HC Deb 12 June 1958 vol 589 cc464-81
The Deputy-Chairman (Sir Gordon Touche)

As the effect of the Clause depends upon the contents of the Third Schedule it might be convenient to the Committee to have a debate on the Third Schedule and to take the Clause formally.

Mr. Maudling

That would be convenient, Sir Gordon.

Mr. John Dugdale (West Bromwich)

If we want to have a wider discussion, involving the duty on wines generally, ought not that to be held on the Question "That the Clause stand part of the Bill"? We shall be much more limited if we deal solely with the Schedule.

The Deputy-Chairman

The right hon. Gentleman is entitled to discuss the Question, "That the Clause stand part of the Bill", but it will mean a duplication of the debate.

Mrs. White

What do you intend to do, Sir Gordon, in respect of the Amendments to the Schedule, of which there is a large number?

The Deputy-Chairman

The Amendments to the Schedule have all been selected and are to be discussed together.

Mr. Harold Wilson (Huyton)

Is it quite clear that when we come to the Question "That this Schedule be the Third Schedule to the Bill"—after the Amendments have been dealt with—the discussion can be as wide as it would be if we discussed the Question "That the Clause stand part of the Bill"? From my experience of past Finance Bill debates, I would say that it is a little unusual to let a Clause go by on the nod, and then take up the principle involved in it in a discussion on the relevant Schedule. More often we have had a discussion on the Clause governing the Schedule and, as in the case which occurred last night, the Schedule has gone through fairly quickly.

The Deputy-Chairman

I am in the hands of the Committee.

Mr. Maudling

May I suggest that the Schedule sets out the rates of Customs and duty on all forms of wine, and therefore we could discuss the whole question of wine duties when discussing that. The Amendments deal with the particular question of a further reduction in the duty on heavy wines. If we could have a discussion on the Motion "That the Clause stand part of the Bill," which would cover the whole question of wine duties, light and heavy, perhaps afterwards we could go back to any votes that arise on the particular question of the heavy wine duty.

Mr. H. Wilson

I should have thought the most convenient way would be to have a discussion on the Question "That the Clause stand part of the Bill," it being understood that since Clause 4 gives effect to the Schedule anything in the Schedule is relevant for a general discussion on the wine duties. Surely a discussion of that kind would not preclude the moving and discussing of individual Amendments on the Schedule, but I am quite sure the Committee would wish to restrain itself in discussing the Question "That this Schedule be the Third Schedule to the Bill." Of course, no one can diminish the rights of any hon. Member, but if we could have a general discussion on the Question" That the Clause stand part of the Bill" and a further debate on the Amendments called, there would not be much desire to pursue the matter further on the Question "That this Schedule be the Third Schedule to the Bill."

Motion made and Question proposed, That the Clause stand part of the Bill.

Mr. R. T. Paget (Northampton)

The particular point to which I wish to address myself on Clause 4 is the position of heavy wines in relation to light wines and, in particular, the question of port. Sherry is in a different position, although we shall probably have to deal with these wines together. That is largely because of a change of fashion which has brought a new demand for sherry in the form of sherry parties. Contrary to the general impression, port has not been a rich man's drink. Over 90 per cent. of the port which is drunk has always been part of the public-house trade. Although the consumption of sherry has suffered, as has port consumption, in the public-house trade, sherry has found a new market, but port has not.

Port is pre-eminently an English wine, and one which I believe is drunk only in England. [HON. MEMBERS: "No."] It is very nearly the case that it is drunk only in England. Very little port is drunk in Portugal; and what people drink as port in Portugal could hardly be recognised as the port wine drunk in England. It is not a natural wine, it is a blended wine, and is blended specially for the English market. It has a tradition within all levels of society. The tradition known best is, of course, the heavy vintage ports which are very remarkable wines, but which represent only a small part of the trade. It is equally the case, or certainly it was until the war, that it is very much a traditional wine in working-class society. It is a wine which was, at least before the war, a feature of jollifications and celebrations.

6.15 p.m.

When I speak of port as an English wine, it is probably the one wine for which the capital for its production is, in the main, that of English companies. We have a very large British investment in the port wine trade. Probably it is a great deal larger than in any other. That being so, to me it seems odd that since the war we should have singled out port for discriminatory treatment. I do not think the Revenue has benefited as a result.

The consumption of port wine today is and has remained pretty level at rather less than half the pre-war consumption. The revenue front the tax on port has been multiplied more than five times compared with the pre-war tax, whereas that on light wines has been raised to a much less extent. The tax on port is 50s. a gallon, or 44s., and that on light wines only 13s. When the tax on light wines was 25s., about double the present rate, consumption was pushed down, as has been the case with port, to below half the pre-war average. With the reduction of the duty by half, the consumption of light wines has risen to considerably above pre-war level. So by reducing the duty on light wines, although there was a temporary loss to the Revenue, within the short period of two years the Revenue had caught up and the receipts were the same as at the higher level of tax. Now it is double what it was at the time the tax was reduced. The amount secured from light wines in 1948–49, when the tax was 25s. a gallon, was only about half what is secured now with the tax at just over half that amount, at 13s. a gallon.

If that be the experience after reducing the tax on light wines, is it likely that it would cost the Revenue anything if we reduced the tax on port in the same way as in 1948–49 we reduced the tax on light wines, that is to say, if we brought it down to 26s. which would be the equivalent? If the experience of reducing the tax on light wine is anything to go by, such a reduction would probably cost the Revenue nothing at all.

Would it be a good thing if the consumption of port went up? On the whole, I think the answer is "Yes". It is not a question of people drinking either port or lemonade. Broadly speaking, people drink either port or spirits, and it is with spirits rather than with light wines that port is in competition. I consider port to be a far healthier and a better drink than spirits. I believe the old idea that port created gout is universally accepted as wholly fallacious and that port has nothing in the world to do with gout. As one who has suffered very severely from gout, I speak as an expert.

Mr. E. C. Redhead (Walthamstow, West)

Does my hon. and learned Friend drink port?

Mr. Paget

No, I have never been a heavy port drinker. As a matter of fact, it is not a wine which I have ever liked. I much prefer a light wine, but my taste is not shared by a great many other people. There are a tremendous number of people who enjoy port. If it had not been priced out of the market, or if it were brought back to a reasonable price relative with its competitors, I believe there would be a very considerable rise in consumption.

The final point I make is the balance of payments argument. The position with regard to Portugal, which, after all, is our oldest ally, is that it is one of the relatively few Continental countries with whom we have a quite substantial balance of payments in our favour. That is to say, Portugal imports from us considerably more than we import from her. I should have thought, therefore, that there was a considerable case for doing something to help the Portuguese for a variety of reasons. Among them sentiment plays a part—this very ancient alliance, this old tradition by which English firms have been established there, many of them now in their sixth and seventh generations. I should have thought that there was a case for doing something fairly substantial to help an old ally and a present valuable customer.

For this variety of reasons, I feel the time has come when the Revenue's discrimination against heavy wine, in particular port, should be brought to an end and that it should be treated on the same level as light wine.

Mr. R. Gresham Cooke (Twickenham)

I, also, would like to say a word on the subject of duty on heavy wines. I believe that very many people in this country are extremely grateful to the Chancellor for the reduction that he has brought about this year.

As has been said by the hon. and learned Member for Northampton (Mr. Paget), it is now well established that port is drunk very much more in "pubs" than clubs. Before the war, port and lemon was a standard drink in the public house, but so far as I know port and lemon is very little drunk today. That reflects the decline in port drinking which is taking place generally. We must also congratulate the port wine trade on having passed on the full reduction of 2s. a bottle to the public. For that, I am sure that the public is grateful. I understand that although this reduction has given port wine drinking a fillip, it will not rescue the trade entirely from its difficulties. They hope that next year the Chancellor will be able to make a further reduction in duty.

Before the war, the ratio between light wine and heavy wine was as two to one. The duty on heavy wine was exactly double what it was on light wine, but today, with the duty at 38s. a gallon on heavy wine and only 13s. a gallon on light wine, the ratio is more like three to one against heavy wine. It would seem that there is a really good case for bringing the ratio to its pre-war level of two to one and seeking a reduction of heavy wine duty to 24s. a gallon instead of 38s. I trust that the Chancellor will look at the matter sympathetically and consider whether he can go a further step by bringing it down another 12s. or 14s. a gallon next year to bring the ratio between light and heavy wines to the prewar level.

Another matter to which I wish to draw the attention of the Paymaster-General is the question of vermouth. The port wine trade has passed on the 2s. a bottle reduction to the public, but I do not think anything like the due proportion of the reduction on vermouth has been passed on. A constituent of mine told me that the reduction in the price of vermouth was only 6d. a bottle. I went to my wine merchant and tried to find what reduction had been made and he told me that so far no reduction has been made.

I understand that vermouth is a blended wine and we do not know what proportions of light wine and heavy wine are comprised in it. Assuming that the proportion were 50 per cent., we would expect a reduction of about 1s. Obviously, it is not quite such a proportion and no doubt in the blend there is more light wine than heavy wine. Perhaps the Paymaster-General can throw more light on the matter and say what proportion there is in vermouth and whether the reduction in the duty is passed on to the public. Although it is fully passed on for port, I think it doubtful whether it is passed on for vermouth.

Mr. Ernest Davies (Enfield, East)

I wish to support my hon. and learned Friend the Member for Northampton (Mr. Paget) in his contention that the relationship of taxation on light and heavy wines will still be out of proportion, even after the change made by this Clause.

It seems somewhat ironic that the two Chancellors of the Exchequer whom one would look upon as the most austere and abstemious during the last decade have been those who have introduced a reduction in the taxation of alcoholic beverages and thereby have been inclined to stimulate the consumption of these beverages. One would have expected that it would have been the Lord Privy Seal who would have taken such a step, because of his known partiality for over-ripe pheasant and vintage port.

The loss to the Revenue, estimated by the Chancellor in his Budget statement, would be between £2¾. million and £3 million. If that were to be a permanent loss I think that hon. Members on this side of the Committee would question whether this priority was right. In recent discussions on Purchase Tax we would have pointed out that there were various consumer goods which we would like to see relieved rather than the reduction in this duty. But I think that the Chancellor believed, as part of his experience has shown, that when there is a reduction in tax on consumer goods the demand increases and that in the long run the Revenue loses nothing. In fact, history has often shown that the Revenue gains.

6.30 p.m.

That certainly has been so with light wines, as was pointed out by my hon. and learned Friend the Member for Northampton (Mr. Paget). Sir Stafford Cripps reduced very substantially in 1949 the duty on light wines; since then the consumption has doubled. That principle could be applied, with advantage to the Treasury, in many other cases. I noticed the other day that the Postmaster-General stated he very much regretted that telephone subscribers made only two local calls per day on the average and that losses were, therefore, incurred on local calls. Perhaps if, instead of raising the cost of local calls, abolishing the free calls and increasing the charge to 3d. he had kept it at its existing level or even reduced it, the position so far as local calls are concerned would improve. I hope that, by contrast, the way in which the Chancellor of the Exchequer has acted in the present case will benefit the Revenue.

The revenue from port wine has been static for several years at about £4 million, whereas the revenue from light wines has been steadily increasing since the reduction of taxation. I believe that the revenue is now about seven times what it was in 1949. The revenue on heavy wines has not risen to more than about 2½ times that of before the war. It is surprising to hear that 90 per cent. of the consumption of port wine is in public houses, a fact which is not generally appreciated. Indeed, the consumption of port has been steadily declining in public houses, as any publican will tell. It is not likely that consumption in public houses will be very greatly stimulated by the reduction. The price of a glass of port and lemon will be reduced by about 1d. or 2d., which does not make a great deal of difference. There has been a change in public taste and it will be very difficult to recapture the demand.

On the other hand, experience has shown, in the short time since the reduction was made, that the home consumption of port, and even of sherry, has substantially increased. If that is the case, I agree that it shows that demand will shift. If there is an increase in consumption of these wines leading to a reduction in the consumption of spirits, that is all to the good. The Port Wine Trade Association is to be congratulated on its extremely clever and successful lobbying and upon impressing the Chancellor of the Exchequer, in spite of his known tastes.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory)

May I ask the hon. Member what my "known tastes" are? They are quite unknown to me.

Mr. Davies

Perhaps I am assuming too much. The Press has built up the Chancellor as a most abstemious man and we congratulate him upon it. Perhaps he will change his tastes when he reads the Port Wine Trade Association literature which has been sent to many hon. Members. The memorandum in which it was urging this reduction states: There are few alcoholic drinks more tonic and better calculated to maintain the health, well-being and vigour of the consumer especially in a climate such as ours. The memorandum goes on to support the contention that port does not cause gout. It says: The suggestion that port drinking is in anyway connected with gout is quite unfounded. It was the overall excessive intake of rich foods, wines, spirits and liqueurs which was basically responsible for the prevalence of gout in the eighteenth and nineteenth centuries. If that is so, the Chancellor is to be congraulated upon introducing the Clause.

Apart from port and sherry, which are heavy wines, equally important are the Commonwealth wines, of which there is increasing consumption in this country. This reduction in the duty will benefit them to some extent, and to that extent it is welcome. There is a strong case for this reduction and an equally strong one for a further reduction. The relationship of heavy to light wines in respect of the duties is out of proportion to their relative merits and to their strength. Before the war, the taxation of heavy wines was twice that of light wines. Before the Budget it was four times and now it is reduced to three times.

I trust that experience during this year will be such that the Revenue will benefit and that the Chancellor will then be in a position to revert to the pre-war position in his next Budget. If he is still at the Treasury and the Government are still in office, he may be able to reduce the taxation of heavy wines further, so that it is twice instead of three times the prewar taxation on light wines.

Mr. Dugdale

Unlike my hon. and learned Friend the Member for Northampton (Mr. Paget), I like port. I have drunk quite a lot of port and I have no gout. In spite of that, I still think that if the Chancellor has any money to spend on reducing the duty on wines he might consider spending it on lighter wines rather than on heavier wines.

My hon. and learned Friend engaged in a somewhat specious argument in saying that port was an alternative to spirits, that therefore it was desirable that we should drink port, and that that was a good reason for reducing the duty. It is even more desirable to drink light wine, like burgundy and claret. In doing so we should be consuming a less strong alcohol, but at the same time helping another alliance which is of equal importance to us. I refer to the alliance with France. If we are to talk about alliances, and if I had to choose between the one and the other, I would prefer the alliance with France to that with Portugal. I do not think that the Chancellor was influenced by these matters in reducing the duty.

It would be a very great advantage to this country if we were to drink more light wines, if they became more popular and if our people did, as is done in France, drink wine as an ordinary beverage. It is now something special, bought for a special occasion, because it is very expensive. If the Chancellor wishes further to reduce the duty on wines I hope he will consider light wines before heavier wines. Subject to that comment, I would not disagree with a reduction of any duty on wine.

Mr. Ray Mawby (Totnes)

I would add my congratulations to my right hon. Friend the Chancellor of the Exchequer on reducing the taxation on port wine. I agree with everything that has been said on this subject. Port is a fine drink, and we ought to make certain that it has as low a taxation as possible.

The point has been made that if more port were consumed less spirits would be consumed, the inference being that there is a choice between the two. Tastes have changed over the last few years and now the greatest opponent to port in the public-house trade is the perry type of drink, like the "Baby Cham". It is an entirely new type of drink which has attained great popularity. We cannot just take this point of port versus spirits.

The idea that we in this country ought to drink more light wines is, I think, wrong. I have always preferred as my main drink good English beer, and I think that it is right that we should continue to drink good English beer. Therefore, so far as light wines are concerned, I think that Philip Harben has done a great deal in showing the British housewife how she can, with the judicious use of light wines, enhance her cookery. To suggest that we should now try to induce the ordinary chap in the local pub to drink wine instead of beer would, I think, be a very bad step to take. I think that light wines are extremely popular and that the duty on them is about right at the present time. So far as the fortified wines are concerned, I should like to see the duty less, but I rejoice in the fact that it has been reduced.

Mr. Cronin

I do not think that I can quite follow the hon. Member for Totnes (Mr. Mawby) in saying that the taste for port or heavy wines has changed substantially in recent years. I think that the real situation is that the consumption of port has been enormously reduced by the duty on it. A simple example of that is the Christmas trade in port and sherry. There is an enormously sharp increase in the consumption of heavy wines during Christmas; this shows that there is a real taste for these wines, but that they are considered something of a luxury, and, of course, the luxury is due to the heavy cost imposed by the duty.

I sympathise entirely with my right hon. Friend the Member for West Bromwich (Mr. Dugdale) in his wish to popularise the consumption of light wines. I think that most people agree that light wines are a higher and better form of drinking from a purely gustatory point of view than beer. The more that people have a higher standard of living so far as drinks are concerned the better. But I do not agree with my right hon. Friend when he says that people who drink light wines drink less alcohol. One can drink a bottle of light wine to one glass of port and it is more abstemious to drink port in those circumstances.

I should like to reinforce the excellent argument of my hon. and learned Friend the Member for Northampton (Mr. Paget) and my hon. Friend the Member for Enfield, East (Mr. Ernest Davies). They have pointed out, I think conclusively and decisively, that, even in spite of the Chancellor's present concession, the duty on heavy wines is too high, and that it is quite probable that if the duty were reduced further there might be an actual increase in the yield. That may be a hypothetical supposition, but that is what happened when the late Sir Stafford Cripps reduced the duty on light wines, and I think that we can reasonably expect that that might well follow in this case.

Heavy wines deserve the sympathy of the Committee for several reasons. One is that, contrary to the impression of many people, they are consumed to a large extent by the low income groups. One understands, for instance, that 90 per cent. of the consumption of port is in public houses or from bottles supplied to the workers and their families. Therefore, a reduction of the duty will produce an easement among a section of the community where it is desirable. In other words, it will be a more progressive type of tax if it is reduced.

6.45 p.m.

These heavy wines are drunk chiefly in places of public entertainment and they form a very important alternative to either beer or spirits. Some of us here may think that spirits are less desirable drinks from a social point of view for obvious reasons, but many people who take their refreshment in public houses cannot cope with the uncomfortable feeling of distension engendered by beer, so port seems to be a pleasant and convincing middle course when one wants to take alcoholic refreshment.

Another important consideration is that reinforced wines are usually considered to be a more elegant drink and more suitable for family use, and I think that some further concession would be of great value to the family side of the population.

Mr. Sydney Silverman (Nelson and Colne)

Does my hon. Friend think that these light wines might satisfy the need of the Scotsman who explained that he gave up drinking because if he drank whisky he was "tight" before he was full whereas if he drank beer he was full before he was "tight".

Mr. Cronin

That seems to be an esoteric point. Heavy wines have certain very practical economic qualities. When one buys a bottle of heavy wine, it does keep. It will keep possibly for one, two or several weeks, whereas a bottle of light wine is much less pleasant the next day and, on the third day, is usually undrinkable. The advantage of heavy wine is that it is economic to buy and keep on the sideboard in a working man's house. It is consumed in a moderate manner, a glass at a time, and there is no rush to finish the whole bottle.

Some of my hon. Friends have referred to medical matters. That well-known authority my hon. and learned Friend the Member for Northampton has assured us that port does not cause gout. He is particularly expert in that, and I should be inclined to reinforce his view. I think that it probably has the blessing of the whole medical profession. Alcohol in general is a rather important medical substance. It certainly has important qualities. It stimulates the appetite, it has a sedative effect and it is being realised more and more that it is very valuable for relieving pain. These reinforced wines are a most convenient vehicle for administering this drug.

That seems to be another argument why the duty on port and reinforced wines generally should be substantially reduced. I think that we can all congratulate the Chancellor on having taken the action that he has. It is certainly a bold and great move to have done this, and we would like him to study this matter carefully to see whether some further reduction can be given.

Mr. John Arbuthnot (Dover)

I think that the Committee has shown complete unanimity on two things. The first is that we are unanimous in saying "Thank you" to the Chancellor for the step which he has already taken. We are grateful to him and we think that he has done the right thing. The second thing on which there is unanimity is that we hope that this is just a half-way house. It has been suggested that the idea of a further reduction in the duty on heavy wines, possibly leading to an increase in the ultimate yield to the Exchequer, is a bit of speculation and possibly hypothetical.

If it is hypothetical and if it is a speculation, it is a speculation with a substantial body of evidence to give it support. The body of evidence which gives it support is what happened with light wines. When the duty was halved on light wines the net result to the Exchequer, within a matter of 18 months, was a greater revenue. There is no reason to believe that the same would not occur with heavy wines. These are early days to see what the result of what my right hon. Friend has done will be from a revenue point of view, but the consumption of heavy wines has already taken a turn for the better since my right hon. Friend reduced the duty. We hope, however, that in his next Budget he will be be able to go the whole hog and do the equivalent of what was done for the light wines—to halve the duty compared with what it was before my right hon. Friend introduced this Budget.

We should bear in mind that it is of particular help because our oldest ally, Portugal, is one of the beneficiaries of the reduction in duty which my right hon. Friend has introduced. In addition, a great many firms which are producing port in Portugal and firms which are shippers of port come from this country. The reduction is benefiting our oldest ally and is also being of benefit to our own people who are in the trade. I join with those hon. Members who have expressed congratulations to my right hon. Friend which, it will be clear to him, are universal in the Committee.

Mrs. White

I feel that we need some social research on this matter, and perhaps in replying to the debate the Paymaster-General will be able to inform us whether any such research was carried out by his right hon. Friend or whether his right hon. Friend looked at this matter entirely from the revenue point of view. Is that the only reason which induced him to reduce the tax on this class of alcoholic drink?

We have had so many different opinions from hon. Members on both sides of the Committee about what is the substitute for port, whether it is beer, gin or "Baby Cham," that it is quite confusing. I should have thought that the friends of the hon. Member for Totnes (Mr. Mawby) who patronise perry or "Baby Cham," which is the trade name of it, probably did not drink alcoholic drinks at all when port was relatively less expensive; they probably did not go into a public house, or, if they did, they probably did not drink alcoholic beverages. I cannot believe that anybody would descend to perry or "Baby Cham" if he had ever been a port drinker. I hesitate to be dogmatic about this. It may be that in Totnes there are such people.

Mr. Jay

That is why they vote for the hon. Member for Totnes (Mr. Mawby).

Mrs. White

Other beverages are included in the group which we are discussing, such as sherry, vermouth and similar drinks, including Dubonnet, which are far more civilised aperitifs than gin. But that is a personal predilection.

It is desirable to know whether any study has been made of the drinking habits of the British public and whether the Chancellor knew what he was doing when he decided to reduce the duty on these heavy wines. If he took the step advocated in an Amendment which we shall discuss shortly and reduced the duty still further, then from the purely revenue point of view, and without taking sides one way or another about the merits of these drinks from the social or economic point of view, I believe that he would achieve his purpose even better. Looked at purely from the point of view of the revenue, the reduction which he has made although fairly substantial, is not sub- stantial enough to make sufficient difference in the price of a glass sold in the public house for it to have any significant impact on the customer. If one is buying a drink by the glass in a public house and has to decide between one drink and another, a difference of a penny a glass will be neither here nor there. If we are to try to get a substantial increase in consumption and thereby compensate for the apparent loss of revenue, then we must do it in such a way as to make an adequate impression upon the consumer.

The Chancellor may have done that for wines sold by the bottle, bought to consume at home, through the fact that these are now 2s. a bottle cheaper—and a little cheaper for Commonwealth wines. South African sherry is not a bad drink. On the other hand, I doubt whether he has achieved his aim for the public house trade in port, which is what is upsetting the port wine industry. I understand that the vintage ports consumed in the clubs which hon. Members opposite frequent are still selling pretty well and that the trade has not declined at that end. I understand that the decline has been greatest in the public house trade.

While not wishing to express an opinion one way or another about the merits of port and sherry and other fortified wines as drinks, compared with other forms of alcohol, we think that from the purely financial point of view there is much to be said for a further reduction in the duty, in order, as happened in light wines, ultimately to compensate the revenue for the apparent decrease proposed by the Chancellor.

Mr. Maudling

As some hon. Members are aware, this is a matter which is close to my heart. I am glad that my right hon. Friend was able to introduce this reduction in the duty on heavy wines. I am not myself a consumer of heavy wines, for I prefer the lighter types.

The hon. Lady the Member for Flint, East (Mrs. White) asked whether any social research had been carried out into the best substitutes for port. I am not aware of any official research, although I have been carrying on a personal research into this matter for many years, and I have concluded that it is a research which will continue for the rest of my life and that I shall never be satisfied with the answer.

Generally, I think the Committee welcomes this proposal to reduce the duties on heavy wines, which have been standing at a very high level. I will not enter into the arguments on the various points which hon. Members have raised. I think that the hon. and learned Member for Northampton (Mr. Paget) was wrong in saying that port was exclusively an English drink. Perhaps he was thinking of vintage port. Ordinary light ports are widely drunk on the Continent of Europe.

I was also asked whether port competes with light wines. I have no doubt that there is considerable competition between sherry and light French white wines drunk before a meal. There is also competition between vintage port and brandy drunk after a meal. I think there is competition between all types of alcoholic drink, and it is difficult to single out one from the other. I therefore think that if we reduced the duty on heavy wines as far as some hon. Members suggest, on the ground that they are very much an English drink, we should get serious criticism from other hon. Members that we had not done the same for whisky on the ground that it was a national drink. We must bear these matters in mind.

The effect of these reductions in the duty has been to reduce the average duty per bottle of heavy wines—broadly speaking, port and sherry—by 2s. a bottle. This has, in our experience, been passed on by the trade to the consumer.

7.0 p.m.

My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) raised the question of vermouth. It is very hard to be exact here, because vermouth, as he says, is a blended wine, the proportion of heavy wine in it varying very much. I know that in at least one case there is no heavy wine in it at all. Clearly, the reduction could not in any way be the full 2s., and I think that the figure he quoted of 6d. is probably a reasonably fair figure for a number of vermouths because, as I say, they vary from having no heavy wine in them at all to having a noticeable quantity of heavy wine in the mixture, so that it is impossible to generalise.

The effect of the reduction in the duty will, of course, be to help those countries that supply us with the heavier types of wine, and, in particular, I am sure the Committee will be glad to welcome it for the assistance it should bring to Australia and South Africa. As compared with pre-war, sales of Australian heavy wine have fallen very much indeed. On the other hand, sales of the South African heavy wines have held up well, because the South Africans have, as I think every one agrees, been doing a great deal to improve the quality of their sherries, which are now quite excellent.

Our friends the Portuguese—our ancient allies—should benefit, because the sales of their port wines are much less than half the pre-war level. On the other hand, the sale of Spanish sherries, in spite of the Imperial preferential margins, is substantial. Spanish sherries—this always interests me in view of the high quality of South African sherries—have maintained the full pre-war level of their sales here. All those countries should benefit to one extent or another by this reduction in duty.

I would not agree with what one or two hon. Members have said about the decline in port wine drinking being due almost entirely to the rate of duty. I should have thought that it was due, almost certainly, to a change in public taste rather than to the level of duty. I think that this is very much borne out by the fact that while the consumption of port has fallen very heavily compared with pre-war, the consumption of sherry has remained at the same level, though both wines pay the same rate of duty. Therefore, I am sure that the port wine trade itself would recognise that in this case there has been a notable change in public opinion.

Nevertheless, it is clear that the heavy wine has been bearing a very high rate of duty. My right hon. Friend is glad that he has been able to make this substantial reduction and that it has been passed on by the trade to the consuming public, but he feels that this is the limit to which he can go at present. It is interesting to speculate, as several hon. Members on both sides have done, that a further reduction might bring a further increase in consumption and, therefore, by the law of increasing returns, not mean any real loss to the Revenue.

Figures have been quoted of the consumption of light wines, which now stands at about twice its pre-war level and which has shown a very marked increase in recent years, since the reduction in the rate of the light wine duty in 1948–49. Again, I am not at all certain that the increase in consumption is altogether due to the reduction in duty rather than to a change in public taste. A good deal of the remarkable increase in light wine drinking is the result, I am sure, of travel on the Continent of Europe by all sections of the community.

I do not think, therefore, that one should assume that a further reduction in the duty would lead to a proportionate increase in consumption, but I know that my right hon. Friend will very carefully watch the effect this reduction has on the sale of heavy wines. I am sure that I am not going any further than he would like when I say that I for one hope that, even though the duty had been reduced this year, this rate will not last for ever, but I think that, for this year, it will have to remain as it is.

Question put and agreed to.

Clause ordered to stand part of the Bill.