HC Deb 02 June 1964 vol 695 cc957-65

5.15 p.m.

Mr. G. R. Mitchison (Kettering)

I beg to move Amendment No. 1, in page 4, line 6, at the end to insert: Provided that the last-mentioned rates of excise duty shall not be charged on British wine berg such intoxicating liquor as is mentioned in subsection (1) of section 2 of the Finance Act 1956 (excise duty on strengthened cider and perry) and that the rates of excise duty set out in Schedule 3 to the Finance Act 1962 shall accordingly continue to be charged on such British wine.

The Temporary Chairman

It will be convenient to discuss at the same time Amendment No. 2, in line 22, at beginning, insert: Subject to the proviso to subsection (1) or this section"; Amendment No. 41, in Schedule 3, page 27, line 9, at end insert: not applicable to such intoxicating liquor as is mentioned in section 2 (excise duty on strengthened cider and perry) of the Finance Act 1956"; new Clause No. 17—(Excise duty on British light wines)—

and Amendment No. 30, new Schedule—(British Light Wines (Rates of Excise Duty)).

Mr. Mitchison

The Amendment which I move is designed to insert a proviso the effect of which would be to save from the proposed increase what is called in a side note the 1956 Act "Strengthened cider and perry", and this means liquor in the nature of cider or perry over 15 per cent. spirit content and so described.

The present rate of duty on British wine is 11s. 6d. The Bill proposes to increase it by 2s. to 13s. 6d. The question is whether that increase ought to be extended to the beverages which I have mentioned. The difference between the tax on light wines and that on heavy wines is a question of alcohol content. This, too, is a question of alcohol content. From that point of view it seems reasonable that there should be some distinction between the 15–25 per cent. range and the higher range covered by British wines and the still higher range covered by British heavy wines.

There is a further reason for this. This is British wine in a sense that no other British wine is. It is grown in England. The apples come from our apple-growing counties. They are the product of a pretty considerable acreage. Cider is a drink that has been in this country for centuries. Strengthened cider may be more recent—I do not knew whether it is or not—but it is still substantially cider. It is a simple sort of drink. It is good; indeed, it is excellent. It is made not entirely of apples but mainly of apples.

The effect of letting in this increase with regard to strengthened cider will be to put on something which is considerably heavier in the case of a fairly cheap beverage, a relatively cheap beverage, than it is in the case of most wines. Therefore, on the ground that the alcohol content is lighter, on the ground also that the beverage itself is rather different in character from the still wine which we are generally considering, and on a third ground which I shall now proceed to put, I hope that the Government will be able to see their way to make this small exception to the increase.

The third ground is the smallness of the exception. When strengthened cider was brought into the duty on British wine in 1956—it was then called "a sweet"—figures were given by the Treasury indicating the extremely small quantity of the total of cider that it represented. It was surely a reason for not differentiating it from other cider rather than for imposing a duty on it. At any rate, the Government insisted on bringing it in.

The hon. Member for Rye (Mr. Godman Irvine), who has his name to one of the Amendments that we are discussing, at that time introduced an Amendment to protect cider made from British apples—fortified or strengthened cider in this case. Looking back at that short debate, I think that the hon. Member had a very strong case, but he spoilt it a little by going into the Lobby afterwards as a dutiful follower of the Government and voting against his own Amendment.

I hope that we shall not see that situation repeated today and that we shall have his support, even if, as is the case, his Amendment goes a little further than we would go. He proposes to reduce the present rate of tax on strengthened cider, whereas we would merely keep it at its present level. We offer a reasonable compromise to him between his constituency views and our views, and he might perhaps be willing to support that compromise if and when the question comes to a Division. However, I hope that we shall not divide. This is quite a small matter. It is obviously fair that there should be a rather lower duty on this beverage than on imported wine and that this is a convenient occasion for making a small concession which would be welcomed by those who grow apples for cider all over the southern counties of England.

There is little more to be said about this. However, as we have been referring to the history of these duties, it is interesting to note that the duty on wine, British and other, has been reduced only once in its history. This was by Sir Stafford Cripps when he was Chancellor of the Exchequer. I hope in these circumstances that the Government, without going quite so far as that, will at least refrain from increasing the duty further in this case. The Tory achievement in this matter appears so far to have been confined to a reduction, introduced when Lord Amory was Chancellor, only in respect of sparkling wine and port. Now the Government have an opportunity to reconsider their proposed increase in respect of a humbler beverage, and to do so in the interest of many growers.

Mr. Bryant Godman Irvine (Rye)

After eight years of using more or less the same words as those just used by the hon. and learned Member for Kettering (Mr. Mitchison), I have the privilege of finding allies on the Opposition Front Bench, which does not often happen. However, I am delighted to accept support from wherever it comes. The only thing I would add concerns differences between Schedule 3 and Schedule 4. On page 26 in Schedule 3 there is a division between "light wine" and "other wine", whereas in Schedule 4 there is only one category.

I am sure my right hon. Friend is aware that certain differences are alleged to exist between foreign wine, Commonwealth wine and even British wine. He must also know that British wine at least comes out in varying strengths. Perhaps he will tell me why the reference to British wine in Schedule 4 suggests that there is no difference between light and other wine.

I have a constituency interest to declare in this matter. One result of the 1956 Act was that the company producing fortified cider was so heavily affected that it turned to producing wines from British fruit, and these wines are competing with light table wines from abroad. In these circumstances, it seems equitable that Schedule 4 should make a distinction between light wine and other wine. It would be reasonable for my right hon. Friend to accept the point that there is a difference between alcoholic strength, even if in the past there was perhaps no light British wine.

Mr. Boyd-Carpenter

The Amendment seeks in substance to reverse the decision this Committee reached in 1956. Hon. Members may recall that the basis of that decision was that a particular kind of fortified cider and perry was then coming into sale, deliberately fortified by the addition of sugar to produce fermentation and very substantially stronger than the ordinary cider brewed—if that is the word—in the normal and traditional way.

After some discussion, it was felt by the Committee then that it was unfair to the British wine industry that this product should be at a lower rate—indeed, I think I am right in saying that it carried no duty at all then—compared with other British wines paying a substantial excise duty. It was also felt, from the Revenue point of view, that to allow the British wine industry to be exposed to competition on this basis would undermine the return to the Excise of the duty on British wines and, therefore, that the right thing to do was to place the two duties on the same basis.

That position remains, except that ordinary cider and ordinary perry are now subject to Purchase Tax in the soft drinks category. But the idea behind the 1956 decision is still right. I thought that the hon. and learned Member for Kettering (Mr. Mitchison) perhaps exaggerated the scope of his proposal. He said that the Amendment would be welcomed by the cider apple growers of the southern counties. I think he exaggerated because, of course, ordinary cider is not touched by this duty or by the increase provided under this Bill. It is and remains under the Purchase Tax as a soft drink.

Indeed, even in 1956, when this strengthened beverage was being introduced, it represented only 3 per cent. of the cider and perry output of the country. Therefore, very few cider apple growers would receive any benefit whatever from this Amendment, which would not touch the ordinary production of apples for cider. It would, indeed, affect what must be now considerably less than 3 per cent. of the production.

That being so, I think we must take another look at the merits of the matter. What we are concerned with, as I have reminded the Committee, is a beverage founded on apples but fortified with sugar so as to induce higher fermentation and thus a beverage comparable with wine. It is not only I who make that comparison. The principal manufacturer in this country is marketing one of his brands of this product "Apple wine"—perfectly fairly I think. But surely that in itself suggests that, if it is to be marketed as wine in competition with wine also produced in this country, it should, as a matter of ordinary fiscal good sense and fairness, bear the same rate of duty. I cannot, therefore, recommend the Committee to accept the proposal of the hon. and learned Member for Kettering.

5.30 p.m.

My hon. Friend the Member for Rye (Mr. Godman Irvine) asked me why British wine was subject to the same rate of duty regardless of strength. He is, of course, quite right in pointing out that we treat imported wine in two different categories, whether it is heavy, above a certain specific gravity or below it. There is also a further complication in respect of duty in that we treat sparkling wines differently.

The Committee discussed this point a number of years ago—I am sorry that I cannot recall in which year—and there was then, according to my recollection, very considerable argument because the standard British wines were, in fact, of a strength very close to the point of division, and very real practical difficulty was being encountered in classifying them in one category or another. It was therefore thought right to put them all into one category regardless of strength.

I think that that was a right decision and that, on the whole, it was received satisfactorily by the public and the trade. So we really come back to the question as to whether in these circumstances we should now reverse the decision of 1956 and in respect of a very small proportion of the cider output of this country and in respect of a beverage deliberately fortified in order to strengthen it in respect of a beverage, the principal makers of which advertise it as apple wine, we should introduce a discriminatory and lower rate of duty. I could not advise the Committee to do that, because, as I was saying a moment or two ago, if we discriminate in that respect we are unfair to the producer against whom we discriminate and from the revenue point of view we undermine the receipts of duty. At the moment when, as the Committee knows, we are seeking to increase the revenue, that is a consideration which must be of some importance to us.

Mr. Mitchison

I am much obliged to the right hon. Gentleman for giving way. If he is going to develop that argument, perhaps he would let us know what the concession would cost.

Mr. Boyd-Carpenter

The net cost would be very small indeed, but I am not resisting it on grounds of immediate loss to the revenue, even though, of course, if, as we fear, the effect were to undermine the receipts from the British wine industry the figure could become substantial. It is not, as I say, a point of the direct revenue which is at issue. The amount involved would be small, but it could, of course, become large. I put the matter to the Committee more on the basis of fairness between the industries, that these are comparable products. They are marketed as comparable and competitive products and I should have thought it reasonable in these circumstances that they should pay the same rate of duty.

Mr. Mitchison

I only wish to say that if we are going to compare fortified cider with anything, the reasonable thing to compare it with is unfortified cider. That is what was done for a very long time indeed up to 1956. We are not asking the Committee to reverse the decision of 1956. We are not saying that there ought to be no duty on fortified cider but are simply asking that the Government should maintain the decision of 1956 which was to charge a certain duty on fortified cider. This is the whole point. I must say that I find it unconvincing to be told that we are going to undermine the duty on something else.

This is one of the Chief Secretary's undermining days. He has been undermining matters or finding them undermined all over the place. I do not see how we are going to undermine duty on British wines to a greater extent than our loss of duty by the change here proposed, and the direct loss of duty, as the right hon. Gentleman is pleased to admit, would be so small that he cannot calculate it or even see it. In these circumstances, I think that the least that the Government could have done would have been for once to extend a proper and friendly gesture to the people engaged in this trade, whether as growers or manufacturers, and let them have this very small concession. But the Government are not going to do that. It hardly seems to be a matter on which it is worth dividing the Committee. There is no deep question of principle involved. It is just another case of Government stinginess.

Mr. Boyd-Carpenter

The hon. and learned Gentleman has put the matter in his usual agreeable way and I respond, I hope, with similar agreeableness. It is, of course, a little ingenuous of the hon. and learned Member to say that we are not departing from the 1956 position to maintain the present rate of duty on fortified cider when we are increasing it on British wines. The essence of the 1956 decision, of course, was that these commodities should bear the same rate of duty. The purpose of the Amendment is to separate them.

On the other point, I do not think that the hon. and learned Gentleman is really as disingenuous as he seems. To allow a competing commodity to pay a lower rate of tax than another commodity would mean a shift of consumption from the one at the higher duty to the one at the lower duty and we should lose the revenue at the higher rate on the more heavily taxed commodity. I do not think that that is too difficult a proposition for the hon. and learned Gentleman even at five and twenty to six in the evening.

Amendment negatived.

Question proposed, That the Clause stand part of the Bill.

Mr. Mitchison

There is less in a way to be said about the social effects of increasing the duty on wine than there is as regards the other commodities which we have been discussing, but I rather regret this increase. The consumption of wine, at any rate as far as I am concerned, is a pleasing and relatively harmless occupation, and I cannot really see the call for this increase at the moment.

As I pointed out in connection with the Amendment, the Tory Government record is that at about the same time as they were remitting a large amount of Surtax they also remitted the duty on wine, but only on champagne and port. Let us never forget the over-ripe pheasant and the old port in which, I think, one of the right hon. Gentleman's colleagues was found to be pleasantly and playfully indulging. He may be able to afford the increase, but a great deal of this wine is sold nowadays in small "pubs", off-licences and so on, and though I appreciate the broad reasons for the increase I am not at all sure that I agree with them. I therefore dislike the Clause.

Question put and agreed to.

Clause ordered to stand part of the Bill.