HC Deb 11 July 1984 vol 63 cc1303-4

Amendments made: No. 35, in page 35, line 29, leave out from `first' to `and' in line 32 and insert `relevant chargeable period'.

No. 36, in page 35, line 33, at end insert— '(7A) For the purposes of subsection (7) above the first relevant chargeable period is—

  1. (a) in a case where the election so specifies, the first chargeable period for which the profits or gains or losses of the trade in question are computed by reference to the facts of the period of account commencing on or before an ending after 12th March 1984, or
  2. (b) in any other case, the first chargeable period for which that computation is by reference to the facts of the first period of account commencing on or after 13th March 1984.'.—[Mr. Moore.]

10.45 am
Mr. Wallace

I beg to move amendment No. 113, in page 35, line 36, at end insert— '(9) This section shall not apply to stocks of maturing Scotch whisky held in the course of trade'. The amendment would remove the Scotch whisky industry from the provisions of the Bill which abolish stock relief. The Minister has probably been made well aware of the arguments of the whisky industry, with which he has had numerous discussions in recent weeks. This major concession is sought because of the obvious nature of whisky, which must be laid down for many years before it can be sold. Therefore, the inflationary uplift for whisky stocks is much greater in many cases than for the stocks held by other industries and trades. The industry estimates that the abolition of stock relief would lead to a 3.6 per cent. increase in corporation tax. A distillery in my constituency has estimated that the effect of the abolition of stock relief would be a reduction of 30 per cent. in the funds available for investment and marketing. Few would claim that the whisky industry has enjoyed a buoyant period recently. The importance of marketing and brand building is crucial for the whisky industry in many parts of Scotland, and that is why the amendment is important

The industry has made representations to the Minister. I have tabled the amendment in the hope that the Government will recognise the peculiar problems of the whisky industry if stock relief is abolished, and that they will go some way to easing the industry's problems.

In the Budget statement the Chancellor of the Exchequer said that he hoped that the transitional arrangements for corporation tax would be broadly neutral. That has not been so in the whisky industry. Therefore, I hope that the Government will introduce new measures or will at least give a sign that they are prepared to resolve any problems caused by the abolition of stock relief

Mr. Hayhoe

The amendment provides that stock relief should continue to be available in respect of stocks of maturing Scotch whisky held in the course of trade. Relief would thus be available to distillers and blenders of whisky who hold stocks in hand but not for retailer stocks of bottled whisky. In the current financial year the cost would be nil. In 1985–86, it would probably be about £20 million, and in the following years it would be £30 million. Therefore, the relief that the hon. Gentleman is seeking would cost a significant amount.

The hon. Gentleman will recognise that the provisions for stock relief are being applied to the whisky companies in precisely the same way as they are applied in other areas of the economy. We recognise the importance of the industry. A number of my hon. Friends have stressed its importance, and a deputation went to see my hon. Friend the Financial Secretary to discuss these issues.

There is no lack of understanding of the importance that the Scotch Whisky Association attaches to the matter. Nevertheless, the companies should look at the proposals in the Budget and in the Bill as a whole. We did not abolish stock relief in isolation. It was part of a major reform of company taxation. The reduced rates of corporation tax will help, and, as the hon. Gentleman will know, the duty on whisky in the Budget was less than valorised, by just under 2 per cent., so the Government have recognised the importance of the Scotch whisky industry as a whole. On the basis that the Government, by their performance, have shown their concern, and will continue to bear the interests of that major exporting industry very much in mind, I hope that the hon. Gentleman will seek leave to withdraw the amendment

Mr. Wallace

I listened carefully to the Minister's reply. He will appreciate that the fact that the amendment would cost money to implement is one reason why it was tabled. As I said, it is all part of a corporate taxation programme. The whisky industry has suggested a phased withdrawal of stock relief. I am glad that the Minister appreciates the problems that the industry faces, and I hope that he will continue to have discussions with the trade.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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