it would have been if the duty had been left where it was. I am advised that I cannot expect any great increase in consumption to follow immediately on this change, although it is very possible that the decline may be arrested. I put the loss at £14,000,000, and that reduces my free balance to £3,291,000.