§ Question proposed, That the Clause stand part of the Bill.
§ Mr. Michael Foot (Ebbw Vale)
I wish to say something about tobacco, which, I think, comes in a quite different category from the other commodities which we have so far been discussing, and I think that everyone would appreciate the reasons why that is so.
I also wish to make some constructive suggestions to the Treasury on the matter, although I must say that I do so with considerable diffidence. The Treasury is a most extraordinary Department. Apparently one can make any accusations one likes against it, but it never takes them to heart. Earlier this afternoon one of my right hon. Friends accused the Treasury of stinginess, and the Chief Secretary bounced to his feet and thanked my right hon. Friend for the great courtesy with which he put his point.
Another hon. Member said that the Treasury had behaved in a most mean and contemptible manner. Once again, the right hon. Gentleman bounced to his feet and said that he could not have put the point with greater grace or accuracy. Several of my hon. Friends accused the Treasury of showing its incompetence and incapacity, and the right hon. Gentleman then said that the argument had been presented with tremendous force.
Try as we may, it is very difficult to insult the Treasury. The point is underlined by one hon. Gentleman opposite who congratulated the Treasury on its kindly and well-disposed manner and the right hon. Gentleman could not have been more startled than if somebody had let off a pistol next to his ear. One cannot dent the Treasury's thick hide, however one tries.
I propose to make a constructive suggestion for dealing with a serious problem, and that should startle the Treasury. 972 Tobacco is a different kind of commodity, and the question that we should consider is whether the House of Commons is to take seriously the warnings which have come from the medical profession about the dangers of smoking. What we shall be doing by passing this Clause is to raise the tax on tobacco to a higher level than ever before; to make the amount of money which the Treasury receives through the tax higher than ever before, and, therefore, to make the revenue more dependent upon tobacco than ever before. Nobody can dispute that.
In view of the reports which have been presented to the nation, some of them recently—the American report on smoking was presented to the world fairly recently; at any rate, since our last Budget debate—we should examine the matter carefully. I do not say that the allegation that smoking produces lung cancer is proved up to the hilt; some doubts still remain. But nobody can question the assertion that those doubts are certainly much less than they were a few years ago. Anyone who has taken the trouble to read what the medical profession, both in this country and in the United States, has had to say on the matter must have come to the conclusion that, as far as can be ascertained in our present state of knowledge, it is extremely dangerous for people to go on smoking and extremely undesirable that young people should be encouraged to smoke.
This is accepted not only by the medical professions of this country and United States, but, in the main, by the Ministry of Health. The Ministry has not shown great alacrity in acting on the reports, but it has moved some way in the right direction. It is spending a few thousand pounds on trying to prevent the encouragement of smoking by young people. But it is not much good the Ministry's spending a few thousand pounds on that when, at the same time, the Treasury is taking action which makes the revenue of the nation more and more dependent upon people's smoking.
Nobody can dispute that if the whole nation were to take seriously the warnings that have been issued by the medical profession about smoking, and were 973 to stop smoking completely, this country would soon be facing a first-class financial crisis. I can put the matter another way. The Treasury has a vested interest in trying to sustain the procedure by which people are encouraged to get lung cancer. It is no good hon. Members smiling; this is a fact. The question is whether it is a desirable thing.
When the Chancellor imposed the extra tax he did not do so to discourage people from smoking. He would not claim that. He put on the extra tax because he thought that people would go on smoking and that he would get more revenue from it. He is not the first Chancellor of the Exchequer who has acted in that way. I am not discriminating between different Chancellors in this respect. Although people may not treat the matter seriously at the moment, they will do so in years to come.
This Committee has a responsibility to people who will probably be killed by being encouraged to smoke, and it should decide what it intends to do about it. If all that we do is to go on raising the tobacco tax, thus making our financial structure more and more dependent upon people's smoking, we are doing something most reprehensible.
I do not say that people should be stopped from smoking compulsorily, by Act of Parliament, but the Committee should show that it is taking seriously the warnings which have been issued by the most weighty medical information available to the world. As Members of Parliament we should do everything in our power to discourage young people from smoking. It is absolutely outrageous that advertisements should appear on television every day encouraging people to engage in a pastime which will help to give them lung cancer, especially when those advertisements are largely aimed at young people. We should stop the advertising and we should increase the amount of money which the Ministry of Health spends on propaganda against smoking.
At any rate, we should increase the amount of money which the Ministry spends on telling the people the facts about smoking, as they are revealed by the medical profession. But it is not 974 much good our doing that if, by its deeds, the Treasury shows itself to be quite content with a situation in which our whole financial structure should become more and more dependent upon more and more people's smoking.
How are we to solve the problem? I want seriously to suggest to the Committee how we should deal with it. In the light of the reports of the medical profession it is quite improper to allow a situation to continue in which we are so dependent upon tobacco taxation. It is irresponsible for the Committee to say, "We do not care about these reports. We do not care if it is proved, as conclusively as such things can be proved, that smoking causes this disease. We shall nit take any notice of it. We shall go on as if these reports had never been produced at all." That is what we shall be doing if we allow the dependence of the Government on this kind of taxation to continue.
It is a difficult situation for the Government. I do not suggest that any Government could say, "We shall abandon the £600 million or £700 million a year which we derive from tobacco taxation." No Government, of any complexion, would like to do that. Therefore, I do not propose that the tax should be removed. That would make smoking easier, rather than more difficult. But we should see whether there is a way of solving this dilemma. We should not be content to go on passing legislation which makes us more and more dependent on spreading this kind of disease. Hon. Members, and the Treasury, should apply their minds seriously to the problem.
It is impossible to think that any Government would abandon, in one go, the £600 million or £700 million a year which they receive in this way, but I suggest than if the Committee wants to treat the subject seriously it should decide that each year over the next 10 years we should make the country less dependent upon tobacco taxation. Let us suppose that it was agreed that the level of tobacco taxation should remain at the level at which it will be established if we pass the Clause. It should then be arranged by the Government, if they wish to treat the question seriously, that each year for the next 10 years we should reduce, say, by £100 million a 975 year, our dependence on the money raised from that source to meet our overall expenditure.
We could maintain the tax at its present level, but we could disregard some part of it, each year, for the purposes of our overall expenditure. If a certain amount was lopped off each year in this way, although the same sum would be collected by way of taxation it would not be counted as part of the normal revenue to meet our total expenditure. To my knowledge this is an absolutely original proposal. At least, it tries to deal with the situation, and I have never heard of any other proposal which seeks to do so. I therefore hope that it will be seriously considered.
§ Mr. Foot
My hon. Friend has not followed me with his usual acumen—or maybe he has. I am not saying that we stop anyone smoking by compulsion; of course not. A person has the right to do himself to death by the method of his own choice and I should not prevent him from doing so—there may be a few exceptions to that rule, but not in this case. I am not proposing to stop people from smoking by force, compulsion or by legislation. I leave the choice to them. I am concerned that the Government should not have a vested interest in the maintenance of smoking.
I have made a concrete suggestion for dealing with the situation. If my plan were adopted, instead of having a crisis over this matter, in 10 years' time or so the country would no longer be dependent on this source of revenue. Hon. Members may think this is a bizarre proposal, but no alternative has yet been presented. It is up to other people who treat seriously the reports made by the medical profession to offer their alternatives. This is a novel idea and, therefore, I do not expect the Minister to get up and say, snap, right away, that the Treasury will accept the idea immediately.
I expect the Government to consider the matter and that in about four years they may do something. We should bear in mind that in four years' time something else may have happened. It may 976 well be that further reports made by members of the medical profession will be even more conclusive than those presented recently. What will the Government do then? Suppose we get a report from the doctors of this country, or America, saying that they have now solved the medical problems which they had the honesty to admit were not fully solved when their previous reports were made, even though they may have reached a general verdict. Suppose they have solved the problems and that it is absolutely certain, without any shadow of doubt whatever, that smoking does greatly increase the perils of lung cancer.
Suppose that is proved without anyone being able to contest it. What do the Government do then? Will they go ahead cheerfully and say, "We shall not worry about that. All we are concerned with is the revenue. We can easily raise money without getting into political difficulty"—which is all the Government are doing this year; everyone knows that—
§ Mr. Eric Lubbock (Orpington)
Statistically, this has already been proved, and it remains for the medical profession to demonstrate the causal connection between smoking and lung cancer.
§ Mr. Foot
I understand that. I did not put the case in the strict medical terms which have been used by the hon. Member. They have not proved the cause or connection, although their verdict is well-nigh conclusive.
I am saying that it is quite possible that we shall have more reports in the next few months or years in which the members of the medical profession will go further and say that it is absolutely certain, and that there is no possible remote question of doubt about it. What will the Treasury do then? Will it say, "We are going gaily ahead as if nothing had happened. All we are concerned with is raising revenue"? In the face even of the reports we have already received, and even more so in the face of reports we may soon receive, I think that the Treasury, if it took that kind of attitude, would be utterly immoral.
I suggest, therefore, that it is the duty of this Committee to relate the medical reports which we have received to the practice of the Treasury and see how it 977 can marry the two. When that conjunction is made, so far it has not been made, I think that the Committee will come to the conclusion that, somehow or other, we must reduce the dependence of the affairs of this nation and the conduct of our whole finances on revenue of this character.
If that is to be done, the Committee will have to decide whether this form of taxation should be abolished altogether in one go—which would cause a financial crisis of the first order—or whether we should adopt my solution, or something along the lines of the solution which I have suggested, which is that we should make up our minds here and now that over the next 10 years we shall remove the dependence of this country on such a source of revenue. If that proposal were adopted, I believe that it would be much healthier for the country.
Once the Treasury had revealed that it was no longer dependent on such a source of revenue we might get from the Government action in other respects such as they ought to have taken already for dealing with this menace. We might then get a Government which had the guts to stop all smoking advertisements on television. That would not be interfering with the free choice of anyone. It would interfere with people encouraging others to smoke themselves to death. We might then get a Ministry of Health which, instead of spending a miserable sum—about £25,000 a year on this subject, to counteract the tens of thousands of millions of pounds spent by commercial companies—on persuading people to stop smoking, might do its duty in this respect.
We might then get from the Government a different attitude altogether to this problem. So long as the matter is not tackled as I have suggested, the Government approach this question as a corrupt body. They are corrupted by their own interest in raising tobacco taxation. Only when the Government have freed themselves from that impediment shall we have a Government which faces honestly the facts presented to them by the medical profession.
§ 6.15 p.m.
§ Mr. Donald Wade (Huddersfield, West)
The effect of this Clause is to increase the Tobacco Duty as from 15th April. I propose to approach the subject from a slightly different angle than that 978 of the hon. Member for Ebbw Vale (Mr. M. Foot). I think that many people have accepted this increase philosophically, but among the elderly there is some sense of grievance and I think it only right that it should be aired.
I do not propose to dwell on the health aspect, except to say that it seems inconsistent that vast sums of money should be expended on advertising cigarettes, for example, and, at the same time, an effort be made to dissuade people from smoking. However it is not the Government's policy to ban smoking and I am not suggesting that they should. We are at present dealing with the subject of raising revenue, and a very large amount of revenue. If this tax acts as a discouragement, I think it much more important to discourage young people, particularly cigarette smokers, rather than the elderly person who enjoys a pipe of tobacco.
I should like to make my own position clear. On another occasion when I spoke on this subject I was described in the Press as an anti-smoker. My family of six consists of my wife, four grownup children and myself. Out of the six, five are voluntarily non-smokers. I am the odd one out. So I cannot say that I have a strong prejudice, but I smoke very little. I have considerable sympathy with those elderly people who have limited incomes. I think that there is a feeling of injustice among them and I speak with some first-hand knowledge. Surely the art of taxation—if it be an art at all—is to keep a sense of injustice to the minimum, and I do not think that the Government have succeeded in relation to the elderly.
As the Committee knows, originally old-age pensioners had tobacco vouchers. These were introduced because the duty had been increased. When they were withdrawn in November, 1957, it was felt right to increase the pension to make up for the loss of the vouchers. I have been reading what was said then by the Chief Secretary to the Treasury, who was then Minister of Pensions and National Insurance. He said:Therefore, for some time we have held the view that this concession should be brought to an end, but it could in fact be fairly and sensibly brought to an end only at a time when substantial increases were being given in the rates of benefit, and that is the process we have followed. Among other factors we 979 have taken into account in considering what should be the proper level of benefits is the fact that, so far as retirement pensioners are concerned, about half the total were losing vouchers which, if used to the full, were worth 2s. 4d. per week. We have taken that into account in deciding the level of benefits…".—[OFFICIAL REPORT, 13th November, 1957; Vol. 577, c. 982.]I should have thought that a similar principle might have applied here. Some elderly people feel that the Government have been rather "too clever". When the vouchers were withdrawn the pension was increased, but now that the tax has been increased there has been no corresponding benefit.
I understand that in Eire, in this year's Budget, the duty on tobacco has been increased by 3d. for 20 cigarettes, but the pension was raised by 2s. 6d. per week. More important to my mind is that a distinction was made between the tax on cigarettes and on pipe tobacco. I understand that the Government there were able to find a way of dealing with this matter so that the increase did not apply to pipe tobacco. The answer of the Government here has always been that it is not practicable to distinguish between pipe tobacco and cigarette tobacco—that people would buy pipe tobacco and use it in the form of cigarettes—but for some reason the distinction has been made in Eire. I should have thought that it could be considered here.
I certainly am not an advocate of cigarette smoking. I fully agree with the hon. Member for Ebbw Vale about the serious dangers, but we should give some thought to the problem of the elderly, to whom a pipe of tobacco is quite an important item of expenditure from a very limited income. I thought it only right to express a word of protest on their behalf before we part with this Clause.
§ Mr. Cyril Bence (Dunbartonshire, East)
I wish to support my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) in his very original and, as he said, bizarre idea of reducing the dependency of the State on tobacco tax. I cannot go all the way with him. I gave up smoking three years ago and as a result I have put on extra weight. I am assured by my doctor that if I do not reduce it I am likely to die from 980 overweight. It is difficult to know what to do in modern society when one gets so much different advice.
In view of the dangers possible from over-eating or excessive smoking the increased revenue we expect to get from tobacco duty might be used in a more efficient educative campaign in the schools by the Department of Education and Ministry of Health to bring home the dangers of smoking, especially to young people. I think that there are other things, such as diesel fumes and had ventilation of factories, which contribute to the possibilities of getting cancer as well as heavy smoking, but I support my hon. Friend in saying that we should reduce the dependency of the Revenue on income from smoking and use the money in a campaign—
§ The Deputy-Chairman (Sir Robert Grimston)
I am sorry to interrupt the hon. Member, but on this Motion he cannot stray into talking about what money could be used for. It is perfectly legitimate to argue that the Treasury should not be so dependent on the amount received from Tobacco Duty, but it is not in order to go into other questions about how that money could be spent.
§ The Deputy-Chairman
That may well be, but it is not in order to discuss that on the Question, That the Clause stand part of the Bill.
§ Mr. Bence
I suggest that increasing the tax on tobacco will by no means cause a drop in smoking because of the higher price. What happens is that people's purchasing power is reduced in other directions. People spend as much on tobacco, but less on other things. We are attacking the subject in the wrong way. Statistics show that from time to time when the tax on tobacco is increased there is a fall-off in consumption, but after a short time it creeps up again and, unless incomes are raised, people reduce their consumption of other commodities which may be more desirable. In general, the tax is a bad thing.
§ Mr. Laurence Pavitt (Willesden, West)
I am grateful to my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) and to my hon. Friend the Member for Dunbartonshire, East (Mr. Bence) for drawing attention to the way in which this tax might affect health hazards resulting from smoking. When the Budget was first mooted there was considerable interest in the question whether the Chancellor would introduce a penal tax on smoking because of the lung cancer interest which, perhaps, would have had greater consequence on the smoking public. He chose not to do so although we have a mild increase in the tax which will affect smokers.
The question raised by my hon. Friend the Member for Ebbw Vale is pertinent for the Committee to consider. It is the whole problem of how future Chancellors of the Exchequer will arrange policy in relation to tax on tobacco. The point was brought out very thoroughly on the health side that if there is an increase in taxation it may be that youngsters will not smoke quite so much. I think that the whole Committee is agreed that in all our discussions about the impact of smoking on health we have sought to aim not so much at those who are already smokers—certainly not the old-age pensioner for whom, in the evening of his life, the hazard is not great—as to concentrate on young people and the present generation at school, 250,000 of whom, the medical profession estimate, will probably die from lung cancer as a result of smoking.
The whole problem was highlighted by the previous discussion in the House today which we were very much concerned about the 240 cases of typhoid, most of whom will recover, arising in the last 10 days about which the whole nation is considerably concerned. Yet in the same period, according to Ministry of Health statistics, at least 230 people will have actually died from lung cancer. My hon. Friend has raised this matter against a background of stark reality about which something needs to be done. The Chancellor needs to be aware of these things in shaping his policy for taxation on tobacco.
I looked carefully at the Clause with the idea of consulting my hon. Friends to see whether it would be possible to move an Amendment, but, owing to the 982 intricacies of the tax, I found that impossible. I am not an anti-smoker, but I am deeply concerned about what is happening to the health of the nation through cigarette smoking. Both the report by the Royal College of Surgeons and the report of the United States Surgeon General say that the hazard is much less to those who smoke pipes and cigars. I looked for a way of making cigars purchasable at 10 for ld. and cigarettes at £1 each, but I found that impossible, so I must confine my speech to the Question, That the Clause stand part of the Bill. If my hon. Friends can help me in framing such an Amendment for a later stage of the Bill, I shall be much obliged to them.
We have to bear in mind that there is no doubt among the medical profession about cause and effect. We are concerned not only with lung cancer, but with 31 million days lost to production through chronic bronchitis. Richard Doll, whose latest report was discussed in the Press last week, pointed out clearly that each year there were 10,000 cases of coronary thrombosis and 15,000 cases of people who died from respiratory diseases—people who would not have died but for the fact that they were smokers. In those circumstances the Chancellor has a responsibility not only to the Treasury, but to his colleague at the Ministry of Health and to all of us who are engaged in seeking to promote the health of the nation.
It must be difficult for the Chancellor. In the Treasury, do officials sit around a table and say, "We can raise £800 million from taxes on tobacco and we shall spend £750 million on hospitals, so that one more or less equals the other"? Do they work out how many deaths they can afford from the one in order to provide the service in the other respect? Is there a computer or some other electronic device which works out the hazards and which calculates one against the other? Not being well versed in financial affairs, I cannot tell. But I plead that the case put by my hon. Friend the Member for Ebbw Vale is one which any serious Chancellor must study, because unless the Government are wholeheartedly behind these campaigns, and all Ministers are working together, nothing will be achieved.
983 The figure which my hon. Friend sought was £32,000 spent on campaigns to persuade against smoking and £10 ½million to £l1 million spent on advertising cigarettes, a matter in which the Chancellor must be extremely interested. How can we expect the Ministry of Health and the Central Office of Information—strangely enough, the only people at the moment conducting research into the matter—to be fully seized of this without Treasury support?
At the moment, there is a vested interest in the Treasury to maximise income from this source. I plead with the Chancellor and the Treasury to consider this matter again to see whether there is some way in which, in the Clause, it is possible to convey to the nation the Government's serious concern, which was put forward by the right hon. Member for Reigate (Sir J. Vaughan-Morgan) as long ago as 1957, when he announced Government policy. Between 1957 and 1964 they have not done very much about it.
I am not simply anti-smoking. But if we are to take seriously preventive medicine and the promotion of health rather than the cure of illness, we must take positive action. One of the people most capable of taking positive action is the Chancellor of the Exchequer, and one of the places in which it would have been possible to take such action is this Clause. It is very much to be regretted that the Clause does nothing about it.
§ Mr. J. T. Price (Westhoughton)
I apologise to the Committee for not being present in the early stages of the debate. I was otherwise engaged. But I am interested in the matter before us, although I think that the arguments to which I have listened in the last few minutes, particularly those of my hon. Friends the Members for Ebbw Vale (Mr. M. Foot) and Willesden, West (Mr. Pavitt) are irrelevant to the Clause. I have not yet heard any Minister argue in defence of the new taxation that it was imposed to discourage the smoking of cigarettes or tobacco or these noxious drugs which are supposed to kill so many people.
I should be out of order in trying to discuss the merits of the medical arguments, because the only arguments which 984 I have heard from any Government spokesman during the earlier stages of the Bill is that this is £100 million of extra taxation to mop up surplus purchasing power. This is a variation of what we used to call Boyle's Law—not in the sense in which physicists use it, but in the sense in which one member of the Administration, now performing in a different Department, used it to mop up surplus purchasing power, to put a brake on inflation and to stop the spiral from going any further.
These are economic arguments which can be defended rationally by people who believe in them. Let us not confuse the economic arguments with the medical arguments; let us not suggest that by putting penal, excessive taxation on cigarettes, in particular, and on other forms of smoking the Government have the medical object in mind. It may be incidental to the object which the Government stated for this new, heavy taxation, which was to stop some of the leak in the purse, if I may use their terms in another way. Too much money, they say, is being spent on all kinds of frivolous luxuries; therefore they must stop this by extra taxation.
It is all very well for my enthusiastic friends below the Gangway, whose opinions I respect very much, to give qualified approval to this taxation because it makes it more difficult for people with limited incomes to buy the number of cigarettes which they bought in the past. That may be incidental, but the fact is that this very high level of taxation on smoking is having a very uneven effect on members of the community. The high price of cigarettes and other smoking materials represents no problem to the man with a big expense account who charges his cigarettes up to the firm. Such people represent a numerous section of the community. This high taxation is no deterrent whatever to the man who has the money to buy as many cigarettes as he likes. He may belly-ache a little about having to pay 5s. a packet for cigarettes. I suppose that we all do. But it will not deter him.
To put this sort of taxation on one band of the community, particularly old people, of whom my hon. Friend the Member for Huddersfield, West (Mr. Wade) was speaking as I 985 entered the Chamber, is wrong. It is putting tie brake on people who have the least to spend and not on those who have the most to spend. It is therefore wrong and inequitable to do it in this way.
If the Government have reached the stage of accepting the evidence which has been provided about the ill-effects of smoking on many members of the community, they ought not to impose this sort of taxation; they should deal with cigarettes as they do with Indian hemp cigarettes, which are prohibited by law. This is the argument which must be considered. It is no use fiddling about with a fiscal remedy if it is necessary to prohibit a practice which is causing a great many people to die before they should.
I must not go outside the rules of order, and I will try not to do so, but I feel that before we put any further penal taxation on smoking we should pay attention to the fact that many quite moderate smokers, particularly the old-age pensioners, and others with small incomes, who smoke only in moderation, are being penalised to an extent which means nothing whatever to many of us who can afford to buy cigarettes even if they are £1 a packet. Sooner or later the country will wake up to the fact that it is only the people who are not quite virtuous who are producing the large share of the revenue, while those who are very virtuous are getting away scot-free and are making no contribution to the Chancellor's Budget. To that extent I support very warmly my hon. Friend the Member for Huddersfield, East, but I am a little sceptical about the comments made by one or two other hon. Members who have spoken in the debate.
§ Mr. H. Rhodes (Ashton-under-Lyne)
My hon. Friend the Member for Ebbw Vale (Mr. M. Foot) has done a service by raising this matter, because he has introduced another element into the debate. He may not be able to carry it to a conclusion during the course of the debate, but it will cause people to think very seriously about the future. If an increase in the price of tobacco leads people to criticise the Treasury for having a vested interest in the sale of tobacco, then if at some future time the Government of the day want to reduce 986 the price of tobacco there will be an even bigger indictment of the Government, especially if it is proved during the next 'new years that smoking cigarettes or tobacco induces cancer. The Treasury is in an even bigger dilemma than my hon. Friend the Member for Dunbartonshire, East (Mr. Bence), who confessed that he had experienced great difficulty in making his decision about smoking. When he gave it up he immediately became fat. The Treasury is n that dilemma.
The Treasury knows all about this. We are not talking to somebody who is doing this thing in a hit-or-miss fashion. There is not a single facet of smoking which the Treasury does not know. Years ago when we were having great difficulty with our dollar purchases, because we could not afford the dollars anyway and because the content of cigarettes was so dependent on the American Virginian type tobacco there was a terrific argument about the effect on the revenue of a small amount of adulteration.
The producers of tobacco in the Commonwealth said that "adulteration" was a horrible word. An argument on scientific lines was deployed by the Board of Trade and the Treasury about the impact there would be on the revenue if even 1 per cent. of Commonwealth tobacco—Empire tobacco, as it was known in those days—was added to the mixture. This is all known. There is no more scientific branch of the Departments levying taxation than that which is concerned with tobacco.
The advertising facet is important. I sometimes hear my hon. Friends condemn the advertising of tobacco because of tobacco's deleterious effect on the community's health. This is known in the Treasury, too. The Treasury knows precisely what effect advertising in the Press and on hoardings has on sales.
Tobacco is a pawn in the economic game. The Treasury has a vested interest in the raising of revenue from tobacco. It could not care less about the effect tobacco has on the community's health, because it is obvious from what has happened in the Budget that when the Chancellor wanted £110 million to increase his discipline on the community's spending power lie immediately whacked an extra tax or tobacco, irrespective of its incidence on old people or on youth.
987 6.45 p.m.
There is another aspect of this levy which is not considered by the Treasury. Both in America and in England there is a growing practice of studying the relative competitiveness of commodities of all types. The Americans know from their research into markets the type of competition they are likely to meet, the amount of money which is available for the commodity they are pushing, and the chances they have, in a market where there is, say, a limited income, of getting a fair share of the available income for their commodity. This type of taxation weighs in favour of the use of tobacco in this country against the ability of people to spend as much of their income on wool or footwear, or even on the necessities of life.
If there is any type of taxation levied by Parliament which needs a thorough appraisal as to where it will lead us, it is the taxation on tobacco and drink. A decision on the ethics of this tax will have to be made at some time. If we could get a crumb of comfort from the Treasury Bench as to the way in which Ministers are thinking, the efforts of my hon. Friend the Member for Ebbw Vale will have been of some avail.
§ Mr. Diamond
The whole Committee will agree that we are indebted to my hon. Friends who have made contributions on a matter which obviously affects many people, both as to its fiscal and its moral and health aspects. This is a Clause which none of us on this side of the Committee likes. It was, therefore, very valuable that my hon. Friend the Member for Willesden, West (Mr. Pavitt) should have made it supremely clear that, whatever the Government may argue in favour of the Clause, they cannot argue that this is part of a responsible attempt to reduce excessive smoking. There is no element in this which can prove that.
The evidence indicating the relationship between smoking and cancer, if not proving cause and effect completely, proves conclusively that some kinds of smoking produce less cancer than other kinds of smoking. There is no attempt whatsoever by the Government to put more weight of taxation on, for example, unfiltered cigarettes than on filtered cigarettes and pipe and cigar tobacco, which clearly cause less damage. There 988 is no attempt by the Government to cover their responsibility in that way.
Neither are the Government claiming that this is done to reduce consumption, because we know that that does not happen. Consumption has apparently reached its peak, but it fell when the tax rate remained constant. There is no clear correlation between increase in taxation and fall in consumption.
Surely no Government would attempt to say that their attitude to collecting tax is so immoral that, if there is something which they are satisfied is wholly against the interests of the country, they should allow it to continue so long as tax is paid and the revenue can be collected and the Treasury profit. We do not manage our affairs in that way. In the case of harmful drugs we do not say, "These drugs are harmful. Either they should be made illegal, or we should charge a duty every time a drug is taken". If we do not like prostitution, we do not say that prostitution shall be permitted so long as a licence fee is paid by every prostitute. That is not the way in which revenue is raised.
I repeat, there is nothing whatever in the Clause which is an attempt by the Government to shoulder such responsibilities as they have for reducing excessive smoking. Indeed, in my view—and I say frankly to the Committee that I am expressing a personal view—I do not believe that this is exclusively a Government responsibility but one which every parent must bear.
My hon. Friend does not so much object to the right of an adult to eat, smoke or, by excessive speed, motor his way to death. He objects more to advertising which encourages young people who have not yet acquired the habit to acquire it. It is, at this point, that the responsibility of the adult and of parents comes in. With due deference, that is the responsibility of every parent. Every parent should not ask what the Government or Opposition are doing, but should ask, "Am I doing the right thing? Am I setting the right example to my children?" I repeat, I am expressing a purely personal view, one which does not affect my hon. Friends in the slightest.
I have expressed this view, first, because I wanted to clear the ground before saying that our dislike of the 989 Clause is not based on any attempt the Government might be making to reduce smoking because, clearly, they are not in this Clause attempting to do that. Our objection to it is that it bears too heavily on those who can least afford to pay the tax.
This was recognised by the Labour Government who, when in office, provided tokens so that old-age pensioners and people of minimum means were able to have the impact of the tax lessened and to continue to smoke when they might have been unable to do so because of the increased duty. That system of tokens ran from October, 1947, until January, 1958. There is no reason at all why the present Government could not have given thought to such a system. They could certainly have mentioned it and have explained the arguments against reintroducing such a token system.
There is a matter to which I have already referred, but to which we have not yet received a reply. A publication of the Central Statistical Office, entitled Economic Trends, gives some interesting statistics for February, 1964. It is, in effect, a Government publication, so the statistics that it contains may be relied upon.
As we suspected, but now know, there is no indirect tax which bears more heavily on those who can least afford it than the Tobacco Duty. To give two examples: an average family of two adults and two children with an income of between £1,750 and £2,000 a year, a well-off couple, pay at the old rate 1.8 per cent. of their spendable income in Tobacco Duty. The same family, but with an income of between £11 and £13 a week, pay not 1.8 per cent. but 5 « per cent. of their spendable income in Tobacco Duty, or three times as much. This shows that the burden on such a family is three times as great.
Then, consider an old couple, two adults, with an income of between £4 and £11 a week. They spend between 6 per cent. and 7 per cent. of their spendable income in Tobacco Duty. It should be emphasised that this is not about 7 per cent. of the couple's spendable income on tobacco, but on the duty. It is a fantastic proportion.
990 There is no attempt by the Government to help people bearing such a burden. On the contrary. Their burden will be increased because the disproportion will be increased and there has been no attempt whatever by the Government to answer this argument. This is not a question of indirect versus direct taxation. We are not entering the realms of arguing whether the proportion of indirect taxation is too great as opposed to the proportion of direct taxation, or vice versa. This is a question of what is inequitable versus what: is equitable—of whether something bears too heavily on those who are least able to afford it. It is for these reasons that we dislike the Clause intensely.
§ The Economic Secretary to the Treasury (Mr. Maurice Macmillan)
I hope that the hon. Member for Ebbw Vale (Mr. Foot) will not think I am proving his point that Treasury Ministers, even junior ones, have thick skins when I say how grateful I am to him for introducing the important—although slightly side element in the Finance Bill—question of the incidence of lung cancer and the dependence of the Treasury on the Tobacco Duty.
Before I deal with that important side of the argument I will deal with a point made by the hon. Member for Huddersfield, West (Mr. Wade) and developed later by the hon. Member for Gloucester (Mr. Diamond), who quoted statistics from Table VI of the document to which he referred on Second Reading.
If one takes any item of expenditure it is true to say that the lower a person's income the higher the proportion of it that item will tend to represent. In saying that the Tobacco Duty bears most hardly upon old-age pensioners and others who can least afford to pay it one is saying that their expenditure on tobacco is a higher proportion of their total expenditure than other, richer people. The coupon system was abandoned in January 1958 in conjunction with an increase in pensions. It was abandoned for the same reason that it has not been reintroduced—that it bears unfairly between pensioners, not all of whom smoke. There is no reason why a pensioner who smokes should be favoured over one who does not, but on the more general side of the argument—
§ Mr. A. Lewis
On a point of order. The Economic Secretary is adducing a wonderful argument and more hon. Members should be present to hear it. I therefore call attention to the fact that 40 hon. Members are not present.
§ Notice taken that 40 Members were not present;
§ Committee counted, and, 40 Members being present—
§ 7.0 p.m.
§ Mr. Macmillan
As my right hon. Friend the Chief Secretary pointed out when discussing a similar argument which developed on the whisky, beer and wine duty increases, industrial earnings have gone up by about 99 per cent. and retirement pensions by about 125 per cent. The hon. Member for Gloucester quoted some figures from the lower end of the income scale. I will quote some more from the same table from which he quoted.
Taking the figures in Table VI of the document from which he quoted, a family of two adults in the income range £315£382 a year spends up to 6 per cent. on tobacco—that is to say, about 8s. a week. If it continues to smoke the same amount, the Budget increase will amount to approximately 8d. a week. This is admittedly a more serious increase than that on families with a larger income, but it is not reasonable to say that, over the field as a whole, increases in indirect taxation on items which cannot, except in very rare instances, be considered necessities, bear more hardly than the alternatives to which my right hon. Friend the Chancellor referred on Second Reading—increases in Purchase Tax or petrol duty.
The hon. Member for Ashton-under-Lyne (Mr. Rhodes)—
§ Mr. J. T. Price
I am getting a little baffled by the hon. Gentleman's argument. In effect, he is denying the generally accepted opinion in the Committee, regardless of where we sit, that all indirect taxation is regressive by its very nature. The hon. Gentleman says that it is nothing of the kind. But it is regressive, and if one puts a steep increase in regressive taxation it is obvious that it will bear more harshly on those with the least money to spend.
§ Mr. Macmillan
I was only saying that I personally regard the taxation of necessities as tending to bear more hardly on the great run of the population than taxation of what might be classed as luxuries. As indirect taxation, Purchase Tax is neither regressive nor progressive; technically, it is neutral, on most forms of analysis. Tobacco Duty is certainly regressive. On the other hand, Income Tax is extremely progressive, and becomes more so the higher the rate of money income rises, as the hon. Gentleman knows.
The dilemma mentioned by the hon. Member for Ashton-under-Lyne is really not a dilemma at all, although he is quite right in referring to the balance of payments compensation to which the Treasury could look with any decrease in the consumption of tobacco. The very fact that my right hon. Friend the Chancellor of the Exchequer chose this particular form of indirect taxation shows that neither he nor the Treasury is dependent on it because, as he pointed out on Second Reading, it was chosen as an alternative to increases in other indirect taxation such as Purchase Tax and petrol duty. In so far as it absorbs purchasing power from elsewhere—such as wool textiles, to which the hon. Gentleman referred—it is fulfilling an economic, as opposed to a fiscal, function at a time of pressure on the economy.
The hon. Member for Ebbw Vale developed the argument that the Treasury had a vested interest in the consumption of tobacco, and therefore had some interest in maximising that consumption. With respect, I suggest that the place to deal with the problem of smoking and lung cancer is not in a Finance Bill, though, with respect, his proposition is not in any case valid. I agree that we do get a very large proportion of our indirect taxation from tobacco—by a paradox, which I think some hon. Members quoted, it is about the amount we spend on the Health Service itself—but we are not dependent on it in the sense that a trader is dependent on a market or a producer on maintaining the turnover on which he makes a set rate of profit, because what we are taxing is expenditure rather than a commodity, although it is expenditure on a particular commodity.
993 Even if, as the hon. Gentleman and many of his hon. Friends would like, the consumption of tobacco were seriously and progressively to be reduced, I think that he would accept the unlikeliness of its coming to an abrupt end at any moment. This would mean that the money not spent on tobacco was being spent on something else, in which case, if it came within Purchase Tax, it would be taxed; if it did not, it would be open to the Government of the day to extend the scope of indirect taxation to cover whatever the money was going on. If it was not spent, but saved, it would not present an economic problem in this context—
§ Mr. M. Foot
Does the hon. Gentleman say that it does not matter what is done, because if one does not spend it on one thing one must spent it on something else? If so, it is a most extraordinary argument.
§ Mr. Macmillan
No. The key to it is that we tax expenditure, and provided we have an obvious adjustment of rates of taxation to balance out the economic system, what expenditure is taxed is irrelevant. It is the amount that is raised. I do not say that other considerations do not come in, because they do—
§ Mr. Rhodes
With respect, I think that the Economic Secretary has the wrong attitude towards this matter. If he thinks that in some way the mopping up of money by putting on this duty will be effective, let him come to his own constituency in the north of England and see the wage drift that is going on at the moment. Whereas it was calculated at 1.5 per cent. last September, I am sure that he will be surprised, and I shall be surprised, if it is not more than 3 per cent. today. They will have more money to pay for what they want.
§ Mr. Macmillan
With respect, the hon. Gentleman says that the Tobacco Duty is ineffective economically, and I was saying that, if a tax on expenditure raises the same amount, for fiscal purposes what that money is spent on is irrelevant.
This is really the clue to our problem, tee to think that I was taking lightly because I should not like the Commit- 994 the hon. Gentleman's suggestions, or those of the hon. Member for Willesden, West (Mr. Pavitt), for dealing with the problem of smoking and lung cancer, particularly among children. I thought that the hen. Member for Willesden, West quoted to great effect what we have already been talking about earlier today. We must keep some sense of proportion in these matters. We get very upset, and rightly, over outbreaks of typhoid, but accept the incidence of lung cancer without much concern. In the same way, it has often seemed paradoxical to me that we get extremely worried about the deaths of children on the roads, and yet accept the fact, apparently without much fuss, that as many are killed by accidents in their own homes.
I suggest to the hon. Gentleman and to his hon. Friends that a Finance Bill is not the most effective way of discouraging smoking or dealing with the problem of smoking. I emphasise that the Treasury has no particular interest in maximising the consumption of tobacco and that the argument that the economy would come to a standstill without the Tobacco Duty is not a valid one.
§ Mr. Diamond
Perhaps the hon. Gentleman would like to add to the argument by making clear, as I am sure is the case, that if the tobacco were not consumed at all it would not be imported and this would have a beneficial effect on our balance of payments.
§ Mr. Macmillan
I made that point earlier and I emphasised that it would make our balance of payments situation considerably easier.
The hon. Member asked why we have not attempted to make any differentiation between filtered and unfiltered cigarettes and various forms of smoking which are less harmful medically than others. The hon. Gentleman explained this later himself when he said that there was little correlation between tax and consumption. Experience in Denmark and in other countries where the Customs and Excise has made inquiries shows that the addictive nature of cigarette smoking means that it is 995 not particularly reduced as compared with other forms of smoking, because other forms are not a substitute for the cigarette smoker. Incidentally, I should like to express on behalf of the Customs and Excise my gratitude for the tribute paid to the expertise of that Department in these matters by the hon. Member for Ashton-under-Lyne.
The hon. Member for Willesden, West also raised the question of a differential between different forms of tobacco. I hope that the answer which I have given will have explained our motives to him. The Clause is part of a general increase of indirect taxation for the Chancellor's purposes, as my right hon. Friend explained in the course of the Budget debate. I would emphasise to the Committee, and I hope to the country outside, that the Government are taking the problem of the dangers of lung cancer, especially among young people, very seriously and are not trying to minimise that problem by paying no attention to it, or appearing to pay no attention to it in this Clause. It is simply that, having considered the matter, and for the reasons which I have tried to explain, including the addictive nature of cigarette smoking, it was not felt right to try to deal with the problem by means of a penal tax. The tax therefore has remained in line with other increases of indirect taxation and we look to other methods of propaganda and to public opinion to deal with the problem of lung cancer. The problem is not to make the country less dependent upon tobacco taxation but to make people less dependent upon tobacco.
§ Mr. M. Foot
I shall try not to repeat myself, and I am most grateful to the hon. Gentleman for his reply, but I do not think that he has answered the argument. The hon. Gentleman says that the Treasury is not interested in maximising cigarette or tobacco smoking, but one could put the proposition in a slightly less strong form and say that if every member of the community became convinced tomorrow morning by the reports of the medical profession it would be a bad day for the Treasury. The revenue would take a sudden nose-dive and we should be in difficulties.
996 7.15 p.m.
I am trying to prepare the Treasury against that day and to deal with the situation which will arise in two or three years' time when we shall have a financial crisis because people will understand what the medical profession is saying. The financial position of the Treasury in a few years' time is a supremely academic question for the hon. Gentleman, but I think that the situation will arise when a sufficient number of people will believe what the medical profession is saying. Therefore, the Treasury should take precautions well in advance to reduce its dependence on this single form of tax, which is being piled ever higher.
The hon. Gentleman says, "On, no, this matter should be dealt with by various forms of propaganda." He should consider who the contestants are in this battle. We have the Treasury, with a huge vested interest in the sale of tobacco. We have the advertising profession with a huge vested interest and the newspapers with a huge vested interest in the sale of tobacco. We have all these powerful vested interests interested in or actively trying to persuade more people to smoke, and on the opposite side we have the Ministry of Health spending £32,000 and the still small voice of the medical profession.
My secondary argument in introducing the matter was to remove at any rate one vested interest from the battle, that is the Treasury, so that increasingly by my arrangement of setting aside £100 million out of revenue collected by taxation each year and putting it in a separate fund, which would not deal with the normal expenditure of the nation, we should decrease the vested interest of the Treasury in seeing that tobacco smoking was maintained.
I do not think that the hon. Gentleman answers that argument by saying that this is merely a tax on expenditure and that if the Treasury were not taxing this form of expenditure it would collect the tax on some other form of expenditure. That amounts to saying that it does not matter how one taxes and that if the Treasury did not have the tobacco to tax for revenue it would find something else to tax. This position is highlighted in the Budget, in particular, 997 because more and more the Government have to concentrate their taxation on fewer and fewer objects, and one of the commodities on which the Government concentrate their taxation is a commodity which has been exposed as highly dangerous to the community that consumes it.
I do not believe therefore that the hon. Gentleman has answered the argument. It is not a sufficient answer to say that each individual must make up his own mind in this situation. Each individual makes up his mind whether he is going to smoke partly because of the influence brought to bear upon him, and the influence of the most powerful vested interests in the country is brought to bear upon an individual to try to persuade him, and particularly the young person, to smoke. I ask that that individual be given a better chance to make up his own mind on the evidence instead of having the pressures of vested interests apply to him.
§ Mr. Maurice Macmillan
I think that this matter is sufficiently important for me to try to reply to the last point made by the hon. Member. I hope that he will forgive me if I deal only with vested interest in so far as it is alleged to concern the Treasury. If people stopped smoking overnight it would, of course, cause great administrative difficulty, let alone the question of longterm economic or fiscal problems. The same would apply if people overnight stopped buying motor cars or if there were any other violent economic change, but I suggest that the measures which the hon. Member advocates are not as practicable in dealing directly with this problem as he argues.
To set aside £100 million which is raised but is not required is the same economically as taxing and having a surplus of £100 million, or decreasing Government expenditure by £100 million. The effect of the tax on the economic system must be taken into account. It is not the same sort of operation as that of a private person setting aside something for a reserve fund. Therefore, much as I admire the hon. Member's attempt, and grateful as we all are to him for bringing the point before the Committee, I hope that if I do not answer him in greater detail he 998 will acquit me of not having any interest in the incidence of lung cancer. If he likes, he can condemn me of being more sceptical than he is about the Government's capacity to deal with the problem by means of a Clause in the Finance Bill.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.
§ Schedule agreed to.