HC Deb 22 April 1947 vol 436 cc909-17

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. David Eccles (Chippenham)

I want to ask the Financial Secretary whether this means that the duty on tobacco grown in the United Kingdom is greatly increased. If that is so, is it not very foolish? The object of these Resolutions is to save dollars. Small though our production may be, surely we ought to encourage it. Further, may I ask the Financial Secretary if it is not a fact that the main reason why we have not been able to develop tobacco growing in this country has been the difficulty of drying the tobacco? Quite recently, we have got over that difficulty with grass. The whole knowledge and practice of drying grass has improved out of all knowledge in the last 10 years. Might not that practice be applied to tobacco? Why has this duty been raised so high?

Mr. C. Williams

This Resolution deals with the growing of tobacco in this country and it has behind it a history of action which was not very wise in the interests of the country. I ask the Chancellor of the Exchequer or the Financial Secretary to look at it from the point of view that the strongest reasons why we should have a complete abolition of this duty are undoubtedly some of the reasons which were given by the Chancellor in support of the last Resolution. Here we are dealing with tobacco, a plant which can be grown quite easily in this country. It is a plant which is already grown in many gardens. If we had developed the growth of tobacco in this country in the same way as we have encouraged the growth of the potato, we might easily have had a very considerable industry today which would have saved a very large amount of dollars. I put that point of view because for a considerable portion of my life I lived in a place which, in all probability, was one of the first places where the potato was grown and tobacco smoked in this country.

It has always been a source of amazement to me, having some knowledge of the cultivation of plants, that we have not developed a plant of the tobacco type in such a way as to make it a real success here. In asking the Government to withdraw this Resolution, or at any rate to consider it from this wider point of view between now and the introduction of the Finance Bill, I wish to put one or two points in support of my argument that tobacco could be profitably grown in this country. At present it can be forced quite easily and planted out. In the course of eight to ten, or rather more weeks, it will produce leaves which can be made into tobacco. There is no doubt that just as there are specialists in the raising of tomato plants, so we could have specialists in the raising of tobacco plants. They could then sell the plants. which could be grown out of doors in vast quantities. That is the first point I make in support of my argument that it is practicable to withdraw this Resolution.

The second point is that which has been raised by my hon. Friend the Member for Chippenham (Mr. Eccles) on the nature of drying grass. As he says, we have had a development in the drying of grass. That is technically a different question from the drying of the tobacco leaf, but undoubtedly in a very short time, with the modern knowledge of chemicals which we have, it should be possible to develop this further if only the tax is withdrawn. It is the tax to which I object. If we do not have this tax we will be able to produce something which undoubtedly will save for the Chancellor many American dollars, a thing for which he is always appealing. Having put it from that point of view; and having tried to show that it is practicable to build up an industry, I would say that there is one thing about the tax which must appeal to hon. Gentlemen opposite. They are always telling us that we must assimilate new ideas. I thoroughly agree with that, provided that they are good ideas. If only the Government would abolish this tax they would be doing something comparatively new. It would not be entirely new. There have been different duties at different times. At one time there was in Hampshire a very prosperous tobacco growing industry. If the Government halved the duty it would be a very definite help to a new industry.

There is one point which I hope will not be used by the Government in defence of this Resolution. I am not very ingenious in working things out, but it is the only reason why I think the Government should insist on maintaining this tax. It is possible that the reply from the Front Bench opposite may be that this tax cannot be taken off or abolished because the Government are bound by the 1938 Agreement. If that is the position, I should have thought that the only complaint would be from America. Do they say that we have to maintain this Excise Duty in accordance with the Customs Duty? If so, can we not appeal to them that we might be allowed to differentiate simply because it is a thing that would help us over a space of years to the tune of very much more than a few additional millions of dollars? That is one of the objections which might be raised by the Government as an argument against my suggestion. I cannot think of any others except for the good old fashioned argument that one must always pay the same duty as one would pay customs. That is one which I have never accepted, and neither have the Tory Party. That kind of stuff may be all right for Liberals or Socialists, but it no good for the real die-hard Tory, the moderate Tory or the progressive Tory such as I.

8.30 p.m.

There is the further question of inflation, and here we are on the primary reason why I object to this Resolution, except for my wish to start a new industry. If we are to deal with inflation, surely we must do everything we can to stop doing those things which in the past have prevented us producing in this country the things that we could produce. That is what the Chancellor, the President of the Board of Trade and innumerable other persons have been telling us. This Resolution fundamentally prevents any British industry today developing a means of stopping inflation. Surely this matter must appeal to the Government, and if they really mean anything in their talk about inflation, they cannot possibly continue with an impost of this sort which absolutely cripples the prospect of a new industry. This refers to the question of dollars. Probably it will be too late to hope for a crop from the plant this year, but if the Chancellor takes action now, in a few years we might easily have a tremendous crop and cut out a vast amount of the American import.

In this Resolution we are doing everything we can to stop incentive in production. We are rightly told that we must produce more. Surely, if we could only produce in the course of the next two or three years a few thousand tons of British-grown tobacco, which I believe is a possibility, and if we could do that by halving or withdrawing this duty, it would be a tremendous incentive. The crop would be more use than some of the things grown at home. There may be arguments that our soil or climate are not suitable, but surely we are not less efficient as cultivators than they used to be in Hampshire. The scientists of this country could, I am sure, quickly raise a variety as suitable for our soil and climate as are the varieties grown in America and elsewhere suited to conditions there.

These are some of the reasons why I ask the Government to withdraw this Resolution or halve the duty. I hope I shall have some support from all parts of the House. I am convinced that if we reduced this duty or withdrew it we should do something to make a new British industry, encourage incentives in this country, and, above all, lay down a long-term policy of helping to secure a saving of dollars in the future. One or two hon. Members seem to treat this lightly, but many great industries have been set up on much more slender foundations than this. I think it was a previous Socialist Chancellor of the Exchequer who encouraged for the first time the growing of sugar in this country, and it was on that production that we relied during the war for our sugar. That has been supported by all parties ever since.

I ask whether, if we cannot have a definite answer tonight, we may not have a reply from the Government that they will go into this matter again from the point of view I have mentioned, because it is not much good for us to continue swallowing the things we did in the past and appealing, as the Chancellor asked us to do, to the people to reduce their tobacco consumption if there is any possibility, as many of us believe there is, of having an industry in this country to produce that commodity.

Lieut.-Commander Gurney Braithwaite (Holderness)

We have here another example of the great advantage of this Report stage procedure on the Ways and Means Resolutions. Here is a matter which would hardly have been discussed at all had it not been for this opportunity. The House has just approved by a large majority a swingeing increase in the Customs Duty on tobacco, and here we have the matter of Excise which is, of course, an entirely different matter. None of the arguments adduced by the Chancellor of the Exchequer in the passing of the last Resolution can be applied to this. The saving of dollars is not relevant at all.

I am one of those who have very little knowledge of the extent of the tobacco industry in this country. I want the Financial Secretary to tell us a little about it. I cannot believe that there is none at all, because, if that is the case, why are we going through this rather laborious procedure for imposing taxation on a nonexistent commodity in this very vicious manner? There must be a reason for it. The hon. Member for Torquay (Mr. C. Williams) has explained that tobacco used to be grown on the soil of Hampshire. I cannot imagine that is the only soil on which it is possible to grow it. This might be a very happy issue out of our afflictions. The Chancellor of the Exchequer has just gone away promising to look into the whole question of a preferential rate for old age pensioners. Here surely is an opportunity, if properly developed, of at least providing from homegrown tobacco sufficient supplies for that section of the community. I wonder whether the Government would not like to examine that, because it seems a most admirable possibility if properly developed. It is quite true that it might not develop in time for the old age pensioners of today, but those of us who are here now might reap the reward when we reach pensionable age of buying tobacco at a preferential rate.

I would like to ask the Financial Secretary, in order to get the matter into perspective, what acreage, if any, is under cultivation for tobacco in this country, what is the yield of the Excise Duty, and what would be the cost to the Exchequer if the Excise Duty were to be removed. This seems a most admirable Resolution to withdraw if all this is true. If there is no tobacco grown here, the yield is nonexistent. There must be some other reason why the Resolution is brought forward. Why is it? I think this is a possibility. I gather we are to have a reply from the hon. and learned Gentleman the Solicitor-General. I think that the 1938 agreement comes into this in some way. I imagined that it would come into the next Resolution dealing with drawback, but I did not realise that it referred to this particular Excise Duty. Perhaps the Solicitor-General would give details, if the figures are not complicated, and perhaps he would tell us at the same time, because it is important, whether the Government intends to do anything or will attempt to do anything to stimulate the tobacco industry in this country. That might not only help to relieve our dollar embarrassment, but might give us a supply of homegrown tobacco which could be sold at a favourable rate to old-age pensioners and comparable people.

The Solicitor-General (Sir Frank Soskice)

The Excise rate is increased correspondingly to the preferential Customs rate less, in the case of homegrown tobacco, 2d. to compensate the home manufacturer for the expenses that he incurs in complying with the Excise regulations. In the case of Negrohead and Cavendish tobacco, which is manufactured tobacco in bond, the duty of 2d. does not appear in the Excise rate because it is paid on deposit. That is the position as the Resolution is framed. Hon Members want to know what is the position with regard to the tobacco industry in this country and why we must have this Excise rate. May I say at once, upon the assumption that there is a case for altering or abolishing the Excise rate, that it would not be appropriate, having regard to our present commitments and by virtue of the negotiations going on in relation to international trade agreements, to make any alteration now in our Excise Duty. In point of fact, it would not make much difference if we did, because, as hon. Gentlemen opposite have said, if you have not an industry there is not much point in having an Excise Duty.

The position with regard to home-grown tobacco is this. Repeated attempts have been made to begin an industry in tobacco in this country. They have practically all failed. The only one which achieved some measure of success, and reached the stage at which it could sell commercially home-grown tobacco, was the one mentioned by the hon. Member for Torquay (Mr. C. Williams) in Hampsire. That manufacture has now come to an end so that, virtually speaking, the answer to the question put by the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) with regard to acreage is "Nil." That is as the matter stands, and, therefore, I do not think I need answer the questions he put with regard to the amount of revenue we would lose if we abolished the Excise Duty.

Lieut.-Commander Braithwaite indicated assent.

The Solicitor-General

But, shortly, my answer is that at the moment it has not been found possible, with that sole exception, to build up a tobacco industry here, even with the lower duty, that is to say, with the unincreased Excise Duty it has not been found feasible, owing, I am told, to climatic, soil, and various other difficulties. Whether it would be possible in the future, by adopting other methods of cultivation, to build up such an industry, I am not in a position to say at the moment. There has been no indication. However, as I said earlier, we could not appropriately, having regard to the negotiations going on at the moment, alter the relation of Excise Duty as imposed in this country to preferential Customs rate in relation to tobacco. Therefore, even if there is a case for their abolition, that case would have to be examined in the future, it cannot be done at the moment.

Mr. C. Williams

I quite understand the point made by the Solicitor-General, but will he look into the matter between now and the introduction of the Finance Bill, and also go into the matter with the Chancellor of the Exchequer and consider whether, for a new industry such as might be possible, we are to be bound for an indefinite time by what I regard as past failures? Will he not offer some hope to a new industry?

The Solicitor-General

The hon. Gentleman's questions proceed upon the hypothesis that there is a chance of a new industry. I was saying that there is no indication of any such chance at all because of climatic and other natural obstacles. However, my right hon. Friend is always extremely receptive to arguments, from whatever quarter of the House they come. He will certainly bear in mind what has been said, but at the moment I am bound to say that the question is more or less academic. There is no industry to speak of, there is no chance of an industry in the near future, there are natural difficulties which apparently cannot be surmounted or only in a small degree, and at the moment, because of our international commitments, it would not be appropriate to alter the Excise Duty. Therefore, I would ask the House to say that this Resolution is one they can accept for the reasons I have given.

8.45 p.m.

Mr. Assheton

This has been a rather curious Debate. My hon. Friend the Member for Torquay (Mr. C. Williams) evidently knows a great deal about the subject and I am glad that my hon. Friend the Member for Chippenham (Mr. Eccles) raised the matter. At first blush, it would appear that the question is quite simple: can tobacco be grown in England? If the answer is "Yes," let us reduce the duty at once, and give growers the opportunity of growing tobacco, and thus saving the Chancellor dollars. If tobacco cannot be grown, remove the duty and withdraw the Resolution because, what on earth is the sense of having the duty in that case? Then the Solicitor-General, who is always helpful, puts forward a reason for the Resolution, but it is one about which I am not quite certain yet. He said that it was impossible to differentiate between the Excise and preferential duties having regard to negotiations now going on. He did not tell us what those negotiations were, and with whom they were conducted, and what they were about.

Mr. Gibson (Kennington)

It is all in the "Daily Mail."

The Solicitor-General

Geneva.

Mr. Assheton

He now says in Geneva.

The Solicitor-General

I did say, quite clearly, the Geneva trade negotiations.

Mr. Assheton

I accept at once that the hon. and learned Gentleman said that, but it did not reach me. Not wishing to embarrass His Majesty's Government in any negotiations in which they are engaged, we on this side do not propose to press this matter to a Division. But we are not at all satisfied with the position, and I urge the hon. and learned Gentleman to represent to the Chancellor the views which have been put forward. It may be possible for the Chancellor to say that either this Excise Duty can be removed altogether, or can be reduced. It seems rather an odd state of affairs to find an Excise Duty which brings in no excise. It certainly gives a certain amount of trouble, as it involves hon. Members of this House in discussion, and if opportunity can be taken to remove the duty, I am sure hon. Members would be glad.