§ Subsection (1) of section four of the Finance Act, 1949, shall have effect as if the Schedule (Wine (Rates of Customs Duty)) to this Act were substituted for the Second Schedule to that Act.—[Mr. Russell.]
§ Brought up, and read the First time.1654
§ 12.15 a.m.
§ Mr. Russell (Wembley, South)
I beg to move, "That the Clause be read a Second time."
At this late hour I propose to be brief on the subject of Empire wines, if only for the fact that I have been lucky 1655 enough in the ballot for the Adjournment tonight, and have yet another speech to make. The object of this Clause and the Schedule referred to is to lower the Customs Duty on Empire wines, and thus increase the preference on these wines. The present rate of duty gives a preference of 15 per cent. in the case of light wines and 20 per cent. in the case of heavy wines. That is omitting minor details like additional duties on sparkling wines and things like that. The rates we propose would put a preferential duty of 70 per cent. of the full rate in both cases, which would leave an Empire preference of 30 per cent.
The Empire wine trade has always been vitally influenced by changes in the rates of preference. Usually, when there has been a preference on Empire wines it has been 50 per cent. That is what it was in the seven years before the war. The duty on light wines then was 4s. at the full rate and 2s. at the preferential rate, and on heavy wines 8s. at the full rate and 4s. at the preferential rate. As a result of this preference there was an increase in the proportion of wines imported into this country from Empire sources. Both South Africa and Australia increased their output of wines by 50 per cent. during the years 1931 to 1937.
During the war the duties both on Empire and foreign wines were heavily increased, and as a result the value of the preference was decreased. In 1948, the Chancellor of the Exchequer increased the duties on light wines up to 25s. for the full rate and 23s. for the Empire rate, which left the margin of preference at only 8 per cent. For heavy wines the rates were 50s. and 40s. which gave a more substantial margin of 20 per cent. Last year a concession was made which had the effect of increasing the preference on light wines to 15 per cent. We say that this is not enough in view of the harmful effect on the imports of Empire wines in the last few years. We would like to see the rates of preference increased to 30 per cent. in both cases as a step towards what we hope will be the restoration of the 50 per cent. preference of pre-war years.
§ Mr. Braine (Essex, Billericay)
I am particularly glad to support my hon. Friend the Member for Wembley, South (Mr. Russell) on this proposed new Clause. I will command the approval, 1656 I think, of most hon. Gentlemen on both sides of the Committee when I say that no fiscal action should ever be taken by a British Government which has the effect of restricting trade between Commonwealth countries and ourselves, or of damaging Commonwealth commercial relations. It is a fact that two years ago the imposition of heavy increases in the full duties on wines largely nullified the preferences hitherto enjoyed by Empire wines.
I trust I shall be in order in saying that this proposed new Clause can only be understood against the background of the decline which has taken place in the last two years in the import of Empire wines. I do not wish to weary the Committee with figures, but it is relevant to say that in 1947 Empire wines constituted 44 per cent. of our imports of wines, but by 1949 they had fallen to 26 per cent. The actual decline in volume was from 4,407,091 gallons in 1947 to 1,959,764 gallons in 1949. That represented a decline of 55 per cent. in two years, and it was experienced by all the Empire wine producing countries.
There is no doubt that the prohibitive duties imposed two years ago have had, and are continuing to have, a serious effect upon the Empire wine industry. In this new Clause my hon. Friend and myself are asking for a modest 70 per cent. preferential duty on light and heavy Empire wines. That will give a 30 per cent. preference in each case, in place of the present rates of 15 per cent. on light wines and 20 per cent. on heavy wines We do so for at least two good reasons. The first is that it should be a matter of common concern to hon. Members on both sides of this Committee to see that Empire industries continue to flourish and enjoy their traditional market in this island.
The second reason is a more materialistic one. It is that the main wine producing countries in Europe—France and Spain and Portugal—lie within a comparatively short distance of their market in this country, whereas Empire wine producers have to transport their product across thousands of miles of sea, through varying climates, and, as a consequence, have to bear heavy transportation charges and other costs. For that reason alone I suggest that there should be an increase in preference.
1657 It is a sad commentary—I hope I shall be in order in saying this—that this is the only country in Europe where wine is a luxury. Before the war the ordinary man and woman who liked an occasional glass of wine could buy a bottle of Empire wine for about 3s. and I make a last appeal to the Chancellor of the Exchequer carefully to consider this new Clause, in the hope that that day may return, and return soon.
§ Mr. Jay
The hon. Gentleman who moved this new Clause was commendably brief and, if I may, I shall be the same. This Clause would, of course, increase the preference for Empire wine compared with foreign wine. That, unfortunately, would be contrary to the Geneva Agreement on trading tariffs, and that, I am afraid, is a fatal objection. I believe that some hon. Members opposite are in favour of even closer economic union with Europe than with the Commonwealth—[HON. MEMBERS: "No."] We are glad to have that assurance, because we also think that there must be some limit to the rate at which one can move in that direction. But we are in favour of keeping treaties which' we have signed with both European and Commonwealth countries. I am sure that hon. Members will realise that Commonwealth countries, including those particularly concerned—Australia and South Africa—were present at the Geneva negotiations, and the agreements reached there were, of course, beneficial in one way or another to all the countries concerned. That being so, I do not think that hon. Members opposite would really wish to push this case tonight.
§ Mr. Braine
I will not push the hon. Gentleman, but can I ask if representations were not made to him personally by the High Commissioners for South Africa and Australia, and that when they were made he promised consideration? With what result I do not know.
§ Sir Ian Fraser (Morecambe and Lonsdale)
Could the Financial Secretary assure us that there is no room within the terms of the Geneva Agreement for any increase in preference on South African light wines, because I thought that, while drastic changes were governed by Agreement, any small change, if he cared to make it, could be made.
§ Sir H. Williams
I am glad to have heard the revealing statement that we have so tied ourselves up that we are no longer fiscally free. I think that three months is requisite in order to get out—[AN HON. MEMBER: "It has not been ratified."] I know that the Havana Agreement has not been ratified, except by Liberia; but the Geneva Agreement has been. That argument is not good enough, and I dislike the cheap sneers that we on this side were not the chief protagonists of Empire trade. We were responsible for Empire preferential duties, and that had the marked opposition of the Socialist Party. They like to forget that nowadays, as they forget so many of their misdeeds.
The fact is that, as the years went by, these preferences were improved. There was differentiation between the heavy and the light wines, and the fact remains that this is an integral part of the policy which this side has always supported, and which the other side, in days before the war, always opposed—particularly in 1931 and 1932. What we want to do tonight is to restore what we did before the war in the matter of this preference.
At this hour, I do not want to take up the time of the Committee, but I think we should be reminded that Cobden in 1859—[Interruption.] Hon. Members opposite have not heard of Cobden, but I understand that is because he has only one representative left in the House of Commons. I was about to say that in 1859 we had a treaty with France which resulted in wiping out Imperial Preference on wines so that South Africa, which had been exporting 600,000 gallons a year, sent in 20 years later only 20,000 gallons. The wine farmers of South Africa were of Dutch extraction and they were numbered among the voortrekkers who caused so much trouble later on.
Hon. Members opposite are unfamiliar with all these things, but let me remind them that by 1939 we had built up a different position, and it is not unreasonable that we should move this new Clause. I hope that between now and next year the Financial Secretary will take steps to free us of the most hampering 1659 engagement entered into at Geneva whereby we are prohibited from doing a whole lot of things which this country and this Parliament ought to be free to do.
§ 12.30 a.m.
§ Mr. Eccles
I am not in favour of increasing this Empire Preference unless I am sure that better quality wines will come. I am told by my friends in the Empire that they do produce some very good wine but do not send it to us. I would like to have that good wine, and I would be very grateful to be able to drink more Empire wine. I want to encourage them to send us their good wine. I really am ashamed of the argument put forward by the Financial Secretary. He advances this Geneva Agreement when it suits him, because he says he is tied to the Americans and therefore cannot increase the preference. When he comes to argue over the European Payments Union, whose Government is it says that they must have the right to discriminate to protect their own country? I wish to say, quite definitely, that when it suits His Majesty's Government they advance this Agreement with the Americans. When it does not, in many negotiations—
§ Mr. Eccles
The argument advanced by the Financial Secretary is that this country, in company with a lot of other countries, has agreed not to increase their preference. In the same Agreement are various Clauses about discrimination—[HON. MEMBERS: "No."]—about nondiscrimination, about the sources from which imports come. When it suits the Government to break these, they do break them, and it is very dishonourable.
§ Sir W. Darling
I hope, in dealing with this Clause, to suggest that Scotland is in the British Empire and that whisky would come under "Empire wine." [Laughter.] Apparently that would be out of order, so I shall content myself with asking this question. Are we to understand that in future this Committee has no control over such matters with which this Clause attempts to deal; and that already these matters have been settled outwith this Committee, by an arrangement to which this Committee was not a consenting party; and that, in future, arrangements 1660 regarding wine between, for example, ourselves and South Africa, are matters which we cannot usefully discuss? If that is so, it is a grievous position which we should take steps to remedy.
§ Sir H. Williams
The Chancellor repudiated the statement of my hon. Friend that this was an agreement with the Americans. Surely, everybody knows the Geneva conference would not have taken place but for the American Loan. It was one of the conditions, and the Americans have sought ever since then—
§ Sir H. Williams
It is no good the Chancellor shaking his head. Everybody knows it. One has only to read the Debate in December, 1945—I was not a Member of the House then, but I read it—to know that the Geneva conference was entirely a consequence of, and was one of the strings attached to, the American Loan, which the Chancellor and his predecessor have wasted. The Geneva conference would not have taken place but for the American Loan. The Chancellor knows that perfectly well, and when he shakes his head he is shaking his head against his own knowledge.
§ Sir S. Cripps
The hon. Gentleman is completely wrong in everything he has said. I was at Geneva, I took part in all the discussions myself, and I know what the reason and the cause of them was.
§ Question put, and negatived.