HC Deb 10 June 1947 vol 438 cc888-924

4.15 p.m.

Mr. David Eccles (Chippenham)

I beg to move in page 3, to leave out lines 9 to 12.

The Clause to which this Amendment is moved increases the tobacco duties by 50 per cent. As the Clause is drafted, the increase is laid upon foreign tobacco, and upon any tobacco we may grow in the Empire or in the United Kingdom, at the same rate of increase. My hon. Friends and I wish to give the Chancellor an opportunity to tell us exactly why he will not give to Empire tobacco a margin of preference that would be sure to stimulate a big increase in supply. The effect of the Amendment would be to leave the preferential rate of duty—the Imperial rate of duty—where it was before the Budget and would give a large preference of something like 19s. per lb. of tobacco.

The background of our argument is not in dispute. We all agree that the problem of finding dollars blots out all other problems. That was the Chancellor's own phrase at Margate. No one would deny that the purchase of American tobacco is a large item in our account to the United States, or that if we could increase the supply of sterling area tobacco we could correspondingly reduce our demand for American tobacco. I think no one will deny that the preference rate established by the Bill of is. 6½d. per lb.—the difference between 54s. 10d. on foreign tobacco and 53s. 3½d. on Empire tobacco—is a very small encouragement to the extension of tobacco growing in the Empire. This margin of 1s. 6½d. comes to us from happier days when the preferential duty was an ad valorem duty of 25 per cent. and when the rate of duty on foreign tobacco was under 10s. per lb. I do not doubt that in those prewar days, when costs of production were much lower than they now are, a preference of 1s. 6½d. per lb. was of real assistance. We have to ask ourselves whether that preference is of real assistance in a postwar condition.

I am sure the Chancellor will tell us that he cannot accept the Amendment because His Majesty's Government are bound by the terms of the Anglo-American Trade Agreement of 1938 and by various other agreements as well, and that we have ourselves said under that agreement that we would not increase the preferential margin from 1s.6½d. Our financial and economic situation in 1947 is not the same as it was in 1938. Now, our basic standard of life is in danger and we are fighting for our meagre rations with ammunition that is rapidly running out. The dollar loans are soon to be exhausted. They were given us expressly for the purpose of providing a breathing space during which we could readjust our economy from the status of debtor to that of creditor and from all the dislocations of the war. Is there any chance that we can make that readjustment in postwar British trade if the substitution of sterling imports for dollar imports is ruled out? The Government know very well that this would make it impossible, if that were so, for us to balance our account. Why are the Government financing a large expansion of groundnuts in East Africa if it is not to increase the supply of edible fats from the sterling area? That must mean that we shall import less fats from North America.

If the Government can put a scheme of that kind for edible fats into operation by subsidies, why cannot they operate a similar scheme by a method of preference or by some other method, for tobacco? The Americans are not so simple as to think there is any real difference between supplanting imports of fats which we previously got from them by imports from Africa under the scheme that we know of, and a scheme for encouraging future expansion of tobacco by Imperial preference. The agreement of 1938 stands in the way. It may be denounced at six months' notice. I assume that it could be modified in any way, if the parties to it were willing to make such a modification. Why do not His Majesty's Government lay a case in Washington for a modification of this agreement with regard to our supplies of tobacco? The Americans are business men. They know quite well that they have no chance of being repaid all the dollars we have borrowed unless we bring our exports and imports into balance. As lenders, they must want us to take the practical steps which would achieve this equilibrium. I am quite certain that if the Americans were in the position of His Majesty's Government they would not hesitate to act on the lines of our Amendment.

Take the case of wool. The Americans have the equivalent of an empire. They have a union of 49 States that stretches from one ocean to another. When they desire to reduce the imports of wool coming from the sterling area into that union and to assure to the producers of wool inside the United States a greater proportion of the home market, do they hesitate to use the tariff weapon? Not at all. They bring a Bill into Congress which will put up the duty on wool. If they were in our position they would do the same thing now with tobacco. The fact is that our good friends in America are good business men, and His Majesty's Government would be more respected in Washington if they would talk like good business men as well.

I hope that the Chancellor or the Financial Secretary when replying will not again bring forward an argument we heard upon the Report stage of the Budget Resolution to the effect that, because we are now buying all the tobacco which the Empire produces, there is no point in raising the preference. That is merely a cowardly get-out from the rather difficult proposal of going to Washington and laying a case for a revision. The Chancellor was once a professional economist. He must have had, at any rate, a textbook acquaintance with the laws of supply and demand. There is no doubt at all in the matter of agricultural crops that, if it is desired to stimulate a further supply, one sure way is to guarantee the market for a considerable period ahead and give a good price. Plantations take a long time and much money to grow to fruition, and if we mean to expand the supply of Empire tobacco in the national interest it is not too soon to begin now.

The purpose of my Amendment is to ask the Chancellor whether he means to use the Budget a; a constructive instrument for changing the pattern of British imports and exports. It is one of the few instruments open to the Government. As far as one can see, their only remedy when they find that it is not possible for us to behave in the way we did before the war, when we bought whatever we liked in the United States, is to tell us to tighten our belts and consume less. There is a more attractive alternative. That is to make arrangements for supplies from other sources. The purpose of this Amendment is to draw the Government on this subject. Have they or have they not any longterm plans for tobacco?

The Chancellor could quite rightly argue that it would be wrong to stimulate the expansion of tobacco growing in the British Empire if the shortage was a purely temporary phenomenon. But that is not so. There are two shortages. There is the shortage of dollars. Does anybody think we are going to have as many dollars as we want in the next 10 or 15 years? The second shortage is that occasioned by the desire of the British people to smoke like chimneys. Is that likely to disappear? The answer is, clearly not. This problem of supplying tobacco to this island, which on the best showing can only grow a very small proportion of its tobacco itself, is a longterm one. I know that the Chancellor cannot accept this Amendment, but I hope he will tell us exactly what he proposes to do. I hope he will tell us in terms which will lead the public clearly to understand that he does not intend simply to sit still because he is bound by all these different agreements made with America a long time ago.

Mr. Dalton

As the hon. Member for Chippenham (Mr. Eccles) has forecast, I cannot accept this Amendment, but I will seek to respond to his invitation to say something on the Government's attitude towards the question of tobacco supplies. It is worthwhile to re-assert—I do not think it is useless to re-assert it because it is important that it should be known—that, as was said in the Debate on the Budget Resolution, we are now buying up all the Empire tobacco which is in the market. I must add that some of it is rather highly priced. I do not quite know why the price has risen so steeply on some of these Empire tobaccos in the last month or two. We must reserve our right if prices rise unconscionably, to cease our present practice of buying all that is available. The smokers of this country must not be exploited, even by parts of the British Commonwealth. None the less, up to date the undertaking remains that we will purchase whatever is available from the Empire supplies.

By what undertakings are we bound in this matter? The original preference for Empire tobacco was introduced in 1919. I will not go over the intermediate years. In 1938 there was a trade agreement with the United States of America providing that this preference would be reduced from 2s. o½d. a lb at which the preference then stood, to 1s. 6½d. a lb., that is to say, by 6d. a lb. That was entered into in 1938 when the right hon. Member for West Bristol (Mr. Stanley) was the President of the Board of Trade and was therefore, departmentally responsible for it. I make no criticism of what was done in those conditions. I merely emphasise that it was done as long ago as 1938 and that the right hon. Gentleman was responsible and can throw on this any further light which it might he useful to throw

That undertaking given in 1938 to the United States Government could not, in fact, be brought into effect until 1943. It was given effect to in the Finance Act, 1943, when the right hon. Member for the Scottish Universities (Sir J. Anderson) was Chancellor and when I was President of the Board of Trade. It was provided in that Finance Act that the preference should be reduced to 1s. 6½d. a lb., at which it now stands. I find difficulty at this moment in altering that figure having regard, in the first place, to the undertaking given in 1938, and. in the second place, to the fact that there are now proceeding at Geneva discussions which, although their course may till now not have been wholly smooth, we are none the less obliged to try to bring to a successful conclusion. Only time will determine whether anything will come out of these discussions at Geneva, but we are immersed in them. The Government are committed to do their best with them, and this would not be an appropriate moment at which suddenly to go into reverse on this matter.

4.30 p.m.

Therefore, apart from the undertaking of 1938, in the light of the discussions now proceeding, we must let these go a little further before we could accept the Amendment or do anything else which might seem to throw doubt on our hopes that, as a result of the discussions at Geneva it may be possible to break down a number of the barriers which have been erected against British exports in a number of markets, not only in the United States, but throughout the world. So I say that this is not an opportune moment to vary the preference, particularly as I have repeated the undertaking that we will buy any Empire tobacco available in the market at the current prices, though we hope these will not rise any further.

This Amendment also covers the case of home-grown tobacco—[An HON. MEMBER: "That will be moved separately."] In that case I will reserve what I have to say on home-grown tobacco. As far as Empire tobacco is concerned, I hope this Amendment will not be insisted on. I do not of course rule out; on a long view, some change in the preferential arrangements, but I say that this is not an appropriate moment, for the reasons I have given, to press the matter.

Mr. Oliver Stanley (Bristol, West)

I am sure my hon. Friend is not surprised that the Chancellor of the Exchequer is not able to accept his Amendment, but I think he has done the Committee a service in giving us an opportunity of discussing, even shortly, a most important point. As the Chancellor has said, I was President of the Board of Trade at the time the Anglo-American Trade Treaty was signed, and as such, of course, I still have a great interest in what was my child. If the previous negotiations were long and difficult—if I remember aright, they lasted even longer than the regulation nine months—when they came to an end I thought they produced a very good baby. But babies, however attractive at birth, tend as the years go by to grow out of their clothes, and that is what has happened to the baby of 1938, because many of the provisions which were entered into then, and which could be defended with perfectly obvious arguments, and which were entered into for perfectly obvious advantages, have now become, under the new world conditions, completely out of date. I remember, with regard to the reduction in preference that at that time, after a considerable number of years during which the tobacco manufacturers in this country had encountered a considerable sales resistance amongst smokers here to Empire tobacco, that had been largely overcome, and it was felt that it was quite safe to reduce the preference by that amount without prejudicing the possibility of the sale of Empire tobacco. But, of course, no one at that time could have anticipated, and certainly did not anticipate, the enormous figure to which the duty on tobacco has now had to be raised, and the trifling percentage, therefore, that the fixed preference now represents in the total price.

Having said that as a defence—if defence were needed—of the provisions made in 1938 under wholly different circumstances, I want to say a word about the future. I understand the right hon. Gentleman feeling a certain reluctance in discussing at this moment the possibility of alteration—which, I imagine, could only be made following a denunciation—in the agreement with America, although it is pertinent to ask whether it is not possible for us to do a little something in tobacco when it appears that the United States are doing a very great deal in wool. We on this side are prepared to accept that for the time being, but it raises this important question: in view of that problem which, as my hon. Friend says, quite rightly is clearly a long-term problem, and the difficulty of buying as much American tobacco as is necessary to satisfy the needs of smokers in this country, what long-term steps are we taking to increase the supply from the Colonies? I have recollections that at the time I was at the Colonial Office certain investigations were made into the possibility of increasing largely the growing of tobacco, particularly in Northern Rhodesia and Nyasaland. I admit that those who were considering the problem at that time had not fully foreseen the gravity of the problem of the American exchange, and, in those circumstances, the report which I received as to the possibility of a long-term expansion of tobacco growing in those areas was not very encouraging. That seems to me now to be completely altered.

There seems a case for the same kind of action in those territories with regard to tobacco that has been taken—and all of us hope taken with success—in East Africa with regard to groundnuts. If it is not possible for the Chancellor to say anything more at the moment about this method of preference as a means of increasing tobacco growing within the Empire, we should like an assurance from him that the possibility of a really large-scale increase with the same kind of Government assistance that has been given to the groundnuts scheme, is being considered, and that there is nothing in any agreement which would stand in the way of a development of that kind if it were found, for other reasons, to be practicable and economically desirable. It seems to me that it is only on those lines that we can hope to find some relief for the smoker in this country, and those who, like myself, have listened to the Chancellor's appeal, may find a release from the sacrifices which he has imposed upon us.

Mr. W. J. Brown (Rugby)

It is a little unfortunate from one point of view that we are to deal with these two Amendments separately. One Amendment re- lates to Empire tobacco, another one relates to home tobacco, and the Chancellor must give a great deal of attention to American tobacco. These three really form part of a total picture which it might have been desirable to discuss as a whole, and it is difficult to do that when we are taking the two Amendments separately. So I may find some difficulty in keeping in Order, though I will do my best.

I think the Chancellor makes an unanswerable case that he cannot accept this Amendment at the present time. In view of what is happening at Geneva, I do not think it would have been possible for him to give any other reply, but I beg him to look at this from the point of view of the ordinary man in the street who, believe me, is much concerned with this problem of adequate supplies of tobacco at a reasonable price. We have now reached the stage in country districts where the poor farm labourer has to go in and order a pint of beer and one cigarette. He does not like that, and the rest of us do not like that, but what burdens his mind is that he sees no end, at least no early end, to that situation. The hon. Member for Chippenham (Mr. Eccles) is quite right in saying that the popular apprehension is that many years will elapse before oar dollar situation will be such that we car buy American tobacco with the same careless freedom that we could have done 10 or 15 years ago. But while the man in the street recognises that to be true, believe me he is not content that he should go on paying 3s. 4d. for 20 Players for the next 10 or 15 years.

This is a political factor of substantial importance. It really is a considerable element in the public mind. What I would wish to have, if possible, is a statement from the Chancellor indicating what his conspectus is for the years to come. What is his broad conspectus either by the development of Imperial tobacco or of home grown tobacco, or the making of more dollars available for the purchase of American tobacco—

The Temporary Chairman (Mr. Bowles)

The hon. Member ought to make his speech on the Motion, "That the Clause stand part of the Bill." He must not go into the question of American grown tobacco now.

Mr. Brown

That is part of our difficulty. We want a long-term conspectus. If it is impossible for the Chancellor to give it to us now, perhaps he can arrange to do so when we come to the Motion, "That the Clause stand part of the Bill."

Mr. Marlowe (Brighton)

I found the answer of the Chancellor rather unsatisfactory because he did not really give us any picture of what he envisaged for the future. He dealt only with the present difficulties in regard to a preference on Empire tobacco. He did not give us any idea of the way his mind is moving in the matter. He may be bound by certain immediate difficulties concerned with Geneva, but the Committee is entitled to know what is in the Chancellor's mind for the future. His answer really boils down to two points. He said, first, that we were taking all the available Empire tobacco, in spite of the fact that my hon. Friend the Member for Chippenham (Mr. Eccles) had forestalled that answer and had invited the Chancellor to resist the temptation of making it again, as he has done before, because it is a bad point. It is really deliberately evading the point at issue. It is perfectly true that we are taking all the available supplies, but that is not the point. The point is that as soon as a wide margin of preference is given it increases the supplies available. That is the point with which the Chancellor did not deal.

I understand that it is stated in a reliable paper dealing with East Africa and Rhodesia: What we should like to see would be a really substantial preference on Empire tobacco. … Southern Rhodesia, which now supplies this country with one-twentieth of her annual consumption, could double her output in three or four years, and treble it in ten or less, without lowering the quality, if she were granted guaranteed markets and her reasonable requirements in fertilisers and a few other lines. The preference for which this Amendment asks would give a guaranteed market, and according to that authority, would vastly increase output and make a great deal more available in future. To say that we are taking all that is available at the moment, is not an answer to the principle underlying the Amendment.

The right hon. Gentleman's other defence against the Amendment was to say, "I am bound by agreements made with America." That again is not really a satisfactory answer, because while it is profoundly true that these agreements are in existence, the Chancellor is not prevented from approaching the Americans again at any time and saying, "We made this bargain in 1938, but it is quite inappropriate to the present circumstances, and we want it amended." Merely to say, "I am bound by an agreement," when it is open to him to amend that agreement, is not a satisfactory answer. I would like to know if the Chancellor intends to approach the Americans about it and to say, "We are put in this most unfortunate position because of a change of circumstances since 1938, and we want this 1938 agreement altered." The amount of the Preference was, I think, 2s. 0½d. and was then reduced to 1s. 6½d. in 1943, since when the amount has remained static while the price has increased. The fact that the figure remains static is continually reducing the percentage, with the result that, as my hon. Friend the Member for Chippenham said, what was a 25 per cent. duty in origin is now in the region of about 3 per cent., so that the reduction over a period of years has been from 25 per cent. to 3 per cent. What does the right hon. Gentleman envisage in the future?

4.45 p.m.

It is for these reasons that I found his answer unsatisfactory. I believe that wt shall do both ourselves and the Empire the most good possible by creating as much trade as we can. I do not see that the Chancellor is entirely powerless because conversations are now going on at Geneva. That does not prevent the Americans from taking a tough line in Congress. They do not say, "We cannot introduce a wool tariff because conversations are going on in Geneva." I hope that the Chancellor will think himself entitled to take as tough a line, and not feel himself precluded from putting forward proposals merely because of what America might think.

Colonel Ponsonby (Sevenoaks)

I am glad that Empire preference is agreed to on both sides of the Committee. I happen to be Chairman of the Empire Tobacco Producers' Federation, and I know a little about this subject. I only rise to emphasise what has been said about the necessity for a long-term policy. Hon. Members will be aware that under the Ottawa Agreement a period of 10 years was given during which the preference was to run. That gave great encouragement to tobacco growers, because tobacco growers are to a great extent different from other growers. I am not at all certain that one could compare the groundnuts proposition with an enormous scheme for tobacco growing. Tobacco growers have to plan a long time ahead and to spend considerable capital. In 1938 the amount required in Rhodesia for buildings, that is tobacco barns, grading sheds, etc., quite apart from the value of the land, was approximately £2,000 for a small tobacco plantation. Not only that, but a great deal of skill is necessary for the growing of tobacco. I would impress on the Chancellor, and it applies also to the President of the Board of Trade, that it is essential, when they have made their plans, and when the Geneva conversations are out of the way, that if they are to ask the Empire to produce a considerable amount of tobacco, they should give a good long guarantee; the producers concerned will then be able to settle down and work their schemes out properly. A long-term policy is very necessary, and I beg the Chancellor to look well into the future when he makes his plans.

Mr. Richard Adams (Balham and Tooting)

This might be a convenient moment for me to raise with the Chancellor a point which I raised on the Budget Resolutions, namely, the advisability of a Purchase Tax on tobacco to meet this and other objections. It will be apparent that the Chancellor is in some difficulty in view of the 1938 agreement and the discussions now going on at Geneva. It seems to me that the imposition of a Purchase Tax could, in the short term, have the same effect as what is suggested from the other side of the Committee.

Mr. W. J. Brown

On a point of Order, Mr. Bowles. Is it in Order for us to discuss a Purchase Tax whatever its merits, on this Amendment?

The Temporary Chairman

I was listening to the hon. Member and I thought he was going too far. I had intended to stop him in a few seconds' time.

Mr. Adams

The same effect as that suggested in the Amendment would be gained, and preference would be given to Empire tobacco, by the introduction of an adjusted Purchase Tax.

The, Temporary Chairman

I am afraid the hon. Gentleman is not in Order.

Squadron-Leader Donner (Basingstoke)

Like other hon. Members, I thought the Chancellor's answer to my hon. Friend the Member for Chippenham (Mr. Eccles) was very disappointing. It is always possible to make out a case for doing nothing. That is the type of case which the Chancellor made out. He went out of his way to mention the difficulty of Geneva. Surely, what are taking place at Geneva are discussions to remove what are known as trade restrictions. If the Chancellor thought it worth while to reduce the duty on Empire tobacco, or to abolish it, he would not be doing anything that would go against the trend of the Geneva discussions. Of course, it could be argued that by doing that he would be increasing Imperial Preference. That would be true but at the same time he would be reducing, or abolishing, an existing duty. Hon. Members on this side have pleaded for the longterm stimulation of tobacco growing. If the Chancellor is not yet willing to give an undertaking that he is prepared to treat tobacco as the Government are prepared to treat the problem of groundnuts, there would seem to be little reason why he should not turn his mind to the subject of reducing, or abolishing, the duty on Empire tobacco. There is little reason why tentative feelers should not be put out in Washington in order to reach a business arrangement.

Sir Stanley Reed (Aylesbury)

I wish to make two brief points which seem to me to be rather important. We all agreed with the hon. Member for Chippenham. (Mr. Eccles) when he asked the Chancellor to frame a long-term policy. If that long-term policy is to be directed to a large expansion of tobacco growing in the Empire, on the assumption that this country will continue to smoke tobacco at the present rate, I think it needs very careful consideration. It is my firm conviction that if the increase in duty which the Chancellor has imposed does not lead to a reduction in the consumption of tobacco, some other measure must be adopted for some years in order to reduce consumption.

The other point is that we all realise the seriousness of the dollar position. We often find it assumed that we have unlimited sterling resources. The Chan- cellor is under no illusions on that subject. We have only to look at what has taken place in the attitude of two of the countries to whom we have very heavy sterling obligations, to realise that we shall have to watch with jealous care how we draw on our sterling resources as well as how we draw on our dollar resources. This is one of my greatest fianancial anxieties. I know from experience the nature of these difficulties. I endorse fully the request for a long-term policy. I conclude with this little caveat, that the Chancellor should be chary of embarking upon a long-term policy leading to a large increase in tobacco production in the Empire and in the sterling area, on the assumption that there will be an easy market for the whole of the increased production.

Mr. Eccles

I hope that the discussion has been useful and that it has brought the attention of the Committee to the need for a long-term policy. In view of what the Chancellor has said about the negotiations in Geneva and his anxiety that the Government should not be embarrassed, though I assure him that if the negotiations fail we shall come back to this point, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Eccles

I beg to move, in page 3, line 13, to leave out Subsection (2).

The effect of this Amendment would be to omit from the increase in duty tobacco grown in the United Kingdom. When I made some remarks on this point during the Debate on the Report stage of the Budget Resolutions, the Solicitor-General did not seem to think it was possible to have any cultivation of tobacco on a successful scale in this country. At that time hon. Members were not very well informed on the matter, but subsequently there has been correspondence in "The Times" which has shown that there are plenty of enterprising cultivators in this country who would like to make a start. If accepted, the Amendment would give a preferential rate over imported foreign tobacco of 19s. a lb. It may be that hon. Members do not know that the average cost of producing one lb. of tobacco in the United States is something round 2s. 6d., or even a little less. Therefore, if anything like a margin of 19s. a lb. were to be given, I submit that the culti- vation of tobacco would be taken up in this country. I do not know whether it could be done on a large scale, but the point is that we are in very grave danger of not getting enough tobacco from all sources.

The time has come to use the Budget as an instrument for replanning our imports and exports. One of the ways in which that can be done is to give financial inducement to people to cultivate in this island various products which we have been accustomed to get from abroad for many years. I should like to see a Government experiment in growing tobacco in this country. When the last experiment took place, the price of tobacco was something under 1s. a lb. It is a very different story now. I think that it is worth reopening the whole idea of cultivating tobacco here. It is for that reason that I move this Amendment. I would like to know whether the Chancellor has looked up the matter and is a little better informed than the Solicitor-General was when he spoke some weeks ago.

5.0 p.m.

Mr. Dalton

I have made every effort to bring myself up to date on this matter, but I maintain the view—I forget whether it was I who said it or whether it was my right hon. Friend the Financial Secretary—that it would be at this time a waste of valuable British land, labour and materials to attempt to grow tobacco on any scale in this country. No additional incentive should be given to such a waste of our natural resources. The facts are that there has been correspondence in the Press, particularly in "The Times," about a certain farm at Church Crook-ham, in Hampshire, on which, from time to time, small quantities of tobacco—and I do not speak of its quality—have been grown. This is the only agricultural estate on which there is any evidence that any farmer has been, shall I say, hardy enough to seek to grow this most unnatural crop. This is not the climate for growing tobacco.

I have here full details—I will not weary the Committee with them all—of the total amount of home-grown tobacco, the Excise Duty paid upon it, and the area devoted to it over a period of years right up to date. The total of home grown tobacco is trivial and the quality has been poor. Apart from the Church Crookham experiment, which has always been on a small and diminishing scale, there are particulars of only very few licences—of course, there must be a licence under the existing law—for tobacco growing in the past 10 years, and if I may very briefly summarise them, the figures are as follow. In 1937, apart from Church Crookham, one-quarter of an acre was planted and 276 lbs. of tobacco were produced, mostly found unfit for cure. In 1940 a quarter of a perch was covered and the crop was destroyed. In 1941 there were three small patches of land devoted to this crop. On the first the crop was destroyed, on the second the experiment was abandoned, and on the third the crop failed. So we go on until 1944, when a quarter of an acre was licensed for growing tobacco and all the plants died, so that there was no crop. In 1946, one perch was licensed, on which two lbs. of tobacco were grown.

This is really a piece of nonsense. The United Kingdom is not a place in which to try to grow tobacco, and I am quite sure that whatever our palates may be—and tastes vary in these matters—there is no future for tobacco growing in the United Kingdom. Our land is too valuable and should be used for other purposes, and I should be the last to wish to humbug any farmer in this country into believing that he was doing other, than an act of folly in seeking to grow tobacco in this land. For these reasons, I must oppose the Amendment.

Mr. Eccles

In view of the dismal story with which the Chancellor has entertained the Committee, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Kirkwood (Dumbarton Burghs)

I rise to speak on this Motion in order to give the Chancellor an opportunity to make a statement on the Amendment in the names of the hon. Member for West Fife (Mr. Gallacher) and myself which was not called. This Amendment was to insert the words: except in the case of old age pensioners, cripples and long-term hospital cases for whom the duties of excise at the full rates specified in the First Schedule to this Act shall not apply, I have written to the Chancellor on this question, and others of my colleagues have also written, and there is considerable feeling in every part of the House, and all over the country, in favour of freeing the old age pensioners and the individuals we mention here from the tax. On the Chancellor's own estimate—he said this in my hearing in the House—the pound today is only worth 12s. 9d. Now it is well down to 9s. 6d. When it is remembered that old age pensioners are in receipt of only 26s. a week, it means that 3s. 6d. is deducted from that sum to enable them to have a smoke. The old age pensioners, and the cripples who are in the hospitals, have no great, powerful organisations to defend them and put up a case. If any one of us has any outstanding ability, either mental or physical, it was not given to us for our own aggrandisement; it was given to us in order that we might defend those who are not able to defend themselves. That is the situation here, and I am sure that I am within my rights in asking the Chancellor, therefore, to make the fullest possible concession to this highly-deserving section of the population.

Lieut.-Commander Gurney Braithwaite (Holderness)

I would like to associate myself with the observations of the hon. Member for Dumbarton Burghs (Mr. Kirkwood). This is a suitable opportunity for the right hon. Gentleman to bring us up to date in regard to his intentions in this matter. Earlier in our proceedings today, the Chancellor was unkind enough to describe some observations of mine as "flat-footed"; I am not sure whether that was intended as a term of abuse or as a tribute to a steadfast attitude. Be that as it may, I think the Committee would be disappointed if, at this stage, we were to leave this Clause without the right hon. Gentleman declaring his intentions to us. The hon. Member for Dumbarton Burghs delivered himself of what I thought was an optimistic remark about the purchasing value of the pound; I should put it a good deal lower; and when the hon. Gentleman brings himself up to date, we shall doubtless see him appearing on the platform of the British Housewives' League in protest against the collapse in our standard of living—a collapse which the Attorney-General tells us does not exist. I am very pleased to enlist such a valuable recruit to this point of view.

This question underlines and emphasises one feature of the tobacco tax, and I submit, with great respect to the right hon. Gentleman, that where it is necessary to contract a particular section of the community out of the operation of a tax, that in itself is evidence of a clumsy tax; it means that a tax has been imposed which will not run smoothly over the whole field. Where special arrangements have to be made to raise the standard of living against particular tax, the chief object of that tax is, of course, being defeated. I hope the right hon. Gentleman may be able to deal with the old age pensioners and those who are in hospital—disabled ex-Servicemen particularly—who are likely to remain there for a considerable period of time, on somewhat the same lines as were followed in regard to the Forces during hostilities, and indeed, if I may go a little further, the Navy—which for some time has enjoyed tobacco duty free.

I mention that because the argument may be adduced—it is the sort of argument the Treasury would adduce—that if a special ration is given at, let us say, the pre-Budget price, or indeed a duty-free ration, there is the danger of creating some form of black market, in that the nonsmoker will receive an allocation and may seek to dispose of it in some way which would evade the main purpose, which is to benefit the old age pensioner. I think the right hon. Gentleman will agree that, broadly speaking, these concessions worked quite well during the war. The special issue of cigarettes to the Forces at pre-1941 Budget prices, which ran until the other day, was a success. I am not saying it was not abused in individual cases; it would be remarkable if it had not been; but by and large the boys played fair, and I think the old age pensioners would do the same thing.

The right hon. Gentleman may get up and say, as I think the hon. Lady the Member for Epping (Mrs. Manning) or somebody else said earlier on, that a number of these old ladies never smoked and never will, and giving them cigarettes would open the door to some kind of abuse. Let us take the risk of that; the benefit to the whole body would be very great. I hope the right hon. Gentleman will say that he has something of this kind in mind. It maybe too early for the machinery to have been perfected; it will I know be difficult to work out the administrative machinery, and to open the door wider, and include the wounded and war casualties in hospitals, would incur further administrative difficulties. We are, however, anxious to see that justice is done, and I hope the Chancellor will make a statement at this stage.

Mr. Tom Brown (Ince)

I rise to support the plea that the Chancellor should do something for the old people in particular. I think it is true to say that, since the presentation of the Budget, public opinion has been roused, as it often is roused when there is a hardship inflicted upon a certain section of the community. The old people have had some concessions given to them by the present Government, but those concessions are going to be more than swallowed up by the increased price which they have to pay for their tobacco. In addition to that—and I am now pleading for the Chancellor to take the widest possible view on this point—they have to meet the increased cost of living which has gone up tremendously, in particular, in regard to four or five commodities which they are compelled to purchase in order to maintain themselves in some degree of comfort. Fuel and light have gone up by 55 per cent., clothing has gone up by 64 per cent., and food 22 per cent over 1939 prices; and one could go on to give a number of commodities which are necessary in order to make life comfortable to some degree.

I would remind the Chancellor that, in 1939, the price of tobacco to the old age pensioner was a modest 1s. per ounce. Today, even the commonest type of tobacco, at the present price and without any concession, will cost 3s. 8d. to 3s. 9½d. per ounce. I think the Chancellor ought to have regard to the great hardship that will be experienced by the old people. I am not afraid, that, if a concession is made, and it is administratively possible to make it, any of the old people of this country will abuse it. I have sufficient faith and confidence in the old people to think that, if they are given a concession by the Chancellor to help them to enjoy the eventide of their lives they will not abuse it.

The next point I want to make, and it is indicated in the Amendment which has not been called, is in regard to crippled people I have in my constituency, and I represent a mining Division, a number of very seriously injured miners. I have in mind now one man who has been on his back for eight and a half years, and who enjoys his pipe of tobacco, which is the only solace and consolation he is given in his days of suffering. I know many others who are experiencing the same affliction. The most remarkable thing about these men, whom I have visited personally, is that not one of them has complained about the Budget in general, but a few have complained about the heavy taxation upon tobacco. I plead with the Chancellor, who gave us a promise in the Debate on the Budget that he would ask his Department seriously to consider the matter, to make a statement, which I hope will include some concession to the old age pensioners and the crippled people.

Mr. Dalton

Perhaps it would be for the convenience of the Committee, and might short-circuit some Debate, if I made a statement on this matter at this stage. I have been asked to explain two quite separate matters. The first concerns what I will call the long-term programme of the use of our Commonwealth resources for the production of tobacco. We have given an example of our desire that the undeveloped resources of the Commonwealth should be developed further than they have been hitherto, by the groundnuts scheme, and this is only the first shot in the campaign for the more intensive development of the resources of the Colonial territories in order to raise the standard of living of the people in them, and, at the same time, to increase supplies of necessary goods for ourselves. In that scheme, tobacco would have a place, but not too emphatic a place, as compared with more genuine needs.

5.15 p.m.

"Food before fags" must still be one of the mottos of our economic development, and, although we would not exclude the possibility of further plans by which we would get additional tobacco supplies from various parts of the Empire, I am more interested in getting something with which to feed the poultry in this country, and in getting more eggs and bacon. We must have priorities in this matter. Subject to that, we are going ahead, and, in due course, from time to time, proposals will be put before the House of Commons by the Government for stimulating the production of all necessities in our Colonial territories. Within that limitation, tobacco has its place, but not a very prominent place. Southern Rhodesia can grow tobacco and maize, but I would sooner see it grow more maize than more tobacco. I hope that will be regarded as a perfectly frank statement of our views towards the development of the Colonial Empire.

With regard to the question of the old age pensioners in particular, I have given constant thought to this matter since the Budget was first presented and debated, and I have been very much helped by the Minister of National Insurance, who is the authority on the administration of pensions, and the Postmaster-General, who also comes into the matter, because the Post Office is bound to be involved. Let no one think that it is easy It is quite easy to say that the administrative difficulties can be brushed away, but, of course, that is not so. Nor is it desirable merely to multiply the staffs in Government Departments. We do not want one half of the community to become engaged in administering the affairs of the other half. We want them to get on with production. I ask the Committee to believe that, when we have been devoting our attention, with our advisers, to considering what we can do in this matter, it has not been at all an easy problem. Nor must it be regarded as a precedent. Nothing done in this regard must be regarded as in any way setting a precedent. The general rule must be that the taxes shall fall on all who are subject to them, and that indirect taxes shall fall upon those who continue to buy the products concerned; and we cannot have, as a general rule, groups of persons segregated from others in regard to the incidence of indirect taxes. With regard to direct taxes, that is another matter, and we have Income Tax levelled on certain income levels and various adjustments to meet certain circumstances

I want to give a warning. I must not be led, from what I say about tobacco for old people, into a general creation of chaos in the whole field of indirect taxation. This is a very exceptional and quite special case. I repeat that I am confident that this tobacco tax is right, and I hope that, if there is a challenge on it now, it will be defeated by an overwhelming majority. I have been astonished to see how the majority of the people have taken it. Most people have clearly understood that we are experiencing a shortage of dollars, and that food matters more than "smokes." That has been accepted as a commonsense judgment in a difficult time. People have responded in terms of their consumption. I would like to take this opportunity of informing the Committee that, whereas I made an appeal for a 25 per cent. cut in the total consumption of tobacco in the country, so far, the people have done better than that, and have cut it to below 75 per cent. of the pre-Budget figure. In the first few weeks there was a sudden drop. People may have stocked up beforehand on the strength of rumours which may have preceded the Budget statement. Immediately after the statement, sales fell to barely 50 per cent. of what they had been in the preceding weeks. Nearly two months have passed since the Budget, and during that period there has been a slight upward movement, although we are still below 75 per cent.

Mr. Stanley

How much below?

Mr. Dalton

We are now, perhaps, running at some 70 per cent., but it varies from one part of the country to another. I repeat on this occasion my appeal to all patriotic men and women to continue to control their lust in this respect, and to continue to check their inclination to smoke. So far, we have done pretty well.

I was praised by the "Daily Express" this morning. It said that I had done my duty with regard to this tax. I thank Lord Beaverbrook; I greet him over a long distance. I know not where he may be. My hon. Friend the Member for Ince (Mr. T. Brown) and other hon. Members have appealed to me to state what can be done primarily with regard to the old age pensioners. I have considered this matter with my colleagues, and I can only inform the Committee that, on the Report stage, I will put down a new Clause dealing with it. There is no advantage in putting it down before that stage because it will have to be discussed and go through the ordinary procedure of the House, but, if the House approves, it shall form part of this Finance Bill. Broadly speaking, there shall be a new Clause which shall give power to make regulations to exempt old age pensioners from the payment of the increased duty in respect of certain quantities consumed. There will be the danger, of course, that the thing will be misused, and we must try, as far as possible, to prevent that. It is not only a question of whether the old people would misuse it—indeed, we hope that in the vast majority of cases there would be no such danger—but there is some danger that younger people might try to exploit the old people, and we must take what precautions we can against that.

I want to be excused at this stage from going into more detail, because we shall have an opportunity of debating the Clause later on. I will say no more now than that I propose to ask the Committee to give me power to make regulations to enable this thing to be done. It will apply primarily to old age pensioners, but, of course, when a concession is given in respect of one section of the community, pressure is at once exerted to have it extended to others. I can give no undertaking at all, except in regard to old age pensioners, because there would be much difficulty in extending it beyond them, much as we might sympathise with the claims of other sections. If the thing is to be held within the bounds of administrative efficiency, we must draw a very definite line. I choose my words with care when I say that, at this stage, I do not commit myself to extend this concession beyond the old age pensioners, but, when the Clause is on the Order Paper, we shall have an opportunity of considering whether any further extension is, on balance, desirable.

It would give me great satisfaction if I could devise a scheme which would be fair in its application would give this benefit to the old people, and would yet not be subject to abuse in its practical application. I assure the Committee that I have considered the matter with considerable intensity. Quite properly, my officials have brought to my notice the various difficulties which will have to be overcome. There is an old rule which Ministers do well to bear in mind, that it is the duty of their officials to present all the difficulties to them, and, then, if the Minister still wants to do the thing, he should say to them, "You have most clearly explained what the difficulties are; will you now apply your experience and intelligence to the making of proposals to overcome the difficulties which you have so clearly put forward." That is what my hon. Friends and I have done in this instance, and I hope the outcome will not be unsatisfactory.

Air-Commodore Harvey (Macclesfield)

As one who gave up smoking on Budget day, I welcome the Chancellor's statement about what he is going to do for the old age pensioners. While I can foresee his difficulties in dealing with other claims which are, perhaps, equally good, or even better, I ask him to bear in mind the case of the Service or ex-Service men who have been severely wounded in the war, such as those who were badly burned while serving in the Royal Air Force. In my own constituency there is a home, Lyme Green, for such men who are paralysed and are employed repairing watches and clocks. They smoke a lot, and a very strong case could be put forward on their behalf for a similar concession. The numbers of severely injured ex-Service men are not very great; in fact, they are, fortunately, comparatively small. I wish to put in a plea for these men, and I hope that the Chancellor will bear in mind the possibility of a similar concession for the war blinded and the very severely wounded men when he is discussing the matter with his colleagues.

Mr. McKie (Galloway)

I do not think that anybody on this side of the Committee will get much satisfaction from what the Chancellor has said with regard to tobacco from the Empire. If I may say so without offence, the right hon. Gentleman was studiously vague. He said it was the intention of the Government to initiate a scheme of Imperial preference—

Mr. Dalton

I distinctly put it wider than that. I talked about the broad problem of the productive resources of the Empire.

5.30 p.m.

Mr. McKie

I thank the right hon. Gentleman for reminding me of that, because I should like to think that that was so. Even so, I am afraid that I must adhere to my first remark that I do not think that anybody on this side of the Committee can be satisfied with what the right hon. Gentleman said on the Fore of the development of the tobacco resources of the British Commonwealth of Nations. Of course, it is no doubt an advance to get the party opposite to make a state- ment such as that, and, so far as it goes, I thank the right hon. Gentleman for it. I quite agree that it is much more necessary to have—I think I am quoting his words accurately—"food rather than fags." I hope the right hon. Gentleman will impress upon his colleagues the necescity of that, and will see that we get more ample supplies of food in the future, no matter what happens to our "fags," than we have received in the past. I think that that is all you will allow me to say on that, Mr. Bowles. I say it for the benefit of hon. Members opposite. This is exempted Business, and we may stay all night on it.

With regard to the second part of the right hon. Gentleman's speech, I wish to join with my hon. Friends behind me in thanking him for having gone so far as he has with regard to old age pensioners. I can hardly support what he said about the way in which the country has received the imposition of this tobacco tax. Re said he was very much impressed with the mild amount of criticism which he had met in the country generally. Hon. Members opposite should not live in a fool's paradise with regard to the way in which the country has received the imposition of this tax. I thought the hon. Member for Dumbarton Burghs (Mr. Kirkwood), although he spoke in very moderate language, was impressed with the seriousness of the situation, but perhaps he had prior information from the Chancellor, because I understand they have been in correspondence on the question of this mild concession to the old age pensioners.

Another hon. Member lifted the curtain a little further and said that he fully realised the potential dangers of this tax. The hon. Gentleman also seemed to be aware of the potential gravity of the addition of the Clause to the Bill from the political point of view, and I wholeheartedly sympathise, having no responsibility for it. Certainly, it would be churlish of hon. Members on this side of the Committee to allow the Chancellor's statement concerning the small concession he is prepared to make for old age pensioners to go without a small vote of thanks. I hope it will not be felt that I am animated by any political motive when I express the wish that the scope of this concession to old age pensioners will he extended to many more people in the country who are very nearly as hardly pressed. Despite the allowances to which the hon. Member for Ince (Mr. T. Brown) referred, the increased amount of money available will be almost completely swallowed up. I am not a smoker myself, but I understand that the small pipe of tobacco or, to use the Chancellor's delightful colloquialism, the "fag," has become an almost indispensable necessity for the vast majority of citizens, both men and women. I hope that if the right hon. Gentleman occupies his present position in a year's time, he will be able to do something more generous for larger sections of the community than he has done so far.

Mr. W. D. Griffiths (Manchester, Moss Side)

I am sure the Committee will have heard the Chancellor's announcement with great pleasure. We appreciate the difficulties involved. When the hon. and gallant Member for Macclesfield (Air-Commodore Harvey) spoke of the disabled ex-Service men, I am sure that, like myself, the Committee felt that there too, was a class of person to whom we would like to see a concession granted; but, as the Chancellor has said, once we start making concessions there are no limits to the cases that can be made out for various sections of the community. For that reason, I must express the view which I have had since I first heard the Budget statement, that it would have been infinitely better, despite the colossal administrative difficulties, to have produced a rationing system. Despite the clamour of the Housewives' League, we maintain that on the question of food we must ensure a fair distribution. In the case of tobacco, that is precisely what is not being applied. The workers of all grades are entitled to say, "Here is a Government, which has always based its policy on fair shares for all, in this instance practising a policy which is diametrically opposed to that." If we are to give concessions to the old age pensioners and the disabled ex-Service men, what about the agricultural workers, the poorly-paid shop assistants, and the whole range of lower income limits? Bearing in mind the difficulties faced by the Chancellor and his colleagues, a rationing scheme would have been infinitely better.

Air-Commodore Harvey

Surely the hon. Gentleman does not place in the same category as the ex-Service man who is wounded for life, the agricultural worker who has got his health?

Mr. Griffiths

During the war the Government saw fit to direct all of us into some form of national service. The agricultural worker had to play his part, as did the men in the Forces. In any case, they are both in the lower wage groups, and should be treated similarly.

Mr. Butcher (Holland with Boston)

The Chancellor is having an easy ride in connection with the Tobacco Duty. He has stated the importance of conserving dollars, and the Committee have been most interested in the way in which he has dealt with the question of "food before fags." It would appear that food, not only for poultry but for human beings, is becoming one of the major preoccupations of the people. It is interesting to examine the Chancellor's determination to economise in the expenditure of dollars by means of one of the three alternatives which are available to him. First, there is the appeal which he has made. I suggest that the appeals to which the people will now respond are becoming very limited. The people have been appealed to over a very long period. Then there is the possibility of rationing, which was referred to by the hon. Member for Moss Side (Mr. W. D. Griffiths), and with which I entirely associate myself. It was the policy of the former Administration that there should be fair shares for all, and I believe that if rationing of tobacco can be maintained in parts of the Continent and rationing of sweetstuffs for children can be operated in this country, there is no reason why, given the will and the determination, tobacco should not also be rationed in this country. The Chancellor has not relied upon either of those two methods of reducing the consumption of tobacco. He has chosen the easiest way, by imposing an increase in price on those who are least able to bear the increase. Let us realise what we are doing in this Committee. We are not penalising the wealthy man; he can continue smoking as much as he likes, and it will not make any difference to him.

Major Bruce (Portsmouth, North)

Will the hon. Member make his position quite clear? Is he suggesting that there should be, in fact, a rationing scheme for tobacco, or is he prepared to support the Chancellor? A rationing scheme would increase the number of civil servants.

Mr. Dalton

"Hordes of officials."

Mr. Butcher

I was associating myself with the remarks of the hon. Member for Moss Side (Mr. W. D. Griffiths), and I must leave hon. Members opposite to compose their differences without bringing me in as a referee. The Chancellor has chosen the naked way of putting up the price, so that the only people who will suffer are the people with the lowest incomes. So far as the Chancellor has mitigated hardship in assisting the old age pensioners, we are grateful to him. How wise and true it was to say that there are difficulties about this which were presented to him by his Department. There are difficulties.

Mr. Michael Foot (Plymouth, Devonport)

There are.

Mr. Butcher

I quite agree. The hon. Gentleman had a better education than many of us on this side of the House, and so, perhaps, he will refrain from sneers at those who did not have that advantage. There are difficulties, and they are great. The Chancellor has explained them. Nevertheless, he is good in this matter to the old age pensioners. If these difficulties are to be overcome for the old age pensioners, I am sure they can be overcome for the disabled ex-Service men as well. It is difficult to exempt classes from this kind of indirect taxation, but once we have decided to exempt a class, then we must examine all other classes to see whether they have a just claim for exemption. I say to the Chancellor of the Exchequer that no section of the community has a greater claim for exemption in this matter than the ex-Service men, and the men of the Merchant Navy, who were, perhaps, disabled in bringing this commodity into the country during the period of war.

Mr. Gordon-Walker (Smethwick)

If I sound a discordant note, I am sorry. But I must say that I am sorry that the Chancellor has decided to assist the old age pensioners in this particular way. It seems to me that the argument used in favour of this method is based on a piece of completely false logic. It is not a question of this tobacco tax being unfair or of its being a clumsy tax, as the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) said. The true logic of the argument in favour of helping the old age pensioners is that, in the circumstances of this tax, the pen- sions of the old age pensioners are not great enough. That is the logic of the position. If that is so and I agree with it—then the fair and proper way of dealing with this is to calculate what this concession is worth in cash, and to add that extra cash on to the old age pensions. By this means we should avoid all these complicated administrative difficulties. It would not involve an extra civil servant, whereas the Chancellor's scheme will involve extra civil servants.

Once we make the concession in one case, it is inevitable that other claims will be urged. We have heard of a good many today—just as good cases; absolutely as good. By this method of the Chancellor's we shall create as much unfairness as we remove, and we shall increase the administrative and technical difficulties. We increase also the temptation for the black market, which is a thing that has to be watched carefully at the moment. There are dangers of the black market, etc., spreading in this country at the moment.

Moreover, to admit that there is a case for a concession in one instance invites the suggestion that there is an equally good case for exemption in others. The old age pensioners have just as good a case for concessions in regard to other taxed goods as they have in regard to tobacco. I am sorry to sound this discordant note, and, perhaps, too late; but even if I am to be only one by myself, I must say that I am sorry that the Chancellor of the Exchequer has decided to go about this in this manner, which will cause many difficulties, grievances and injustices, instead of doing it in the straightforward and fair way of making an addition of the amount of the tax-equivalent of this proposed concession to the pensions of the old age pensioners.

5.45 p.m.

Mr. Ronald Chamberlain (Norwood)

I have a great deal of sympathy with what my hon. Friend the Member for Smethwick (Mr. Gordon-Walker) has just said. In fact, had the Chancellor not announced this concession, I was going to propose to him that he should make a concession outside the scope of the Bill. I mention that only in passing, because I think there is a lot in what has already been said by my hon. Friend, and that the proposal he has made would, if adopted, avoid a great deal of administrative difficulty. But what I really want to do now is to ask my right hon. Friend it he will go a little further in explaining what is his intention. I am well aware that he does not want now to disclose all that is in his mind, but I think one point should be made clear. There was in the previous Debate on this subject some question with regard to women old age pensioners, and I think that my hon. Friend the Member for Epping (Mrs. Manning) suggested that, in general, they do not want a tobacco or cigarette concession. That is probably true. But, at the same time, there is a large number, some in my own constituency, who do, quite rightly and legitimately, enjoy their cigarettes; and all I want my right hon. Friend to say, if he can at this stage, is whether or not his intention is merely to give this concession to male old age pensioners. I would ask him in making the concession to bear in mind and make provision for the women old age pensioners.

Mr. Dalton

There will be no sex disqualification imposed.

Mr. Stanley

Equal smokes.

Mr. Gallacher (Fife, West)

It has been said that this concession will be unfair to other categories and will raise protests. I quite agree with that, but that is not an argument against concession. What we are discussing now is the Finance Bill, arid if we do not do something about this in the Finance Bill the full tax will be borne by the old age pensioners; they may not be able to get a concession, and the old folks will thus lose. We have to find the best means of getting the fullest measure of relief that we can for them. If we can get it for others besides, all well and good. I was disappointed that an Amendment on the Order Paper in my name and those of my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) and of the hon. Member for the Isle of Wight (Sir P. Macdonald) was not called. It was in favour of the old age pensioners, and of cripples and longterm hospital cases, as well. It was a great relief to me when I heard that the Chancellor of the Exchequer had decided to make this concession. It is a very good concession, taking everything into account, and the Chancellor deserves high marks for it, and I hope he will get them.

At the same time, if, between now and the Report stage, we can persuade him to bring in the long-term hospital cases and cripples as well, we shall make the concession better. We have cases of people lying in hospital, month after month, year after year. I remember visiting a hospital where there was a lad abed who had been lying there three years. The nurse brought him tea in the afternoon and the consolation of a smoke. If we consider those unfortunate people lying in hospital month after month, and, as in the case of some of the miners, for as long as a year or more, we shall wish to extend the concession to them. I know that the Chancellor of the Exchequer, who carries a song in his own heart, would like to put a song into the hearts of those suffering people, and so I hope that, before the Report stage, he will try to bring some of those people in.

Mr. R. Adams

I was a little surprised to hear the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) acting as a recruiting officer for the Housewives' League, because I was assured that it had no political allegiance; but I think that the hon. Member for Galloway (Mr. McKie) talked about "lifting the curtain," so perhaps he was lifting the curtain in this particular matter.

Lieut.-Commander Braithwaite

I was merely predicting that the hon. Member for Dumbarton Burghs (Mr. Kirkwood) might be appearing on the platform of this strongly non-party organisation.

Mr. Adams

I did understand the hon. and gallant Gentleman to say that he was encouraging him to do so. My purpose in getting up was to refer to some of the difficulties in connection with the tobacco problem. Like many other hon. Members, I welcome the concession which the Chancellor has made to the old age pensioners; but from the short Debate which has followed his announcement, I think it will be apparent that there are many difficulties in the way. It was pointed out that there would be administrative difficulties; and I think the Chancellor himself indicated that he had not yet found a final scheme for assisting these people.

Mr. Dalton

I said we would overcome the difficulties.

Mr. Adams

At any rate, my right hon. Friend did refer to the fact that he had experienced some difficulties in finding a suitable scheme. It will have been noted that the moment he sat down other hon. Members got up and suggested other classes who ought to be brought in. It seems to me that if classes are excluded from legislation in that way, it is asking for people immediately to suggest other classes for exclusion also. We have heard pleas for disabled ex-Service men, cripples and people who have been in hospital for a long time. They are all very good cases, and it seems difficult for the Chancellor to say: "I will grant it for old age pensioners but no one else."

That brings me to the point I wish to make, namely, the proper use of the Purchase Tax as a way out. It is a bad thing for the Chancellor to have to raise form of taxation, and then to say, "I will exclude a certain class because I do not think they can afford to come in." Surely, the taxation has to be adjusted in such a way that everybody can bear it fairly? My objection to the increased Tobacco Duty is that it does not bear fairly on all classes of the population. It has been made only too clear that it bears too heavily on the old age pensioners, and it could be argued quite consistently that the increased Duty bears far more heavily on the working class man earning, say, £4 or £5 a week than it does on really well-to-do people. The hon. Member for Holland with Boston (Mr. Butcher) made the point—quite rightly, in my view—that a man earning £2,000 or £3,000 a year will not have his smoking affected one iota by this increased Tobacco Duty. If we want all sections of the population to make an equal sacrifice, then I suggest we should spread the burden of taxation fairly and equally over all sections of the population. That is just what the Purchase Tax will enable us to do—

The Temporary Chairman

The hon. Member has again referred to Purchase Tax. This Clause is nothing to do with Purchase Tax.

Mr. Adams

I thought I was in Order in pointing that out as an alternative to the present proposed Tobacco Duty. I was pointing out its unfairness in certain respects, and suggesting the use of Purchase Tax as an alternative. It would be possible to reduce the proposed rate of Import Duty, and to exclude Empire tobacco entirely from the Purchase Tax. In passing, I would remind hon. Members that the old age pensioners and the poorer working men tend to smoke the cheaper tobacco and the Empire tobaccos; and, therefore, if my suggestion were adopted, the price of tobacco to them would not be quite as high as it is at present. The standard brands could bear some proportion of Purchase Tax, while the more expensive tobaccos, cigarettes and cigars could bear a high rate of Purchase Tax. My suggestion would equate the burden that has to be borne in order to cut down our dollar expenditure, and would spread it more fairly over all sections of the population. In addition, it would meet the practical objections to the Chancellor's suggestion for helping the old age pensioners. I hope the Chancellor will at least give some consideration to the suggestion I have made between now and the Report stage.

Captain Crookshank

May I come back to Clause 3 for a change, the Question being that it should stand part? For some little time we have been discussing a Clause which will be introduced later on, and within the framework of which the Chancellor has pointed out he will make some concession to old age pensioners. The appropriate votes of thanks to him have been moved, seconded and supported from all quarters of the Committee, and I am very glad to associate myself with the desire of the right hon. Gentleman to ease the burden of the old age pensioners. Having said that, I should now like, for one brief moment, to look at Clause 3, because it is a bad Clause. All this talk of concessions would not be necessary if it were not for the Clause itself. What the Clause does—and do let us remember this; although it is, of course, done on Budget day, this is the final authority for doing it—is to increase the existing Tobacco Duty by 50 per cent.

In his Budget Speech the Chancellor said that he hoped that as a result of this savage increase in taxation the dollar expenditure might be reduced by some 30 million dollars, but only if consumption went down 25 per cent., and that if that happened he would get £75 million extra revenue. Of course, if it did not he would get more revenue, but it all depends upon the result of the right hon. Gentleman's appeal. We were wondering what effect it has had so far. He has just told us that while at that time the drop in con- sumption—I suppose he meant in purchases—was 50 per cent. or so—possibly because there may have been considerable stocks in private hands; and I think that is more than likely, because as far as I know, that always happens about Budget time—since then the purchases have risen, and reached something like 70 per cent. Well, we have gone only two months, and we cannot really deduce anything from those figures.

Today, we are left to decide, not the question whether if there is this Duty there should be some concession for old age pensioners. That is not the question we are discussing at all. We shall discuss that later on when we get a new Clause. Hon. Members on both sides of the Committee, including myself, put forward that proposition at an earlier stage, and the Chancellor has conceded it. But that is quite another matter from the question which arises at the moment, whether or not this Committee accepts the proposition of the Chancellor that this enormous increase in taxation should be put upon merely one section of the indirect taxpayers. If the right hon. Gentleman had wanted to raise revenue on a large scale—which he might have been well advised to do, when taking into consideration the general financial situation and the inflationary pressure from which we are suffering—if he had decided to impose increases in taxation over the whole range of indirect taxation, that would have been

one thing. But to single out the smokers and nobody else for this very heavy duty—and that not because it was a good or a bad financial policy, but because as a result of it he hoped to save 30 million dollars—is a proposition which we on this side of the Committee do not accept. We think it is a foolish thing to have done.

We cannot see that the Chancellor has any guarantee—except the result of his appeal—that he will save any dollars at all. If consumption rises still further, he will go on paying out dollars. He may even have to pay out more dollars this year, in the end, than last year. Therefore, we think the whole plan of raising the Tobacco Duty in this way in this Budget is misconceived. Because that is the question—and not this extraneous matter at all—when considering whether or not this Clause should stand part of the Bill, and because we think the approach which the right hon. Gentleman has made is wrong, we shall vote against this Clause.

Mr. James Callaghan (Cardiff, South)

Surely, the right hon. and gallant Gentleman is not going to resume his seat without saying what he would do instead?

Captain Crookshank

Yes he is, and he. has done so.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 233; Noes, 89.

Division No. 241.] AYES. [5.59 p.m.
Adams, Richard (Balham) Brooks, T. J. (Rothwell) Driberg, T. E. N.
Adams, W T. (Hammersmith, South) Brown, George (Belper) Dumpleton, C. W.
Allen, A C (Bosworth) Brown, T. J. (Ince) Ede, Rt. Hon J. C
Allighan, Garry Brown, W. J. (Rugby) Edelman, M
Alpass, J H. Bruce, Maj. D. W. T Edwards, Rt. Hon. Sir C. (Bedwellty)
Anderson, A. (Motherwell) Buchanan, G. Evans, S. N. (Wednesbury)
Anderson, F. (Whitehaven) Burke, W. A. Ewart, R.
Attewell, H. C. Butler, H. W. (Hackney. S.) Fernyhough, E
Austin, H. Lewis Callaghan, James Follick, M.
Ayles, W. H. Castle, Mrs. B. A. Foot, M. M.
Ayrton Gould, Mrs B Chamberlain, R. A. Forman, J. C.
Bacon, Miss A. Champion, A. J. Gallacher, W.
Balfour, A. Chater, D Ganley, Mrs. C. S
Barstow, P. G Chetwynd, G. R. Gibson, C. W.
Barton, C, Cluse, W. S. Gilzean, A.
Battley, J. R. Cocks, F. S Glanville, J. E. (Consett)
Bechervaise, A. E Coldrick, W. Goodrich, H. E.
Belcher, J. W. Colman, Miss G. M Gordon-Walker, P C
Benson, G. Comyns, Dr. L. Grey, C. F.
Berry, H. Cook, T. F. Grierson, E.
Beswick, F Cooper, Wing-Comdr G Griffiths, Rt. Hon. [...] (Llanelly)
Bing, G. H. C Corlett, Dr. J. Guest, Dr. L. Haden
Blackburn, A. R Cove, W. G. Gunter, R. J
Blyton, W. R. Grossman, R. H. S. Guy, W. H
Bowden, Flg.-Offr. H. W. Daggar, G Haire, John E. (Wycombe)
Braddock, Mrs. E. M. (L'pl, Exch'ge) Daines, P. Hale, Leslie
Braddock, T. (Mitcham) Dalton, Rt. Hon. H. Hall, W. G.
Bramall, E. A. Dodds, N. N. Hardy, E. A
Brook, D. (Halifax) Donovan, T Harrison, J
Hastings, Dr. Somerville Mitchison, G. R. Silverman, J. (Erdington)
Haworth, J. Monslow, W. Simmons, C J.
Herbison, Miss M Montague, F. Skeffington-Lodge, T. C.
Hicks, G. Morley, R. Snow, Capt. J. W.
Hobson, C. R. Morris, Lt.-Col. H. (Sheffield, C) Soskice, Maj. Sir F.
Holmes, H. E. (Hemsworth) Morris, P. (Swansea, W.) Stamford, W.
House, G. Morris, Hopkin (Carmarthen) Strauss, G. R. (Lambeth, N.)
Hoy, J Morrison, Rt. Hon. H. (Lewisham, E.) Stubbs, A. E.
Hudson, J. H. (Ealing, W.) Mort, D. L. Summerskill, Dr. Edith
Hughes, H. D. (W'lverh'pton, W.) Moyle, A Symonds, A. L.
Hynd, H. (Hackney, C.) Murray, J D Taylor, H. B. (Mansfield)
Irving, W. J Nally, W. Taylor, R. J. (Morpeth)
Janner, B. Naylor, T. E. Taylor, Dr. S. (Barnet)
Jay, D. P. T. Neal, H. (Claycross) Thomas, George (Cardiff)
Jeger, Dr. S. W. (.St Pancras, S. E.) Nichol, Mrs M. E. (Bradford, N.) Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)
John, W. Nicholls, H. R. (Stratford) Thurtle, Ernest
Jones, D. T. (Hartlepools) Noel-Buxton, Lady Timmons, J.
Jones, Elwyn (Plaistow) Oldfield, W. H Titterington, M. F.
Jones, P. Asterley (Hitchin) Paget, R. T. Tolley, L.
Key, C. W. Paling, Will T. (Dewsbury) Usborne, Henry
Kinley, J. Palmer, A. M. F Vernon, Maj. W. F
Kirby, B. V. Pargiter, G. A. Viant, S. P.
Kirkwpod, D Parkin, B. T. Wadsworth, G.
Lang, G Paton, J. (Norwich) Walkden, E.
Lavers, S. Peart, Capt. T. F. Wallace, G. D. (Chislehurst)
Lee, Miss J. (Cannock) Poole, Major Cecil (Lichfield) Wallace, H. W. (Walthamstow, E.)
Levy, B. W Popplewell, E. Watson, W. M.
Lewis, J. (Bolton) Porter, E. (Warrington) Webb, M. (Bradford, C.)
Lipton, Lt.-Col. M. Porter, G. (Leeds) Wells, P. L. (Faversham)
Logan, D. G. Pritt, D. N. Wells, W. T. (Walsall)
Longden, F. Proctor, W. T. West, D. G.
Lyne, A. W. Pryde, D. J. Westwood, Rt. Hon. J.
McAllister, G. Pursey, Cmdr. H White, H. (Derbyshire, N. E.)
McEntee, V. La T Randall, H. E. Whiteley, Rt. Hon. W.
McGhee, H. G Ranger, J. Wigg, Col. G. E.
Mack, J. D. Rankin, J. Wilcock, Group-Capt. C. A. B.
McKay, J (Wallsend) Rees-Williams, D R Willey, F. T. (Sunderland)
Mackay, R. W. G (Hull, N.W.) Reeves, J. Willey, O. G. (Cleveland)
McKinlay, A. S. Rhodes, H. Williams, D. J. (Neath)
McLeavy, F. Richards, R Williams, J. L. (Kelvingrove)
Macpherson, T. (Romford) Roberts, Goronwy (Caernarvonshire) Williams, W. R. (Heston)
Mainwaring, W. H. Roberts, W. (Cumberland, N.) Williamson, T.
Mallalieu, J. P. W. Robertson, J. J. (Berwick). Willis, E.
Mann, Mrs. J. Rogers, G. H. R. Wills, Mrs. E. A
Manning, Mrs. L. (Epping) Ross, William (Kilmarnock) Woods, G. S.
Martin, J. H. Sargood, R. Yates, V. F.
Medland, H. M Segal, Dr. S.
Mellish, R. J. Shackleton, E. A. A TELLERS FOR THE AVES:
Middleton, Mrs. L. Sharp, Granville Mr. Joseph Henderson and
Millington, Wing-Comdr E. R Shurmer, P. Mr. Hannan.
Astor, Hon. M George, Maj Rt. Hn. G. Lloyd (P'ke) Morris-Jones, Sir H.
Barlow, Sir J. Gomme-Duncan, Col. A Morrison, Maj. J. G. (Salisbury)
Baxter, A. B. Gridley, Sir A Morrison, Rt. Hon. W. S. (Cirencester)
Birch, Nigel Grimston, R. V. Mott-Radclyffe, Maj. C. E.
Boothby, R Hare, Hon. J. H. (Woodbridge) Neven-Spence, Sir B.
Bower, N. Harvey, Air-Comdre A V Noble, Comdr. A. H. P
Boyd-Carpenter, J. A. Head, Brig. A. H. Peake, Rt. Hon. 0.
Bracken, Rt. Hon, Brendan Headlam, Lieut.-Col. Rt. Hon. Sir C Peto, Brig. C. H. M
Braithwaite, Lt.-Comdr. J. G. Hinchingbrooke, Viscount Poole, 0. B. S. (Oswestry)
Bromley-Davenport, Lt.-Col W Hudson, Rt. Hon R. S. (Southport) Prescott, Stanley
Buchan-Hopburn, P. G. T. Hutchison, Lt.-Cm, Clark (E'b'rgh W.) Raikes, H. V.
Bullock, Capt. M Jarvis, Sir J. Ramsay, Maj. S
Butcher, H. W. Jeffreys, General Sir G. Ross, Sir R. D. (Londonderry)
Challen, C. Lancaster, Col. C. G. Savory, Prof. D. L.
Channon, H Law, Rt. Hon. R. K. Scott, Lord W.
Clarke, Col. R. S Lennox-Boyd, A. T. Smith, E. P (Ashford)
Conant, Maj. R. J. E Lindsay, M. (Solihull) Snadden, W. M.
Cooper-Key, E. M Lyttelton, Rt. Hon. 0 Stanley, Rt. Hon. 0.
Crookshank, Capt. Rt. Hon H F C MacAndrew, Col. Sir C Stewart, J. Henderson (Fife, E.)
Cuthbert, W. N. McCallum, Maj. D. Stuart, Rt. Hon. J. (Moray)
Darling, Sir W. Y. Macdonald, Sir P. (I. of Wight) Sutcliffe, H.
Davidson, Viscountess Mackeson, Brig. H. R. Thornton-Kemsley, C. N.
Dower, Lt.-Col. A. V. G. (Penrith) McKie, J. H. (Galloway) White, Sir D. (Fareham)
Dugdale, Maj. Sir T (Richmond) Maclay, Hon. J. S White, J. B. (Canterbury)
Duthie, W. S. MacLeod, J. Williams, Gerald (Tonbridge)
Eccles, D. M. Macmillan, Rt. Hon. Harold (Bromley) Willoughby de Eresby, Lord
Eden, Rt. Hon A. Macpherson, Maj. N, (Dumfries) York, C.
Elliot, Rt. Hon. Walter Marlowe, A. A. H.
Foster, J. G. (Northwich) Marples, A. E. TELLERS FOR THE NOES
Fraser, H. C. P. (Stone) Marshall, S. H (Sutton) Mr. Drewe and Mr Studholme
Fraser, Sir I, (Lonsdale) Mellor, Sir J

Question put, and agreed to.

Clause ordered to stand part of the Bill.