§ "(f) relieving duty on sales of wine bought directly from vineyards by way of farmgate sales ".'.—[Sir Anthony Grant.]
§ Brought up. and read the First time.
§ Sir Anthony Grant (Cambridgeshire, South-West)
I beg to move, That the clause be read a Second time.
§ Mr. Deputy Speaker (Mr. Michael Morris)
With this it will be convenient to take new clause 12—English wine sales (relief of duty) (No. 2)—
§ "(g) relieving duty from wine sold in vineyards of under 10 hectares of production.".
§ Sir Anthony Grant
I did not expect to move the new clause, although I wholly support it. I know that some of my hon. Friends will wish to speak at rather greater length than I do, so I shall not detain the House. The new clause is designed to rectify the grossly unfair position in which English vineyards find themselves. I have in my constituency a vineyard called Gamlingay. It produces on a fairly small scale a very nice dry white wine which I commend to hon. Members and to anyone else who likes to participate.
One reason why the vineyard has difficulties is the imposition of duty. The producers sell the wine for £4.50 a bottle, of which approximately £1.20 is duty. If it were sold in France, in Germany, in Luxembourg, in Portugal, in Italy, in Greece or in Spain, the £1.20 would not arise. If our producers were on a level playing field, they could sell the wine for £3.30.
This problem applies not only to that vineyard, but throughout the British wine trade. If an Englishman, a Welshman or a Scotsman buys 10 cases of wine by direct sale from a vineyard in any of those European countries, he would pay no excise duty. If he bought the wine in France, the duty would be about 2p a bottle, which is negligible. He could bring that wine back home to the United Kingdom without having paid any duty. That same person buying at an English or Welsh vineyard, whether Gamlingay or anywhere else, will pay £1.16 or £1.20 a bottle in duty, or as much as £1.92 if the wine is sparkling. That is patently unfair to English vineyards. We talk about a level playing field in Europe. That should apply to everything, and certainly to wine.
It is with absolute confidence that I move the new clause. I believe that Treasury Ministers wish to support British wine as well as to consume it. I believe that they wish to encourage the trade and that they want to put us on the basis that applies in Europe. There is no excuse for discrimination, and the sooner that it is got rid of the better. One way to do that is to accept the new clause with pleasure and with alacrity.
§ Mr. Andrew Smith (Oxford, East)
We have heard an enchanting case for the merits of English wine and the prospect of the garden of England being bedecked with new vineyards. I can see the case which is being made, but the new clause amounts either to a plan to subvert EC fiscal legislation—I can well understand why some hon. Members want to do that—or to an invitation to open a Pandora's box of delights concerning the consequential effects on other alcohol taxation.
Unless the Paymaster General tells us to the contrary—I fear that he will not—we will be told that, first of all the new clause runs foul of the agreements on harmonisation, which the Government signed with other European countries, and that if the hon. Member for Cambridgeshire South-West (Sir A. Grant) and his right hon. and hon. Friends wish to have the new lower duty on English-produced wine they will have to have that duty on all wine sold in this country.
Although we suggested in Committee that there was a need for some adjustment in the relative fiscal scales on alcohol taxation, I do not think that anyone suggested reducing the duty on wine in this country to the same level as that of some of our European neighbours.
One of the new clauses would make farm gate sales free of duty; the other would exempt from duty smallholdings smaller than 10 hectares. If the change is applied to wine, why not apply it to beer or spirits? That would invite small-scale duty free sales of home-distilled brews across the country, which may have many attractions but would subvert the basis of charging duty on alcohol and would give rise to a curious distortion in the structure of the industry, as our breweries and distilleries had to get themselves down to the farm gate sales threshold, or the 10 hectares, to take advantage of selling cheap booze.
Although the hon. Gentleman's move to give a special boost to English wine is attractive, I fear that the Paymaster General will have no alternative but to knock it firmly on the head.
§ Mrs. Jacqui Lait (Hastings and Rye)
I have a constituency point that causes me to support the new clause. I also support in general the need to make English vineyards as competitive as possible. Although they make fine wines, they do not compete on price. Much of that is a result of the burden of over-regulation and excise duty.
My point relates entirely to our new clause on farm gate prices. The custom of the vineyards in my part of Sussex had dropped dramatically as a result of the single market. I am not criticising the single market—thank goodness for it—but it is having a definite effect on the vineyards in east Sussex because they are not able to sell wines—as they have done—from the vineyards. We must encourage them to be as competitive as possible vis-a-vis the French vineyards. One has only to spend a brief period on holiday in France and see how much of its product any vineyard will sell to people who turn up at the farm gate to notice what a substantial part of sales it is for many vineyards and how much it contributes to their annual output and hence their profit.
I hope that the Paymaster General will, in a general review of English vineyards and the Customs regime to which they are subject, have a good look at helping to make English vineyards considerably more competitive, particularly at the farm gate.
§ Mr. Anthony Steen (South Hams)
I am glad to have caught your eye, Mr. Deputy Speaker, over a topic about which I have spoken in the House for the past 15 years. On one occasion—I want to assure the Whips that this will not be such an occasion—I had the Adjournment debate at 10 o'clock. As the business of the House had collapsed, the debate started at 4.30 pm. I had a wonderful three hours—4.30 pm to 7 pm and then from 10 pm to 10.30 pm. My right hon. Friend the Member for Mid-Sussex (Mr. Renton) was engaged in that operation with me and I am pleased to see him here tonight.
I should declare an interest at the outset. I was interested in English wine long before the English Vineyard Association was even thought about, and before we had an English vineyard industry. I now advise the association, which has 400 commercial vineyards in membership. I do not think that many hon. Members realise that there are 400 commercial vineyards in this country. They now produce just short of 25,000 hectolitres of wine a year, some of which is very good.
The trouble is that English wine is out of the reach of the majority of the population, not because it is too difficult to get down in a glass, but because it sells for too much. For most people, the average price of a bottle of wine is £2.99 or less. As the duty on a bottle of English wine is £1.16, one can see that that leaves only £1.83 for a bottle of wine to be produced, marketed and retailed.
I have to declare a second interest, as I have five vineyards in my constituency, and they are very good indeed. I make it a point to visit them to ensure that they are doing what they should be doing and in the way in which we would like it to be done. Devon has 10 vineyards. Somerset has 10 vineyards. Norfolk has only four, but Kent has 170 acres of vines. In the constituency of my right hon. Friend the Member for Mole Valley (Mr. Baker) there is one vineyard of more than 200 acres. The industry is quite big now.
The vineyards in Britain are so far north that they do not yield as much wine as the French or Spanish vineyards. They need help from the Government—
§ Mr. Steen
Sunshine, yes, but they can be helped with the duty as well, which is what this issue is about. As my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) quite rightly said, people go to France, not only in charabancs but in large transit vehicles, and they can buy any amount of still and sparkling wine at the French level of duty, which is 2p on the bottle. Much more significantly, if they go to any vineyard in Germany, Italy, Spain or Greece and buy over the gate, which is what the new clause is about, there is no duty at all.
Only one country apart from Britain imposes duty on farm gate sales—France. France imposes a duty of 2p a bottle, which includes VAT. In Britain, the duty is £1.16 a bottle, including VAT. There is thus no incentive for British vineyard owners to show tourists around their vineyards because those who would like to take away a little souvenir bottle of wine discover that there is a large amount of duty to be paid on each bottle. In any other European country apart from France such bottles are excise duty free because they are counted as farm sales for personal use. In France people can take six cases of wine, sparkling or otherwise, from a vineyard and pay only 2p a 730 bottle duty on it. In Italy, Spain, Portugal, Greece or Germany cases of wine can be bought without paying duty on them—or VAT.
The new clause tries to establish a level vineyard across Europe. I look forward to hearing what the Paymaster General has to say about this. He will probably say that he has not appreciated that there was a problem. We are, after all, talking about a drop in the ocean—the amount of duty involved, to mix a metaphor, is no skin off the Treasury's nose. We are talking about a few pence at most.
The present injustice hurts vineyards in constituencies such as that of my hon. Friend the Member for Hastings and Rye (Mrs. Lait). Many people cross the channel and then drive along the coast. The French, who are understandably rather careless of English wine, drive into vineyards on the Sussex coast and get the shock of their lives when they find that they have to pay £6 for a bottle of wine when they can buy as good wine for a third of the price in France or elsewhere—
§ Mr. Steen
The new clause is only about farm gate sales and is designed to deal with our Government's discrimination against our own vineyards. The Government have shown clearly that they realise that we must back British goods, and it would help vineyards' commercial viability—they are experiencing difficult times—if they were not charged for farm gate sales to people who buy wine for their own use. Accepting the measure would do such vineyards a great service.
New clause 12 has to do with relief of duty on wines sold from vineyards of under 10 hectares. Most of our 400 commercial vineyards are very small, and it would be marvellous if the Government gave them some relief. There is a precedent for this: the arrangement giving those who produce wine a growers' allowance. I do not know how much they are allowed to consume without paying excise duty, but the point remains the same.
I should have thought that the Government could easily accept this new clause, which would merely give statutory form to the growers' allowance, which is already well established here. Cider producers also enjoy some arrangement allowing them to produce some cider for their own consumption without paying duty on it.
I hope that the Minister appreciates the great interest in the House in English wine. Certainly Conservative Members have a great many vineyards in their constituencies. I look forward to hearing from my hon. Friend the Member for Lincoln (Mr. Carlisle), who runs his own vineyard and who can speak with experience. We also look forward to hearing other hon. Members speak—
§ Mr. Deputy Speaker (Mr. Michael Morris)
Order. Which other Members are called is entirely the choice of the Chair. It is not up to the hon. Member who is speaking.
§ Mr. Thomas Graham (Renfrew, West and Inverclyde)
I am very interested to hear about the hon. Gentleman's knowledge of the wine industry, and I have great sympathy with what he is saying. I only hope that the farm gate price 731 of whisky can come down too, so that Scotland can enjoy some of the stuff that we produce more cheaply—but I take the hon. Gentleman's point.
§ Mr. Steen
What the hon. Gentleman says is precisely what I feared—the Minister will say that he cannot give way on wine because other people will start saying that the same should be done for whisky. There may indeed be a case for that. We are anxious to be fair to those who produce our wine. At the moment wine producers operate with both hands tied behind their backs—we seem to be shooting them not only in the foot but in the brain. We are not allowing them to encourage tourists to visit their vineyards and leave with bottles of wine, because we are tripling the amount that they have to pay for it.
Many other Members wish to catch your eye, Mr. Deputy Speaker, so I will conclude. If the Minister gets this one right, he will perform a great service to the nation—and solve a lot of problems.
§ Mr. Kenneth Carlisle (Lincoln)
I begin by declaring an interest. On my farm in Suffolk we have a vineyard, which we planted five years ago. We planted seven acres with 12,000 vines, and we are proud to be part of a new and, we hope, growing industry in the United Kingdom.
I was appalled to hear the hon. Member for Oxford, East (Mr. Smith) talking about cheap booze. That just shows how little he knows about the quality of wines that can be produced in England. The closer a producer is to the geographical extremity of where a fruit can grow, the better that fruit can be. Even though the process is more risky, the longer maturing period enables production of a better quality fruit.
We in the countryside have all been encouraged to diversify, and this is a diversification—not to mention a large investment, which I and many others who have tried to make a living in the countryside have made. The industry needs encouragement: not help, but fair competition.
The industry also creates employment. By the time we have looked after our vines and made and marketed the wine, our little venture employs six people, part or full time. It thus makes a contribution to local prosperity—another point for the Minister to bear in mind.
What we produce is drunk and enjoyed in this country. It substitutes for imports, another laudable achievement. We do not want help; we just want fair competition. My hon. Friend the Member for Hastings and Rye (Mrs. Lait) made a good point about that. At present, vineyards near France suffer greatly from unfair competition owing to the new regulations.
§ Mr. Carlisle
That remains to be seen. We have entered a competition and I look forward to hearing the result. I am hopeful that we have produced good quality wine.
I hope that the Minister will listen to the arguments. The wine industry is not a big one, but it is developing. It is a serious industry, which is becoming more professional and capable of producing good wine. Given a level playing field, we are confident that we will not only create employment in rural areas but help to cut imports.
§ Mr. Graham
I did not intend to speak in this debate, but I have a lot of sympathy with what hon. Members have said, for example, about employment, which is very important.
I understand the rules that apply in other parts of Europe, and I agree that we should have a level playing field. I would like to extend it to the social chapter and other areas, but that is not the point.
For years one tremendous growth industry in Scotland has been the tourist trail to distillers. As many hon. Members are aware, people from all over the world visit the distilleries to take a wee dram and encourage them to buy whisky when they get back home. I understand the point about possible visitors to the new wineries in England, or whatever they are called, and how that could be a new growth industry in tourism.
Last night I was reading a book about the history of Great Britain, starting with the Roman times. There was a paragraph about the wine that was produced in those days. Some of the finest wine in the Roman world was produced in Britain. Apparently, the climate then was slightly better than it is today. I came here from Scotland today, and I know how different the weather is in Scotland. I think that, given the heat down here, not only grapes but bananas can be grown.
On a less frivolous note, I think that what hon. Members have said tonight is very serious. I believe in a level playing field and if wine can be bought duty free at the farm gate in France, Germany, and other countries, that should be possible here.
I genuinely believe, based on historical facts, that we can produce wine as good as that produced by any other country. I would encourage the folk in England, who are lucky enough to have the right weather, to produce the wine. The Government could take a wee lesson and give strong support to the new flourishing art—or rather ancient flourishing art—of wine making in Great Britain.
Like every other hon. Member, I like a wee glass of wine. I do not know a good wine from a bad one. I would follow the advice of the hon. Member for South Hams (Mr. Steen), who seems to have visited all the vineyards. Next time perhaps he would like to take me and my family with him.
§ Mr. Tim Renton (Mid-Sussex)
I am grateful for the support of the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) for the new clauses to which I have put my name. Perhaps we could have a useful twinning association and organise exchange visits to the vineyards in Sussex, Kent or Suffolk and the distilleries that are near the hon. Gentleman's constituency.
I congratulate my hon. Friend the Member for Lincoln (Mr. Carlisle)—and this is an unsolicited comment: I have drunk his wine and it is excellent. I hope that soon the Chairman of the Catering Select Committee will ensure that it is available in the Members' and Strangers' Dining Rooms.
I am happy to support the new clause tabled by my hon. Friend the Member for South Hams (Mr. Steen). I spoke in support of him a number of years ago in the debate to which he referred. In my part of the world, in the county of Sussex, as my hon. Friend the Member for Hastings and 733 Rye (Mrs. Lait) has already said, vineyards are a growing business. That is a bad pun, but the fact is that tourism has always been immensely important to Sussex.
In recent years, coastal towns such as Hastings, Eastbourne and Brighton have not found it easy to develop their tourist industry. One of the good recent developments is the vineyards, which are increasingly flourishing. Those on the downs in my constituency, inland from the coast, provide a pleasant stopping place during the day for tourists who have been to Brighton, Eastbourne or Hastings. In the afternoon, tourists and their families can go to somewhere like Drusilla's vineyard, where there is a wine shop that sells farm produce as well as English wine.
As my hon. Friend the Member for South Hams has rightly pointed out, there is an anomaly. We want to sell more English farm produce and English wine from our local shops, but the duty on English wine sold at the farm gate is £1.16 a bottle as compared with 2p a bottle in a comparable establishment in France, or nothing at all in other comparable continental establishments. I am sure that my right hon. and good Friend the Paymaster General will say something encouraging about that when he winds up the debate.
Many people in Sussex now take their cars on the ferry over to France from Newhaven, which is next door to Hastings and my constituency. They fill their car boots with dozens and dozens of bottles of wine at the hyper in Dieppe or Pas de Calais. I am a great supporter of the single market, but it is wrong that there should be such a tax differential against our English wine.
§ Mr. Graham
Is the right hon. Member for Mid-Sussex (Mr. Renton) aware that coach loads of people come down from Scotland every week, or every day, and go over to France to buy wine? They could possibly stop in his area, load up there with wine and save the cost of the petrol necessary to go to France. That would increase the amount of money that would go to the Exchequer.
§ Mr. Renton
I am delighted that Scotland is so prosperous under a Conservative Government that so many of the hon. Gentleman's constituents are able to take a bus down to fill up with wine in France. I hope that they will also stop at our wine shops in Sussex on the way back.
The tax differential poses a serious problem in Sussex. It is not a frivolous matter. Wine growing is an important young industry and we wish to be able to compete against our continental neighbours on a level vineyard, to use the memorable phrase of my hon. Friend the Member for South Hams.
Sussex has often prided itself on the slogan "Come to Sussex, Sussex by the sea". We would like to add a word in the middle of that. We would like people, when they come, to drink Sussex "Sauvignon" by the sea.
§ Sir Roger Moate (Faversham)
I should like to endorse everything that my right hon. Friend the Member for Mid-Sussex (Mr. Renton) has said, which applies equally to the vineyards of Kent.
I do not think that it is up to the Chairman of the Catering Select Committee to decide which wines are supplied in our Dining Rooms. All I know is that the excellent Syndale valley wine from my constituency—it is produced close to my home—got on to the wine list. I was 734 privileged to be a member of the Select Committee when it tasted the wines. It was done without any knowledge of the origin of the wines, but that local wine still got on to the wine list. That is a tribute to my local vineyard and explains why I wish to add my voice to the powerful voices that have been heard today in support of the new clause.
§ Sir Roger Moate
It would certainly be sad if that happened. The important thing is that consumers should be allowed to make their choice.
There is tremendous international competition to supply the wine drinkers of this country. The English vineyards do not produce volumes of wine and cannot compete easily with the flood of high quality wines that now come into this country. What is of tremendous importance is that they can compete by offering tourists and others the opportunity to visit vineyards that are found in some of the loveliest parts of the countryside.
I urge my right hon. Friend the Paymaster General and his colleagues, when considering the new clause or other proposals, to remember that the fact that people can go into the countryside, visit the vineyards and buy wines there is a tremendous and fast developing asset. That is the key point. It is even more important because of the international competition.
If it is true, as we are informed, that virtually no excise duty is charged at the farm gate in France, and that in most other European countries no tax is imposed, what is the justification for imposing it here? It cannot be because of the revenue raised because the amount collected must be very small. But if we can encourage tourism, diversification, conservation and the improvement of the countryside, I should have thought that my right hon. Friend would accept our overwhelming argument.
§ The Paymaster General (Sir John Cope)
I, too, like English wines. Indeed, I have a constituency interest in the form of a small vineyard at Thornbury castle. I understand what my hon. Friends are trying to achieve in tabling the new clauses, which are designed, as their title suggests, to assist English wines. However, they do not do that. They demonstrate my difficulty in distinguishing between English and other wines under the tax system.
The basic principle of international trade was laid down many years ago, after the war, in article III of the general agreement on tariffs and trade, which says:the products of the territory of any Contracting Party should not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products.Since 1947, there has been a lot of case law on that and it covers the matters that we are discussing. Under GATT we are not permitted to distinguish in favour of English as opposed to imported wines. The principle behind it is that no country's tax system should discriminate against imports. My right hon. Friend the Prime Minister was doing his best the other day to achieve improvements in GATT and to lower all sorts of trade barriers.
It is also against article 95 of the treaty of Rome and European law to distinguish between products in that way.
§ Dr. Godman
Is the Paymaster General confident that his decision to reject the new clauses is compatible with European Community law and hence not challengeable in the European Court of Justice?
§ Sir John Cope
Yes. I have just quoted the GATT article and mentioned the treaty of Rome and subsequent bits of European law.
In trying to get around the problem of not contravening GATT or the treaty of Rome, my hon. Friends have hit on two ideas, which are incorporated in the new clauses: first, so-called "farm gate sales"; and, secondly, the 10 hectare suggestion.
§ Mr. Andrew Smith
The Paymaster General has given the answer that I expected about European and international law, but how would he reply to the argument that in other European countries, with the exception of France, those farm gate sales are not charged duty?
§ Sir John Cope
I should not have given way to the hon. Gentleman and I apologise to the House for having done so because I was just coming to that point.
New clause 11 deals with farm gate sales, or rather vineyard gate sales. There is no difference in any European country between duty at the gate of a vineyard, or within a vineyard, and duty at a supermarket or anywhere else, nor can we introduce a difference under European law. The overall duties on wine imposed by France are less than that imposed by this country, and other European countries impose no duty at all. But that is true across the board; it is no advantage to sell wine at a vineyard, nor can we introduce such an advantage.
It is a question of the difference in excise duties between this country and the other countries named by my hon. Friend the Member for South Hams (Mr. Steen). Our neighbours in other directions, such as Ireland, impose a duty similar to or higher than that imposed by this country. We have often discussed the difference bei ween our excise duties and that of other countries. My hon. Friend discussed a direct function of a much wider argument about excise duties, particularly in the light of the single market.
§ Sir John Cope
I should first like to discuss new clause 12, which deals with the 10 hectare limit.
§ Sir Roger Moate
Before my right hon. Friend leaves that point, may I say that the English Vineyards Association informed most hon. Members that all those other European countries pay no excise duty at the vineyard? Is my right hon. Friend saying that that is simply because they pay no excise duty at all on all wine sales, or is our information wrong?
§ Sir John Cope
I am saying exactly what my hon. Friend suggests. No excise duty—in some cases, VAT is charged—is payable on wine in the countries named, apart from France which imposes a small amount of excise duty. The rate of excise duty and VAT is exactly the same for sales at vineyards and in supermarkets or anywhere else in France and other European countries.
New clause 12 suggests that we should discriminate on the basis of size, but 10 hectares is far too large for discrimination to be of value. The vast majority of 736 vineyards throughout the continent are under 10 hectares. I am told that most premier cru Burgundy comes from vineyards of under 3 hectares. Those small vineyards have a small production because they believe in being exclusive to maintain their markets. There are approximately 1.9 million vineyards on the continent, of which only 90,000 measure more than 10 hectares. Therefore, the difference of 10 hectares would be of little use and the same would be true if we changed that figure to 5 hectares or fewer.
Because of the international agreements that 1 mentioned earlier, we would be unable to distinguish between European and English wines in that way. If we said that the produce of small vineyards under 10 hectares or some other size should carry a lower rate of duty, we would have to apply that rule to continental vineyards of the same size, which is the vast majority of them. It is another way of saying that we would reduce the rate of excise duty on wine from almost anywhere in the world. Under GATT, an Australian vineyard of over 100 hectares or a large Californian vineyard would have to be treated in the same way as we treat our most favoured vineyards. We would have to offer the 10 hectare rate even to the most enormous vineyards imaginable, provided that they were overseas. It would discriminate only against large United Kingdom vineyards, not against large vineyards elseshere.
For all those reasons, I do not think that either of the solutions offered by my hon. Friends provides a way forward for us. I believe in free international trade; I also believe in the single market. I recognise the problems caused by the difference in duty rates, which is not confined to wine, but is a wider issue. In the circumstances, it is not possible to use a duty device to benefit English wine. I hope that the trade flourishes. The best way to ensure that is by improving marketing techniques and by extending the ways in which grapes are grown and wine is produced and marketed. We cannot ensure that the trade flourishes by trying to seek duty advantages, which would cause immense difficulties.
§ Mr. Steen
Is my right hon. Friend aware that the English Vineyards Association is planning to set up stalls in French ports to sell English wine to English travellers returning from France so that they can buy English wine at £1.16 a bottle less than in England? It is crazy for English people to go to France to buy English wine to bring back to this country because it is cheaper in France. If the new clauses are incorrectly drafted, can my right hon. Friend help us to table some helpful new clauses?
§ Sir John Cope
I do not believe that there is a method of distinguishing, through the duty, in favour of English wine. Perhaps somebody else can find a way, but I have not found a method consistent with GATT or European Community agreements that benefits English wine through the use of duty.
My hon. Friend the Member for South Hams has mentioned a marketing method. I was commending innovative marketing methods, and my hon. Friend has drawn attention to just such a scheme. I recognise the difficulties of which he has spoken, but it is true that English wine or any other wine bought in France for personal consumption and either brought back to this country or drunk in France bears French duty. The important factor is the country in which the wine is 737 bought; it is not the specific farm gate or place where the wine is bought or where it is produced. I cannot accept the new clauses.
§ Question put and negatived.