HC Deb 23 June 1953 vol 516 cc1758-74

Section four of the Finance Act, 1949 (which imposes duties of customs on wines), shall have effect as if the Second Schedule to that Act were amended by the substitution of £ "1 5 0" and £ "0 15 0," for £ "2100" and £"20 0," respectively, as the rates of customs duty for wines other than light wines, being still and not in bottle, of non-Empire production and of Empire production, respectively.— [Mr. N. Macpherson.]

Brought up, and read the First time.

Mr. N. Macpherson

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

The object of this Clause is to reduce the taxation on heavy wines from £2 10s. to £1 5s. per gallon in the case of foreign wines and from £2 to 15s. in the case of Empire grown wines. In 1949, the late Sir Stafford Cripps reduced the duty on light wines in cask from 25s. to 13s. with a 2s. Imperial Preference. He left unaffected the duty on light wines in bottles at 27s. 6d. with a 3s. preference, and he also left heavy wines in cask at the heavy rate of 50s. on foreign wines and 40s. on Empire wines, with additional charges of 2s. 6d. and 1s. 6d. respectively on wines imported in bottle.

I think it is important to have a look at Sir Stafford Cripps's own reasons for doing this. This is what he said in his Budget speech in April, 1949: 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, which will not only benefit the Exchequer, but will also assist our trade with France and with the wine-producing countries of the Commonwealth."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2092.] What has been the result? The Exchequer has certainly not suffered. Indeed, it can be said that the Exchequer has benefited. Imports of wines from France rose from 564,000 gallons in 1949 to an average of 1,716,000 gallons in the years 1951 and 1952. On the other hand, imports of wines from the Commonwealth, which had averaged some 4,316,000 gallons in the years 1947 and 1948, and were just under 2 million gallons in 1949, were slightly lower in 1952. What was the reason for that? The reason was given by Sir Stafford Cripps, almost in anticipation, during the Committee stage of the Finance Bill in 1949, when he admitted that most of the Commonwealth wines imported into the United Kingdom were heavy wines, that is, not exceeding 27 degrees proof spirit, and, therefore, would not benefit at all from the concession he made at that time.

One of the principal reasons for this, of course, is that light wines do not travel well from over the other side of the Equator, so that Sir Stafford Cripps's concession, so far from helping the Commonwealth trade, actually handicapped it. I suggest that it is high time that that handicap was removed.

In pre-war days the duty on heavy wines was 8s. per gallon with a 50 per cent. Preference, and on light wines it was 4s., also with a 50 per cent. Preference. Today, the duty on Empire heavy wines is 10 times what it was prewar, while the duty on European light wines is the comparatively mere matter of three and a quarter times. The effect on Empire wines is all the more serious because of the practice of importing European wines at under 25 degrees proof and subsequently fortifying them —that, I believe, is the expression used— and raising them to over 27 degrees proof.

Sir Stafford Cripps's action directly encouraged this practice to the detriment of the Empire producers. The duty on a wine of over 27 degrees proof is nearly four times that on a wine of 25 degrees proof, and that is not only manifestly unfair but is bound to cause a distortion in the wine trade, and that distortion should be corrected as quickly as possible, because the longer it is continued, the more vested interests it creates, the more difficult it will be to alter it.

What is, perhaps, especially remarkable is that this favouritism shown for light wines by a Socialist Chancellor of the Exchequer, in so far as it discriminates between one section of the community and another, discriminates in favour of the well-to-do. Light wines are mainly consumed by the richer sections of the community, whereas before the war the Empire ports and sherries were becoming more and more popular with the less well-to-do.

All that we are asking the Chancellor to do now is to do for heavy wines what the then Chancellor of the Exchequer did for light wines in 1949, and bring them once again into something like the same relationship as existed before the war. We do not go quite so far as to restore the relative position between Empire heavy wines and European light wines as existed before the war. Then, of course, the duty was identical. We still leave a slight margin in favour of the European wines.

I appeal to the Financial Secretary to reduce this duty. It is a crippling discrimination against Empire wines. I quite realise that it will benefit other producers at the same time, but we ask my hon. Friend to do three things which, I think, will be dear to his own heart: first, to help Commonwealth trade; secondly, to rectify an injustice; and, thirdly, to give pleasure to many less well-to-do people, who like a glass of Empire wine.

All this he can do in all probability without sacrifice to the Exchequer. The reduction in the duty on light wines has actually benefited the Exchequer. In 1948–49 the clearance of light wines in casks amounted to 985,000 gallons with the duty halved, and in 1950–51 they were just over 3 million gallons so that the Exchequer actually benefited. What we are suggesting is that the Chancellor will do good all round if he accepts this new Clause, and I commend it to the Committee and the Government.

7.30 p.m.

Mr. Ronald Russell (Wembley, South)

I beg to support the new Clause, which has been moved so admirably and comprehensively by my hon. Friend the Member for Dumfries (Mr. N. Macpherson). Three years ago, when several of my hon. Friends and I were sitting on the other side of the Committee, we tabled a new Clause designed to reduce the duty on Empire wines only. I must confess that I am in one sense sorry that this new Clause does not do the same thing. We were told by the then Financial Secretary to the Treasury, the right hon. Gentleman the Member for Battersea, North (Mr. Jay) that that was ruled out by the General Agreement on Tariffs and Trade, which, of course, prevents any increase in the preference on Empire wines. My hon. Friend has taken care to avoid that pitfall in putting down this new Clause by proposing a reduced rate on both foreign and Empire wine, leaving the preference at exactly the same rate.

I should like to emphasise what he has said about the very heavy discrimination against Empire wines. It is rather incredible to think that the duty on Empire heavy wine should be 10 times what it was before the war, whereas the duty on heavy foreign wines is only about six times what it was before the war. I should also like to emphasise that the heavy wine industry in Victoria, Australia, has been developed to a great extent by ex-Service men of both world wars. Their occupation will be endangered if there is a continuation of these very exorbitant duties on Empire wine, because they will tend to reduce consumption very much more.

I should also like to stress in another form the point put by my hon. Friend about the result of the reduction of duty on light wines by Sir Stafford Cripps four years ago. I understand that it resulted in an increase in the receipts from the duty by 50 per cent. That is a very satisfactory result, which ought to encourage my hon. Friend to think kindly about this new Clause.

There has also been reference to the type of consumer who likes heavy wines. I understand that of all the port drunk in this country before the war nearly two-thirds was supplied through public houses, mainly in the form of a glass of port. That shows with which section of the community these heavy wines were most popular. It was not with those who go to London clubs, and who, some people imagine, are the only people who drink port wine.

Another point is that the purchase cost of foreign or Empire wines is very low. Most of the cost goes on duty, and, therefore, any increase in the imports of foreign wine will only mean a very small amount of foreign currency. I hope that the Treasury will not be frightened by that particular point.

In conclusion, I hope that my hon. Friend the Financial Secretary will be able to look favourably upon this Clause. As I said at the beginning, I wish it applied to Empire wines only, because I believe we ought to do everything possible to encourage those wine-growers. I realise that at the moment the General Agreement on Tariffs and Trade rules out any actual increase in the preference, but this reduction in duty which my hon. Friend proposes would have the effect of increasing the proportion of preference, and, therefore, it ought to be of some benefit to Empire wines.

Sir Robert Cary (Manchester, Withington)

I am in full sympathy with this new Clause moved by my hon. Friend, the Member for Dumfries (Mr. N. Macpher-son) in favour of high strength wines. At the same time, I think it will jeopardise the present margin, which is 9s. 6d., which exists between the high strength British and the high strength. Empire wines. The Clause as it stands is proposing a reduction of 25s., reducing the British high strength duty below the British low strength duty, which is absurd.

I would ask my hon. Friend the Financial Secretary, if he is thinking of accepting this new Clause, to preserve the margin and, therefore, the maximum by which the Treasury could reduce the high strength duties would be 20s. all round. This would then result in there being only one rate of duty applicable to British wines, the same position as existed before 1947.

What is really required is an extension of this Clause to cover not only Section 4 of the Finance Act, 1949, which imposes the duties of Customs on wines, but Section 5 of the Finance Act, 1949, which imposes duties of excise on sweet wines. If the Clause were altered to that extent it would maintain the margin that I have in mind.

I was interested in the observations of my hon. Friend the Member for Wembley, South (Mr. Russell) about port in this country. Last night in the Library I was examining a debate similar to this which took place some years ago. The Committee embarked upon a search as to what is a pipe of port. I became interested in this long argument. It went on in Committee for some time, but there was no conclusion except that it reached the foundation for an all-night Sitting. I hope that that will not be the example on this occasion.

Nevertheless, in a moment of lightness I tried to find out what a pipe of port really is, and I hope my hon. Friend the Financial Secretary will be able to give us the true definition when he replies. I looked it up in Murray's Dictionary and they give it as 126 old-wine gallons. I looked it up in Pears' Cyclopaedia and they said that it was 115 gallons. Nuttall's Dictionary gave it as 105 Imperial gallons, a distinguished wine merchant in St. James's Street said it was 56 or 57 dozens, while the Smoke Room waiter said it was a mighty drop of port. As I said, perhaps my hon. Friend will give us the exact answer.

Mr. Glenvil Hall

Perhaps I might intervene before the Financial Secretary replies if only for the reason that it will give him the opportunity of answering one or two questions which I should like to put to him. As I understand the hon. Member for Dumfries (Mr. N. Macpherson), his reason for moving it is that the consumption of light wine has considerably dropped and that has been detrimental to the trade which up to now has obtained between us and the rest of the Commonwealth.

Mr. N. Macpherson

I should like to correct the right hon. Gentleman. It is not that the consumption of light wine has dropped. It is that the consumption of light wine has increased while the consumption of heavy wines has remained stationary or dropped away.

Mr. Glenvil Hall

I am much obliged. That helps me considerably in the argument I was about to put forward.

I remember very well the change to which reference has been made being introduced into the Finance Bill of 1949 by my late right hon. Friend Sir Stafford Cripps. He did it deliberately to help the light wines to a bigger and better market. I was at the Treasury myself at the time and I remember that we found that between 1948 and 1949 there had been a considerable drop in the consumption of what are called Empire wines, that is, light wines from Australia and the Union of South Africa. To help them, and also to help the wine industry of France, the then Chancellor of the Exchequer made these changes. From what the hon. Gentleman has said, it is obvious that they have had the effect desired at that time.

We were asked then why it was that we had not made similar changes so far as heavy wines were concerned. I do not know to what heavy wines the hon. Gentleman is referring, but I suppose quite a volume of those heavy wines would come from Portugal. One of the difficulties—I would like to ask the Financial Secretary if it still obtains— was that we had not the currency to spend on this type of luxury so far as Portugal was concerned, and this was one of the ways of preventing too great a trade being done at that time with Portugal. Not that any of us wanted to keep Portuguese heavy wines out if circumstances had been different.

I would remind the Committee that although it was true that nothing was done in the Finance Bill of 1949 for heavy wines, a good deal had been done by the then Chancellor of the Exchequer the previous year. He had increased the preference on heavy Empire wines from 4s. to 10s., so it was thought that it was the turn of the light wines in 1949. When we come to deal with the question of Customs duty on wines, either light or heavy, we come unfortunately up against both the Ottawa Agreement and the agreement made at Geneva.

We have no feeling on this matter on this side of the Committee—except perhaps my hon. Friend the Member for Ealing, North (Mr. J. Hudson). It makes very little difference to us, but is it the fact that if a change were made at this time in order to help the heavy wine industry, it would be difficult so to do in the light of agreements made? In addition, I would like to ask the Financial Secretary what it would cost if the proposals made by his hon. Friend were acceded to.

Mr. Macpherson

Does the right hon. Gentleman realise that in 1948 the amount of light wine that came from the Commonwealth was less than one-sixth of the total amount of wines that came from the Commonwealth, even at that time?

Mr. Glenvil Hall

Yes, and that helps to prove the case I was trying to make, that something had to be done then to help the light wine industry, particularly the light wine trade with the Commonwealth.

Mr. Macpherson

But it has not done it.

7.45 p.m.

Mr. Boyd-Carpenter

One question I will seek the leave of the Committee not to answer is that put by my hon. Friend the Member for Manchester, Withington (Sir R. Cary), who asked me to define a pipe of port. If that be the responsibility of anybody in the House of Commons I suggest that he goes to one of the Law Officers, who can define the subject with experienced skill.

I agree with the hon. Gentleman the Member for Dumfries (Mr. N. Macpherson) that this is an important matter in many respects, and I hasten to assure him that I have no doctrinaire bias or antipathy against the subject matter of the new Clause. That is particularly so at this hour of the day. That there is an important issue is beyond argument, but perhaps my hon. Friend has failed to appreciate some of its complexities, to which I will refer in a moment.

In view of something that was said by my hon. Friend the Member for Wembley, South (Mr. Russell) about the Australian aspect of the question, I want to add a little to what he said. Last summer I had the opportunity of seeing on his visit to this country the Chairman of the Viticultural Council of Australia, with whom I had a most interesting talk. It is certainly the case that what he told me confirms very much what my hon Friend has said as to the social importance of this question in Australia, in view, in particular, of the fact that after the 1914–18 war the then Australian Government settled a considerable number of its ex-Service men on wine farms. That aspect of the matter was drawn to our attention as long ago as last summer.

The first problem which has to be faced when considering whether anything can be done on this question is the problem to which both my hon. Friends referred. It is the fact that under the General Agreement for Tariffs and Trade, if an adjustment of this kind is made in respect of the Commonwealth product, similar adjustments have to be made on the foreign product. That is a consideration which involves, among other things, substantially increasing the cost of any change to the Exchequer and, as the right hon. Member for Colne Valley (Mr. Glenvil Hall) pointed out, also to some extent involves some questions of foreign currencies, although I do not want to labour that argument.

Therefore it is not possible, whatever one might wish, to approach this problem as a straight problem of Empire trade, although one could approach it from the point of view that if a concession of this kind is made to the Empire product, consequential adjustments have to be made to the products of Spain and Portugal.

Then there is the fact that the Empire wine problem is by no means a simple and straightforward one. My hon. Friend referred properly to the fall in imports into this country of Australian heavy wines. That picture is in contrast with the fact that the South African heavy wines, mainly sherry, have, in substance, maintained their pre-war level of exports to this country. That would seem to indicate that this problem is not bound up with the rate of duty but, at any rate to some extent, is bound up with changing social habits; that is to say, the consumption of the sherry type of wine is maintained, whereas the consumption of ports or what have under the Matthews Treaty to be described in certain cases as "port type wines," has tended to decline. Port appears to be on the wane if not on the wagon.

The difficulty is further added to when one considers that this is not merely a question of the Commonwealth and foreign product but, as my hon. Friend pointed out, there is a third and not unimportant factor to be considered, the home product or British wines. I ought perhaps in this context to disclose that I have a constituency interest in this aspect of the problem in that about half the British wine produced in this country is produced within the boundaries of the Royal Borough of Kingston-upon-Thames.

One has to consider, if one is making any adjustment to wine duties, not merely the question of an inevitable alteration in the foreign product, but the question of what one should do about duty on British wines. My hon. Friend seeks to solve that problem by doing nothing at all about British wines inasmuch as he does not alter the Excise duty on them in this Clause. At the end of the process the rate on foreign heavy wines would be 25s. a gallon and the rate on Commonwealth heavy wines would be 15s. a gallon. The rate on British wines produced in this country would be 30s. 6d. That is to say, so far from there being a preference, there would be an actual discrimination against the home product.

I do not propose to enter into a learned disquisition on the relative gastronomic attractions of these different beverages, but I think hon. Members will agree that it would be a quite extraordinary arrangement to provide that the rate of duty upon a product produced in this country should be twice that produced in the Commonwealth and larger even than that produced abroad. That poses the very difficult question that if we made this adjustment in Commonwealth and foreign wine duty what adjustment should we make in the Excise duty on British wines? If we were to maintain the same margin of preference as they have at present over the Commonwealth product, that would involve reducing the rate to 5s.

That immediately raises the question of the rate of duty on British light wines, which is 10s. 6d., and if we were to reduce the duty on British heavy wines—as we would have to do in order to maintain the margin—to 5s., it would be quite ludicrous that the duty on light wines should be more than twice the amount. That is one of the complications with which one is faced when one begins to look at this body of duties and to consider possible changes in them.

I wish to say a word about the experiment which was made by the late Sir Stafford Cripps, to which reference has been made in, I believe, all the previous speeches in discussion of this new Clause. There is no doubt that it was a most enterprising change and one which was made with complete impartiality in the matter. But it was made in very particular circumstances—some which have been recalled by the right hon. Member for Colne Valley—at a moment when the consumption of light wines in this country has suddenly and severely fallen.

There was, therefore, the possibility of a quick change if a large alteration of duty were made, Sir Stafford Cripps, rightly judging the timing of that operation, made the change in time to check that sudden fall and to recover it. I think that is a fair description of what happened, but it is a little misleading to suggest that the increased rates of duty on light wines which flowed from that decision indicated a net increase in revenue generally of anything like the same order.

As the right hon. Member for Colne Valley pointed out, it was with a view to some extent to switching the demand to light wines from other forms of what are described in the licensing laws as "intoxicating liquors" that this change was made. There is no doubt, although it is difficult to evaluate it precisely, that some revenue was lost, which would otherwise have been obtained, from duties on other forms of liquor. There was a switch and that is another example of how careful one has to be in fairness in making any of these adjustments.

This proposed new Clause proposes an adjustment in the case of sherry. If one made such a change, and a change of this order, one would have to recall that sherry competes with gin and an adjustment on sherry poses the question of whether one should reduce the duty on gin—

Mr. Godfrey Nicholson (Farnham)

How is gin concerned with sherry?

Mr. Boyd-Carpenter

I hope that one never allows one to come into the other, but they are beverages each competing for a market. They do compete as part and parcel of the same way of life under the same conditions. My hon. Friend will appreciate that there are occasions when one person has a glass of sherry and another person has a glass of one of the many admirable brands of gin provided by distillers in this country.

Similarly, of course, in the case of port one immediately has to consider brandy and one has to consider liqueurs. There is the further consideration that if we start adjusting these duties there is a very strong Empire interest in rum. The West Indies are very much concerned with the rate of duty on rum. If one made an adjustment with regard to rum, I think it not improbable that hon. Members from Scotland would raise the question of the whisky duty.

That is an indication of the complications and, secondly, of the cost of changes of this sort. If one takes the new Clause as it stands the cost would be £6 million. That of itself is a very substantial figure to add to the concessions made in this Budget. My right hon. Friend is regretfully unable to sacrifice so much revenue in respect of this particular body of duties. But, as I have indicated, in practice if one considered making that adjustment one would be compelled to make further adjustments, which would add to the cost.

I think my hon. Friend the Member for Dumfries will agree that one would have to make adjustments in the case of British wines to avoid the ridiculous situation, which otherwise would arise, and one would be at least forced to give serious consideration to duties on a number of other beverages amounting to a substantial sum in millions of pounds over and above the £6 million. Therefore, while I have a great deal of sympathy with this proposal, particularly in its Imperial aspects, which, I agree with my hon. Friend, are perhaps its most compelling claims to attention, it is not possible for my right hon. Friend this year to take the step which is suggested.

I can tell the Committee that in our general review of taxation which preceded the Budget statement this subject was given very close consideration because there are here real issues of more than insular importance. For that very reason it was given the closest consideration. My hon. Friend will also appreciate that in the construction of the financial proposals for the year there is the inevitable question, if one decides that a certain amount of revenue can be dispensed with, in which direction it should in the national interest be dispensed with.

From that point of view my right hon. Friend came to the conclusion that, whatever it may be possible to do in the future, this year it was not possible to afford this amount of revenue even for this wholly admirable purpose. I regret to have to say to the Committee that it is not possible this year for my right hon. Friend to do what my hon. Friend asks.

I can assure my hon. Friend, however —what I have said is tantamount to such an assurance—that my right hon. Friend is concerned about this matter, particularly in its Imperial aspects, and will watch the position very closely during the year to see that these duties do not do serious damage and from the practical point of view to which my hon. Friend properly referred, that duties carried to an excessive point are very shortsighted from the revenue point of view as a whole.

Both those points will be borne in mind during the coming year and my right hon. Friend, I hope, has already been able to indicate that this is a subject which is of concern to him and whose importance neither he nor Her Majesty's Government underrate.

Mr. Nicholson

I must apologise to the Committee and to my hon. Friend the Financial Secretary for not having been here for the whole of his speech. I must also announce my interest in this subject, as I am a wine merchant. I am sorry that my hon. Friend made the speech he did. I cannot help feeling that it showed that he did not treat the subject with seriousness—

Mr. Boyd-Carpenter indicated dissent.

Mr. Nicholson

It is ridiculous to say that if one alters the duty on a particular strength of wine one must alter it on a group of spirits. In saying that my hon. Friend showed a frivolous approach.

Mr. Boyd-Carpenter

I said nothing of the sort. Had my hon. Friend paid as close attention as I hoped he had, he would have realised that all I said was that one would have to consider the position, in particular, of those duties which fell upon the rest of the competing products. I did not say they would have to be changed.

8.0 p.m.

Mr. Nicholson

Of course, but to suggest that the duty on gin might have to be altered because the duty on sherry was altered is to betray either an existing innocence of mind and total lack of knowledge of the strong drink trade or an improper lack of appreciation of the subject. I hope that next time the Treasury approach this subject they will pay attention to the real issues which, to my mind, are not so much the Imperial issues. The export of Australian heavy wine to this country plays a relatively small part in the Australian wine industry.

The aspect to which I would draw the attention of the Committee is that of the port trade in Portugal. British merchants have been established in Portugal for well over 250 years, possibly 300 years and more. It is one of the most historic sides of British commerce. The net effect of the present high rate of duty is that trade is languishing. I know my hon. Friend has an historic sense and I appeal to him to think a little of the effect of these duties upon that group of British merchants.

I think I am right in saying that there is no other place in the world with a record of British commercial history comparable with that of Oporto. Its trade has been carried on in many cases by the same families for 250 years and more, and because of what I regard as the short sighted policy of the Treasury they are being hit very hard. Famous firms with famous names are suffering economic pressure and I think it would be a pity if, because the Treasury do not give adequate consideration to this subject, those firms should have to shut down, or their business should languish and ultimately become extinguished.

Mr. Glenvil Hall

I know that the hon. Member speaks with great experience in this matter. I hesitate to intervene in what he says, but would he not agree that in part, the reason for the fall in consumption and in trade with Portugal is not so much the heavy duty as the change of taste by people in this country who now drink other things, including gin, whisky, sherry and beverages of that kind.

Mr. Nicholson

It is difficult to separate the effects of changes of taste from those of economic factors, but I do not believe there is much in this suggested change of taste. People go round saying that they like dry wines. If the right hon. Member for Colne Valley (Mr. Glenvil Hall) took a lady for a drink and offered her some sherry, she would say she liked a dry sherry, but if he were to give her a dry sherry she would not like it at all. On the other hand, if he gave her the sweetest sherry he could lay his hands on, she would be very pleased and would think she was drinking a dry sherry. That is my experience.

I think the change in social habits or taste is at the bottom economic. It is the high price of port which drives people away from port. I have always been very sceptical about this argument which is based on the assumption that there is a taste for drier things, for less sweet things, in this generation than there was before.

I do not wish to detain the Committee. All I wanted to do was to put in a fervent plea for the British community in Oporto and for the port trade in general. I hope my hon. Friend will not mind my telling him that he is off the beam when he thinks that any alteration in the duty on heavy wines must involve even the reconsideration of the spirits duty. That is far from the case. I hope he will redirect his attention to this problem and will recognise that in the attitude which he is adopting he is dealing, what I trust will not be a fatal blow, but what is a severe blow at some of the most honourable merchants in British trade and the most historic British trading colony on the Continent of Europe.

Mr. Boyd-Carpenter

I hope my hon. Friend who I know is a considerable expert in this subject, will understand me if I say that to some extent I resent his suggestion that I was taking the subject lightly. It is, in point of fact, a subject to which I have given great attention for at least the last year. I do not know whether he was in the Committee during that part of my speech in which I referred to my discussion with a distinguished Australian concerned in this matter. If he were here he would realise that I have had this difficult subject very much in the forefront of my mind for nearly a year. I hope he will let me say, therefore, that it is quite unfair to suggest —whether he likes our conclusions is another matter—that I or Her Majesty's Government have been other than serious in our treatment of this case. I quite agree with him that it deserves serious attention.

I was interested in what he said about the port trade in Portugal, which is a very ancient British industry—a partially British industry—as, indeed, is the sherry industry in Spain, in which a considerable number of British families have taken part for many generations. No one would wish to deal these ancient industries a severe blow, but it is a fact, which none of us can escape, that at a time when a heavy burden of expenditure, both on defence and on social services, requires high taxation, it is necessary to impose high levels of taxation on a very wide variety of products, many of them of most admirable quality. We have already had considerable discussion on the subject in our debates on the Purchase Tax. It does not indicate any disregard for the well-being and merits of a particular industry to have nonetheless regretfully to say that in present circumstances a high rate of taxation upon its products is inevitable.

Like my hon. Friend I do not wish to detain the Committee, but I have sufficient respect for him, I hope he will allow me to say, to desire to clear in his mind at any rate—I do not think it was in anyone else's—the suggestion that this subject has been treated other than with the seriousness which it demands. It is an important matter both by way of an industry and also by way of revenue.

I differ from my hon. Friend on the question of the repercussions upon other duties. Had he given the consideration to the problem which I have given in the last year, I think he would realise that there is more in what I said than he suggests, but on that subject we can agree to differ. Where I hate to differ from him is in the suggestion that we do not regard this subject with proper seriousness.

Mr. Nicholson

I entirely accept what my hon. Friend says, and I am sorry if I wounded him by turning on him in that way, but I was a little surprised that he should fortify what are cogent arguments with what I thought were weak arguments. I was also told, I must admit to the Committee, and it shocked me to hear it, that my hon. Friend was not aware of how many gallons there were in a pipe of port.

Mr. Houghton

On a point of order. Can these reconciliations take place outside the Committee?

Mr. N. Macpherson

Before I withdraw the Motion, may I make three short comments? First, I know my hon. Friend realises that my hon. Friends and I were not unaware of the complications which would follow the acceptance of this new Clause We felt that the case in itself was sufficiently strong to warrant putting it forward and expecting the Government to make such necessary adjustments as they thought fit. Secondly, while my hon. Friend said the immediate cost would be £6 million, I think he will agree that that would only be the case if the consumption remained as it is at present. Our case is that the consumption would increase very considerably and that he would recoup most of what he is giving away. I would not say the same necessarily regarding British wines and in consequential adjustments.

Reference has been made to Australia and Portugal. There are social consequences in South Africa which are serious as well. My hon. Friend has mentioned what might be termed the branded sherry trade. South Africa was a large exporter of the cheaper forms of wine as well, and they are suffering seriously. Unless the vineyards can continue to supply the cheaper as well as the more expensive wines it will be very difficult for them to carry on.

I hope my hon. Friend will bear these considerations in mind and remember that it was on the basis of the encouragement given pre-war that the South African vineyards were built up. I disagree with my hon. Friend the Member for Farnham (Mr. Nicholson). I think the Financial Secretary has dealt with this matter sympathetically. If we cannot have a concession this year, we look forward to very sympathetic and more fruitful consideration next year. I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.