HC Deb 18 May 1971 vol 817 cc1052-4
2. Dr. Gilbert

asked the Chancellor of the Exchequer how much excise duty was paid on beer in 1970 and how much he assesses will be paid in 1971 on the basis that gravities were in the same proportions to the total amounts liable for duty in 1970 and in 1950, respectively.

The Chief Secretary to the Treasury (Mr. Maurice Macmillan)

Duty receipts from beer produced in the United Kingdom were £436 million in 1970 and at unchanged average gravity would probably be about £450 million in 1971. If the average gravity were to fall to the 1950 level, receipts would be reduced by nearly £10 million per year.

Dr. Gilbert

I did not ask the hon. Gentleman anything about average gravity. That is the point. We should like to know exactly how average gravity is calculated and whether the gravities were in the same proportion to the total amounts. Does the hon. Gentleman have that information, which would be very different?

Mr. Macmillan

In 1950 the average gravity of home-produced beer was 1036.24 degrees. In 1970 it was 1036.87. Beer gravities have changed remarkably little since the early days of the war.

12. Mr. Ashton

asked the Chancellor of the Exchequer whether he will seek to change the basis of taxation on beer from its strength to its volume.

Mr. Maurice Macmillan

No, Sir.

Mr. Ashton

Is the hon. Gentleman not aware that under the present system of taxation there is a great incentive for a brewer to water the beer? Does he not agree that while it would cost nothing extra to make it of a higher strength, the brewers, if they did so, would have to pay more tax? Would not a value-added tax on beer on volume be a far better way from everyone's point of view?

Mr. Macmillan

The question of value-added tax on beer is one for discussion and decision in common with other V.A.T. questions. As to the question of altering the basis of taxation, the difficulty with a flat-rate increase regardless of strength would be that it would tend to put up the price of cheaper beer and to bring down the price of the more expensive beers. I am not sure that that is what the hon. Gentleman is trying to do.

Mr. Biggs-Davison

Does Watney's Red Revolution mean a watering of the workers' beer?

Mr. Rhodes

Is the hon. Gentleman aware that every time the gravity of a particular beer declines—and there is abundant evidence that this is happening—a company then saves taxation which it would have to pay to the Government but fails to pass this saving on to the consumer, thereby deceiving the beer-drinking public?

Mr. Macmillan

The hon. Member is under a slight misapprehension. The gravity has been fairly consistent since the war. In 1949–50 it had fallen to 1,033.71 degrees, but it rose to 1,036.51 degrees in 1950–51. In 1960–61 it was 1,037.25 degrees, and in 1970–71 it is provisionally put at 1,036.66 degrees. Gravities have been constant for some time.