HC Deb 19 June 1951 vol 489 cc340-8

In section thirteen of the Finance Act, 1942 (which provides for a five per cent. reduction of duty on publicans' licences in respect of diminution in supplies of wines and spirits), for the words "five per cent." there shall be substituted the words "twenty-five per cent." —[Sir J. Mellor.]

Brought up, and read the First time.

Sir John Mellor (Sutton Coldfield)

I beg to move, "That the Clause be read a Second time."

The Finance Act, 1942, reduced the duty on publicans' licences by 5 per cent., and the Clause proposes to substitute for that a reduction of 25 per cent. An identical Clause was considered by the Committee in 1946 when the then Chancellor of the Exchequer gave some very definite encouragement, saying: My sympathies are deeply engaged with the ideas … which lie behind this Amendment. A little later he said: Who knows but that next year what is impossible now will he possible."—[OFFICIAL REPORT, 25th June, 1946; Vol. 424, c. 1126.] The need for some relief was great then, but it is even greater now, although for a very different reason.

In 1946, the great trouble was that the publicans could not obtain adequate supplies. Now the trouble is that they cannot sell the supplies which are available owing to the very serious shortage of purchasing power. Clear evidence of that is to be found in the figure of the output of beer for United Kingdom consumption for the first three months of this year, which was lower than for the corresponding quarter of any year since 1940. That is a rather striking fact, and it shows the diminution in consumption is entirely due to the fact that the customers have not the cash. Of course, whisky is exceptionally scarce, so scarce that the demand is unsatisfied. In the case of all other beverages they are plentiful, but only so because the consumers cannot afford to buy.

The duties on spirits were heavily increased by the Finance Act, 1948, and that had a damaging effect upon the trade. Unfortunately the very small reduction in the Beer Duty in the Finance Act, 1949, produced little effect. I would point out that this Clause relates solely to publicans' licences. The duty payable was fixed in 1910, and the amount was fixed at half of the gross annual value of the premises for rating assessment. The only reduction was that I mentioned, the reduction of 5 per cent. in 1942, and I would submit that there is now a strong case, in view of the experience of the trade, for a much more substantial reduction.

I am told that altogether in the country there are about 70,000 licensed houses and that of those approximately 14 per cent. are managed houses, 68 per cent. tied houses and 18 per cent. free houses. Apart from the managed houses I should make it clear that no gain would accrue to the brewers from this Clause being incorporated in the Act. In the case of tied houses the duty is almost invariably paid by the licensees and of course in the same way in the case of the free houses. Therefore, the benefit of this Clause would go almost entirely to the licensees.

In 1946 the then Financial Secretary to the Treasury stated that the reduction in Duty which was asked for then and for which I am asking now would cost £600,000. That is reported in HANSARD on 25th June, 1946, at column 1122. The Chancellor of the Exchequer estimated that in the current financial year the total revenue from beer and alcoholic drinks should be £368 million. Therefore, the relief for which I am asking would, if granted, represent something less than one five hundredth part of the total revenue from beer and alcoholic drinks. I think I may claim to be making a very modest request in a very good cause.

8.30 p.m.

Lieut.-Colonel Sir Thomas Moore (Ayr)

In supporting the Clause I feel somewhat embarrassed, having spoken on the same subject on two successive days, partly because my constituents, should they read my remarks, may gain the impression that I have a personal interest in the matter. I suppose that I have, but I think it is an interest that is shared by practically every other Member of the Committee, except, possibly, the hon. Member for Ealing, North (Mr. J. Hudson), and some of his "fellow travellers."

In justification of my intervention I advance the plea that whisky, like food and exercise, if taken in moderation, has no unharmful, but possibly beneficial, effect on the community as a whole. It is only when any one of these things is taken to excess that it becomes a real menace to the physical and moral health of the community. Although I may not have much of a personal interest, I have a very distinct national interest, and I want to address my remarks to a rather narrow angle: that is, to the whisky side of the Clause.

We all realise, especially Scottish Members, how very important to Scotland is the manufacturing side of the industry. Secondly, although this has no strict relevance to the Clause, it is important to our dollar position. As I pointed out a few nights ago, when speaking to an Amendment moved by my hon. and gallant Friend the Member for Perth and East Perthshire (Colonel Gomme-Duncan), there can be no possibility of a healthy and permanent foreign export trade unless it is backed by a satisfactory home market.

As long as the publicans are strangled in their efforts to sell the products of Scottish factories, so also will our home market be strangled. That is one of the chief, if not the main, reasons why I support the Clause. We must give the publican a chance to sell his wares. We must make it profitable for him to sell them, and by doing so we shall be helping to improve the whole economic situation.

Mr. Manuel (Central Ayrshire)

Before he leaves that point, will the hon. and gallant Member explain how a reduction or an increase in the amount which a publican pays for his licence interferes in any way with the selling of his wares?

Sir T. Moore

As my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor) has pointed out, the charges on the publican are excessive. In the First World War, owing to the shortage of supplies, the duty on publicans' licences was reduced by 5 per cent. to 75 per cent. Yet today and during the recent war, with an enormously reduced turnover, the reduction is still only 5 per cent.

Mr. Messer (Tottenham)

It makes no difference to the licensee.

Sir T. Moore

The Chancellor of today is not as wise as the Chancellors of 25 and 30 years ago, and what is to be left of this industry for the Conservative Chancellor of the future I really do not know.

I often wonder whether it would not be wise for the Economic Secretary to ponder over a sliding scale for this duty; whether it could not be based on the amount of spirits which a publican sells during the year, so that he could either pay in arrear or get a rebate, according to the amount he sells. It seems to me quite unfair that there should be a standard rate which has no bearing whatever and no relevance whatever to the amount of spirits that the publican sells during the year. I put that out for the thought and consideration of the Economic Secretary as a fair way out of the present somewhat irresponsible method of taxing publicans.

The Deputy-Chairman

This is a definite sum; it is not for a sliding scale.

Sir T. Moore

Yes, you are perfectly right, Sir Charles, and, of course, I propose to obey your Ruling.

As my hon. Friend has pointed out, it is just five years since we got one crumb of hope from the then Chancellor. My hon. Friend has quoted his remark on that occasion when he was giving the 5 per cent. and he said we would hope to do better things in the future. If it is to be another five years before anything concrete happens, there will be no licence holders and no trade for those licence holders to sell to and I can see the Chancellor looking round for a trade to rescue. He will have succeeded in having contributed his share to destroy one of the fundamental trades of our country. One can see the dead goose giving a cackle of cynical amusement, but the Chancellor may possibly have lost his egg.

I therefore come back to my original proposal that there should be a graduated tax which would reflect—

The Deputy-Chairman

I have already stopped the hon. and gallant Member talking about a graduated tax.

Sir T. Moore

I was carried away by the wisdom of my suggestion.

I shall not detain the Committee further, but will leave the matter in the hands of the Chancellor because I believe that there is some very powerful argument in the case we put forward and I believe that if the Chancellor were to accept the Clause, even as it stands, he would in due course find that he would benefit substantially and the publicans would also benefit.

Mr. Jay

Like the hon. and gallant Member for Ayr (Sir T. Moore) I am rather conscious of the fact that we discussed this subject to some extent in a way yesterday. I said then that if we were to take the action then suggested and diminish the privilege of the publicans in the matter of the size of the bottles sold by off-licensees the publicans might think themselves entitled to some compensation for a reduction of the licence fee. I said that this did not seem a year in which we should pick out that particular form of tax relief and I can only add to what I said then that the case for such a relief would be even smaller if the other action had been taken on the matter of the size of bottles.

After all, this is a year when we are having to increase taxation rather than to reduce it and it would be out of relation' to the rest of the Bill if we were to make this concession. I think the hon. Member for Sutton Coldfield (Sir J. Mellor) was exaggerating rather when he talked of publicans being stricken, or strangled, or prevented from plying their trade by the present level of licence duty. Nor do I think the duty has any practical relevance to the present rate of exports of Scotch whisky.

Sir H. Williams

I was a little disappointed in the Financial Secretary. Like the two previous speakers I have no connection with this industry except that as a director of an insurance company I insure a lot against the loss of their licences, but that is rather remote. However, I am told that the publicans are having rather a bad time, worse than they have had for many years past. Because of that, they are entitled to some remission of the burden that falls upon them.

We all realise that this is a year of increased taxation, but if people are suffering economically because of the burden of taxation they carry, even though indirectly, due to the fact that the price of the commodity they sell is exceptionally high, and they have to meet this overhead expense irrespective of the amount they sell, then on the grounds of sympathy they are entitled to sortie consideration.

Just as I thought when I moved the "small bottle" Clause yesterday, the on-licence holders are entitled to sympathetic consideration from the hard-hearted team on the Government Front Bench. The Chancellor is missing. I suppose that he is at the present moment in an unlicensed restaurant. [Horn. MEMBERS: "Oh!"] Yes, the Kitchen Committee of this House does not pay licence duty and even then it loses money. However, that is in passing, but I thought I would mention it to remind the Financial Secretary that there is a case behind this, namely, that here is a body of traders who are having a very thin time. They are heavily burdened by the taxation on the commodity they sell, and they are also burdened by this direct charge which they have to pay in any event. They are entitled to some consideration other than has been given to them tonight by the Financial Secretary to the Treasury.

Mr. Gerald Williams (Tonbridge)

I agree with every word spoken by my hon. Friend the Member for Croydon, East (Sir H. Williams). If the Financial Secretary is not aware of how some of the small beer houses are being hit, I will put it to him in this way: when they sell a pint of beer they make lid. If they have quite a good evening in a small country public house they may sell 60 pints of beer. Their reward for this is 7s. 6d. It is impossible for them to carry on on those lines and so they have to go out and do other work.

When it is considered that they should be able to make their living out of the house they are keeping, it means that they are having an extremely bad time if they are forced to do other work owing to the high nature of this tax. It is a little easier where spirits can be sold, but this is not possible in many small country public houses, and in the places where whisky can be sold, it is not always obtainable. So they are being hit all along the line.

The law of diminishing returns is coming in here and the Chancellor may be forced to do something about it because, owing to the high nature of the tax, there is less being sold. It is not like cigarettes. People crave for cigarettes and will have them. I dare say that the right hon. Gentleman might even put a little more on cigarettes and people would still smoke, but some people consider beer to be a luxury and, when things are tight, they have to cut down on it. If it gets any worse, the Chancellor may well be forced to reduce this tax.

His predecessor said he would like to do something about it. He went further and said it was the sort of thing he would like to do. I would add to that, "Me, too." It is a thing we would all like to do, and it may well become necessary owing to the rising costs and the lower consumption. The Financial Secretary has given us only a very brief reply, so I hope he will consider it again and say a few more words to those who have spoken from this side of the Committee.

Lieut.-Commander Braithwaite

In resisting this Clause I thought the Financial Secretary was on sound grounds this year when he pointed out that it was a year in which concessions could not be made, but that is no reason for the case not being deployed. If I may return to one of my favourite descriptions, I think the publicans should take their place in the annual parade so that their case should be kept under consideration.

My hon. and gallant Friend the Member for Ayr (Sir T. Moore) put the debate on a rather nationalistic level for a few minutes. Indeed, there was a moment when I thought he was going to discuss the Estate Duties. It is worth the while of hon. Members who represent English constituencies to remember that the problem has now passed far beyond that of the consumption of spirits. There has also been a severe falling off in the consumption of beer, and the figures show it. That may bring joy to the heart of the hon. Member for Ealing, North (Mr. J. Hudson) who is absent at the moment.

8.45 p.m.

There are many ways in which publicans can be assisted. The beer duty is very high. Many reasons are adduced for the falling off in consumption and the lack of attendance at public houses. I heard one licensed victualler in Bristol say that the advent of television had done a good deal to keep people at home in the evenings. There was a good deal in what he said. Perhaps they took their beer home with them but, anyhow, they were not patronising him, and he was considering what he could do to get a television screen into his house to see if that would bring the customers back.

These are the sort of factors we have to consider. We should remember that this matter was last reviewed in the Finance Act of 1942, and that nearly 10 years have passed and there have been many social changes. While I thought that the Financial Secretary was on sound ground in resisting the Clause this year, I hope that the problem has not been dismissed from his mind or from the mind of the Treasury. It is the sort of thing which ought to be kept under review.

Mr. Douglas Houghton (Sowerby)

The hon. and gallant Gentleman can be quite sure that it will be.

Lieut.-Commander Braithwaite

I fear that the hon. Gentleman's interruption had a somewhat sinister implication. Knowing him as we do, I would suggest that what he had in mind was a raising rather than a lowering of the duty. I have never known the hon. Member advocate in this Committee that we should let anybody off any taxation. My hon. Friend the Member for Tonbridge (Mr. G. Williams) talked about conditions in "pubs" being tight and I would say that the hon. Member for Sowerby (Mr. Houghton) is the sort of person who would drive people to getting tight.

I hope that this problem will be borne in mind. There is no doubt that it exists. Licensed victuallers are undergoing a falling off in their customs and I hope that, from year to year, the Treasury will keep this matter under review. That remark is made not only for the benefit of the Chancellor who has introduced this Finance Bill, but for the benefit of his successor who may or may not be within earshot at the present moment.

Dr. King (Southampton, Test)

I am glad that the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite), raised the important issue which he has just mentioned. I agree with most of what he said, apart from his diversion at the expense of my hon. Friend the Member for Sowerby (Mr. Houghton); but while I agree with him that it is impossible for the Chancellor to make this concession at a time when we are increasing tax burdens everywhere, I think it is about time that some Chancellor looked at the savage, inequitable nature of the burden which the licensed victualler has to bear. The whole structure of this taxation should be studied.

I intervened to say that the burden which the licensed victualler faces could have been easily alleviated if the brewers had passed the profits that they are making on the increased price of ld. which they have placed on beer, or, alternatively, if they had not raised the price of beer and had allowed the licensed victuallers to have the increased consumption which there would be apart from that. I was interested in what was said by the hon. and gallant Member for Ayr (Sir T. Moore). Yesterday the national newspapers reported that a Scottish brewery made a 60 per cent. dividend last year. Out of these gross dividends the licensed victuallers might well have been helped.

Question put, and negatived.