HC Deb 12 June 1958 vol 589 cc482-8
The Temporary Chairman

I think that all the Amendments to the Third Schedule conveniently go together.

Mr. Redhead

I beg to move, in page 45, line 40, to leave out "£1 18s. 0d." and to insert "£1 12s. 0d."

I am sure that after the very interesting discussion we have had on Clause 4, it will be unnecessary for me to traverse all the arguments that may be adduced in support of this series of Amendments. I feel that the Paymaster-General has, perhaps, already indicated what the Government's attitude will be to them, but I think that the discussion we have had on Clause 4 has been of such a character as to encourage the Chancellor to continue the universal welcome afforded to the reduction he has made and, perhaps, induce him to go a little further in the proposal that has received such support.

I am not able to bring to bear any expert knowledge such as some of my hon. Friends have shown in the earlier discussion. I must say that I was highly interested to hear the rival claims for the different types of alcoholic liquor, and I found myself, after the Committee had been carefully mixing its drinks, with more intelligence on the subject that I had before, though I am not able, I am afraid, to follow the Economic Secretary in his personal research and life-long study.

What the Chancellor has proposed is a reduction of 12s. a gallon, or 2s. a bottle. We are told that this is the first reduction in heavy wine duty that has been made in living memory. The Chancellor explained it as going some way in seeking to correct the balance of the duty as between the light and the heavy wines and the consequent distortion in trade and demand that has occurred. It seemed to me that when the Chancellor said "some way" he was a little apprehensive that what he was proposing might not have met with the universal approval accorded to it by this Committee. I therefore hope that he may still be induced to go that little stage further that is suggested in the Amendment.

Light wine consumption, after all, has been steadily rising in this country for a considerable time. An increase of one million gallons occurred during 1956–57 over the previous year, and it now runs at about twice the pre-war level—and the light wines have had a rate of duty very substantially less than that on heavy wine. Under the Chancellor's proposals, we still have a grave disproportion in the rate of heavy wine duty, which will now be of the order of about three times the amount of the duty on light wines.

This Amendment, and those that are being considered with it, would redress that balance a little and would narrow the gap. It would involve no more than the slightest risk of lost revenue, but would probably give confidence to those who argued on Clause 4 that we might go substantially further without endangering the Revenue, because the experience in the light wine trade would encourage the view that some similar increase in consumption would compensate for loss of revenue on the heavy wines.

Mr. Ernest Davies (Enfield, East)

Having already spoken on the Question "That the Clause stand part of the Bill," there is very little I can add, but there are two points on which I should like to support my hon. Friend the Member for Walthamstow, West (Mr. Redhead) in urging that there might be a further reduction in the duty on these heavy wines.

The first arises out of our relationship with Portugal. The Paymaster-General quite rightly drew the attention of the Committee to the fact that it will help our ally by increasing trade with Portugal in port wine. So far, the effect of the high duty on heavy wines since the war has led to a deterioration in our position in that country, and particularly in Oporto itself, which, as the Paymaster-General knows, is the centre of the port wine trade. This trade was entirely built up by British firms, but over the last decade there has been a diminution in the number of British firms operating there, partly due to the heavy duty and the reduced consumption of port in this country, and partly due, of course, to the action of the Portuguese Government themselves in stimulating national control of capital investment in their own country.

The fact remains that since the war some ten British port shipping firms in Oporto have had to close down, and have had to do so because of the decline in the sterling trade. I happen to have been in Oporto last year, and nobody can go there and meet the British interests in the port wine trade without being impressed both by the British tradition which survives there, with the Factory House still remaining in British possession as a club or centre, and with the concern which is shared by all British interests in Oporto lest they shall be driven out of the country because of the inadequacy of the trade in port wine.

I think it would be very regrettable if, because the Government do not feel able to reduce the duty on port wine to the same proportion as it stood to that on light wines before the war, trade is not stimulated sufficiently to keep those firms in business. That is the first point which I wanted to stress in regard to this matter.

The second is that the Paymaster-General referred to the change of taste which was largely responsible for the diminution of the consumption of port wine. That is partially true, but I do not think the fact can be ignored that the change of taste has been very largely influenced by the high price of the heavy wines. Before the war, a dock-glass of port wine in a public house generally cost 8d.; today, before this reduction, it was generally about half-a-crown, and may now have come down to 2s. 3d. When the price goes up to that extent, which is far greater than the rise in the price of beer, for instance, or even in the price of spirits, it influences very considerably this switch in taste from port wine, which was a very common drink with the lower income groups before the war, particularly in the case of women. It is that which has led to the change in taste.

7.15 p.m.

The right hon. Gentleman also stated that, in the case of sherry, consumption had stood up, but I think other factors apply there. There is a certain snob value about sherry for some unknown reason. It is considered the thing to do, it is considered "U" to serve sherry before a meal in one's own home when one is having guests for dinner. There is a steady consumption of sherry, which is likely to remain with the improvement in the standard of living, which does not apply in the case of port, which mainly is not an aperitif but an after-dinner drink. I would draw the attention of the Paymaster-General to that fact.

I do not think that the change of taste has come about without having been influenced by the fact that the duty on port wine itself is very high. If it were possible to give serious consideration to this Amendment, which, unfortunately, the Paymaster-General has already rejected—though he himself would like to see a reduction in the duty and hopes for it next year—I think the debate might serve some useful purpose.

Mr. Maudling

The arguments in support of the Amendment under discussion have tended to follow the debate we had on the Question "That the Clause stand part of the Bill," and I think it would be the general agreement of the Committee, and certainly would meet with my agreement, that it is a very desirable thing, if it were possible, to reduce further the prices of wines, be they heavy or light, but the actual proposal to reduce further at this moment the rate of duty on heavy wines is not one which my right hon. Friend the Chancellor can accept.

My right hon. Friend fully recognises the arguments that have been put forward from both sides of the Committee, for example, about the comparative cost of heavy wines, and about British trading interests in the Oporto district, which was mentioned by my hon. Friend the Member for Dover (Mr. Arbuthnot) and by the hon. Member for Enfield, East (Mr. Ernest Davies). These were the reasons why he decided to make this substantial cut in the duty this year which will cost, in his estimate, something under £3 million. The best estimate we can make of the cost of the Amendment would be over £1¾ million in a full year. That is something which the Committee as a whole would agree would be too much to concede, particularly in relation to other sums which we have been refusing to concede during the progress of this Committee stage.

There remains the argument that a further reduction in the duty would result in increased consumption, so that the Government would not suffer a loss of revenue. I cannot feel myself entirely convinced by that; at any rate, not sufficiently convinced to take a chance on it at this stage. No doubt the experience of what happens in the next year or two on the basis of the existing or proposed rates of duty will be very instructive. For the time being, however, my right hon. Friend feels that he has done all he can do, though he has been glad to do it, and all that he can rightly do at this stage, for the heavy wine consumer and the heavy wine trade. I hope, therefore, in these circumstances, that the Committee will not feel it necessary to press this Amendment.

Mr. Jay

Can the right hon. Gentleman tell us how much weight he attaches to the argument advanced from both sides of the Committee that British trading interests in Oporto and in Portugal were suffering as a result of the decline in the port wine trade? If it is the case that British exports from this country to Portugal are suffering from a decline in this connection, it seems to me that it is obviously a rather cogent argument that has been advanced, and that it might conceivably influence whoever is at the Treasury, if not this year, then probably next year. Would the right hon. Gentleman say whether he thinks there is some force in that argument?

Mr. Maudling

There certainly is force in that argument, and we are anxious to increase our trade with Portugal. I think it is likely that further consumption of Portuguese wines might expand our exports to Portgual, but we are not working on a bilateral basis. All European trade is on a multilateral basis, and Portugal is a member of the European Payments Union. The net effect of buying more Portuguese wine would be that we would have to pay 75 per cent. in gold for any additional purchases cleared through E.P.U. It is difficult to be dogmatic about the expansion of trade with Portugal, but we are most anxious about it and we will continue to bear it in mind.

Amendment negatived.

Motion made, and Question proposed, That this Schedule be the Third Schedule to the Bill.

Mr. Cronin

We have extensively discussed a proposal for the reduction of the duty on port wine, but there may still be some purpose in pointing out that there is a case for reducing further the duty on light wines. I think it is generally accepted that light wines are considered to be a superior form of alcoholic beverage to beer, and it seems to me that an increase in the standard of living of the population should run parri passu with the increasing consumption of light wines.

I think that rather earlier in the debate my hon. Friend the Member for Flint, East (Mrs. White) asked the Paymaster-General if there had been some social research. It is always an involved question, but in a country such as Switzerland where light wines and beer are equally obtainable it has been found that with an increase in the standard of living of the population there is a large increase in the consumption of wine and a corresponding decrease in the consumption of beer. It seems that an increase in the consumption of light wine would be desirable from the point of view of the standard of living. It seems rather an anomalous situation that in France the actual production of light wine is so much less than what could be produced. In fact, the French cannot dispose of the limited amount—I say "limited" in view of their resources—of wine which they manufacture. It seems unfortunate that the population of this country should be prevented from drinking this wine, which is in such superfluity in France, very largely by the heavy rate of duty.

I need not point out that light wines are a very valuable Commonwealth product, and it would be of the utmost importance to Commonwealth trade if there were further reductions in the duty. Therefore, I hope that the Chancellor will give further consideration to this matter and perhaps when he introduces his Budget next year we may see some corresponding reduction.

Question put and agreed to.

Schedule agreed to.