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Clause 6—(Beer—Customs And Excise)

Volume 476: debated on Wednesday 14 June 1950

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I beg to move, in page 7, line 9, to leave out "Second Schedule," and to insert "Schedule (Revised Rates of Beer Duty and Drawback)."

Before speaking on the Amendment which stands in the name of myself and several of my hon. Friends, I want to explain my interest in this matter; more especially as one of the lower journals has referred to me as a "beer baron." I must say that I should rather like to be one, but the fact is that I am not. I do not have one single farthing, directly or indirectly, in the brewing industry. My interest arises from the fact that my constituents are very interested in the brewing industry and its prosperity makes a very great difference to them, and indeed, to the whole town of Burton-on-Trent.

This Amendment means, in simple language, that 2d. would come off a pint of beer. I think that the interests of the people concerned should be very carefully considered. The brewers, whom I have not approached, and from whom I have not had any communication on this subject, are not, I understand from the newspapers, particularly favourable to the form of alteration which I seek.

They think that nothing less than 4d. a pint would make any difference, but there is also the licensee to be considered. There are between 60,000 and 70,000 licensees in this country, and they have just as much right to have their interests considered as anybody else. The work which they do is work which is not despised in the community; the licensee provides, to some extent, a club for a very large number of people, and large numbers of people, particularly from the working classes, would be put out, if their "local" was not available to them.

At present the consumption of beer is falling very rapidly. There was a slight rise in March, but since then there has been a considerable drop in the beer output. I will quote from "The Times":
"It was expected, owing to the earlier incidence of Easter this year, that the abnormal beer production in March would be followed up by an abnormal reduction in April. But, in fact, the April decline, in comparison with the corresponding figure last year, considerably outstrips the March advance. Output for April, which covered Easter, dropped to 1,670,000 bulk barrels—the lowest figure for any April since 1934."
5.30 a.m.

As "The Times" very carefully pointed out, it is a very dangerous thing for the Treasury, which relies so largely on the revenue from beer and tobacco, to induce non-drinking and non-smoking habits in this country. Some people may not like that statement, but let us be blunt and honest about it. Any Chancellor must depend to a very large extent upon the revenue from tobacco and beer. People who have not looked into this question may not realise—I did not realise it until I went into it—what an enormously increased amount is now being paid for beer. The ordinary beer drinker today is paying 26 times what he paid for beer in 1914.

As a legal adviser to licensed victuallers for many years, may I ask the hon. Gentleman if it would not be better to stop the tied house system, under which the licensed victualler is charged more for the beer than the wholesaler?

That might not be desirable, but, at any rate, it does not come within the scope of the Amendment. The enormous increase in the price of beer is far more than anything in respect of which we have been told in the last few days by the Treasury that taxation ought to come up proportionately all the way round. Fortunately, Income Tax and Surtax cannot go up 26 times, but, with the exception of tobacco, I think it will be found that no commodity has been taxed to the extent to which beer has been taxed. It is out of all proportion to other increases.

Beer is undoubtedly a very healthy drink. It is very much better for the ordinary man to have a pint of beer than to go to other sources of distraction. The Chancellor forgot 7 million men in his Budget. I am indebted to the hon. Member for Kirkdale (Mr. Keenan). In his Budget speech he said that he did not like the Budget because it left at least 7 million of the lower paid workers untouched, for they got no benefit from the Income Tax remission, and he asked that something should be done for them. I quite agree with him, but where can you give them anything except in regard to tobacco and beer? There is a dollar element in tobacco, but, practically speaking, there is no dollar element whatsoever in beer.

The suggestion of the hon. Member for Kirkdale was that there should be an extension of family allowances but this would cost far more than the amount which I am sure the Chancellor of the Exchequer or his assistants are going to say that this remission of the beer tax would cost. I would like to deal with that point at once. It is commonly assumed that if this 2d. were taken off the pint of beer, there would be a loss of revenue of £60 million. I think that is, roughly, the figure agreed to generally. As a matter of fact, that, of course, is a complete fallacy, because if the working man does not spend £60 million on been we have to ask what he does with it.

If he saves it, he does what the Chancellor of the Exchequer and all of us want done; that is, stop the "dis-saving" that is going on at a rapid rate. Already this year £14 million has been "dis-saved" by the working class. If the working man does not save it and spends some of it on beer, then there is greater revenue and the loss is not, therefore, £60 million. If he spends it on tobacco, he spends a proportion of that amount of money just as if he had spent it on beer. If he spends it on entertainment, such as the cinema, again he pays tax. There are very few avenues of expenditure which do not involve some contribution to the Chancellor of the Exchequer.

Therefore, I do feel that this matter ought to be very seriously considered and one of the reasons why I think this should be so is this. We have perhaps all, particularly the Chancellor of the Exchequer, exhorted the working man in the last year or two that he must work harder and longer, and that there must be greater output. In fact, there has grown up a habit of thinking of him as a productive unit living in an accommodation unit. If we made a different approach, we should get a different result. If, in this Finance Bill, we were to give, him a remission of 2d. on a pint of beer and wished him good luck, it would do as much as anything which might come from higher sources.

To come back from these 7 million men who get no tax remission in the Budget, the Chancellor of the Exchequer referred to the lower incomes but he did not refer to those with the lowest incomes. They get nothing. The only way, in my submission, that we can do anything they will appreciate—and they would appreciate it very much—is to give them 2d. off their pint of beer. I will not keep the Committee longer at this hour, but I do ask that this matter should be seriously considered. The 2d. will be taken off one day; we may have to take it off. Here one has an opportunity of doing something for the lowest-paid worker which will be not only immensely appreciated but which he will more than make up for in all sorts of ways.

I wish to intervene very briefly to say that we cannot advise the Committee to accept this Amendment. Our main reason for that is, though it is no doubt desirable that there should be a reduction of 2d. in the price of a pint of beer, that it would unfortunately cost something between £45 million and £50 million a year in revenue. It has been correctly pointed out already today that the Amendments down in the names of the Front Bench Opposition spokesmen, if all carried by this Committee, would deprive the Revenue of about £400 million in the present Budget.

Surely the hon. Gentleman would agree that in making Amendments to the Finance Bill it is not supposed that even the most genial of Chancellors of the Exchequer will accept the whole of them.

I was presuming that the Front Bench Opposition members who have put down these Amendments sincerely intended that they should all be passed, if the Opposition had their way. It is true the Front Bench have not given their support to this Amendment, but if this Amendment be added to the rest we should then be deprived of altogether something like £450 million of Revenue.

A year ago we took a penny a pint off beer-tax partly because we thought it desirable to lower prices in the interest of consumers, to which the brewers made a contribution in reduced profits. We also did it because we thought there was some substance in the argument that there was a fall in consumption occurring at that price which might endanger the Revenue. In the Debate at that time we were, however, criticised, as hon. Members will remember, for facilitating in that way a reduction in the price at a time when certain food prices were being raised. In this year's Budget we arranged that the gravity of beer should be improved, also at some cost to the Revenue, because we think it is desirable that the consumer, now that the grain is available, should get better beer. We also think it will go some way to restrain the fall in consumption. But in our view it would be going altogether too far in this direction to sacrifice £45 million to £50 million worth of revenue which, if we had it to concede, could be conceded in much better Ways.

I think this proposal comes oddly from the Opposition benches, when we know that the official Opposition policy is to make large reductions on the food subsidies which would, of course, raise the price of food, and therefore the cost of living, substantially at a time when the hon. Member's proposal would, we think, reduce the price of beer. For these reasons we are bound to recommend the Committee not to accept the Amendment.

The Committee is indebted to my hon. Friend the Member for Burton (Mr. Colegate) for raising this subject, though I understand that he does not wish to press it to a Division which, I think, would be the correct decision. This is a difficult matter because I do not think 2d. will be enough. I think a larger reduction, which the brewing industry thought necessary, would make too large inroads into the Revenue. At the same time we applaud the Government's decision to increase the gravity of beer. I take it that among the Eton and Winchester contingent there is a certain sympathy with the case of the beer-drinker, and I am prepared to let it rest at that.

5.45 a.m.

I would first disclose my interest in this matter as a director of a brewing company, and in case any hon. Gentleman opposite thinks me vile, perhaps I may modify his attitude by saying that I am also interested in another beverage which we drink, namely, tea. The only angle from which this problem should be looked at is from the point of view of the Treasury and whether, sooner or later, it will not be necessary to do something to retain the yield from this duty. I will not mention what was in my mind when the hon. Gentleman the Member for Oldham (Mr. Leslie Hale) told us about the tied-house system, except to assure him that I would welcome the opportunity of debating that subject with him.

Whereas barrelage in the calendar year 1947 was nearly 30 million, a year later it dropped to 28 million, and in 1949 it dropped still further to 26 million. The tendency in the first four months of this calendar year shows that that drop has been not only continued but, if anything, accelerated. It is not altogether surprising that the Government have stated they are unable to accept the Amendment, but it is fair to state that if Revenue is to be maintained at a sufficiently high level to satisfy the demands of the Government it may be necessary, at some near date, to take even more drastic steps to maintain consumption, and consequentially yield, than the Government are invited to do by this Amendment.

The Financial Secretary, in resisting this Amendment repeated the argument which we had from the hon. Baronet the Member for Gravesend (Sir R. Acland). I think that it is a point worth taking up, because it is the second time that it has been adduced from the Government benches. The point was that were all our Amendments accepted by the Government the cost to the Exchequer would be in the vicinity of £450 million. I do not think that can be allowed to go without some comments. I have, of course, not had the time to do the necessary research, but it would be interesting to know, taking a period of 10 years for instance, what Opposition Amendments, in other circumstances, would have totalled. It would have been probably much less than £400 because, before the war, we lived in the days of £800 million Budgets.

The Financial Secretary used it as his chief line of resistance without rebuke from the chair, Sir Charles. May I merely say, however, that we are entitled to remind the hon. Gentleman that the Committee stage of the Finance Bill is the annual parade of certain matters which are put down by the Opposition, and by Government backbenchers, when they did their duty, calling attention to certain grievances which they desire to be discussed. Very often after such discussion, as in this case, the Amendment is not taken to a Division, so I hope the hon. Gentleman will not make too much of that point.

On the subject of the Beer Duty the Treasury are in something of a dilemma. They have to consider in what form the best contribution is made to the national finances. Is it better that beer should be cheaper, in order that people should contribute more to national savings? Or is the true patriot he who drinks as many pints of beer as possible, smokes as much tobacco as possible, and—if he can afford it—drinks as much whisky as possible? In that case he makes a free gift to the Government of a contribution from which he gets no return at all. If he contributes to national savings or buys gilt-edged securities he draws a certain, amount of interest from the Government. Anybody who takes a sane view of these matters would say that it is far better that investments and national savings should be accumulated. But the Chancellor of the Exchequer is always subject to this temptation of the vast revenue he is now getting from the Beer Duty.

I think the hon. Member for Burton (Mr. Colegate) and the hon. Member for Woking (Mr. Remnant) were right in pointing out that it is the Revenue that is in danger from this very high rate of duty. A penny was taken off in the last Budget, but we are living in days when a penny off the pint has nothing like the impact on the consumer that it had in pre-war days. Then it was a popular Budget tip nearly every year, and sometimes it came off. A penny off the pint was then regarded as a very real concession—but not now. The Government are in danger of doing with beer what they have done with whisky, putting it out of the reach of the lower income groups altogether, taxing it out of existence so far as that type of consumer is concerned.

I am not here to argue the merits, or otherwise, of beer drinking. We always leave that to the hon. Member for Ealing (Mr. J. Hudson), and I hope he will contribute to this discussion. What I am saying is that both from the point of view of the Revenue and from the point of view of those who enjoy this beverage, it is taxed at a rate which does damage. I believe that, at the present price of beer, what the Chancellor has to consider seriously, if he is going to maintain his revenue, is taking 3d. off the pint at the earliest possible opportunity. This is the annual parade of this subject. It is not going to be pressed this year, but I hope there will be considerable cogitation by the Chancellor as a result, and that he will do the necessary research for his successor—who will be provided from this party—to do the necessary next year.

I would like to take up the Financial Secretary on the reference he made to taking a penny off the pint last year. That was misleading, because, in fact, he took three-farthings off, and the brewers took one farthing off.

I did not understand that the hon. Gentleman said so. If he did I apologise.

There is no doubt that beer is rationed today by the pocket. The only thing which is responsible for the drop in consumption is the length of the working man's pocket, and unless this taxation can be eased the trade will continue to fall. May I admit that I am a brewer? We are often told in private enterprise that we should go out and take risks to win, but the Chancellor seems to have completely different ideas when it comes to taxation. I suggest that by taking some of the tax off beer, the Chancellor will not only stop the fall in consumption, but will increase consumption.

I apologise to my party for detaining them on this subject, but I would not like it to go out that we are not the slightest bit interested in the tax on beer. In my view, if the price was reduced by 2d. or 4d. we should not return to the old days when a man went to a pub at 5.30 and stayed until 10.30. The standards of our people in these days have improved considerably. I am told, for instance, that in my constituency more television sets were sold last year than radio sets. People are staying indoors more these days instead of finding then-pleasure outside the home. [An HON. MEMBER: "But they still drink beer."] That is true, but it is late in the evening or at week-ends. They do not live in the public house as in the old days, when it was often better than the home.

Is the hon. Member aware that television ends when the average public house closes?

Television is surely on when the public houses are open.

One of the great problems these days is the publican. He is in great difficulty, while the brewers are still making colossal profits.

If the brewers are to be brought into this discussion, I hope that a reply can be given.

One has only to read the papers to find that out. Publicans are in serious trouble because of the decline in trade. It ought to be noted that the brewers, in the main, are not helping the publicans who are their tenants. In my constituency, they are still charging the same rents as in the days of the war. It should also be brought out that what the brewers are doing today is to get rid of their tenants and replace them with managers.

The hon. Member says that the rents are the same as during the war, but is it not a fact that the rents of council houses have gone up since the war?

Does the hon. Member for Burton (Mr. Colegate) wish to withdraw his Amendment?

Before doing so, Sir Charles, I should like to make one comment on the statement of the Financial Secretary that the loss of revenue would be some £40 or £50 million. He did not refer to the fact that a large proportion of the money saved would go back into the Revenue in one form or another. I ask the right hon. and learned Gentleman to consider this point. But as it does not arise now, I beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.