§ 4.16 p.m.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
I beg to move Amendment 65, in page 5, line 23, leave out "fifteen shillings".
After the events which the House has been discussing during the last three-quarters of an hour, I cannot honestly claim that this Amendment has the same earth-shaking importance, but I hope that it is one with which the Treasury Bench will have some sympathy.
I must preface my remarks by declaring a remote and somewhat indirect interest in that I hold a position as an employee of a company which operates a number of distilleries.
In general, Clause 4(1), which this Amendment seeks to amend, must be welcome to those businesses which are covered by the simplification of the licence duties. This covers the Excise licence which allows the operation of a brewery, distillery, tobacco factory, or whatever it may be.
Clearly, it is right that there should be some charge for such a licence, if only to cover the administrative costs. Hitherto, that licence has been calculated on a number of different bases broadly related to the output of the installation concerned. Under Schedule I of the Customs and Excise Act, 1952, for instance, a distiller's licence is based on the output in the previous year at the rate of £10 for the first 50,000 proof gallons and £10 for every subsequent 25,000 proof gallons or part of 25,000.
Under the Second Schedule of that Act, brewers are dealt with in two categories. In the case of brewers for sale, the licence duty is £1 for the first 100 barrels and 8s. for every subsequent 50 barrels or part of 50. The same Schedule also deals with private brewers who make beer for their own use. In that case the 815 licence duty is decided on the annual value of the brewer's house. The Third Schedule deals with beer primers, where the licence duty is £25 for the first 25 barrels and £5 for every subsequent 25 barrels.
It will be seen that, so far, all amounts are in round figures. However, when we come to tobacco, which is dealt with in the Fifth Schedule to the 1952 Act, we find a more complex scale of duties calculated for the first time in guineas. The scale here is from five guineas for under 20,000 lbs. of tobacco produced, up to a fee of 30 guineas for amounts over 100,000 lbs. What is proposed in the Bill is the substitution of a flat rate of 15 guineas for all such licences. It will be a welcome simplification, and it involves a small reduction in the amount of yield of those licence duties.
I tabled a Question to the Chancellor of the Exchequer—answered on 5th May—asking how much the yield was of the duties as they were in 1966–67; in other words, how many licences there were. It appears that altogether 453 licences were issued during that year, giving a yield of about £300,000, with the average figures being as follows: the brewers, £980; the distillers, £450 per distillery; the beer primers £66; and the tobacco manufacturers £20.
The effect of the change in the Clause, assuming that the Amendment is not accepted, will be to reduce the yield in licence duty from £300,000 to just over £7,000, so the substance of the matter must be in the Clause, where the Chancellor has, not unreasonably, forgone a very small amount of duty in favour of what must be a substantial simplification.
The Amendment is to delete the shillings from the guineas and make the duty £15, not 15 guineas. I fancy that this must be just about the cheapest Amendment that any hon. Member has ever had the privilege to move. Assuming that 453 licences will again be issued this year, the cost of the Amendment would be £339 15s. The arguments for it are simple.
First, guineas is an old-fashioned concept. Indeed, with great respect to my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), it is a concept and not a coin. It may be all right for barristers, because the barrister does not 816 get the shilling in the guinea. It is his clerk who gets it. No doubt we shall one day see a statue standing in the Temple to the man who invented this invaluable tradition. But why should large businesses be taxed in guineas?
Secondly, when we go decimal, on whatever system, surely we do not want to find ourselves dealing with licences in cents or mils, or whatever we settle for. For example, the licence would be £15 and 75 cents on the proposal favoured by the Chancellor of the Exchequer or £15, seven florins and 50 mils on the proposal that I put in Committee on the Decimal Currency Bill. But whichever it is, this is obviously a complication.
Thirdly, the Government seem to have harmonised round the most complicated of the old duties—the Tobacco Duty, which was the only one set out in guineas. I ask the Committee to take its courage in its hands, take a breathtaking leap into the second half of the twentieth century, and settle for these duties in pounds and not in guineas.
§ The Financial Secretary to the Treasury (Mr. Niall MacDermot)
I am grateful to the hon. Gentleman the Member for Wanstead and Woodford (Mr. Patrick Jenkin) for his welcome in general to the Clause. I wondered whether he might not have declared a second interest, in this case a negative one, as a barrister. If he is going to start reducing all guinea fees to pounds, we will see how progressive our colleagues in the Temple are about that.
The reason why the 15 guinea figure was used rather than £15 is very simple. It is that, in adopting a flat rate—which we do in this Clause—it was thought best to adopt the rate already applicable to other comparable excise manufacturers, namely, rectifiers and compounders. I am sure that all hon. Members—like myself, after I had made inquiries—are thoroughly familiar with their activities.
The hon. Gentleman raised an argument on the position under decimalisation, which is some years off. The position clearly is that, when we get to decimalisation, a second decimal currency Bill will have to contain many amending provisions in consequence of decimalisation. It will then be for consideration whether it would be right for simplification to amend these flat-rate 817 charges. I think that then would be the time to do it, including the case covered by the Clause.
To keep the position open, I cannot think that there is any enormous complication in paying the sums of £15.75 rather than £15, but I suggest, for the reasons I have given, that, for the time being, it would be better to keep a single flat-rate duty.
§ Mr. John Smith (Cities of London and Westminster)
This subsection seeks to charge a duty of 15 guineas on certain licences and the use of guineas made me suspicious that the people guilty of using such an old-fashioned unit of value might also be guilty of old-fashioned thinking and that this Clause might be a piece of Parkinsonian bureaucracy that we could do without.
The Clause is two pages long and quite complex. It contains no fewer than 50 references to other Acts or other parts of the Bill. Accountants will have to study it. Litigation will flow from it. We must, therefore, assume that it is a reasonably important matter to justify adding so much sand to the sand already in the works of life. It seeks to charge these guineas for licences—which, incidentally, expire on 30th September, to add to the confusion—to brew beer, add solutions to beer and manufacture tobacco.
There are complicated other provisions about rectifiers and compounders and makers of sweets and part-year licences. We have heard that, if the same number of licences is issued this year as before, only £7,000 will be raised and, also, a charge might be thought to be justified to cover administrative expenses. I would have thought that, when part-time licences and refunds of licences have been taken into account, there was nothing in it for the country as a whole.
I wonder how many people take out part-time licences to add solutions to beer and how many manufacturers of tobacco apply for relief under Section 169(2) of the 1952 Act on permanent discontinuance of a trade. It might well be necessary to license these trades, but surely, as a means of raising money or even of covering expenses, it is absurd and wasteful. We would all be better off without these additional words in the Bills and Acts that we have to read and if no charge were made for these licences at all.
§ Mr. Patrick Jenkin
I have listened to the Financial Secretary's explanation and no doubt we shall have to return to the matter on the next decimal currency Bill, when that appears. I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Question proposed, That the Clause stand part of the Bill.
§ Mr. Patrick Jenkin
One of the disadvantages of this sort of provision is that there is no opportunity for the Government to explain, either in the Budget speech or on Second Reading of the Bill, the reasons for some of the very minor provisions which appear in the Bill. This is the opportunity to do so, and I simply ask the Financial Secretary to give some explanation of what lies behind Clause 4(5) which, so far as I can understand it, removes the need for a licence for a vinegar maker.
Vinegar is widely defined in excise measures as anything which might be used for vinegar. In this context, one is not dealing with the same dichotomy as one has under the Merchandise Marks Act and trade description regulations, where one can only describe as vinegar that which is vinegar, a double brewed material. One has to call the other one non-brewed condiment, and I understand that there is a Non-Brewed Condiment Manufacturers' Association.
There have been changes recently in the techniques of manufacturing vinegar used normally by the housewives, and it may be that it is that which has led the Government to make this change. It would be helpful to the trade to have an explanation in public, and I hope that the hon. and learned Gentleman will be able to explain why this duty is being relieved altogether.
§ 4.30 p.m.
§ Mr. MacDermot
The reason for the different treatment is that, for administrative convenience, the other licences were not abolished because registration of these manufacturers of highly dutied commodities is required for revenue control purposes and the fees are needed to deter frivolous applications for registration. In the case of the vinegar makers' licences, this has completely outlived its usefulness and can be abolished and any risk to the revenue can be adequately met without licensing.
§ Mr. Edward M. Taylor (Glasgow, Cathcart)
I am reluctant to comment on this Clause as I am a teetotaller and a member of the Temperance Group of the House of Commons, but there are one or two small rating matters which arise in connection with subsection (4). I am sorry that there is no member of the Scottish Office team here, but I know that, with their usual conscientious application to duty, Ministers will have considered the point in detail.
The first issue which arises on this question of the rent to be paid for lodgings in a distillery in Scotland and in England is that we are introducing a new system. The new system is decided on the basis of the gross annual value as in the General Rate Act, 1967, in England, which was a consolidating Act, and the Valuation and Rating (Scotland) Act, 1956, for Scottish distilleries. It is obvious that there can be marginal differences in the basis of assessment for both countries, but no great problem would arise. What I fear is that there may be a considerable distortion in the amount which will have to be charged.
This is because, first, we have different valuation years in Scotland and England. We had ours last year and the English revaluation has been postponed perhaps indefinitely because of the shortage of valuers. Secondly, in Scotland we have industrial derating which has been abolished in England and this difference may remain indefinitely.
My specific questions are in connection with operating subsection (4,b). Is there any obligation on an assessor in a Scottish town or county to make a separate valuation of these lodgings? We have a strange arrangement in Scotland for controlling assessors. They are paid by local authorities, although they do not act under their general jurisdiction. If they have to get this figure and if no agreement is reached, is there an obligation on the assessor to make such a valuation, and who pays the bill?
Once this has been done, if there is statutory authority, is it put in as a separate entry in the valuation roll? It would appear that such lodgings in a distillery do not form any meaningful part of a separate valuation. Will it be essential for a separate entry to be put in the valuation roll? It would seem 820 very strange, because these lodgings, as an integral part of the building, will not be a separate entity for rating purposes.
Is there any statutory obligation on as assessor in Scotland to carry out such a valuation, should it be required, and will there be a separate entry in the valuation roll? I know that the answers will be obvious, but I should like to hear them.
§ Mr. John Peyton (Yeovil)
I rise only for a moment to congratulate my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) on the great charity of the way in which he found the arguments of the Financial Secretary entirely acceptable and so persuasive. That is indicative of the warmth of his heart and his general kindly disposition.
I feel that the Government should be congratulated on this Clause. We have here on earth-shaking concession, that an excise licence shall not be required for the purpose of carrying on the trade of a maker of vinegar for sale. This is remarkable, because it is a concession and because it is intelligible. In the background of the Bill it deserves some merit and comment. I wonder why it is that under successive Governments this requirement has lived on and on. I wonder whether the Commissioners of Customs and Excise could not be persuaded to disgorge this sort of means of raising revenue rather more speedily instead of throwing us one crumb after another.
However, I do not want to run the risk of annoying the Financial Secretary again, so I will curtail my remarks. He said the other day that one of my speeches was a good argument for sending the Finance Bill upstairs. I hope that he will not repeat this argument today, because it might lead me to exceed my normal bounds of civility and habitual courtesy.
§ Mr. John Smith
I said just now that we must be on our guard against piling up legislative clutter in these Bills. My hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) illustrated that very well. The subsection to which he referred deals with distillers who refuse to provide excise officers with lodgings at a rent which the Commissioners think reasonable. This machinery involves reference to the Act of 1952 821 which is not, as most accountants and business people will think, the Income Tax Act or the Finance Act, but the Customs and Excise Act. Section 93, which incidentally has 91 words before reaching the first comma, refers to three other Acts.
I wonder whether all this is necessary. How many disagreements have there been about Excise officers' lodgings? How many of these good men have been stranded in glens? Surely, in this day and age, the Commissioners do not need special legislation to see that their staff are housed.
The rest of this Clause, as we have heard, deals with vinegar makers. These lucky people henceforth are exempt from the Clause. If the vinegar makers have burst their chains, surely these other people, the adders of solutions to beer, can be let off as well. The whole Clause is an enormous improvement on Clauses and Schedules in the Act of 1952, which was even more complicated, but all that is 15 years ago, in the days before these decimal guineas, and we have progressed since then and life has become more complicated. The matters dealt with in this Clause should be left behind us and there should be no charges for these licences and nothing about arbitration for distillers who refuse to house Customs and Excise officers. That we can do without the Clause.
§ Mr. MacDermot
I welcome the conversion of the hon. Member for Yeovil (Mr. Peyton) in his attitude towards the Customs and Excise in that he now finds it such a liberal Department. I assure him that it needed no pressure from Treasury Ministers for the Customs and Excise to bring forward these liberalising measures. I suspect they may have been bringing them forward under the previous Administration, but at last they have been fortunate in finding a Finance Bill in which room may be found for them.
The hon. Member for Glasgow, Cath-cart (Mr. Edward M. Taylor) raised a problem about the valuation procedure in Scotland, on which I speak with the diffidence of the ignorant. However, I can assure him that in most cases these premises will be what under English rating law we call separate hereditaments and will be the subject of a separate 822 entry and will be separate premises for rating purposes. In the majority of cases they will already have a gross annual value for rating purposes and it will not be necessary to determine one. In the event of there not already being one determined, one would be determined in accordance with the ordinary rating procedure.
I remind the hon. Member for the Cities of London and Westminster (Mr. John Smith) that this provision, which is long standing, that there shall be a procedure for determining these rents has been out of date since the abolition of Schedule A, since it was based on Schedule A valuations. It is for that reason that the gross annual value basis has been chosen instead.
§ Mr. Edward M. Taylor
I asked two questions. I asked whether in the exceptional case, where there was not a separate entry, there was any obligation on the assessor in Scotland to carry out a valuation, and whether there would be a separate entry in the roll.
§ Mr. MacDermot
If it is not what we would call a separate hereditament, which I take to be the same, the valuation would have to be determined by apportionment of the total value, I assume, but in the normal case it will be separate premises on their own for rating purposes.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.