European Community (Excise Duties)

HC Deb 03 December 1980 vol 995 cc377-98

Motion made, and Question proposed, That this House takes note of European Community Document No. 7854/79, together with the supplementary memorandum by HM Customs and Excise dated 17 November, and would support acceptance by Her Majesty's Government of arrangements for the harmonisation of the structure of excise duties on alcoholic drinks which are compatible with the maintenance of a satisfactory excise duty system in the United Kingdom.—[Mr. Brooke.]

11.55 pm

Mr. Michael English (Nottingham, West)

On a point of order, Mr. Deputy Speaker. Surely, you are not allowing to come before the House a document that is not written in English.

Mrs. Peggy Fenner (Rochester and Chatham)

Whose English?

Mr. English

Anybody's English. I hope that it is the language of the hon. Lady as well. If she sits for the constituency that she does and cannot speak it, it is a pity.

The document refers to Excise duties on beer, wine and alcohol. It is probably true that beer and wine may contain alcohol. It is also true that the French language, having a paucity of words, may not have a word for "spirits". One single English poet had used more words than exist in the Academie Francaise dictionary, as we all know, but I do not see why we should have this abortion coming before US.

Mr. Deputy Speaker(Mr. Richard Crawshaw)

I hope that the hon. Member for Nottingham, West (Mr. English) is corning to the point of order.

Mr. English

You know, Mr. Deputy Speaker, when confronted with the phrase Excise duties on beer, wine and alcohol", that either something is missing or something is doubled up. May we have it made clear, by the Minister perhaps, whether beer and wine in the future, under the Common Market regime, will exclude alcohol, or whether alcohol will be a separate commodity from beer and wine?

Mr. Deputy Speaker

I take the point of order in the spirit in which it was intended. I see no wording here that precludes our discussing the motion.

The Minister of State, Treasury (Mr. Peter Rees)

Far be it from me to come between the Chair and the hon. Member for Nottingham, West (Mr. English) on the meaning of "alcohol", particularly at this hour of the night.

I am afraid that this is another chapter in a long-running saga—

Mr. English

They cannot write English.

Mr. Rees

I am sorry to have offended the delicate susceptibilities of the hon. Gentleman, but, as he will have appreciated, "alcohol" in Communautaire language is the equivalent of "spirits". I quite appreciate that Communautaire language is not necessarily acceptable—

Mr. English

It is bad translation. Why not say "spirits"?

Mr. Rees

Perhaps the hon. Gentleman will allow me to come to the substance of the matter that we are debating rather than raise fine questions of syntax.

Mr. English

It is the English language.

Mr. Deputy Speaker

Order. If the hon. Member wishes to intervene, he must seek to do so and not sit shouting across the Chamber.

Mr. Rees

There have been initiatives by the Commission to harmonise the structure but not the rates of duties on alcohol consistent with article 99 of the Treaty of Rome practically since the year 1972. The House may recall a debate in January 1978 which was initiated by the then Financial Secretary, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), when his role and mine were reversed. The proposals by the Commission that were debated on that occason did not achieve anything, and fresh proposals were introduced by the Commission on 2 July 1979. They are perhaps best set out in the explanatory memorandum which is in the Vote Office and which no doubt right hon. and hon. Gentlemen have studied carefully. It was put in on 17 November 1980.

Perhaps I may identify four of the main proposals. One is that there should be a range of duties on beer and fortified wine and spirits but that the duty on table wine should be optional. Another is that there should be a ratio between the duties on wine and beer. Currently, the alcoholic strength of beer in the United Kingdom is 3.5 per cent. and the ratio between our wine and beer duties is about 4.9 to 1. The Commission's proposal is that the ratio should be 3 to I but that that should be achieved over a period of time.

If that proposal found favour with the Council and the various member countries, it could be implemented in this country in many ways. The House need not assume that it would necessarily involve an increase in the duties on beer or necessarily a decrease in the duties on wine. Many permutations would be possible.

Another proposal is that there should be a single specific rate of excise duty on spirits, which would be favourable to the Scotch—

Mr. Tony Marlow (Northampton, North)

My hon. and learned Friend said that this measure could be implemented in many ways. Supposing it were implemented by reducing the duty on wine, how much revenue would that mean the Government had to surrender and, therefore, find in a different way?

Mr. Rees

The question is a little premature. After all, we are debating so that the House can express its view on various proposals that have been the subject matter of negotiation and will again be—I regret to say—-on 22 December, which is not a particularly convenient date.

I cannot answer my hon. Friend directly, but I can say that if the proposal of a 3 to 1 ratio were adopted it could be implemented on a fiscally neutral basis—that is, so that the Exchequer would not lose any money — by increasing the duty on beer by ½p and decreasing it on wine by 17p.

Mr. English

Will the hon. and learned Gentleman stop using the word "spirits", since clearly the people who translated the document did not know that it existed?

Mr. Rees

It was very much in deference to the hon. Gentleman's susceptibilities that I used the word. I thought that that was the English word that he preferred. I am happy to defer to him on this matter. In due course, perhaps the hon. Gentleman will catch the eye of the Chair, and then he will be able to make his points of substance.

In view of the lateness of the hour, I am omitting some proposals of less importance, although they are to be extracted from the explanatory memorandum. The fourth significant proposal is that the duty on beer should be switched from a duty on worts — the liquid before fermentation—to a duty on finished beer by 1985.

The negotiations have been running parallel with infraction proceedings by the Commission under article 95, first, against France, Italy and Denmark, on the basis that they have discriminated against spirits, including whisky. I am happy to tell the House that the European Court has ruled against France, Italy and Denmark. I say that not in any spirit of hostility to those countries—

Mr. Douglas Jay (Battersea, North)

They will not do anything about the ruling.

Mr. Rees

I do not know on what basis the right hon. Gentleman says that. Those countries will conform with their Community obligations, just as we would be disposed to do in that situation.

Mr. J. W. Rooker (Birmingham, Perry Barr)

The hon. and learned Gentleman must be joking.

Mr. Rees

There is always a place for a bit of humour, even at this late hour and even on such a technical subject as this.

I should also tell the House that infraction proceedings were started against the United Kingdom in 1976, during the period in office of the Administration of which the right hon. Member for Llanelli (Mr. Davies) was such a distinguished member. The Commission's assertion was that the high duty imposed by this country on wine protected our brewing industry and discriminated against the wine-growing countries, among which perhaps it does not number us.

An interim decision was given by the European Court last February, holding that wine and beer were to a degree in competition. I am sure that I carry the hon. Member for Nottingham, West with me on that. The United Kingdom and the Commission were asked to re-examine the whole question and report back by 31 December this year. In view of the pending negotiations, an application for an extension of time has been made, and we have high hopes that it will be successful.

Mr. Jay

Might it not be better if, instead of all this nonsense, each country applied the policy that suited it best?

Mr. Rees

If I were to approach the problem from the honourable and well-understood premise adopted by the right hon. Gentleman, I should reach that conclusion. However, since one of the essential points of the European Community is that there should be a common market and a free movement of goods between the countries, he will appreciate that discriminatory excise duties might prevent the free movement of whisky into France just as it might prevent the free movement of wine into the United Kingdom. Apart from our dedication as a Community to a free market, there are other reasons why we desire this. If I began from the same premise as the right hon. Gentleman, who does not believe in the fundamental principles of the European Community, I should reach the same conclusion—but I do not start from that premise.

Mr. Jay

The Minister of Agriculture, Fisheries and Food has just reached an agreement with the Community under which British lamb will be subject to a levy if it is imported into France. Why cannot the same apply to alcohol?

Mr. Rees

Over a period, we hope to iron out every distortion created by the Community. Tonight we are discussing merely the distortions, implicit or explicit, in the multiplicity of rates of duty on alcohol—or, to defer to the hon. Member for Nottingham, West—spirits, wine, beer and a whole range of other things which enliven the human race.

The debate is circumscribed. On another occasion we might investigate the gastronomic implications of a levy on lamb. Now, I am charged only with the duty to put before the House the Commission's proposals which were the subject of negotiation in October, and which will be the subject of negotiation again on 26 December, so that we can take the mind of the House with us. When I negotiate on behalf of United Kingdom interests, I hope that I can go with a united House behind me.

Mr. Marlow

Surely, it is a question of priorities. We are talking about harmonisation. I should like my hon. and learned Friend to be honest. Should we not deal with the more important issues first? For example, the electricity price in some countries in Europe is less than 2p per kilowatt hour, whereas here it is 3p. The price of gas is 23.6p per therm here and in France 15.2p per therm.

Mr. Deputy Speaker

Order. The hon. Gentleman's intervention has nothing to do with the matter under discussion. I hope that he will stay in order.

Mr. Marlow

I certainly shall, Mr. Deputy Speaker. May I ask my hon. and learned Friend whether he agrees that we should get the massive energy things sorted out before we go for the minor details of harmonisation to do with what people eat and drink?

Dr. J. Dickson Mahon(Greenock and Port Glasgow) rose—

Mr. Rees

I am sorry; I can deal with only one intervention at a time, although I am flattered that the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) thinks that I can turn in two directions. That would tax me to the limit.

I understand the concern expressed by my hon. Friend the Member for Northampton, North (Mr. Marlow). He will recognise that I am not charged with responsibility for energy prices. These matters are proposals from the Commission. We are dealing with a specific set of proposals for alcohol—wine and beer and other related matters. My hon. Friend should direct his questions to other Ministers on another occasion.

Dr. Mahon

I understand that the Minister will discuss in Europe, on the basis of tonight's debate, the rate of excise duty on alcohol. Alcohol is alcohol, whether it is called beer, wine, spirits or eau-de-vie. Why do not the British Government propose a tax based on the degree of alcohol in the drink concerned?

Mr.Rees

The right hon. Gentleman is making a shrewd point, but we must move gradually and by stages. There has been sufficient difficulty in reaching a measure of agreement on the relatively simple proposals that the Commission has put forward for negotiation. The right hon. Gentleman should reserve that point for a later stage in harmonisation. I hope that we shall work towards something similar, but I do not know that it should necessarily be alcoholic strength. There should be a harmonious range of duties across the Community. We must take the proposals as they come.

I say in all candour that there has been considerable difficulty in finding a common base, even with these Proposals. If hon. Members look through the various explanatory memoranda, they will see how the Commission has shifted its ground and dropped certain proposals. We are down to a rather narrow range on which I hope agreement may be found, provided that the House approves, on 22 December.

I wish to indicate what I believe to be the British interest in the negotiations. First, we should safeguard British whisky against discriminaton consequent upon the imposition of varying rates of VAT. The House may appreciate that in Italy, for example, there are varying rates of VAT. We feel that they bear a little hard on exports of whisky. Secondly, we wish to preserve a certain flexibility for a period about the ratio of duties on beer and wine. Thirdly, we wish to ensure that cider will not be subject to crippling duties. I am happy to say that with the latest set of proposals that will be ensured. Finally, we hope to achieve a measure of relief for British vineyards, which form a small, vigorous industry.

The successful conclusion of the negotiations would conform with article 99 of the Treaty. At an earlier stage, rather more elaborate proposals were commended to the House, as I have no doubt the right hon. Member for Llanelli will recall, by the right hon. Member for Ashton-under-Lyne, the then Financial Secretary. I hope that Hs words will sound a fair commendation to the House. He said: we are concerned with a structure and with getting it right for any subsequent move towards further harmonisation, which is a long way off. As for the structural changes, it seems likely that oar trade interests will, on balance, see advantages here for this country."—[official Report, 30 January 1978; Vol. 943, c.176.] I do not think that I could have put it more modestly or eloquently myself.

On the basis that that was the way that the previous Labour Administration commended roughly the same proposals to the House, so I commend those proposals to the House this evening. I look forward to hearing the views of the House.

Mr. Deputy Speaker

Mr. Speaker has selected the official Opposition amendment.

12.13 am

Mr. Denzil Davies (Llanelli)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: rejects the proposals contained in European Community Document No. 7854/79 on excise duties on beer, wine and alcohol; and calls on Her Majesty's Government not to accept any proposals, arrangements or decisions which take away from Her Majesty's Government and the House of Commons the unfettered power to determine the structure of and the levels of excise duties on beer and wine.

The Minister has tried to gloss over the problem. He found an apt quotation from a spokesman for the previous Government. However, he never told us that there has been a court decision. The European Court decided that we were discriminating against wine by our existing duty regime. It said that if we did not come to an arrangement it would impose its decision on Britain and seek a reduction in the duty on wine and, possibly, an increase in the duty on beer.

The Minister of State will negotiate at Brussels under duress. He knows that if he does not come to an arrangement the court will impose one upon him. That is the background to this so-called harmonisation.

It is not harmonisation. The Italians have no duty' on wine, nor have the Germans. They are not asked to have a duty on wine. However, as a result of this so-called harmonisation we shall have to have a duty on beer in excess of any duty that the British Government—

Mr. Selwyn Gummer (Eye)

No.

Mr. Davies

That will he the result. The effect of the harmonisation will be that the duty on wine will have to be reduced and the duty on beer will have to be increased.

Mr. Ivan Lawrence (Burton)

If the amendment is carried, will it not mean that the European Court will rule against us and force us to conform with the ratio change that the Commission has recommended? If that happens, is the right hon. Gentleman suggesting that we should break the law?

Mr. Davies

The answer to that is "Yes". The hon. Gentleman is right. If the amendment is carried, the Europen Court will tell us, in a matter of taxation, which I have always thought was a matter of national sovereignty, that we must have the taxation regime that it wants us to have. The hon. Gentleman talks about breaking the law. The French are breaking the law, as are the Italians and the Danes. The Danes have recently introduced a discriminatory tax against Scotch whisky. To talk about breaking the law is to use a rather emotive phrase. The European Court is concerned basically with politics and not law.

Mr. Gummer

Does the right hon. Gentleman accept that he was a member of a Government who renegotiated our arrangements with the European Community and accepted the authority of the court in those circumstances? Is it not appalling to suggest that if we do not like the law we should ignore it and blame others because they break it?

Mr. English

Tell that to the French.

Mr. Davies

The others do it. I remember that some hon. Members voted against the European Communities Bill and that the hon. Gentleman voted for it. With hindsight, I think that he was wrong and I was right. There has been no benefit to the United Kingdom from that Bill. The directive is an example of that.

I ask the Minister of State not to agree to this harmonisation. Let him tell the court, as the French and Germans have done and as the Danes are doing, that we are not prepared to agree to this taxation regime because we believe that taxation is a matter of national sovereignty to be decided by the British Government.

The hon. and learned Gentleman tried to give the impression that the directive is not too bad because it helps the Scotch whisky industry and the spirits industry generally. We all know that the French National Assembly has refused to take away the discrimination against Scotch whisky. We know that the Danes have increased their VAT on Scotch whisky. We know that the Italians have discrimination against Scotch whisky. We know that there is nothing in the directive that provides that value added tax cannot be increased on whisky. That is an issue that is completely outside the terms of the directive.

Our objection to the directive is based on two factors. First, there is the commercial factor. Why should Britain accept a reduction in wine duty—that is what will happen, and it is no good the hon. and learned Gentleman saying "We can work it out between wine and beer"—and an increase in the duty on beer? Why should our home-based industry have to suffer an increase in duty for the benefit of the European industries which will enjoy a reduction in duty? Wine will benefit.

Mr. Nigel Spearing (Newham, South)

There will be a wine lake.

Mr. Davies

That is right.

We are talking about harmonisation. There is no harmonisation for the Italian wine industry. There is no duty on wine in Italy or Germany. Why, therefore, should we have to suffer an imposition on our beer industry? The directive will mean that our beer industry, which employs many people in distribution, manufacture and capital investment, will have to suffer a duty when a Continental industry will benefit as a result. That is one reason why we oppose the directive.

Sir Anthony Meyer (Flint, West)

I hope that before he sits down the right hon. Gentleman will deal with the question of Scotch whisky exports, which will greatly benefit if the recommendation is accepted.

Mr. Davies

I have dealt with that. The French National Assembly has refused to take away the discrimination on Scotch whisky, as have the Italians. There is nothing in the directive that prevents a discriminatory value added tax on Scotch whisky exports to Europe. The directive has nothing to do with value added tax. Since the directive has been published, the Danes have established a value added tax on Scotch whisky. It is possible for other countries to do the same. If the Minister argues the case, he must obtain an arrangement so that there is no possibility of discrimination through value added tax or any other tax against the Scotch whisky industry.

Another point that should be raised is sovereignty. We are concerned with taxation. Taxation in the realm of excise duties means that, if the Minister agrees to the directive, he is taking away from the British Chancellor of the Exchequer and the House of Commons the right to determine the level of excise duties. It is no good the Minister saying that it is a small matter; it is not. The Commission's intention is to try to harmonise the basis of taxation in Europe. First, it wants to harmonise excise duties. It tried to harmonise corporation tax and stamp duty. At the end, it will have nothing left but income tax. If we accept the directive, we shall be reducing the area of sovereignty over taxation.

If the Minister agrees to the ratio of 3 to 1 or 2 to 1—

Mr. Keith Best (Anglesey)

Is the right hon. Gentleman seriously trying to draw a distinction between the imposition of excise duties and contributions to the EEC budget? Does he not accept that they are integral parts of the same thing? Does he take pleasure in trying to persuade the House that merely because other EEC countries have found themselves less able than ourselves to subscribe to their Treaty obligations this country should not subscribe to its Treaty obligations? If so, will he translate that principle into the concept of domestic British law?

Mr. Davies

I am not sure whether the Treaty has much to do with taxation, and domestic taxation at that.

By seeking to harmonise excise duties, the Commission is gradually seeking to take away from the national Governments of the EEC all power over taxation. It is an insidious process. If the hon. Gentleman thinks that it is not, he is very naive. The Commission seeks to look at excise duties, stamp duties and corporation tax. Of course, it does not dare touch income tax, but, by the time that it has managed to harmonise all the other taxes, there will be no battle left over income tax.

Mr. Teddy Taylor (Southend, East)

If France, Denmark and Italy have refused point blank to remove the illegal discrimination against Scotch whisky following a decision by the European Court, why should they pay any attention to a directive?

Mr. Davies

I am coming to that. The point that I am trying to make now is that there is no reason why the Commission should have power over internal sovereign matters concerned with taxation. It may have other powers, but taxation is a sovereign matter. It does not mean that because this may be excise duty it does not affect our tax base. Once the excise duty area has been taken out of the grasp of a British Chancellor of the Exchequer, his power on other matters will be limited. At the end of the day he will be left only with income tax, and that will not mean anything at all because his power over that will have been taken away by the Commission.

I take the point made by the hon. Member for Southend, East (Mr. Taylor). Why should we accept harmonisation which does not benefit our brewing industry? Of course, it benefits the Continental wine-making industry. But we contend that our brewing industry is more important than the Continental wine-making industry. Therefore, this harmonisation is not in our interests.

We ask the Minister of State to go to Brussels and to say "We are not accepting this harmonisation. This is not in the interests of the British economy." If the European Court says that we cannot do it, the hon. and learned Gentleman must tell the court, as did the French, that we will not accept its decision because it is a political court which is not concerned with the commercial interests of this country.

This directive is not in the interests of the British economy, the British brewing industry or the people who work in that industry. For that reason, apart from the sovereignty issue, the amendment should be accepted.

12.28 am

Mr. Paul Dean (Somerset, North)

I declare an interest in these matters and wish to put some brief points to my hon. and learned Friend the Minister of State regarding the negotiations which are still taking place.

The speech by the right hon. Member for Llanelli (Mr. Davies) has been wholly unhelpful—

Mr. Best

Confused.

Mr. Dean

—to the negotiations on which Her Majesty's Government have embarked with our partners in the Community.

I have some scepticism about the value of harmonisation in this area and in other areas, but the reality is that membership of the Community involves negotiations of this kind. Therefore, it would have been more helpful if the Opposition had addressed their minds to the reality of the situation and tried to reinforce the Government in the negotiations.

In my view, substantial progress has been made during tae past couple of years in trying to get a fairer deal for tae United Kingdom. I understand that the original proposals would have involved substantial discrimination against British wine and cider and Scotch whisky. My hon. and learned Friend was able to give us some assurance that Her Majesty's Government would not be prepared to agree to any proposals which still retained substantial discrimination against the three key commodities. I hope that he will give further reassurance on that in his reply.

I understand that the United Kingdom duty on beer is very much higher than that in most, if not all, of the other EEC countries. I suggest to my hon. and learned Friend that if there is to be harmonisation—and I accept that that is the reality of the position—there should be at least the option that the harmonisation should involve the reduction in the duties on wines rather than the increase in the duties on beer. I hope that he will be able to say that this is at least an option that Her Majesty's Government will keep open in their budgetary strategy over the coining seven or eight years while the arrangement is phased in, if an agreement is reached.

The motion is that harmonisation of the structure of excise duties should be compatible with the maintenance of a satisfactory excise duty system in the United Kingdom. I regard that phrase as being of very great importance, and I should be prepared to support the Government in that context. But I hope that my hon. and learned Friend will be able to give us some indication of the timetable. I understand that negotiations are still proceeding, that some progress has been made already in preserving the key areas that I have mentioned and that it is unlikely that any agreement will be reached until towards the end of next year; in other words, it will rot be relevant for any proposals that my right hon. and learned Friend the Chancellor of the Exchequer may have for the Budget in April-May 1981. There is still a certain s mount of time, therefore, before final decisions are reached.

If my hon. and learned Friend is able to reassure me on the points that l have mentioned, I am prepared to say that the motion before us will strengthen the hand of cur Government in negotiation within the EEC and will make it easier for our Government to ensure that our key national interests with regard to beer, home-made wines, cider and also Scotch whisky are adequately maintained.

12.33 am

Dr. J. Dickson Mabon (Greenock and Port Glasgow)

The trouble with our debates on these matters is that, although some Labour Back Benchers resent our being in the Common Market— and I am an unrepentant proMarketeer—as long as they criticise these matters they weaken the entire British position, although they may not intend to do so.

Tonight is a classic example of our fighting with our friends—if that is not a contradiction; in the Labour Party it is not a contradiction—in the Common Market to insist on our rights as well as their rights. If I were a Frenchman in the National Assembly, I would vote for the motion in the knowledge that my Ministers would fight on it. They would not win 100 per cent., but at least they would have my support as a Deputy in getting on with it. Whether I happened to be a Socialist Deputy or not would not matter. It would not matter whether I was a Socialist or a member of some other party.

The trouble is that in the British Parliament we are fighting about the principle of something that we settled eight years ago in an Act of Parliament and five years ago in a referendum, and which we shall settle again in another referendum in a few years' time, if my hon. Friends, with their natural democratic tendencies, will allow us. We shall beat them again, because we are bound to stay in Europe.

This is a vital subject. I declare an interest because the whisky industry is vital for Scotland. It is a highly capital-intensive industry. It is the third largest in terms of the number of people involved in the industrial sector. It is a marvellous product that is consumed with delight all over the world.

The trouble with the British Government is that we are submitting to the Europeans that "alcohol" is all acohols and not just some alcohol—not the alcohols produced by Italy or by Germany, but all alcohols in the Ten countries of Europe as they will exist as of 1981. That includes all kinds of spirituous ouzo liquors. I am not quite sure where ouzo comes in, in the Greek context, but it must come in somewhere.

What we in this Parliament should be doing is telling our Ministers "No, we are not satisfied with this proposal. It is a dreadful draft. It is not good enough." The Minister said that we cannot get perfection tomorrow. He is right. We have to proceed stage by stage. But on the way we must not lose vital principles.

The Brewers' Society, with which I have no connection, has sent a submission which confesses: The Society has always opposed the view that beer and wine form part of the same market". Why? The reason is selfish interests. This, by the way, refers to British beer and British wine—what a helpless little innocent that is! The society insists that they are separate. The society adds: but the ruling of the Court in the interim judgment virtually disposes of the point. The Society has been equally reluctant to seek the introduction of a directive which would require the United Kingdom to reduce the ratio between the duty on wine and beer, but not require wine either to be taxed at all or to any given level in relation to beer".

In other words, the society is admitting that there is, in competition in the market, some relationship between the alcoholic content of beer and the alcoholic content of wine.

I take the point made by my hon. Friend the Member for Nottingham, West (Mr. English), which was valid, that we are talking not only about that aspect but about spirituous liquors — as they say in the Presbyterian Church.

Mr. English

I am a Presbyterian.

Dr. Mabon

I know. My hon. Friend is a good man. We are talking about eau de vie, about brandy, which the French National Assembly will defend to the last, and quite right, too. We are talking about Scotch whisky, about all kinds of high alcohol-content liquors.

I submit that, given that we are in the Common Market—-that is a fact—and given that we are likely to stay in it—that is perhaps a doubtful fact—the Government ought to be getting for Britain the best deal possible, irrespective of which Minister negotiates for us. I submit, with due respect to my right hon. Friend the Member for Llanelli (Mr. Davies)—and I shall vote with him tonight—that we should be as difficult as are our Common Market partners over these matters. They are making us edentulous—"We cannot bite because we do not bite. We should be out altogether." That is a daft argument. If we are in a partnership, until that partnership ceases we must insist on our rights. We must strive hard to secure some fundamental points.

Mr. Marlow

The right hon. Member says that we made the decision to join the Market eight years ago. Did we make a decision eight years ago that we would surrender domestic taxation to the Commission in Brussels? If we did, why did we not tell the British people at the time?

Dr. Mabon

At the time, the recitation I made was that in 16 years I had always voted at my party's call … never … thinking for myself at all. But on that occasion 69 Labour Members, including myself, voted with the then Government led by the right hon. Member for Sidcup (Mr. Heath) to go into the Common Market. That action implied a constant reduction in our ability to exercise control over certain taxation powers. We cannot get away from that.

Furthermore, at the insistence of the very honourable wing of my party, the anti-Marketeer section—which I hope to do as much justice to as it does to me—we had a referendum in which, by two to one, the British people decided to stay in the EEC. Unless and until this Parliament, supported, I hope, by a referendum decision by the people, decides otherwise, what we are arguing about is the best deal we can get out of this wine-beer-alcohol argument. That will go on for several years.

It is not British to rob us of our arguments because we are in the Common Market. We are in the Common Market, so let us make the best deal we can so long as we are in it. If we leave the Common Market, all will be different—I quite agree on that. But, while we are in the Common Market, it is against our interests—it is acting for the French, for the Germans, for all those against us in this case—constantly to undermine Ministers, Labour or Tory, so that they go to meetings and are unable to get the deal that we want.

I say—on behalf of the Scotch whisky industry, if I may say so—that we reluctantly accept this directive. It is inadequate; it is a serious challenge to the basis of harmonisation. But British Ministers must stand up in the Council and say "We want an overall harmonised rate dealing with alcohol content; we want a harmonised rate of VAT on all alcoholic beverages in each member State." If we are to accept this directive, it must be on certain conditions. If we do not make conditions, no one will listen to us.

We have to try to get an excise rate relationship between wine, beer and spirits in every member country. That is what the Common Market is all about. To argue this or that variation in terms of the national interest is, to my mind, self-defeating.

The British are the most reluctant, unhappy members of the Community, who have very bad relationships with their colleagues. We have to do our best to try to persuade our friends in the Community that as long as we are members we will try to behave reasonably and fairly. But in return for that we demand justice. This directive is not enough, and Ministers must be supported by the House in an attempt to get a better deal.

Mr. Teddy Taylor

Surely, the principle that the right hon. Gentleman wants the Government to fight for was decided some time ago by the European Court. Surely, what is needed to achieve justice for Scotch whisky is not a directive, not harmonisation, but simply to get three Common Market countries to obey that decision of the European Court. What on earth do we need a new harmonisation policy for? Surely, what the right hon. Gentleman wants, and what I want, has been established by the European Court.

Dr. Mabon

The European Court has been described as a political court, and that might well be true; it depends on how one looks at it. But the Scotch whisky industry is delighted that it has won its action in the European context. It has also won victories in Japan and other countries. Surely, my hon. Friends would not deny those victories to us. What we have to do is enforce them. One cannot ask a court to rule in the way one wants and then say "If the ruling is against us, we do not want to respect it."

12.45 am

Mr. Teddy Taylor (Southend, East)

I think that the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) has evaded the vital issue. I question whether we need a directive, whether we need harmonisation. The only argument that has been put forward in support of the directive is that it will make life easier for Scotch whisky and remove the discrimination against whisky in, for example, France.

The right hon. Member for Greenock and Port Glasgow is usually very intelligent, and I do not know why he is not prepared to understand the point. The right hon. Gentleman knows what it is, because he is smiling. The fact is that this principle was established by the European Court. The only thing that is preventing Scotch whisky from getting the justice to which it is entitled is that three Common Market countries have refused to obey that court decision.

To those who say that the directive is essential to get justice for Scotch whisky I say that if France, Italy and Denmark have ignored the decision of the European Court, what confidence can we have that they will obey the directive or the regulations? It seems to me that if it is justice that is wanted there is no need for the directive.

We then come to the question of what justice there can be. On page 2 of the communication from the Commission to the Council, we have the real reason for the directive. It is stated there that the Community's policy must be to secure some reduction in the overall level of taxes levied on wine, in order to improve outlets for wine production. It seems clear to me that if this directive goes through it will be a move—perhaps a limited move—in that direction. The Minister referred to a reduction of 17p in the price of wine. We know that it may be done in different ways, but the point is that the gap will narrow and that, relatively, wine will he cheaper and beer will be dearer.

Mr. Lawrence

Wine is produced in this country.

Mr. Taylor

That is true, but I think my hon. Friend will accept that there is a massive wine lake in Europe, and most objective observers would say that if we reduce the price of wine and increase the price of beer the inevitable result, if we believe in capitalism, will be that more people in Britain will drink more wine and probably less beer.

The Minister has asked for our views. I wonder whether we can say that it is sensible for this country, particularly at a time of high unemployment, to agree to a general policy which, in a limited way, will lead to a reduction of jobs, prosperity and profits while increasing those of our Common Market partners.

Is this harmonisation? There is no proposal here to have the same tax in France and Britain. The only proposal is that there should be a 3 to 1 relationship in the tax on beer and wine. There is no suggestion that the tax on beer, whisky, schnapps or anything else should be the same in Germany, France and Britain. All that we say is that there should not be any difference in the tax on spirits. The Germans can have a tax that is 10 times as high as ours. How is it a move towards harmonisation when one can still have enormous variations in taxes in different EEC countries?

What is the point of this directive? If it is simply a means to back up decisions made by the European Court, I submit that there is no need for it. If it is meant to be a great advance, and if the intention is to take a further step towards harmonisation, I very much doubt whether that is spelt out. If it is not spelt out, it should be.

To those who, unfortunately, interpret all these little debates as though they were great debates on whether the Common Market should continue, I say that they are not. I cannot see how the Common Market will be weakened if we do not approve a directive of this sort. Nor can I see how it will be strengthened. It is harmonisation for the sake of harmonisation. If the simple purpose is to try to enforce two decisions of the European Court, I say that the directive is unnecessary. The simple way in which to resolve the problem is for the countries of Europe—three of them—to agree to the decision of the court, as I am sure and confident the British Government will agree to the decision that has been made on beer.

Mr. Lawrence

Does my hon. Friend agree that it is better to negotiate more favourable terms for ourselves than to pack in the negotiations and sit down under whatever the court imposes?

Mr. Taylor

The court has made the decision. It made a decision on unfair discrimination against whisky. That was a long time ago, and the decision has been ignored by the three countries concerned.

Mr. Lawrence

It was an interim judgment.

Mr. Taylor

We have an interim judgment in relation to the British proposals.

It would certainly help a great deal to resolve this and other problems if we were not put in the position of constantly being the mugs of Europe and always being the chaps to obey the court decisions while the other countries of the EEC do not. My hon. Friend knows that that is the case. He knows that the decision has been made and that three countries ignored it. Surely, it is for all the member countries to obey the law. I should be glad if the United Kingdom would agree to abide by the European Court decision in this case and for the three European countries to agree to it. If that were to be done and this was no longer an issue, there would be no need for the regulations, because that is all that the directive implies.

Let us not approve the directive or the new regulations. Let us simply make an appeal to three of our Common Market partners, who have ignored a legal decision to obey that decision, and then we may have a sounder basis for understanding and confidence in the EEC.

12.51 am

Mr. Michael English (Nottingham, West)

This must surely be a late night, pre-Christmas joke. My right hon. Friend the Member for Greenock and Port Glasgow (Dr. Mabon) was right in saying that it is not a question of whether we are in the Common Market. Of course, we are in the Common Market, and, of course, the referendum resulted from our joining. It is not a question of whether we do or do not like being in the Common Market. It is this document that we are discussing. It begins by saying that it is signed by the Irish Commissioner. That seems appropriate in relation to anything concerned with alcohol. Its subject, believe it or not, as we all know, is the excise duties on beer, wine and alcohol.

I thought that the Minister of State was trained in the law, a profession that believes in a fair use of precision in words. He stands here in his professional capacity—

Mr. Peter Rees

No, not my professional capacity; my political capacity.

Mr. English

I am sorry, I did not know that Ministers of the Crown were unprofessional. I gather that the moment the hon. and learned Gentleman became a Minister of the Crown he ceased to be a professional. He said that he was not here in his professional capacity. We should take note of that. I know that the organisation to which he used to belong is going out of business, but I did not know that he was.

This whole matter is a joke. Surely, we are not seriously suggesting that beer and wine do not contain alcohol. I am aware that the right hon. Member for Sidcup (Mr. Heath) agreed with the French Government that the French language should be used as the drafting language of European documents, and I can see some sense in that. It is clearly true that the most limited language in Europe should be used as the drafting language, because obviously it should be possible to translate from a language that has a smaller vocabulary into languages that have larger vocabulary. It should have been the German language, because I think that that language has a slightly smaller vocabulary than the French language. However, the right hon. Member for Sidcup agreed that the French language should be used for drafting, I presume on the principle that since it had a smaller vocabulary it would be easy to translate into English.

We are taxpayers, and we all know that one of the reasons for the considerable costs of the Commission's bureaucracy is translation. That cannot be helped. If we are to have a multilingual Community, there must be translation. The translators cost money, and we pay money to have translations made. We have here a translation that speaks of excise duties on beer, wine and alcohol. In other words, whoever translated the original French draft into the English language had never heard of the word "spirits".

It is worth looking at document 7854/79. The first sentence on page 2 reads: The Commission's original proposal for an excise on wine was a logical —I hope that hon. Members will note the use of the word "logical"— consequence of its proposal that the Community excise system should include excises on beer and alcohol. That is a splendid sentence, and I hope that whoever speaks after me will endeavour to interpret it. I submit that in the English language it has no meaning.

Is the Minister of State, who has apparently given up his profession, seriously putting before us on behalf of the Government something as meaningless as that? Did anyone in the Foreign Office or the Home Department who goes over to Brussels ever mention that the document had no meaning in English? We know that the President of the Commission had so little knowledge of French that he could not even get his first speech translated into French when he made it. He made it in English and could not get it translated into any other Community language—

Mr. Deputy Speaker

Order. The hon. Gentleman is labouring the point. He is not dealing with the document as such.

Mr. English

I was quoting from the document, Mr. Deputy Speaker, but I do not know what it means. The House of Commons cannot seriously be expected to deal with something that it cannot understand. It purports to be written in the English language, but it is not. I suppose that it is a translation of something written in another language, and it is a bad and inaccurate translation. The ultimate result is meaningless. I suggest that the Minister of State should revert to his professional capacity. He knows perfectly well that he could tear this document to pieces if he were standing in court.

12.58 am

Mr. Selwyn Gummer (Eye)

I declare an interest in this matter. I believe strongly that it is important in the discussions that are now to ensue that we should be perfectly clear about one or two points that seem to have been mis-stated during the debate.

First, it is not true to say that the European Court has delivered a final judgment on the subject of Scotch whisky. It has delivered an interim judgment, and none of the countries concerned has to accept that judgment until it is final. It is not acceptable for my hon. Friend the Member for Southend, East (Mr. Taylor) constantly to mis-state the position. The court has given the interim judgment in order to enable the kind of discussions described by my hon. and learned Friend the Minister of State to continue. Surely, that is the sensible way to sort out problems between the members of the Community.

Although it is possible to argue about the wider range of the Common Market, we are dealing this evening with specific matters and there are certain issues at which we on the Conservative Benches would like my hon. and learned Friend to look carefully when the negotiations come.

Mr. Teddy Taylor

Is what is stated in the document incorrect? It refers to the four particular member States which discriminated in respect of whisky being found against by the Commission, and in the case of the United Kingdom the judgment being an interim one. My understanding was that it was a final judgment in the case of whisky but an interim judgment in the case of beer. If I am wrong I shall apologise, but I point out that paragraph 5 of the explanatory memorandum is quite specific.

Mr. Gummer

In the judgment that is stated, it is held that the judgment will not be executed until these negotiations have been concluded. Therefore, that is quite clear. I think that it will be found that that is so.

Mr. Taylor

It is not. My hon. Friend is wrong. He should apologise.

Mr. Gummer

If my hon. Friend is right, I should be happy to apologise. But the fact remains that the issue which lies before us brings this country into a number of problems which I do not think my hon. and learned Friend the Minister has discussed with the detail that we would expect.

First, there is a British wine industry. Much of it is in my constituency. We are very concerned about not only the arrangements that my hon. and learned Friend may come to when dealing with discrimination against wine coming into this country but the present discrimination against the British wine industry. The fact is that his Department has for some time discriminated against British-produced wine. We would hope that while this is being sorted out English wine will be placed on all fours with the wine which is coming in from other member States. I hope that he will not forget that point in his discussions.

Secondly, it is surely perfectly reasonable to say that wine and beer are consumed with a certain amount of reference one to the other, and that if one has a very much higher excise duty on wine than one has on beer it must be accepted that people will be more likely to drink beer than to drink wine.

My hon. Friend the Member for Southend, East is right in saying that if one changes the duties so that there is a narrower gap between them there may be some trend towards the drinking of wine rather than beer. However, I thought that we on the Conservative Benches belonged to a party which believed in the consumer making choices. It seems to me perfectly reasonable for people to be able to make a resonable choice and not find their choice dictated by decisions from outside which suggest that in some way or other wine is a less pleasant and less suitable drink than beer. It is perfectly right that these two things should be placed on all fours with each other.

The third point that seems reasonable would be to ask a serious question of the right hon. Member for Llanelli (Mr. Davies). I hope that he will reconsider what he said about the court. It is perfectly reasonable for my hon. Friend the Member for Southend, East to complain about member States which do not obey the court. If I have misrepresented the position, I apologise to him. But we are all at one on the position that, if we have a court and that court decides, that court should be obeyed.

I believe it to be a very serious statement by the right hon Member for Llanelli to suggest that courts fall into two kinds, those of which he approves and those of which he does not approve, and that countries and people are supposed to obey them only if he gives them the imprimatur. This is a very serious matter to have arisen in what is a much less important debate. Out of this has come a very large matter.

Mr. Denzil Davies

Does the hon. Gentleman agree that if the French or the Italians refuse to accept the judgment of the court we should not agree to this directive?

Mr. Gummer

I think that the right hon. Gentleman is moving from the point that I put to him. I would not like him to move quickly on to that. The point which I put to him very clearly was not whether we should do something about the directive if they did not obey the court. What he said to the House was that we should not obey the court, which is a different matter altogether. What he is therefore saying is that because the French do not obey it—if that is true—we should not obey it. The same argument in this country would obtain. Evidently, if one individual does not obey the court, the right hon. Gentleman will suggest that other individuals should pray in aid that decision. This is a very serious matter. It means anarchy.

The reason why we agree to the court and the reason why we shall press with great vigour against any infringement of the court is precisely on that ground.

Mr. English

rose—

Mr. Gummer

I am coming to a conclusion.

What I put very seriously to the right hon. Member for Llanelli is that he represents a party that believes in international order. Labour Members are constantly telling us how important it is. They are constantly saying that in the United Nations and elsewhere we should come to international agreements and should hold to them and believe in them. If anyone has entered into a solemn, binding agreement to obey a court and then he says "I voted against a very novel judicial position arises, and it is a very dangerous one. It is all very well for the right hon. Gentleman to look at this document in a slightly confused way and say that it is unimportant. It is not unimportant, even at this late hour, and I hope that he will Look at it again and perhaps, at the end of the day, withdraw what he said.

1.5 am

Mr. Frank Hooley (Sheffield, Heeley)

I agree wholeheartedly with my right hon. Friend the Member for Llanelli (Mr. Davies) that the key issue here is the exercise of control over revenue-raising powers and taxation of a British Government. We should resist that and go on resisting it until we free ourselves from the shackles of this institution.

I want to deal with a slightly different aspect, though not in any way wishing to undermine my right hon. Friend's argument, which is of fundamental importance and which I am sure we shall go on discussing.

The hon. Member for Southend, East (Mr. Taylor) was right to draw attention to the sentence on page 2 of the main document: the Community's policy must be to secure some reduction in the overall level of taxes levied on wine, in order to improve outlets for wine production. It is saying, in effect, that given, as a result of a totally absurd agricultural policy, that there is a massive over-production of wine which the Community does not know what to do with, it tries to force it on the consumer by cutting taxation to the minimum possible level, making the stuff as cheap as possible, without regard for the social consequences of such a disastrous policy.

I can understand why the Community is so worried. It faces the entry of two of the main wine-producing countries—Spain and Portugal—and it knows that in those circumstances the common agricultural policy is a total lunacy, as it has been all along. So it is trying desperately now—this document admits it—to devise various financial fiddles which it is hoped will mitigate the consequences of a system which is inherently absurd anyway. That is what lies behind this so-called harmonisation proposal.

A little earlier, the document says: Excises on these drinks already generate in all Member States considerable tax revenues and are in any case justified on social grounds. That is very important. But what is disastrous about the document is that at no other point does it examine the social consequences of the financial proposals that it contains. It does not suggest that for social reasons excise should go up or down or that it is reasonable that in certain countries which by culture, history and tradition drink more beer or drink more wine there should for good social reasons be variations in the ratio of taxation. There is merely the fundamental point that the Community wants to solve the wine lake problem and this obsession with harmonisation without regard for the wider social consequences.

The social consequences of excess consumption of alcohol are disastrous. They are in this country, they are in other countries of the Common Market, and there is a slow but increasing realisation of the appalling consequences of the ever-rising consumption of alcohol in our society.

At this hour, there is no need for me to detail all those consequences. On the roads, we know the death and destruction that are caused by drinking and driving. We know the violence that occurs and the crime that occurs. We know, too, that the terrible disease of alcoholism is increasing year by year.

I had the task of sitting on one of the Select Committees of the House a few years ago which discussed preventive medicine. One of the aspects that we considered at that time was alcohol and the appalling and rising problem which the increasing consumption of alcohol was causing.

The document simply says that excise duty should be justified on social grounds and then makes no attempt to discuss the social consequences of the financial arrangements that are proposed. On that ground alone, the House should reject the document and the financial arrangements proposed until there is a serious examination by the Commission of the problems of alcohol and of the restraints, controls or benefits that might arise from different fiscal or taxation policies. As the document makes no attempt to examine those problems, which are of the gravest social consequences, it should be rejected.

On the fundamental problem of the interference with our own tax affairs, I wholly agree with my right hon. Friend the Member for Llanelli. The House would fail in its social duty if it (lid not adopt the amendment and reject the document.

1.10 am

Mr. Roger Sims (Chislehurst)

I am sorry that the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) has left the Chamber, because I should have liked to congratulate him on his robust defence of the EEC and on his point that the House must support my hon. and learned Friend the Minister in his negotiations. It seems illogical that, having said that, the right hon. Gentleman should then say that he would vote for the amendment rather than the motion.

However, the right hon. Gentleman was right to emphasise the international implications of the document. We must consider not only its effect on the trade and the consumer in the United Kingdom but its effect on our trade in the EEC, which is a matter of considerable importance. Shipments of Scotch whisky to EEC countries in 1979 were to the value of £168 million, so it is an important aspect of our export business.

The document is part of a long story. Two of the most recent developments were the judgment in February about the discriminatory practices, particularly against Scotch whisky, as regards both taxation and advertising, not only in France but in Denmark, Ireland and Italy. The Scotch whisky industry naturally welcomed the judgment, but unfortunately the relevant countries have yet to abide by it.

Mr. English

rose—

Mr. Sims

We have very little time left, and several of my hon. Friends still wish to speak.

I hope that in his discussions later this month my hon. and learned Friend will strongly emphasise that we expect those countries affected by the judgment to comply with it.

The United Kingdom has also been proceeded against on the question of the wine duty compared with the beer duty. We are waiting for the final judgment, but the interim judgment is not particularly helpful, suggesting that the final judgment, if the matter proceeds, could go against us. We could finish up having to have either a lower wine duty, with a loss of revenue to the Exchequer, or a higher duty on beer, which would be unpopular both with the brewers and with consumers. It is the Government's natural anxiety to try to reach an agreement so that the situation does not develop along those lines.

I speak tonight in my capacity as secretary of the all-party Scotch whisky industry group — a most distinguished office. The industry's fear is that an agreement disadvantageous to it may be reached.

I should like to make several points briefly. First, the document proposes a relationship in duty between wines and beers, and a particular ratio is suggested. Why is it only between wines and beers? Surely, it should be between wines, beers and spirits. I urge my hon. and learned Friend to suggest to his colleagues in the ministerial Council that spirits be included.

Secondly, the document proposes the harmonisation of a rate of excise duties on all spirits — presumably, whether they be imported or domestically produced.

Mr. English

The document does not say so.

Mr. Sims

No, but presumably that is so. If it is a harmonised duty within a territory, it will apply to spirits whether imported or domestically produced. The expression used is "single specific rate." It appears that this is to be a rate of duty on volume. That does not seem to be a satisfactory rate. Surely, the duty should be on alcohol content. If we are working towards a degree of harmonisation, we should start in the way that we intend to continue and decide that the basis should be alcohol content.

The document proposes that the same rate of VAT on wines and beers shall apply within each country. No reference is made to spirits. It appears that each country could charge a higher rate of VAT on Scotch whisky. That would defeat the object of harmonisation. That gained on one hand would be lost on the other. Surely, the rate should be the same on all alcoholic beverages.

In principle I support harmonisation, not of duties, which is not the aim at this stage, but of the structure of duties. We must be sure that we neither perpetuate the disadvantages suffered by this country's second largest exporter — the Scotch whisky industry — nor replace those disadvantages with others equally unfortunate for that industry. I urge my hon. and learned Friend to ensure that that does not happen. I hope that he will have a pleasant and useful pre-Christmas visit to Brussels. I venture to suggest that he might take for his fellow Ministers a suitable Christmas gift. I am sure that I do not need to suggest what form it should take.

Mr. English

On a point of order, Mr. Deputy Speaker. I appeal to you. A misconception has strayed into the debate—that a judgment in the European Court is the same as a judgment in a British court. That might be so in Britain. The hon. Member for Eye (Mr. Gummer) introduced the misconception. It is specifically stated in the Treaty of Rome—

Mr. Deputy Speaker

Order. The hon. Gentleman surely does not expect me to answer his question. He is trying to make another speech. That cannot be a point of order.

Mr. English

Further to that point of order, Mr. Deputy Speaker. The Treaty of Rome specifically states that no State is justiciable.

1.19 am

Mr. Peter Rees

The House will be grateful to the hon. Member for Nottingham, West (Mr. English) for his deep learning on high constitutional points. The debate has fluctuated between points of high technicality and high constitutionality. In the brief time left, I shall not be able to deal with them all.

My hon. Friend the Member for Somerset, North (Mr. Dean) wanted reassurance about the whisky industry, wine produced in the United Kingdom as opposed to British wine, and cider. Cider is safeguarded. We shall endeavour to safeguard wine produced in the United Kingdom. The prohibition on the use of VAT to discriminate against whisky will be high on our list. I hope that that will give reassurance to my hon. Friend and the interests that he represents.

Mr. Denzil Davies

Nothing in the directive prevents VAT from being discriminatory against Scotch whisky. Will the Minister seek an arrangement under which, if the directive is accepted, there will be no VAT on Scotch whisky?

Mr. Rees

We are discussing proposals. Nothing is final.

If I might correct my hon. Friend the Member for Southend, East, (Mr. Taylor), this is not a directive but merely proposals which are the basis for negotiation. I indicated the points that I regarded as important to the interests of Britain. As the House will appreciate, there must be a certain amount of give and take in negotiations. The fact that that particular point: is not found in the latest compromise proposals does not mean that I shall not press it strongly.

Mr. Ron Leighton(Newham, North-East) rose—

Mr. Rees

I have no time to give way as there are only six minutes left. I hope that the hon. Gentleman will acquit me of discourtesy if I continue and deal with some of the technical points before coming to the points of principle.

My hon. Friend the Member for Southend, East indicated that there was no need for the proposals. That viewpoint rests on a slight misunderstanding of the decisions of the European Court. The decisions in the case of France, Denmark and Italy were final, although a period of time was given to them to adjust their domestic arrangements, as we would expect if a decision involved alterations in our domestic legislation. That is the reason for the delay. My hon. Friend may take a different view, but I have no evidence that there is any intention on the part of those countries to flout the judgment of the European Court. If there was, and if that affected a vital British interest, we should make the strongest possible representations to the European Commission. As regards the infraction proceedings against Britain, that is a matter of a temporary, interim decision only. We might say in the English courts that it is an interlocutory judgment. There is a period of time for Britain and the Commission to see whether we can reconcile our differences.

We are not under duress. That was a bad point made by the right hon. Member for Llanelli (Mr. Davies). An agreed application from both the Commission And ourselves for an extension of time has gone to the European Court. We shall not be negotiating under duress. We hope that we can reach a conclusion at the next Council meeting on 22 December. That may render it unnecessary for the European Court to give a final decision. I hope that that will reassure the right hon. Gentleman and the House—

Mr. Denzil Davies rose—

Mr. Rees

I hope that the right hon. Gentleman will be brief because there are only four minutes left.

Mr. Denzil Davies

The Minister is negotiating under duress. If he does not agree to the directive, the court will give a final decision which will say that we are discriminating against wine and that we must reduce the duty on wine. That is the sort of duress under which he is negotiating.

Mr. Rees

I am negotiating under no more, duress than that under which the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) negotiated, because the proceedings in the European Court had already begun when he last attended a fiscal Council. The right hon. Member for Lanelli assumes too much. I do not understand how he knows with such utter certainty what the final decision of the court will be. I certainly could not advise the House about that.

In view of the time left, I must now turn to the points of constitutional principle raised by the right hon. Gentleman and the hon. Member for Sheffield, Heeley (Mr. Hooley). We are concerned to try to harmonise the structure of excise duties. Of course, to a degree that involves a circumscription of the rights of the House and the Government. However, that was always implicit in our adherence to the Treaty of Rome. Some right hon. and hon. Members on both sides of the House take a fundamental view on that point. They have never voted for adherence but have consistently opposed it. I respect their point of view, although I do not share it. In this debate we must start from the premise that we have adhered to the Treaty and that there are various provisions in the Treaty and, so far as lies within our power and without prejudicing fundamental British interests, try to reconcile them with what we are doing on this occasion.

That does not preclude a British Chancellor of the Exchequer from deciding the rates of duty. The right hon. Member for Llanelli misunderstands the position. It could happen on certain broad limits on the wine-beer ratio. Some hon. Members were worried about the effects on the brewing industry and British beer drinkers. I must say—not for the first time, but for the second or third time—that there are about three or four possible permutations. Even supposing that the conclusion of negotiations or the decision of the European Court were that a British Chancellor of the Exchequer had to observe a wine-beer ratio of three to one, that could be achieved in a variety of ways. In the time-honoured phrase, I could not possibly anticipate my right hon. and learned Friend's Budget. This is all to negotiate for.

I hope that the House, having listened to the constitutional arguments and the detailed arguments, will recognise that there can be advantages not only for British drinkers but for important British industries in bringing back an agreed series of measures. I hope that it will recognise that this is entirely consistent in principle with the decision of the House, taken not once but twice, that Britain should remain a member of the Economic Community. Although it may be difficult for me to reconcile all the views expressed in this evening's debate—

It being one and a half hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business.)

The House divided: Ayes 34, Noes 91.

Division No. 9]	[1.25 am
AYES
Abse, Leo	Hooley, Frank
Cocks, Rt Hon M. (B'stol S)	Jay, Rt Hon Douglas
Concannon, Rt Hon J. D.	Kaufman, Rt Hon Gerald
Cowans, Harry	Leighton, Ronald
Cryer, Bob	Mabon, Rt Hon Dr J. Dickson
Davies, Rt Hon Denzil (L'lli)	Marlow, Tony
Davis, T. (B'ham, Stechf'd)	Millan, Rt Hon Bruce
Deakins, Eric	Molyneaux, James
Dean, Joseph (Leeds West)	Morris, Rt Hon C. (O'shaw)
Dixon, Donald	Powell, Rt Hon J.E. (S Down)
Dormand, Jack	Powell, Raymond (Ogmore)
English, Michael	Roberts, Ernest (Hackney N)
Evans, John (Newton)	Ross, Wm. (Londonderry)
Foster, Derek	Spearing, Nigel
Freud, Clement	Welsh, Michael
Golding, John
Harrison, Rt Hon Walter	Tellers for the Ayes:
Haynes, Frank	Mr. George Morton and
Homewood, William	Mr. Hugh McCarney.

NOES
Alexander, Richard	Benyon, Thomas (A'don)
Ancram, Michael	Berry, Hon Anthony
Baker, Nicholas (N Dorset)	Best, Keith

Bevan, David Gilroy	Meyer, Sir Anthony
Blackburn, John	Mills, Iain (Meriden)
Boscawen, Hon Robert	Morrison, Hon P. (Chester)
Brinton, Tim	Myles, David
Brooke, Hon Peter	Neale, Gerrard
Brown, Michael (Brigg & Sc'n)	Nelson, Anthony
Bruce-Gardyne, John	Neubert, Michael
Bulmer, Esmond	Newton, Tony
Butcher, John	Page, Rt Hon Sir G. (Crosby)
Cadbury, Jocelyn	Page, Richard (SW Herts)
Carlisle, Kenneth (Lincoln)	Parris, Matthew
Clarke, Kenneth (Rushcliffe)	Penhaligon, David
Cockeram, Eric	Rathbone, Tim
Cranborne, Viscount	Rees, Peter (Dover and Deal)
Dean, Paul (North Somerset)	Renton, Tim
Dorrell, Stephen	Rhys Williams, Sir Brandon
Dover, Denshore	Ridley, Hon Nicholas
Dunn, Robert (Dartford)	Roberts, M. (Cardiff NW)
Faith, Mrs Sheila	Sainsbury, Hon Timothy
Fenner, Mrs Peggy	Shaw, Giles (Pudsey)
Fraser, Peter (South Angus)	Shepherd, Colin (Hereford)
Garel-Jones, Tristan	Sims, Roger
Gorst, John	Speed, Keith
Griffiths, Peter Portsm'th N)	Speller, Tony
Grist, Ian	Spicer, Jim (West Dorset)
Gummer, John Selwyn	Spicer, Michael (S Worcs)
Heddle, John	Stanbrook, Ivor
Hunt, John (Ravensbourne)	Stevens, Martin
Hurd, Hon Douglas	Stradling Thomas, J.
Jopling, Rt Hon Michael	Thomas, Rt Hon Peter
Kitson, Sir Timothy	Waddington, David
Knox, David	Wakeham, John
Lawrence, Ivan	Ward, John
Le Marchant, Spencer	Warren, Kenneth
Lester, Jim (Beeston)	Watson, John
Lloyd, Peter (Fareham)	Wells, Bowen
MacGregor, John	Wheeler, John
MacKay, John (Argyll)	Wickenden, Keith
McNair-Wilson, M. (N'bury)	Wolfson, Mark
Mates, Michael	Woolmer, Kenneth
Mather, Carol	Young, Sir George (Acton)
Maude, Rt Hon Sir Angus
Maxwell-Hyslop, Robin	Tellers for the Noes:
Mayhew, Patrick	Lord J. Douglas-Hamilton and
Mellor, David	Mr. John Cope.

Question accordingly negatived.

Main Question put and agreed to

Resolved, That this House takes note of European Community Document No. 7854/79, together with the supplementary memorandum by HM Customs and Excise dated 17 November, and would support acceptance by Her Majesty's Government of arrangements for the harmonisation of the structure of excise duties on alcoholic drinks which are compatible with the maintenance of a satisfactory excise duty system in the United Kingdom.