Clause 22.—(TIED PREMISES.) (Hansard, 19 May 1952)

§ Mr. Geoffrey Bing (Hornchurch)
It would be very unfair on the party opposite if the Committee were to pass from this Clause without some discussion. After all, it has always been the policy of hon. Gentlemen opposite to see that about 10 per cent. of their Members are directors of brewery companies, and as this Clause is described by the "Brewery Journal" as striking a hard blow at the brewery companies, there ought to be at least an explanation by the Chancellor of the Exchequer of why he should have seen fit to strike this blow at people who, as we all know, are principal contributors to Conservative Party funds.
We all know that the Chancellor very carefully worked the Excess Profits Levy so that the one class of shares that rose on the market very appreciably were the brewery shares, and it is therefore unfortunate that, under his eagle eye, this Clause should have been slipped through. It results from a long contest between the Income Tax authorities and the brewery companies. Oddly enough, it always seems to have concerned Tamplin's brewery. So far as I can recall, in 1915 they had the worst of one fall with somebody called Webb; then in 1951, they had the worst of a fall with somebody called Nash.
I am glad to see that the Leader of the House has come into the Chamber. He will remember that the last time that he and I were engaged in any controversy was on the Army Act, and he said that if only I had used a small "c" in my Amendment everything would have been all right. Unfortunately there was a big "C," and therefore the right hon. Gentleman could not accept it. So far as this Amendment is concerned the Chancellor of the Exchequer should realise that if 178 only he had put a big "T," then this Amendment would have been quite clear. But whenever he speaks of the relevant trade with only a small "t," the statement is not understandable by the public concerned.

§ Mr. Arthur Colegate (Burton)
What Amendment?

§ Mr. Bing
The hon. Gentleman is perfectly right in interrupting. He takes the point of view, as the representative of Burton, that the law as it relates to breweries is fixed and that there should never be any change in it. When I referred to an Amendment I referred to a change in the law which the Chancellor, very foolishly, in view of the hon. Gentleman's opposition, has been so unwise as to propose. I am referring to Clause 22.

§ Mr. Colegate
I am not a director of a brewery company. Has the hon. and learned Gentleman the right to make these allegations of motive?

§ Mr. Bing
I am sorry that that is not so. The Conservative Association in Burton ought to be reproved for slipping up and departing from a tradition they have maintained for the last 100 years. There really has been a most deplorable slip from Conservative principles in Burton and, in those circumstances, the hon. Member's lack of knowledge of the brewery trade is perfectly understandable.
I will return to the argument I was making to the Committee in regard to this Clause. What I am really complaining about is the somewhat mealymouthed approach of the Chancellor. Why should not he have said that this Clause refers after all to the "Trade" with a capital "T," and that this is an attempt to get a bit back from the brewery companies for which the Chancellor is giving them a little later on under E.P.T.?
We should like to know one or two figures so that we may compare what we get back and what we are giving them. Has the Chancellor any comparative figures? Can he say how much better or worse off the companies will be when the Finance Bill as a whole is passed?
I am sure that those of his hon. Friends who, unlike the hon. Member for Burton, are directors of brewery companies, and, unlike the hon. Member for Burton, have an interest in breweries, and, unlike the 179 hon. Member for Burton, are interested in the profits made by breweries, will be able to express themselves on this matter, and say whether in fact the brewery companies, who have described this as a hard blow, are justified in that description. Or whether it is one of the miserable party points which are made from time to time by vested interests who, like the hauliers, think that because they have subscribed to Conservative Party funds they ought to have a say in the legislation of the country.
We, of course, realise that the business of this Committee cannot be conducted in that way, but we think that the Chancellor ought to give some figures to set out the position. As I understand it—and I do not think there is any harm in using terms well known to those who, unlike the hon. Member for Burton, are interested in the "trade"—what the Chancellor is saying is that no longer shall Income Tax authorities pay any attention to the "dry rent"; that they shall look at what is elegantly termed, and which phrase I am sure the hon. Member for Burton would not appreciate, the "wet rent."
What is being asked for is that taxation be assessed on the wet rent. If that is so, how are we to assess the wet rent? Let us look at the Clause in some detail and try to discover from the Chancellor what is meant. We may start by saying that this Clause refers to tied premises. What are the tied premises, other than tied brewery premises, to which it refers? What other trades are affected, if any other trades are affected? It seems wrong to put in general terms a matter which refers to one particular trade.
If it refers only to the brewery trade, or mainly to that trade, how are we to assess this wet rent? How are we to assess the value of licensed premises? The trouble with regard to such premises —and this will lead to a long discussion when we come to the question of licences in the New Towns Bill, a matter which seems somehow to have been dropped from the programme at the moment—is that this is a monopoly created by the State, which is now being exploited by the private individual.
The State, for reasons of sobriety, said there was to be only a certain number of public houses, and this has been ex- 180 ploited by the brewery companies to control those outlets. What we have to consider is how valuable are those outlets. No doubt the Chancellor will give some indication about how it is proposed to assess the value of those outlets. How are we to find out what is the true wet rent of the premises?
Can the Chancellor tell us—because we understand that these discussions go on—whether there has been any consultation with the brewers concerned, either before the Clause was produced or afterwards, and what are the views of the brewery companies with regard to it? I am quite sure that several of his hon. Friends, who were elected through the assistance of the brewery companies, will seek to use this opportunity to divide the Committee in order to put forward the views of the breweries concerned. Therefore, before they take action of that sort we ought to hear whether this matter has been discussed with the brewers' society and that the brewers have, or have not, expressed their approval of this Clause. If they have then we know where we are, and we shall know that the remarks in the brewers' trade journal are the mouthings of Conservative journalists.

§ The Solicitor-General
I do not think that any Member was surprised in the least to find that the hon. and learned Member for Hornchurch (Mr. Bing) was unable to resist the temptation to make a speech on a Clause entitled "Tied premises." But, having said that, I must also add that I was unable to discover whether he was in favour of the proposal in this Clause, or whether he was against it. He certainly gave himself a great deal of pleasure by what he said; it might not have been confined to him alone, but he appeared to enjoy himself more than did anyone else.
I am surprised that he should have sought to accuse my right hon. Friend of being friendly to the brewers when what this Clause does is obviously to correct an anomaly which has gone on for a very long time and which the last Government did nothing to correct. Indeed, this anomaly has gone on since 1914; it has not been corrected by Governments since that year, and is now being corrected by a Government accused of undue friendliness towards the brewers.

§ Mr. Bing
I thank the hon. and learned Gentleman for giving way, but I must ask him to say which Governments have been in power between 1914 and 1945.

§ The Solicitor-General
The hon. and learned Member knows as well as I do what the answer is, and it shows what influence he had on the last Government, because this anomaly was not then corrected.
To return to the point—and I am sure the hon. and learned Gentleman will support our proposal—the position is that, ever since 1914 the difference between the annual value of the licensed premises and the "tied" rent has been allowed—and allowed legally—as a reduction from the profits of the brewery. The hon. and learned Gentleman will know of the Usher's Wiltshire Brewery case. I need not go into the basis behind that decision; it is a decision which has been somewhat expanded in a recent Tamplin case, and H.M. Government and the Millard Tucker Committee, take the view that this anomaly should be amended.
The effect of the Clause will be to ensure that the annual value will be treated as the rent of the tied house, even although the "tied" rent be less than the annual value. That is to say, that will be the position where the brewer is the owner of the premises. If the brewer is himself a lessee of the premises and is, therefore, making a payment in rent for them, so that a deduction is made from his profits, this complicated Clause comes into effect. I agree it is complicated, but its effect is to preclude any possibility of the brewer paying tax on less than his true profits.
I was asked a question in the course of the speech of the hon. and learned Gentleman about what other trades are affected by this Clause. Of course, he knows that it is intended primarily to apply to the brewers. It is the brewers who "tie" premises, and he wants to put a stop to the practice; but, despite his objections to it, it is not beyond the bounds of possibility that other trades may take tied premises. In the event of that occurring, they will come within the provisions of this particular Clause. I hope I have made the purpose of this Clause clear, and that I have dealt with the question put by the hon. and learned Gentleman.

§ Mr. Christopher Hollis (Devizes)
May I clear up one doubt I have in my mind? The hon. and learned Member for Horn-church (Mr. Bing) commented on the conclusion of some of his hon. Friends that the brewers are the principal subscribers to Conservative Party funds, while many of his hon. Friends have already on the Order Paper a Motion objecting to the Government's transport proposals on the grounds that the road hauliers are the principal subscribers to Conservative Party Funds. Which is it?

§ Mr. Bing
We should not leave this Clause with so many matters unresolved. I am sorry there is confusion among my hon. Friends on this side as to who are the principal subscribers to Conservative Party funds, but it would have been dispelled if the party opposite had submitted themselves to the judgment of the House when, in the last Parliament, we passed a Motion asking them to publish their accounts. They have not seen fit to do so, and therefore it is a little hard to blame us for the confusion.

§ The Chairman
This discussion is going beyond Clause 22.

§ Mr. Bing
I appreciate that, Sir Charles, but I felt it my duty to answer the hon. Member for Devizes (Mr. Hollis).

§ Mr. Hollis
The hon. and learned Member is not at all confused. He made a definite statement that the brewers were the principal subscribers. If, as he says, the accounts were not published, how he knows that I do not know.

§ The Chairman
Order. We cannot argue that point on this Clause.

§ Mr. Bing
I do not want to say anything out of order. If I may, I will deal with the points that are raised. A number of tied premises are quite different from these tied premises which we have been discussing, and we ought to consider them. We ought to hear from the Chancellor what he is going to do about cinemas. For example, the Rank Organisation has a great many cinemas which are tied premises, which can show only those films sent to them by the distributing organisation. How are they to be taxed?
What about garages? There are a great many which are tied in the sense that they are owned by the same person 183 and then subjected to a rule that they must sell only certain petrol. Are we to have an undertaking that garages are to be included?
Thirdly, the learned Solicitor-General did not deal with what I think is the very important point as to whether there was any consultation with the Brewers' Society on this matter. Fourthly, there is the point, which I hope will be dealt with, as to whether, when the hon. and learned Gentleman talks of the annual value, he means the annual value which those premises would bear if they were not licensed. The difference is in regard to the rent, which is so low—lower than the rent which would be paid if the premises were let on the open market without a licence. The annual value of licensed premises is the annual value which they would bear if unlicensed.
When we start on such a valuable reform as this, why should we not go on and carry it through, and ensure that the amount deducted is the amount which the premises would pay if let unlicensed? Can we have from the Solicitor-General a statement why he commenced this task, after reproving the Labour Government, the Conservative Government, the Coalition Government and everybody else for not having dealt with it? Will he not tell us why the charge does not extend to the rent paid for other premises which are licensed?
I should like an answer to these four questions. As the Solicitor-General found it difficult to carry them in his mind, and I did not get an answer to them before, I will repeat them. First, is it proposed to apply this provision to cinemas; second, is it proposed to apply it to garages; third, has there been consultation with the brewers; and, fourth, what is it proposed to do with regard to the valuation of premises licensed to a brewer when the annual value of the premises has been calculated on the value of the premises unlicensed?

Mr. Glenvil Hall
Are we not to have a reply? We are not trying to delay the Committee unduly. My hon. and learned Friend has put points which ought to be answered. If the Solicitor-General cannot answer them, perhaps the Chancellor of the Exchequer will do so. I think it is unfair to the Committee that no reply should be given to questions 184 put in all seriousness by my hon. and learned Friend.

§ The Solicitor-General
I find it difficult to accept the statement that these questions were put seriously. It is also difficult to accept the view that the hon. and learned Gentleman has read the Clause. If he had, he would see that it is general in application, and that if the circumstances of the letting of a cinema, or garage, are such as to bring it within the Clause, then the Clause will apply in that instance. He tried to suggest that the brewers were getting away with something because the standard of comparison was not the full letting value of the premises. I can assure him that he is wrong. In future that will be the standard taken.