§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. Birch
I do not think it will be possible for the Financial Secretary to make such a big gaffe on this Clause as he made on the last one, because, as far as I know, the cost of wine does not appear in the cost-of-living index, although some of the same considerations which apply to this duty apply also to the Beer Duty. I think that part of the Chancellor's Budget speech which dealt with the taxation of wine was clearer than the part which dealt with the taxation of beer. When he was talking about wine, he used these words:The receipts from the duties on the cheaper kinds of table wines, those taxed as 'light wines imported in cask,' have fallen off very sharply in the last few months. I propose to make a substantial reduction in these duties, and I hope that this will, in due course, bring about an increase in consumption. …Therefore, it was perfectly clear that his object was, first, not to pull down the cost-of-living index, but to get more revenue by lowering the price, and, secondly, as he pointed out, to do something to help Western Union. At the end of his remarks on wines, he added:I cannot extend the scope of this concession to any wines other than those falling within the definition."—[OFFCIAL REPORT. 6th April, 1949; Vol. 463, c. 2100.]That is to say, that heavier types of wines and wines imported in bottle were not affected in any way by these reductions.
The history of the Wine Duty is as follows. Before the war, it was 4s. a gallon on light wine and 8s. a gallon on heavy wine. Before the reduction imposed by this Budget, the duty on light wine was 25s. and on heavy wine 50s. a gallon, showing an enormous increase over pre-war. On top of that, there was an extra duty of 2s. 6d. a gallon on wine imported in bottle. The effect of this taxation has been that the consumption of all wines is running, I believe, somewhere between 50 and 60 per cent. of what it was before the war, and that of heavy wines is running at something like 30 per cent. of the pre-war figure, that is 242 to say, less than one-third. Therefore, I think the Chancellor was clearly wise to reduce taxation which was killing its own object.
But again, as on beer, we should like to ask a few questions. The first is, is the duty fall likely to be enough to stem the reduction in consumption? The Chancellor thinks it is, and we should like to hear something about what has happened to the consumption of light wine since the duty was reduced. I should also like to know why no reduction has been made in the duty on heavy wines. The Chancellor said:I cannot extend the scope of this concession to any wines other than those falling within the definition,and he gave no reason why he could not. As the consumption has gone down more heavily than in the case of light wines, one would have thought, on the face of it, that a reduction of taxation was necessary in order to preserve the revenue. Again, why is there this prejudice against the jug and bottle department? Why do not wines imported in bottle, quite regardless of their strength, get the benefit of the reduced duty? I cannot think of any reason at all except one, and that is that the whole of this business is really a "Strachey Relief Fund," to get rid, in some way or other. of all that Algerian wine sitting in bond which was bought at the wrong price and about which we can hear so little because whenever we raise the subject we are told that it is against the public interest to disclose the facts. There is no doubt that, in buying this wine, the right hon. Gentleman out-kitchened the Kitchen Committee.
It seems to me that there are three considerations which should prompt us to look very carefully at what the Chancellor is doing. The first is the one I have touched on, the question of revenue. Will the reduction, substantial as it is, in the duty on light wines be enough to keep up the consumption? Secondly, on the revenue question, if we tax heavy wines and bottle wines at this rate, will the consumption not continue to decrease very heavily, and, therefore, will not the revenue go down? That is the first revenue consideration.
The second consideration which we should bear very much in mind is one 243 which the Chancellor himself mentioned, the question of trade within Western Union. There is no doubt that all the countries in Western Union, including Portugal, and particularly France and Italy, attach very great importance to their exports of wine which are extremely important for their economy. This is one of the ways in which we can stimulate freer trade within Western Union, and, therefore, there is an obligation upon us to do it. It would hardly be felt that we sincerely believed in Western Union if we did not arrange our taxation policy, as far as we could, to help our friends and Allies in those countries.
The third consideration, which particularly applies to France, is this. Under little Marshall Aid, as I understand it, owing to the deficit in the French balance of payments, we are, in fact, financing them for nothing. If we buy more wine from them we, in fact, reduce France's adverse balance, and thereby reduce some of the credits we have to extend to her in view of her difficult position. If, therefore, we refuse to import wine from France, and if we say, as the Chancellor once said, that they have nothing we require, all we are doing is to give them money for nothing and to reduce our own revenue over here. That does not seem to me to be a very sensible thing to do.
Before leaving this Clause, we should also like to have some explanation of Subsection (2), on the question of the Ottawa Agreements. It says:If at any time the Treasury are satisfied that an increase … would not contravene any of the Ottawa Agreements …I should like to know on whose representations the Treasury act. How do the Treasury become satisfied that these agreements are all right if they are not already satisfied by their study of these agreements? There may be some special reason, but I should like to know what it is.
I cannot leave this subject without a brief reference to the Liberal Party's attitude on this matter. Its members are ready on their benches, keen to make their contribution, but it will be within the recollection of the House that on the Report stage of the Budget Resolution they voted against the reduction on the Wine Duties. Gladstone very much hoped to make this a wine-drinking 244 country, and Cobden's French Treaty of 1860 was a classic triumph which reduced duties on wines and stimulated our exports to France. Tariff reductions these days are very rare things. We had a statesmanlike action in the last Budget when the duty on prunes was reduced, but I can think of no other case except this, where a tariff has been reduced.
What did the Liberals do on this great occasion? For the first time in history all nine of them went into the same Lobby to vote against the reduction in the duty and for the cause of trade restriction. I do not know why they did that. They might give as their reason that they objected to wine prices going down while food prices went up, but that cannot be the reason of their leader the right hon. and learned Member for Montgomery (Mr. C. Davies) because the whole theme of his speech was that subsidies ought to be reduced and food made more expensive. Therefore, they are attempting to punish the French because the price of food has not been further increased.
The Liberals are always dilating on their special virtues, and I very much hope that next time they make their usual peroration on free trade they will add that on one of the few occasions when a step towards freer trade was being taken, they solidly voted against it. Returning to the main question, I hope that we may have answers to the financial points on the stimulation of trade, the Western Union point, and the Marshall aid point that, in fact, we should not have to pay for these wines anyway.
§ Mr. Dodds-Parker
I should like to add to what my hon. Friend the Member for Flint (Mr. Birch) has said about the intention to stimulate a certain amount of trade between this country and Western Union, and in particular with the Empire. Before the war there was a differential between Empire wines and wines from France, which gave such an advantage to the Empire wines that they could find a ready market. I think hon. Members on both sides of the Committee will agree that throughout the war the Empire played the greatest part in producing wines which we in this country consumed, because the Empire was the only place where we could get wines, and therefore they built up a considerable output. When 245 the Chancellor or his predecessor decided to raise these duties, it was done without increasing the differential on the Imperial preferential rate.
§ The Chancellor of the Exchequer (Sir Stafford Cripps)
The hon. Gentleman is quite inaccurate. We increased it last year to a differential of 10s. on Empire wines.
§ Mr. Dodds-Parker
We happen to be discussing light wines. I hope the Chancellor will not draw one of his red herrings across the subject under discussion. We are discussing light wines on which the Imperial preference has remained the same as it was before the war, I believe. In spite of increases in duty, that differential remains the same, but the cost to the consumer is such that, the taste being what it is, the Empire wine is prejudiced. I cannot see how under the present system there is likely to be any encouragement to the wine-producing industries which have grown up in the Empire and which had considerable encouragement during the last 10 years or so. I ask the Chancellor, when considering these rates, to see whether it would be possible to increase the preferential rates and thus once more give the Imperial wines sufficient differential so that they can have a better market in this country.
§ Lieut.-Commander Gurney Braithwaite
It is necessary to ask a few questions about this Clause because on this occasion we have had no introductory remarks from the Financial Secretary. We assume that the object of this proposal is not to steady the cost of living or to earn the gratitude of the working man. It seems to deal with rather another aspect of the revenue than that. I feel that my hon. Friend the Member for Flint (Mr. Birch) is probably right when he describes it as an "Algerian Clause." I am sorry that the Parliamentary Secretary to the Ministry of Food is no longer present, because I think she could have been helpful. We understand that the Minister of Food is still what is known in other trade circles as a "stale bull" 246 of very large quantities of Algerian wine which have been bought at the wrong price for which the taxpayer has had to "carry the can" back.
§ Lieut.-Commander Braithwaite
I am obliged to the hon. Member. However, as opposed to Clause 2, let us move from the practical to the theoretical. There is all the difference in the world between the cost of beer and of wine, which in these days and at these prices has become largely a matter for epicures who, of course, eschew the Algerian imports of the Minister of Food. But if we come to the other aspect of the matter, surely we are dealing here with the same problem as that which we were discussing on the beer duty a few minutes ago—namely the problem of revenue. When the Chancellor of the Exchequer introduced his Budget in April we understood that he had two main reasons for reducing the duty on light wines imported in cask: that consumption had been falling off very sharply as in the case of beer and he hoped a reduction in duty would benefit the Exchequer, and that he hoped to assist our trade with France and with the wine producing countries in the Empire. Those were his main reasons as we understood them.
So far as the first objective is concerned, the right hon. and learned Gentleman does not seem unduly hopeful, because he used these words:If there were no counter-balancing rise in consumption, the initial effect of these reductions would be to reduce the revenue by £1 million a year, but I expect that the eventual loss will be much less than this."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2100.]But does he anticipate any gain? That did not appear to be the case when he addressed us on that occasion. It is worthy of remark how sharply these duties have risen since before the war when duties on foreign wines were 4s. a gallon for light wines and 8s. a gallon for heavy. These duties now stand at 25s. for light and 50s. for heavy, and one must also take into account 2s. 6d. a gallon additional for wines imported in bottle. The right hon. and learned Gentleman now seeks to reduce the duty on light wines imported in cask from 25s. to 13s., which obviously leaves a very wide margin between the light wines im- 247 ported in cask and any other kind. It is interesting to note that at present the consumption of heavy wines has fallen far more than the consumption of the others. For instance, port is as low as 30 per cent. of pre-war consumption, while the average for wines of all types is between 50 and 60 per cent.
I do not think there is any doubt that this new concession is desirable. It will encourage trade with France and indeed with the Commonwealth. Although the amount of Commonwealth light wines imported is relatively small, I understand that some 90 per cent. of their export to us is imported in cask, and it would also help to build up the home bottling trade. Those seem to us on this side of the Committee to be the main advantages of the proposal. Before we pass this Clause, we should like to hear from the Government whether any gain is anticipated in the revenue from the steps which the Government are now taking.
§ Mr. J. Hudson
I should like to say a few words on the subject of wine from the point of view of the arguments which were advanced by the Financial Secretary on the last Clause we discussed. I do not know whether he will say anything about the cost of living. The general belief of hon. Members opposite seems to be that this question cannot be related to the cost of living. Yet, if wine-drinking is justifiable, I do not know why it should not be related to the cost of living. I should like to know whether the Government assume that wine-drinking will always remain the privilege of the few—that is, on the assumption that wine-drinking is necessary.
I have listened on more than one occasion to my hon. Friend the Member for Bilston (Mr. Nally)—not that I agree with him—who has said that he looks forward to the time when the working-classes will be connoisseurs of wine in the same way as the privileged classes whom hon. Members opposite represent. By State policy we are deliberately reducing the cost of wine in order to help France. How do we suppose we shall help France unless a lot more people drink wine? Or are we to assume that the small number of people who are drinking the wine will be the same num- 248 ber but that they will drink a great deal more? What justification could there be for a Labour Government to support that result of this action?
If it were necessary for the right hon. and learned Gentleman to argue that there should be this cheapening of beer because the cost of living required it, then it is just as necessary that the same argument should be applied to wines. In fact, I do not know where the Front Bench are to stop now that they have let loose this cost-of-living argument. In view of the fact that there are so many people engaged in football pools, in a little while we shall be backing up the football pools in reducing or raising the tax—I do not know how their argument will run—on the basis of the cost of living. I want to tell the Chancellor of the Exchequer the sort of hole he is left in by the argument his Financial Secretary has been advancing.
I sympathise with the Financial Secretary because he had nothing else to call in aid in view of his position, but I feel he has landed the Government in an even worse hole; and, as I have said all along, they have been in a hole from the beginning on the question of these taxes on alcoholic beverages. They have been in a hole all along through an attempt to associate what people can well do without, whether it be wine, beer or any other alcoholic beverage, with an argument concerning the cost of living. That argument is too sacred for Members on these benches to play with. We have built most of our great cases on the cost-of-living argument and on the necessity for a better standard to be provided for the people, because there was something involved in that argument, but to associate it with this question of alcoholic beverages is, in my opinion, a most deplorable mistake. I hope the Treasury will think again before they provide arguments of the sort to which we have had to listen.
§ Mr. Spearman (Scarborough and Whitby)
I think the telling logic of the hon. Member for Ealing, West (Mr. J. Hudson), will be almost as effective as the admirable speech of my hon. Friend the Member for Flint (Mr. Birch). My hon. Friend made a plea to the Chancellor of the Exchequer, although perhaps the word "plea" is not one which one associates 249 with my hon. Friend's expressions, for they are always more of a robust than a gentle nature; he made a plea to the Chancellor that he should encourage the consumption of wines of the better qualities as well as of the cheaper qualities in this country because, after all, we are not paying for these imports from France with fresh exchange, as my hon. Friend said, but are Using up credits that otherwise we should have to give them. If that is the case, surely by encouraging wine in this country not only do we give pleasure, as my hon. Friend said—because, unlike the hon. Member for West Ealing, I consider it harmless and indeed admirable—but we also are increasing the revenue of the country.
Thirdly—and this is a fresh point which I wish to make in support of my hon. Friend—we are surely mopping up purchasing power in this country; and "mopping up" is a very appropriate phrase. I would remind the Chancellor that it is not very long ago that he told the House that inflation was still an evil. He said:Inflation is not an evil that, once checked, disappears: the threat remains, and we must be on our guard against it."—[OFFICIAL REPORT, 6th April, 1949: Vol. 463, c. 2077.]The Bulletin for Industry, published by the Economic Unit of the Treasury in June, 1949, states:Consumer demand shows little sign of falling away. Total personal expenditure rose quarter by quarter last year to a record high level.If we can use up some of that purchasing power which is putting a strain on the economy of the country by threatening an inflationary situation; if we can use that up by buying goods from abroad without expenditure of further exchange, then surely we are doing these three things: giving pleasure to the people of the country, increasing the revenue of the country and diminishing the fear of inflation. On all accounts it would appear to be an admirable course to take to encourage the consumption of wine in this country.
§ Captain Crookshank
I do not want to keep the Committee from the Financial Secretary for one minute, but I think he would like to know that we do not propose to divide the Committee against this Clause, because we voted with the Government on the subject at the Report stage. I think it is worth pointing out, 250 however, that when we had the Resolutions of the Committee to consider the other day there were Divisions, initiated by the Liberal Party, both on the proposed changes about beer and those about wine, but that none of the Liberals has been present during the whole of these Debates. Therefore, we have no idea why they put both us and the Government to the inconvenience of Divisions on that night, and I hope it will be noted as an act of irresponsibility on the part of one of the groups in this House.
If, as I take it, we are dealing with the Clause from the purely budgetary point of view, the point is, as I understand it, that the present rate of tax has been so high that consumption has fallen and, therefore, the tax is defeating its own ends. So far as that purpose is concerned, I imagine that the figures produced by the Treasury show that the change is justifiable. I think it is of interest to the social student to note that it was a Socialist Chancellor of the Exchequer who made use of the words:I hope that this will, in due course, bring about an increase in consumption.—-[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2092.]I put aside the arguments advanced by the hon. Member for West Ealing (Mr. J. Hudson), because his point of view is somewhat different from that of most hon. Members. It is interesting to find the point of view which I have mentioned put forward from those benches because it goes to destroy the theory that to drink wine is somehow the sin of wealth. It is not. In most countries, or at any rate in a great number of countries in the world, particularly in Europe, wine drinking is an ordinary custom of the country. It is a custom which has not been introduced here, although in point of fact the Romans produced wine a very long time ago and we still have relics of the places where they did it, but in modern times the drinking of wine, except, of course, the port and sherry trade in the public house, has been rather limited—and there are sweets, although nobody could call that wine. Perhaps I had better not describe it; it is not what, in his less austere days, the right hon. and learned Gentleman would have considered a nice glass of wine.
If the custom of wine drinking spreads to any extent I think it will help to bring our people somewhat more into line 251 with those with whom they will be very much concerned in the Western Union of the future. In so far as this will help to increase trade, particularly if it comes to us as imports without our having to pay exports—and I understand a good deal of this is being charged up against old debts—then to that extent, as my hon. Friend the Member for Flint (Mr. Birch) pointed out, we shall be receiving something from a lot of countries from whom otherwise we might not receive anything.
I agree, however, that I should have liked some explanation why the change has been made only in light wine. Why have we forgotten our oldest ally of all, Portugal, who will get nothing whatever from this Clause? I hope it is not because of the political prejudice of hon. Members opposite, because sherry comes from Spain, and no concession is being made to heavy wines. They must bear in mind that, of course, wines of that type have been very much developed during the war in our Dominions overseas. I am perfectly certain that very few gatherings in this Palace could have functioned in recent years had it not been for South African sherry. I should like to know why that difference has been made, particularly in view of the budgetary argument that, because there has been a great falling off in consumption there has been a falling off in revenue. The fall in consumption, down to 30 per cent. of the pre-war rate, has been greatest of all in heavy wines, and nothing has been done to rectify that. I hope that is not because of any form of prejudice. I do not see why it should be.
However, to go back to the class of wines consumed in public houses, it is that type of wine rather than the light wines that are consumed at ordinary bars. I hope that the right hon. Gentleman has some explanation of that point. On the whole, it seems to us that, in view of the drop in revenue, and in view of the desire to help our European friends, he has acted on this occasion quite sensibly. There are many other things he might have done, but so far as he has gone he has, at any rate, not incurred our displeasure. For that reason we shall not divide the Committee. We live in hopes that we may have the reason given us by some member of the Liberal Party why they felt the way they did on the other occasion.
§ Mr. Glenvil Hall
I am sure that the right hon. and gallant Gentleman will not expect me to deputise for the Liberal Party.
§ Mr. Glenvil Hall
I can only deal with the reasons why my right hon. and learned Friend has inserted this Clause in this Bill. Perhaps, before I come to say briefly why a reduction is proposed I may clear out of the way a question put to me by the hon. Member for Flint (Mr. Birch), I think it was, who asked if I would explain why subsection (2) is where it is. All that subsection does is to recapitulate the provision of—I think it is Section 3—of the Ottawa Agreement of 1932, under which the preference for light wines amounting to 2s. per gallon, at present enjoyed by South Africa and Australia, would revert to one shilling if by any chance the Ottawa Agreement duties ceased to apply. That is the sole reason why that is here.
Let me deal with why my right hon. and learned Friend has decided to ask the Committee to approve this reduction on light wines imported in cask. The reason—one of the main reasons—is that there has been a very substantial drop in the consumption of light wines since the middle of 1948. In the first half of 1948, 975,000 gallons were consumed, and in the second half of 1948 the number of gallons consumed was 430,000.
§ Mr. Glenvil Hall
Yes, but it went for consumption. How much was drunk it is impossible to say, but I understand that this type of wine does not keep very long, in any case; and I suppose that those who withdrew it from bond would not have withdrawn more than they felt would be consumed in an appreciable time. As a result, of course, our revenue fell accordingly, and, as my right hon. and learned Friend explained when he opened his Budget, in order to help South Africa, Australia, and our trade with France, this reduction has been made, and it is hoped that, as a result, there will be a revival of consumption.
253 5.45 p.m.
One hon. Gentleman opposite asked me why nothing had been done to assist the heavier wines in order to help the Empire products. As my right hon. and learned Friend in an interjection reminded him, we did in our last Finance Act increase the preference margin from 4s. to 10s. a gallon, and, thereby, gave effect to the Geneva Agreement. The right hon. and gallant Gentleman asked me why we were doing nothing for heavy wines to help our old ally, Portugal. As a matter of fact, we have got an agreement with Portugal under which we do take a certain amount of her product, but it has to be limited, because it is quite impossible—and I am sure that the Committee will agree with me here when I say this—that we should pay gold for an unlimited supply of port; and, therefore, any change in the incidence of taxation would make no difference to the amount of port which does come in from Portugal at the present time. I think that covers the points that have been made.
§ Mr. Glenvil Hall
Bottled wines are, of course, different. The wine that comes in, sparkling and still, in bottle is small indeed.
§ Mr. Glenvil Hall
If the hon. Gentleman is speaking particularly of the lighter wines, and asking why they must come under this arrangement in cask, the short answer is that it surely makes no difference to the importer. They can come in; but it does help the British bottling industry to bottle the wines here. That is the situation. The more expensive wines can come in bottle, and they do come, I repeat, into a separate category. That being so, I believe that what my right hon. and learned Friend is doing here is reasonable in the circumstances, and that it will help, as has been said, Western Union and the Dominions. I am delighted to hear that the suggestion now being put forward is acceptable to the Opposition and that they are in agreement with my right hon. and learned Friend that this reduction should be made.
I should like to add that already the trade has begun to implement the under- 254 taking it gave, namely, to sell wines of some grades at no more than 8s. I understand that the Civil Service Stores, for instance, have introduced a new wine, white Bordeaux, at 6s. 6d. a bottle, and there is one red Bordeaux, claret, available at 7s.; and Empire wines too, in some cases, have been reduced by 2s. 6d. a bottle. From the figures that I am thus able to give it does appear that the trade is playing its part and that wines are being reduced in price and made more available, and we hope that, as a result, those who previously felt that the price asked was too much will now be able to afford wine and help trade not only with South Africa and Australia but also with France.
§ Mr. Spearman
Would the right hon. Gentleman allow me one question? Before he adopts this policy based on the fact, as he said, that it does not matter whether wine is imported in a barrel or bottle into this country, or whether or not it is bottled in France, will he take a little expert opinion on the subject? He will find that it makes a huge difference. A wine of the same chateau in the same year varies enormously in quality according to whether it is bottled one month or another. It appears that the right hon. Gentleman is advocating a policy based on extreme ignorance of the facts. I do ask if he will have the whole matter reconsidered in view of that.
§ Viscount Hinchingbrooke (Dorset, Southern)
I do not intend to stand for very long between the Committee and the representative of the Liberal Party who has now hastened in to explain the attitude of his party towards the Resolution, but I think I ought to remark in passing that the Financial Secretary's contribution has been in line with his contribution on the previous Clause, on beer, in that he has given a number of financial explanations but has not really got down to the economic and social reasons behind the change the Chancellor is making. He has not made it clear why the Government have singled out light wines imported in cask, and why he has neglected bottled wines and the heavier wines from Spain and Portugal.
The right hon. Gentleman said not a word about Spain. I suppose that is much too dangerous a subject for the Labour Party to touch. But ought we not to 255 restore and bring back to normal in peacetime our wine trade with Spain? Is there not some hope of getting a more liberal attitude on the part of Spain, so that we could agree to take their products in good and fair quantity? I should have thought that there was. I should like to know whether the Chancellor has had any consultation with the Foreign Office on the question of what could be done to help forward a liberal democratic régime, even in this light matter of taking one of Spain's principal exports. I do not believe any thought has been given to that subject.
Why have bottled wines of the light variety been excluded from this concession? I should have thought that some members of the Government and of the party opposite, and some representatives of nationalised industries, would have been rather upset to find that in these days, when there is so much entertainment of foreigners, and one thing and another, by the Socialist Government and its representatives all over the country, that some concessions were not made in the importation of bottled wines. Of course, the French are just as anxious to send us their bottled wines as they are to send their cheap wines in cask. The Financial Secretary gave us no figures to show what has been the effect in the last few years of the Duty upon bottled wines. He has given us the figures for wines in cask and the fall that took place in 1948. He must also have a large array of figures for the importation of bottled wines, but those he has not given us.
I suspect that there has been a very heavy drop in bottled wines, too. I also suspect that the proportion of cask to bottled wines sent by France to this country is very high in favour of the bottled wines. If so, that is further argument why, in order to bring the Western Union idea to fruition, we should pay attention to the claims of France in that respect. I therefore hope that the Chancellor will himself intervene, which he was unable to do on the previous Clause on beer because of the necessity to have a cup of tea, and tell us to what extent prejudice or politics enters into the giving of the minor concessions which he has sought to make to this great trade.
§ Mr. Bowen (Cardigan)
I had not intended intervening in this Debate, but 256 I have received so many cordial invitations to do so that I cannot resist them. No doubt the hon. Member for West Ealing (Mr. J. Hudson) would take the view that a Government should play the part of temperance advocate. I do not take that view. But I certainly do not think that any Government should take it upon themselves to be intemperance advocates; and I certainly do not think that any Government should take upon themselves as part of their deliberate policy the encouragement of the consumption of beer and of wines. I think that in that respect individual judgment is far better than Government guidance, and I feel that a deliberate policy which has as its background the desire that there should be an increase in the consumption of wine as a contribution towards the solution of our economic difficulties is not a healthy approach. If we really want to make a contribution towards solving our economic problems and towards the general happiness of our people, it will not be done by saying that among, particularly, the limited income groups there should be a greater absorption of income through the medium of greater expenditure on wine and beer. The Chancellor would be furthering the welfare of the country far better if he were ensuring that we had a wider variety of goods on which to spend money and more money to spend in that way. That is my reason for having no enthusiasm for this fresh development in Government policy, which is directed towards the deliberate encouragement of wine and beer consumption as part of our fiscal policy.
§ Mr. Walter Fletcher (Bury)
I should like to address myself to the difference between wines imported in cask and wines imported in bottles. The question of quality enters very considerably into this, and if the Chancellor is looking to increase revenue in future he must be certain that the wines imported under the new arrangement are of very good quality. After tasting some of the original Government imports I was reminded of the old Latin saying, in vino sanitas. Possibly, now that the choice is passing out of Government hands into that of private enterprise, we shall avoid that danger. But what of those classes of wines such as the Alsatian wines, and even the German Moselle and Rhine wines which traditionally come into this country in bottles and are greatly appre- 257 ciated? Will the Chancellor look again and make quite certain that he is not loading the dice against himself by giving too much of a concession to the light wines, which we all appreciate and like very much; will he make certain that he is not loading the dice somewhat heavily against the very good, sound and not expensive wines in bottles which used to come from an area with which we are trying to encourage trade with this country—the Palatinate wines, the Moselle, Rhine and Alsatian?
§ Mr. Eccles
I thought that the Financial Secretary spoke much better about wines than he did about beer, because he did lay down a good sound principle. He said that the Government wanted to expand the consumption of wine, and that they wanted to get as much revenue as they could from wine. Very well then. On that principle have they gone far enough, and is this the right sort of arrangement of duties? I doubt that very much. I think that the preference shown for one kind of wine as against another is probably bad for the revenue, bad from the point of view of increasing the consumption of wine.
All through our history Governments have interfered with the drinking habits of the people. My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) pointed out how in Caesar's time some good wine was made in this country. The other day on looking at a catalogue I saw these words:If William of Malmesbury is to be believed, Englishmen of the Middle Ages drank the wine of Gloucestershire as greatly as that of Burgundy and Bordeaux.Well, of course we can believe William of Malmesbury. I represent Malmesbury; they are very truthful people, and our William is always right. But we have changed our habits of drinking wine, and what we are now doing is reversing the Methuen Treaty of 1703, in which we gave a very big preference to port wine and put a very heavy duty on French wine. We are now reversing that, and we seem to be doing it as a by-product of the Minister of Food's foolish purchase of Algerian wine. I do not think that that is a sensible reason to upset the commercial relations between ourselves and a country like Portugal, or for that matter—and I stress this still more—with the Empire producers of heavy wines. 258 The Financial Secretary said the reason that the duty was being lowered on light wines was because consumption was going down. But the figures show that consumption of heavy wines is going down still more, and so that is not a good argument at all. My information is that the consumption of port is lower compared with pre-war than the consumption of light wine. I may be wrong, but that is my information.
I was very interested when the Financial Secretary said that we should have to pay gold to Portugal for port wine. That would have been true earlier, but does he assert that it is true now? Is it not a fact that the Portuguese balance of trade has changed and it is now rather difficult to find sufficient means to provide her with current sterling? We ought to know the answer to that, because my Lisbon friends tell me the position is very different now. These people in Portugal who supplied us with port wine behaved very well during the war. I was there, and there was great pressure put on them by the Germans to sell them port wine because they wanted it on the Eastern front to keep warm their troops fighting the Russians. They did not sell the wine to Germany when they could have made a lot of money, and we ought to do something for them now.
If the principle of the Government is to expand consumption of wines in order to get revenue, then why do not they do it over the whole field? It can only be because of class prejudice. It can only be that they do not like bottled wines because they think that the "swells" drink bottled wines. They have some idea that if the Civil Service Stores offer us some Bordeaux, it is all right. I think that is a very narrow point of view, especially in relation to France.
I was in Paris last week, and business men were tumbling over each other to buy anything in sterling because the sterling trading rights scheme which we have with the French expires on 30th June. They were buying anything they could to use up the money we have given to the French until the end of the month. Why should we not have wine instead? It would be very much better for all the reasons put forward by my hon. Friend the Member for Flint (Mr. Birch). This is really a topsy-turvy affair. This 259 whole question of getting goods like wines from the Marshall countries, with whom we hope to draw much closer, as well as from Empire countries, should be thought out again. This is just tinkering with the matter in order to get the Minister of Food out of a difficulty.
§ Mr. Boothby (Aberdeen and Kincardine, Eastern)
I have been literally dragged to my feet by the acting leader of the Liberal Party. I should like to ask why the Government of this country should not encourage the drinking of wine. I suggest that it would contribute both to the happiness of our people and to their industrial efficiency if they could drink more wines.
§ Mr. Bowen
I apologise if I did not make my point clear. To my mind, in the case of large numbers of people in this country, their surplus income, if they have any, could be far better spent than on wines and beer, and it is a mistaken policy on the part of the Government to encourage people with their present income problems to spend their money in these two directions.
§ Mr. Boothby
I always thought that the Liberal Party meant what its name implied. I am very strongly in favour of letting people spend what money is left to them—and there is not much left to them these days—in any way they choose. If they choose to buy wines I do not see why they should not do so, or why the Liberal Party should tell them on what they are to spend their money.
The reason for this reduction was given by the Financial Secretary. It is to increase the revenue. The law of diminishing returns has applied; the consumption of wine has gone down. The result is that the Chancellor of the Exchequer is not getting his revenue, and so he wants to get more, and the only way is to encourage a little more wine drinking in the country, from which everyone benefits. Scotland used to be a great claret drinking country, but that has ceased now to a marked extent. I think it is an unmitigated disaster, and it is a very bad thing from Scotland's point of view. I cannot understand why the Government have deliberately excluded wine in bottles. As my hon. Friend the Member for Chippenham (Mr. Eccles) has said, it is not only the "swells" who 260 drink wine in bottles. The working and middle classes, in the old days when we were living a more or less tolerable life, used to drink a good deal of wine. They used to buy wine cheaply and keep it. There was a day when there was hardly a farmhouse in Scotland where you could not get a good bottle of claret which had been bought cheaply and kept for 10 to 15 years. I think it is a great mistake for the Chancellor of the Exchequer to have reduced the duty on wines in casks only instead of applying it also to wines in bottles. I am sure that if he had done that it would have been a good thing for the people of the country and would have substantially increased the revenue.
§ Mr. Hopkin Morris (Carmarthen)
The hon. Member for Chippenham (Mr. Eccles) pointed out that this country was a wine-drinking country prior to 1703. That is a very important fact to remember, because the taxation on wine has always followed our relationship with foreign countries, except in the case of Mr. Gladstone who reduced the taxation in order to encourage the country to be a wine-drinking country once more.
§ Mr. Hopkin Morris
The duty was imposed in 1703. We had been at war with France and wanted to punish France by keeping out her wines.
§ Mr. Hopkin Morris
I am surprised that a Scottish Member should say that; because it was then that the Scottish whisky distilleries for the first time became a great trade. There is another more famous case if we go back a little earlier. It can be claimed that the British Navy itself rests upon the wine trade. If we had not imported wine in British bottoms from Spain in the reign of Edward III, the British Navy would never have been built. The interesting thing is that although duties are often imposed because of our relationship with foreign countries, they produce very unexpected results, which is what will happen now.
Let us take the free trade position. When Bentham in 1830 advocated free trade, the Whig Party accepted the argument and asked why the duty on beer 261 should not be abolished; why, it was argued, should not a free run be given to the licensee to carry on his trade like a butcher and baker or any other tradesman? Parliament accepted the argument and passed an Act which became known as the "Free Beer Bill." In principle it was right, if the principle were only the principle of free trade. But the result was that in less than a year Parliament was compelled to repeal the Act because of what was happening in all the big towns in the country.
The hon. Member for Ealing, West (Mr. J. Hudson) was quite right in his argument. Parliament has experimented in all kinds of ways in relation to this trade over the past century. There is no case for the reduction of the tax on wine. We may say that there is a case for it historically, and quote the British Navy, the defence of the country, and the opportunity to punish France; but what I wish to point out is that, from a commonsense point of view, we should not tax merely on the consideration of our feelings towards one country or another. We should not discriminate in this way. If we lower or raise a tax purely on a revenue basis, be it so. That is a revenue consideration.
I agree with the argument of the hon. Member for Cardigan (Mr. Bowen). When the Government are controlling household expenditure, and planning us to a degree to which no Government have done hitherto, except in time of war, to make this discrimination now in favour of beer and wines is wrong. Leaving out the moral argument, the reduction should not be given in the case of these commodities. These are luxury things, and any discrimination in favour of them is wrong.
§ Mr. Gallacher (Fife, West)
I wish to say a couple of words prompted by the remarks of the hon. Member for East Aberdeen (Mr. Boothby). He said—and it is typical of the hypocrisy adopted on this question—that he thought that the Liberals, like himself, believed that the people should have the right——
§ The Chairman (Major Milner)
The hon. Member should not have used that word "hypocrisy." It is unparliamentary to accuse another hon. Member of 262 hypocrisy, and he must withdraw the word.
§ The Chairman
I have requested the hon. Member to withdraw that expression. It is unparliamentary, and should not be used. It is not a question for any other hon. Member.
§ Mr. Gallacher
If you ask me to withdraw the expression "hypocrisy," I withdraw it; but it is the first time I knew that it was an unparliamentary expression. I always thought that the truth was acceptable in this House.
§ Mr. Stanley
I do not intervene because the hon. Member for West Fife (Mr. Gallacher) used that expression, which he has naturally withdrawn at your request, Major Milner; but I think the Committee as a whole would like to know the exact limit of your Ruling. Am I never to say that the arguments adduced by hon. and right hon. Gentlemen opposite are hypocritical? And if that is all right, cannot I proceed further, and say that their whole policy is hypocrisy? If I am allowed to do neither, what can I say either about them or their policy?
§ The Chairman
The right hon. Gentleman knows that there is a difference between an accusation against an individual and one addressed to a party. I understood that the hon. Member for West Fife had accused another hon. Member of being guilty of hypocrisy. If I was wrong, I am sorry, but I think I ought to say that it is not the custom of the House, nor is it Parliamentary, to make personal imputations as from one hon. Member to another. I agree they may be largely a question of degree and it must be left to the Chair to decide, but such imputations are objectionable in any case and unparliamentary in most cases according to our practice.
§ 6.15 p.m.
§ Mr. Gallacher
I would not wish to make any personal imputation against the hon. Member for East Aberdeen, but I deplore the company he keeps. I said that the remark was typical of the kind of hypocrisy that is common to hon. Members on the other side of the Committee. At any rate, to get back to the point, what he said was that he always thought the Liberals believed, as he 263 believed, that the people should have the right to spend whatever money is left to them in any way they liked. Does he believe that? No, he does not, nor do hon. Members on the other side of the Committee. On this question of liquor, the hon. Member for West Ealing (Mr. J. Hudson) and myself consider it a form of dope. Can people spend their money on opium, another form of dope? Can they spend their money on cocaine, another form of dope? Let us come to something more practical. The ordinary workman can, if he wishes to drink, spend his money on a teapot or a coffee pot. But can he spend his money on a still? No—there is too much profit in that for hon. Members on the other side of the Committee. So he is not allowed to spend his money in any way he likes.
§ Mr. Stanley
I intervene only for a moment, and I regret that I must bring the discussion down from the high moral level it has reached under the advocacy of the hon. Member for West Fife (Mr. Gallacher) of freedom of choice of narcotics of all kinds, and the explanation of the Liberal Party of why they now differ from Mr. Gladstone. I wish to bring the discussion down to what I think is one point of difference between the great majority of hon. Members in this Committee. We have already expressed, on behalf of my hon. and right hon. Friends, our general approval of the step which has been taken, but it is not explained to me why it has been necessary in the circumstances under which this reduction has been introduced, to confine it to wines imported in casks and exclude the bottled wines. We have not been told that cheap wine figures in the cost-of-living index. There has been no attempt to show that this concession is made as a concession to hard-hit people to enable them to bear the trials of life rather more easily. It has been put, and rightly put, on a purely financial basis.
Here we have an article the consumption of which is falling and the revenue from which is therefore decreasing; and where a decrease of the revenue will, it is hoped, lead to an increase of consumption and to an increase of revenue. Added to that is the very cogent argument that here we have a product which, in terms of balance of payments, we can, so far as I can see, import free. It is not a 264 question that because we increase our imports of wine we have to increase our exports pro tanto. We get wine or nothing at all. Therefore, to be able to import something free to use up surplus purchasing power is an obvious economic asset.
If that is the situation, then why is any price limit drawn at all, because that is what, in fact, is the object of excluding bottled wines? The revenue there can be made just as big. The only difference is that, on the whole, bottled wines are not only better, but more expensive than wines imported in casks. It is quite true that, on the whole, they are likely to be drunk more by the richer section of the population than by the poorer. But this reduction is not to give undue benefit to the poorer section of the community. If that was being looked for, it would be easy to find a number of objects which they would appreciate very much. The object is purely financial. Wine in bottle, sold to the rich man, will add just as much to the revenue, and mop up just as much purchasing power, as wine sold in a cask, which will be within the grasp of those within the smaller income group.
I cannot understand the logic of excluding from this concession these more expensive types of wine, which would help the Government to achieve the economic aim they have in view. No explanation has been given. The assumption is, "We can only give this concession on the cheaper sort," but that is no use if it is based entirely on the question of a financial return. I hope the Chancellor will reconsider the possibility of extending this concession to wines in bottle as well as in casks. If, between now and Report, he is unable to make up his mind, I hope that on the next stage my hon. Friends will be able to give him an opportunity of coming to what I am sure will be a wise decision.
Mr. Norman Smith
The right hon. Gentleman the Member for West Bristol (Mr. Stanley) has reinforced the argument of his hon. Friend the Member for Chippenham (Mr. Eccles) who, apparently, is quite unaware that powerful and palatable wines are still made in his own constituency, although not for the market. The omission of bottled wines from this Clause is another example of the remarkably good and wise statesmanship of this beneficent Labour 265 Government, to which the country owes so much. We have to consider the matter from the point of view of those who reap benefits. We want to promote good relations with France, and especially to keep her out of the Cominform. I am sure we can help France substantially in this way, and the Chancellor, from whose views I often dissent, is to be congratulated on excluding bottled wines.
§ Mr. W. J. Brown
I find it rather difficult to follow the logic of some of the arguments which have been advanced today. I can understand the position of the hon. Member for West Ealing (Mr. J. Hudson). For many years he has been a strong and very effective attacker of the evils of drink, and he holds his point of view with such passionate sincerity that we always listen to him with great respect; but I should have thought that the logic of his position today would be that he desired to see the drink traffic prohibited altogether. If it were, we should neither be increasing nor diminishing taxes on beer or wine, or even leaving them as they are.
As to the Government's position in this matter, I accept straight away the argument that their proposal is necessary in order to improve trade relations with countries we desire to help. I thought that argument was powerful and adequate in itself, and that no further argument was needed for the proposal, although I agree that if that argument be sound it applies with just as much force to heavy as well as light wines and anything else. The Chancellor has still to answer that particular point.
I am concerned about the other argument used by the Government—that they propose a reduction deliberately in order to increase the consumption of wine. We ought to look at the considerations which are involved in this argument. The Chancellor says, "I shall reduce the tax on wine in this Budget so that you should drink more. "Suppose we do drink more—and here I shall not be able to count on support from the hon. Member for West Ealing. Suppose we fall short of requirements in this respect and, despite all the effort we can command in drinking wine, the revenue still falls short of its present point. The logic of that is that in the next Budget the Chancellor will say that there must 266 be a still further reduction in the duty on wine, and that wine drinkers must embark on the task of drinking still more wine so that the revenue may be increased.
This has only to proceed long enough for wine drinkers to become incapable of assisting the Government any further. It looks as if the Chancellor is inviting us to copy the labours of Sisyphus. As fast as we push the ball up the hill it rolls down again, so that there is no hope whatever of achieving finality. If we are to apply this principle will the Government apply it elsewhere? If we have also to smoke as hard as we can to sustain the Government it seems that a quite intolerable burden is being put upon us; neither our pockets nor our constitutions can sustain the task which is implicit in the argument advanced by the Government today. What applies to wine and tobacco applies just as well to half a dozen other things.
I disagree with the Liberal Party in this matter. The free trade argument is a dead as mutton, for the time being at any rate. That being so, we have to ask ourselves, not whether the proposal is in line with free trade theory, but whether it is a practical and wise step in the present disposition of world affairs. I think it is; I think it is enough for the Government to take their stand on that point, but if they withdraw from us the task which is to be imposed on us, I think they should find some justification for distinguishing between light and heavy wines.
I wonder whether I might ask advice from the Treasury Bench on a matter of fact. There has been a good deal of argument dependent upon a comparison between French wines and, for instance, Portuguese wines. I am not quite sure what the present position is; does somebody on the Treasury Bench know? Is it a fact that you could not, until recently, buy port in Portugal and bring it to England; not because the duty was prohibitive on it but because there was an actual physical prohibition? You were actually forbidden to import wine from Portugal. Is it a fact that now that prohibition has been lifted and, if so, for how long or by what maximum number of pipes of port has it been lifted? I think the whole comparison is meaningless.
267 I am not asking the Financial Secretary to give the answer out of his head, so to speak, but the general point is clear enough, and we ought to have an answer to it. If the fact is that what controls the amount of port brought to this country is not the duty but a physical control, I think we ought not to part with this Clause until we have been told what are the Treasury's ukases in that matter at the moment and, secondly, what are the Chancellor's intentions. Until we know these things all the arguments about a comparison between France and Portugal in this matter are without meaning.
While I am on my feet, and perhaps to enable the Financial Secretary to find an answer to that, unless he already knows it, may I put another point? If you wish to drink the best wine of any sort, you do not always necessarily go to the place where the wine is grown. Perhaps Burgundy is as good a place as any other for drinking burgundy, but it is at least arguable that Belgium is better. For historical reasons, into which I need not go now, it is easier to find the best burgundies in Belgium than in Burgundy. So, similarly, it has always been easier to find the best port in this country. Port is a highly artificial wine which has been only very gradually developed and evolved in order to suit the palates of East Anglian farmers and doctors. We find better port in this country than anywhere else in the world.
We have been debating the subject of encouraging tourists to come to this country, and almost everyone who took part in the Debates has suggested that the most important factor consists in our improving our hotels and restaurants. I do not believe that a great State ought to encourage tourism. It ought to take tourism as a by-product and as a matter of course. I believe that we are making a mistake in going directly out for it, but this House has decided over and over again, and almost unanimously, to do that.
What is the chance of having a large influx of visitors to this country so long as the drinking of the best wines is regarded as one of the gross forms of immorality, comparable only to the capacity for distinguishing between one kind of cheese and another? So long as 268 that remains the official and legislatively enforced view of this country, there cannot be any improvement in our cuisine or in our hotels, and there cannot be any successful tourism. I think that is a fair point to make and I hope that it may be considered.
The point I rose to make. was to ask what controls the importation of wines from Portugal, and how it will be affected by the changes in the duties on heavy wines, whether or not they are bottled.
§ Mr. Glenvil Hall
I can briefly answer the point put to me by the hon. Member for Cambridge University (Mr. Pick-thorn). As I understand the position, we have been making an annual agreement with Portugal. It is an overall agreement, within which we agree that so much of various commodities shall come to this country, including, of course, Portuguese wines.
§ Mr. Glenvil Hall
I say "of course" because that is part of the agreement, and because people here want to drink Portuguese wines.
§ Mr. Pickthorn
The right hon. Gentleman said "of course." I am not trying to catch him out, but it is not of course that every year a part of the imports allocated from Portugal is in the form of wine. I do not think that is a matter of course. I inquired how it had been done in practice during the last year, and how it would be done in the future.
§ Mr. Glenvil Hall
That depends upon the people who negotiate the agreement on the one side and what the Portuguese want to send us on the other. It depends also upon what the markets here think they can use. An agreement is made, and, so far as the Treasury are concerned, it is a global agreement because, unfortunately, exchange enters into it. Up to now gold has had to enter into the transaction, in spite of what was said by the hon. Member for Chippenham (Mr. Eccles).
§ Mr. Glenvil Hall
Within the first four months of this year we have consumed 240,000 gallons of Portuguese wine.
§ Mr. Glenvil Hall
I do not know, but I could go over the figures if the hon. Gentleman is interested in them. Naturally, I have not all the figures here. I think I have said enough to answer all the questions that the hon. Gentleman has put to me. What my right hon. and learned Friend has done here is to balance a number of factors. For revenue reasons it was impossible for him to extend this concession over the whole field of light as well as heavy wines. What he has done, and I think rightly, is to give relief where, in his view, and I hope in the view of the Committee, the greatest benefit will accrue to all concerned: to the Revenue, to the French and to South Africa and Australia. At the moment, the bottled wines, the light chateau-bottled kinds, are not showing any real diminution, as have other wines that have been imported in cask. The Committee will remember that I gave figures in an earlier speech on this matter. If the import of these brands of bottled wine, both light and heavy, is still keeping up and fortifying the revenue, there is every reason why my right hon. and learned Friend should concentrate upon wines coming in in cask. I think that statement answers some of the speeches which were made after I had made my earlier contribution to the Debate.
§ Mr. C. Williams
I should like to ask the right hon. Gentleman one question. He has raised the very important matter of our trade with Portugal. It is essential, as my right hon. Friend who is leading the Opposition today is aware, for a place like Bristol to have an interest in trade with Portugal. I would not expect the Chancellor of the Exchequer, who also represents Bristol, to come sufficiently down to earth to know anything about the trade of Bristol. I ask for some information on this question of increasing the global amount of our trade with Portugal. That matter should be given very careful consideration during the next 12 months. It is essential for us to encourage that trade. Consultations of a very exciting character are going on between the Treasury and the Parliamentary Secretary to the Ministry of Food. I can only hope that they will spread to the Treasury officials and persuade them to give us a ruling on this Clause and to withdraw the tax as far as possible. I see that the Chancellor of the Exchequer is beginning to smile. I am sure that all of us want 270 him to get up and say that he will yield to the Opposition and make a concession in this matter.
§ Question put, and agreed to.
§ Clause ordered to stand part of the Bill.