HC Deb 01 June 1967 vol 747 cc399-405

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

Mr. Maxwell-Hyslop

On a point of order. Would it be possible for us to debate Schedule 3 and Schedule 4 together, although, if necessary, having separate Divisions, Sir Eric? There is a distinct relationship between the two and it would be more convenient in deploying arguments if they could be debated together rather than separately.

Mr. Peyton

Further to that point of order. While my hon. Friend may wish to discuss the two Schedules together, there are nevertheless distinct points to be made on both, and I hope that Schedule 3 can be considered first, although I have no wish to restrict my hon. Friend's desire to speak on both Schedules.

The Chairman

If objection is taken, we must take each Schedule separately.

Mr. Peyton

I do not want to prolong my remarks on the subject. I want to make the point that, as a result of their persistent policy of increasing duties, the Government are putting a penalty upon the cheaper wines. This is not a policy which can be pursued indefinitely with credit to themselves, or benefit to anyone else.

The words of this Schedule reduce an otherwise interesting and engaging subject to a fairly prosaic level. What worries me about the Government's attitude to these things is that persistently they take the view that there must be something wrong with anything which affords pleasure. People should have been warned that that was part and parcel of the Socialist creed. Unfortunately, shortness of memory being a more or less constant human failing, it has turned out to be substantially on the side of the Government and people forgot when they made their decisions at the last two elections.

But here, laid down in language which one immediately associates with the prose which always comes from the Commissioners of Customs and Excise, lacking inspiration but nevertheless firm and de- pressing in its effect, we have the whole spirit of Socialism condensed into dull words. I am sure that the Financial Secretary's personal tastes do not lead him in these dreary directions.

Seriously, I wonder whether the Government ought to go on loading these burdens on wines. My hon. Friends from north of the Border have made a very eloquent plea that Scotch whisky should be treated more mercifully. That plea fell on deaf ears and it is unlikely that any plea from this side of the Committee, however eloquent, will receive much better attention when it is made on behalf of wines from foreign sources. Nevertheless, I hope that, some time, the House of Commons will rise in its wrath against the Government, who seem to be permanently against anything which can afford any pleasure or joy to any one. They are in favour of a sort of endless, dull vista of gloomy austerity of their own making, and I find it abominable.

Not only that, but I think that in the exercise of their discretion they may be wrong, in that there will come a time when the rates upon these things impose such a burden that the consumption goes down and the return through duty diminishes. Looking at the benches opposite the only things of beauty are the empty spaces. [An HON. MEMBER: "There are plenty of those."]

I do so hope that before it is too late the Government might show some signs of repentence, some signs that they are not determinedly and for ever opposed to anything which will give us pleasure. So often we have heard their eloquent pleas on behalf of those who are not so well off. Can they not see that these added burdens bar for ever those who are not well off from the enjoyment of small quantities of wines or spirits from time to time? I hope that the hon. Gentleman will at least let humanity creep in for a moment.

Mr. MacDermot

The speech to which we have just listened by the hon. Member for Yeovil (Mr. Peyton) is one of the best arguments that I have heard for a long time for sending the Finance Bill upstairs. The hon. Gentleman did not really direct any arguments to the Schedule against which he was speaking, other than to say at the outset that he throught that it imposed too heavy a duty on the cheaper wines. But the increases recorded are proportionately the same for all different types of wine, and this is not altering the relative burden of taxation of one kind in relation to another.

For the rest of his speech, all that he did was to expound the fallacious thinking on this subject of many ignorant people, and I would not have thought that he was one of them, who believe that any article which is the subject of revenue taxation is being visited with some moral judgment by the Exchequer. Quite the contrary. The Exchequer is not concerned with passing moral judgment on the way in which people spend their money. Through indirect tax, one levies a certain amount of revenue on people's expenditure. It is by the choice that people make in their expenditure that they decide which are the things upon which they want to spend their money and, not unnaturally, they become the target of indirect taxation.

The Revenue does not regret the fact that people spend their money in this way, and therefore enhance the Revenue. I, as a non-smoker, rejoice when I see people smoking. I do not pass any moral judgment on them. The hon. Gentleman is confused in his ideas as to what constitutes Socialism.

Lieut.-Colonel Sir Walter BromleyDavenport (Knutsford)

I should like to support the remarks in the excellent speech of my hon. Friend the Member for Yeovil (Mr. Peyton), which brought forth such an immoderate reply from the Financial Secretary. Every year both sides of the House—although not on this occasion I regret to see—ask for the duty on imported wine to be reduced. Every year the same arguments are put forward, and every year, with certain wonderful exceptions, of course, when the Conservatives governed the country, the Chancellor has turned a deaf ear to our pleadings. Indeed, only one thing, in my experience, ever seems to move the Chancellor, and that is the law of decreasing returns.

10.30 p.m.

With the enormous increase in our population today, revenue from the consumption of wines ought to be increasing. What is actually happening? Let us take the example of port. In 1966 the import of port wine was only 1.29 million gallons. In 1938–39 we were importing nearly three times as much as we are importing today. We have already had examples of how the consumption of whisky is going down, but let us take the example of light wines. That, I think, is pretty stable, but let us take the price of light wine in bottle. The value of the wine in a bottle of white wine retailing at 7s. or 8s. a bottle cannot be more than a few pence, but what is the result of this huge charge put on a bottle of wine? The result is that comparatively few people can afford to drink it. The consumption of all wine imported into Great Britain still amounts to barely three bottles per head per year. Compare that with France, where they consume well over 100 bottles per head per year. Why should the poor people of this country be denied the pleasure of drinking wine?

I should like to repeat what I said about the deplorable Budget speech of the right hon. Gentleman the Chancellor on 11th April, when I said that we often hear of Chancellors of the Exchequer talking about the law of diminishing returns, but I do not think that I have ever heard a Chancellor of the Exchequer of any party talk about the law of increasing returns.

I should like to give an example which I gave then regarding indirect taxation in Germany. I am informed that a firm called Henkel Trocken, in Wiesbaden, turned out an excellent sparkling wine on which the tax was three marks a bottle. As a result, 13 million bottles were sold in the market. But then the shrewd German Chancellor of the Exchequer reduced the tax to one mark per bottle and as a result they sold not 13 million but 85 million bottles. In other words, the tax was reduced by two-thirds, and six and a half times as much wine was sold. Not only did the German Treasury get more revenue, but think of all the poor people who were able to enjoy the wine. Here we work on different principles. We have high taxation so that comparatively few people can afford to drink it.

Therefore, my final plea is that the duty should be reduced on imported wines and spirits. What would be the result? We would give more pleasure to everyone, rich and poor alike—and nowadays, under the present Government, people want to drink as much alcohol as they can to forget their troubles. Secondly, not only would everybody be as happy as people can be under existing conditions, but the Chancellor of the Exchequer would get more revenue.

Mr. Maxwell-Hyslop

We must judge the Schedule on two grounds: the rates of tax which it imposes, on which I need not add to what my hon. Friends have said, and its effect on imports and on alternative consumption. Comparing the figures for heavy wines—those above 27 degrees of proof spirit—at the last Budget and now, we find that as a result of the 10 per cent. regulator and the Chancellor's rounding-off, the duty on foreign imported wines has gone up in the last year by 7.5 per cent. and on heavy wines from the Commonwealth, which the Schedule also covers, it has gone up by 10 per cent., but on home-produced heavy wines the Chancellor has increased it by 16 per cent., by more than twice as much as the duty on foreign wines and by more than half as much again as increase in duty on wines originating in the Commonwealth.

It is important, therefore, that the Chancellor—if I may have his attention for a moment; perhaps the Chief Whip, to whom he is speaking, is wondering how the debate is going. If he listens to the debate, he might find out. I wonder, in passing, whether it is the Financial Secretary's intention to intervene on each item rather than at the end of the debate, which is the more conventional practice.

I was endeavouring to draw the Chancellor's attention to the way he has written the Schedule compared with Schedule 4. It is now more attractive comparatively than it was after the last Budget to drink foreign, imported heavy wines than heavy wines emanating from the Commonwealth or produced in this country. This is an extraordinarily bizarre way of contributing to our balance of payment problems or to our level of employment at home. I ask the Financial Secretary to comment on why his right hon. Friend has achieved this somewhat bizarre result.

Mr. Iain Macleod

We are discussing, in a sense, four Schedules concerned with spirits, wine and beer. On Schedule 1, my hon. Friends from north of the Border in particular made what we regarded as an extremely convincing case, on which we registered our view on the Division Lobby. Schedule 2, relating to beer, we let pass without comment. Obviously, the regional argument does not apply. We are discussing Schedule 3, and we are coming to Schedule 4, on British wines.

My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), speaking on Schedule 3, has been allowed to refer to the point which he hopes to make presently on Schedule 4. I suggest to my right hon. and hon. Friends that it would be consistent both with our action on Schedule 1 and our lack of action on Schedule 2 to have our vote expressing our views on this matter on Schedule 4, which deals with the rates of duty on British wine, and not on Schedule 3, which is now before us.

Mr. MacDermot

With respect, we would agree with that course. I take the point which the hon. Member for Tiverton (Mr. Maxwell-Hyslop) has been making. He is in a difficulty because he wants to discuss the effect of Schedule 4 in relation to Schedule 3. I ask him to accept that I take his point, and perhaps we can discuss it further on Schedule 4.

Sir D. Glover

The Financial Secretary said when he intervened in the debate that he did not think that moral judgment had anything to do with the rate of tax on wines and spirits. I am not blaming him or the Chancellor, because this is something which runs through the thread of British history. There is no doubt that the original reason for the heavy burden on wines and spirits had a great deal to do with moral judgment. It came from the Nonconformist conscience. But we are now living in a freer society, and the Government should realise that they have not the support from the country which they would have had 50 years ago.

The rate of tax is a severe burden on the enjoyment of ordinary people who, as the world gets smaller, go overseas for their holidays and become more used to drinking these wines. Any Government should begin seriously to look at the problem. It has nothing to do with moral judgment, though it certainly had originally. Wine drinking is becoming a much more accepted practice among the ordinary people of this country and is no longer the privilege of the wealthy.

Question put and agreed to.

Schedule agreed to.