§ The duty of excise and the excise draw-hack allowed in respect of beer brewed in the United Kingdom under section one of the Finance Act, 1933, shall be reduced as from the first day of July, nineteen hundred and thirty-four, by five per centum in the case of beer known as lager beer, that is to say, beer mashed by the decoction process and fermented by a bottom yeast at a temperature of under forty-five degrees Fahrenheit.—[Colonel Baldwin-Webb.]
§ Brought up, and read the First time.1623
§ 8 p.m.
§ Colonel BALDWIN-WEBB
I beg to move, "That the Clause be read a Second time."
I should like to refer to the remarks made by a previous speaker that it is important that attention should be given to employment in rural districts. If the Chancellor of the Exchequer would accept the Clause employment in the rural districts would be generally helped. The Clause is framed in order to ventilate a grievance that exists in an important industry, or a section thereof, with regard to foreign competition. Lager beer, being an article dutiable under another enactment, cannot put its case before the Advisory Committee, and has to rely therefore upon the Chancellor of the Exchequer to deal with the situation. The consumption of lager beer represents 80 per cent. of the world consumption of beer, and consumption is going up in this country. I believe that one-third of the lager beer consumed here comes from abroad. It is produced abroad more cheaply, and is imported here at a price much below the cost of production in this country. During the past year the import of lager beer has gone up from 22,486 standard barrels to 32,480 standard barrels. That was during the period 1932–33 to 1933–34. It is an alarming increase. The Chancellor of the Exchequer himself said in this House only recently that the tastes of the public were shifting, and it is true to say that lager beer is becoming more and more popular. At the same time the import of foreign lager is increasing.
It is true to say that the new Clause as drafted does not deal with the situation adequately, but it is a means of ventilating this grievance, and I hope that the Chancellor will consider the matter with a view to remedying the situation at some future time. It is known to the Committee that a private Member cannot bring forward any Clause or Amendment which would have the effect of increasing taxation. Therefore, the Clause is drafted in another way. With regard to the advantage that the foreign brewer has over the English producer, I would mention that the English brewer has to pay a duty on the bottles, on the packing, corks, etc., that he imports, whereas the foreign brewer who imports his beer into this country pays no duty at all on the bottles, corks, 1624 labels, straws, cases, etc. It is estimated that in a case of six dozen bottles of beer the value of the beer is probably not more than one-quarter of the, f.o.b. price, and the balance goes in bottles, corks, labels, straws, cases, etc. We should, therefore, be assisting a number of other industries in the country, all of which are valuable from the national standpoint. I would urge that this matter should be dealt with, and as I know other hon. Members wish to speak I content myself with those few remarks.
§ 8.3 p.m.
§ Colonel Sir GEORGE COURTHOPE
Although I am not very hopeful that my hon. Friend the Financial Secretary will accept this Clause, I do hope that he and the Chancellor of the Exchequer will pay serious attention to the position which has arisen in connection with lager beer. Until a comparatively few years ago the method of brewing lager beer was especially a Continental one, but the beer became popular in this country, and large expenditure has been made here by certain brewing firms, with the result that we are now in a position to turn out admirable lager beer and can meet the whole demand. But the competitive imports are increasing at a very rapid rate. Normally if this industry was not the subject of a Revenue duty the matter would have been brought in the ordinary way before the Import Duties Advisory Committee, but that is technically impossible owing to the Revenue duty to which the beer is subject. Therefore, my hon. and gallant Friend who moved the Second Reading of the Clause adopted the only course that was open to a private Member, in order to draw the Government's attention to this matter, and that was to draft this Clause, although admittedly it is not a perfect solution.
§ 8.5 p.m.
§ Mr. BOULTON
The ground has been covered so well by my hon. and gallant Friend the Member for the Wrekin (Colonel Baldwin-Webb) and by the hon. Baronet the Member for Rye (Sir G. Courthope), that I shall detain the Committee only a short time in order to emphasise two or three points. I would like to make it clear at the outset that the deduction of the Excise Duty of 5 per cent. which we propose by no means provides the protection which this industry 1625 requires. As has been said, this Clause is only a means to an end, in order to allow this matter to be discussed. The Clause refers only to lager beer, and what I want to emphasis is that this is a new and developing industry. The consumption of lager beer is rapidly increasing and our manufacturers have been trying to meet the demand, which I am advised they can well do if it were not for the severe foreign competition. In support of that statement I would mention that the importations from abroad, according to the latest figures available, show that Danish imports have increased by 34 per cent., German by 60 per cent., Dutch 10 per cent., Czechoslovakian 12 per cent. Our manufacturers have spent considerable sums of money on new plant, which is very expensive, and they have spent considerable sums in other directions, for bottles, straws, labels and so on. One firm alone spent last year £70,000 on glassware and so on, apart from £30,000 in freight. This is apart from the benefit which agriculture derives from a growing industry of this kind.
§ The question of bottles has been referred to. These imported bottles from abroad come in free, but the British importer has to pay a duty on the foreign lager, and the bottles come into use again in this country and are actually sold in this country at something like 2s. a gross less than the price at which the British manufacturer can sell his bottles. If that is correct I think it is a hole that requires to be stopped. It is also anticipated that the increase in the sale of lager beer in this country will lead to an increase in the export trade, but when our manufacturers talk of exports they are up against heavy odds. I would give one instance of which I have been advised. I am told that Japanese brewers are today delivering lager beer in Calcutta at 13s. 6d. a case of six dozen bottles, whereas no English brewer can import the same quantity at less than 26s. if he is to make a profit. I am also advised that the Japanese Government is giving a subsidy of 5s. to the Japanese brewers for every case that they import into India at 13s. 6d. Therefore, when we come to the export trade there is very severe competition. Yet all the foreign countries that import lager beer into this country are imposing very heavy duties on British beers going into their countries.1626
§ Although I have no personal interest in this industry, it does seems to me to be a typical case of a new industry requiring Protection in its infancy. After all, if we are going to drink lager beer, let us drink British lager beer, which can be produced of a quality equal to anything that could be imported. What the trade really wants is to be allowed to put its case to the Import Duties Advisory Committee, with a view to having a duty imposed on foreign imports. This may require new machinery, but I do hope that the Chancellor of the Exchequer will be able favourably to consider the matter, and see whether he cannot give the protection-which is necessary for this new industry, or at any rate provide an opportunity for the industry to place its case before the Advisory Committee.
§ 8.11 p.m.
§ Sir W. WAYLAND
The last hon. Member said, "If we are going to drink lager beer, let us drink British lager beer." I do not think we are going to drink lager beer. Lager is to all intents and purposes a foreign beer, a very cold beer, a beer which has been trying to "take" in this country for many years, and I hope will never succeed. Looking at the question from the point of view of employment, lager beer brewing does not employ anything like the same number of people per barrelage as our English beer. Secondly, take the materials. If lager beer were to oust English beer we could shut up most of our hop-fields, because the greater part of the hops used in lager beer are-German hops. When we take the plant we find that a great deal of it is bought outside this country. Then there is the barley used in the brewing of lager. A great part of it comes from abroad. So I hope that the Chancellor will not for one moment think of accepting this Clause. Next, I believe that we should protect all our industries from foreign competition. I should certainly be quite willing for the Chancellor of the Exchequer to put an extra duty of 50 per cent. upon all lager beer coming into this country if he also put 25 per cent. extra duty upon lager beer brewed in this country. Lager is consumed in this country by the middle classes, certainly not by the working classes. The working classes want something which warms them up a little more than lager beer. I do not think it will ever take root in the 1627 United Kingdom. For those reasons, I certainly oppose the new Clause.
§ 8.15 p.m.
§ Lieut.-Colonel HENEAGE
I do not entirely agree with the hon. Member because he rather suggests that they do not use British barley.
§ Lieut.-Colonel HENEAGE
In saying "partly," my hon. Friend is rather going back on what he said. The ordinary brewers in this country partly use British barley.
§ Sir W. WAYLAND
Although the English brewers brewing British beer use a certain proportion of foreign barley, the lager beer brewer uses a very much greater proportion.
§ Lieut.-Colonel HENEAGE
At any rate, the lager beer brewers do use some British barley, so that from the point of view of the British barley growers we are interested in the acceptance of the Clause. I am informed that 4.2 barrels of lager beer use about one quarter of barley, and I do not see any reason why this should not be almost completely British barley. It is to the advantage of agriculture to encourage the manufacturer of lager beer. The practice of drinking lager is growing, probably at the expense of ordinary beer. That is a matter of fashion with which we cannot interfere artificially, but I ask the Treasury to watch the tendency of the fashion in drinking. We are certainly very much exercised that there may be anything like an increase in importation. I do not think the ordinary brewers have much to fear from the importation of ordinary beer, but the lager manufacturers certainly do fear an increased importation of foreign beer. As the taste in this country for lager increases, probably the importation will increase at the expense of the British barley producer, and, as I come from a part of the country which is mainly a barley country and is very much interested in this proposed Clause, I ask the Chancellor of the Exchequer to look into it.
§ 8.18 p.m.
§ Mr. HORE-BELISHA
I am sorry to note the difference of opinion which has arisen about this new Clause, but I profit by it, because it shows how careful I must be in dealing with the subject. The 1628 Clause as it stands would reduce by 5 per cent. the excise duty on British lager beer. The Customs, however, do not distinguish lager beer from other beers, and the duties, both custom and excise, apply equally to all types of beer without distinction. The effect of the Clause, therefore, would be to introduce a differentiation in the excise duty in favour of one particular type of beer brewed in this country based, not on a difference of gravity or alcoholic strength, but merely on the method of manufacture. That would clearly be grossly unfair on the brewers of other kinds of beer. It is not desirable to draw that distinction in the excise, and it is not practicable to impose a specal customs surtax on lager beer as such because it is not possible to distinguish finished lager beer as imported from other types of beer by any methods which could be applied by customs officers or even by chemical analysis. These are some of the technical difficulties.
I understand, however, that I am not intended to take the proposal of this new Clause literally, but to regard its introduction merely as an occasion to call attention to what may become a difficulty of the British lager brewing industry which, I understand, is making great progress. We have been told that the imports of lager beer have vastly increased. The Customs returns do not, for the reasons I have given, distinguish between lager beer and other beer, but, assuming that the beer which comes from Germany, Holland, Denmark and Czechoslovakia to be lager beer, I observe that the imports have increased between the 1st April, 1930, to the 31st March, 1931, from 29,300 barrels to 30,174 barrels. That does not seem a great increase, and the home production must be many times that figure.
§ Mr. HORE-BELISHA
The figures last year were 22,224. They fell from 1933, but they rose again presumably on account of the hot summer. I am not trying to make a point of this, however. I am merely trying to put the matter in perspective. It is an anomaly that this industry cannot go to the Import Duties Advisory Committee. We have not, I hope, reached the stage when it has 1629 become necessary. The position can always be reviewed, and I hope that my hon. and gallant Friend and those who have supported him have performed a service in bringing this matter as one of substance before the Committee.
§ Mr. HORE-BELISHA
Because it would involve a general reduction, the Clause would cost between £2,000,000 and £3,000,000.
§ Colonel BALDWIN-WEBB
I hope my hon. Friend will not lead the Committee to believe that the proposal in the Clause would cost that amount.
§ Mr. HORE-BELISHA
The proposed Clause would be impracticable as drawn. It would involve a general reduction on all beers and it would cost the sum I have mentioned. If we could separate lager beer, the cost, of course, would be very much less.
The Financial Secretary will realise, on his own figures, that if the barley were grown in this country it would make a difference of 10,000 quarters.
§ Question, "That the Clause be read a Second time." put, and negatived.