Clause 4. — (Removal of Restriction on Delivery of Imported Vodka for Home Use.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 15th June 1966.

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Question proposed, That the Clause stand part of the Bill.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

We come now to vodka. I admire the sense of propriety of right hon. Gentlemen opposite who put vodka into Clause 4. It seems entirely appropriate.

The Clause is quite simple, but it raises one or two questions. Section 109 of the Customs and Excise Act, 1962, which is the one which provides for the three-year maturation of spirits, has many exceptions, some of them being well known. It is well known, for example, that gin may be sold the moment it has been rectified. It is treated as a compound because of the flavouring in it. In fact, it is a very highly rectified spirit, very pure, and can be used at once. Vodka, as the Committee will know, is in exactly the same case. True vodka, I am informed, is really a pure spirit, and the home producers of vodka are able to avoid the three-year maturation period only by putting some minor flavouring into it sufficient to qualify it as a compound so as to bring it within the exemption.

The extension of the exemption to imported vodka seems perfectly reasonable and sensible. The words in the Clause, which have had a flavour communicated thereto are put in with a purpose, because it might well be that something which could give a flavour did not come within the description of a compound.

I have one or two questions about the effect of the Clause. It is in no way clear from the statistics how much vodka was imported during the last year for which figures are available. It is my belief that there was very little indeed, a negligible quantity, but it would be useful to know how much was imported, and what the effect of the Clause will be in increasing the imports of vodka.

Is it the intention to increase imports of vodka from overseas, presumably from Russia and Poland, where it is made? If that is the intention, is it part of a negotiation whereby we have something in exchange? Will it help British exports, whether of spirits or of other products? What do the Government envisage as the effect of the Clause? As I say, the modification made seems sensible in the circumstances, but we should like to know how the Government expect it to work, and with what result.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

The Clause is introduced to remove a discrimination which would offend against the E.F.T.A. Convention, a discrimination against imported vodka which arises almost accidentally from the wording of our existing legislation. The general rule is that immature spirits, that is, spirits less than three years old, may not be delivered for home use. But there are certain exceptions, and these are in favour of spirit beverages which are traditionally consumed immature. As regards those manufactured in the United Kingdom, the exception is expressed in quite general terms, but where the exception relates to imported goods, it is specifically limited to two spirits, Geneva, more commonly known as gin, and liqueurs.

Vodka has grown in popularity in recent years. The type which is made here comes within the general terms of the exemption as it applies to United Kingdom-manufactured spirits, but the imported vodka does not get by as Geneva or liqueurs, and it is this which produces the discrimination which offends against the Convention. Under the terms of the Convention, we are bound to remove it.

That is the sole intention. It is not that we want to affect or influence in any way the current of trade. The effect on the revenue is expected to be extremely small. In so far as there is any, there may be a small gain, but it will be of no significance, the reason being that the duty on immature spirits is slightly higher than that on mature spirits.

The Clause has been agreed not only with the importing interests concerned but also with the United Kingdom manufacturing interests.

Photo of Mr John Biffen Mr John Biffen , Oswestry

It may be the Financial Secretary's purpose that this change should have no effect, or no noticeable effect, upon the importation of vodka, but it does not follow that there will be no effect. We do not import substantial quantities of vodka from the Scandinavian countries, but, as my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) pointed out, the main sources of importation, so we are led to understand—only the hon. and learned Gentleman can confirm this—are the Soviet Union and Poland. Is it not likely, therefore, that as one of the consequences of Clause 4 there will be an increase in imports of vodka?

As I understand it, notwithstanding the E.F.T.A. Convention, we export a great deal of immature whisky to Sweden, and always have done. I understand—I am sure that my hon. Friend can confirm this—that that trade continues. If we waive the rule on that account, for perfectly legitimate reasons, permitting the Swedish importation of raw whisky, we are entitled to be sure that we do not put ourselves at a disadvantage by accepting the possibility of freer imports of Russian and Polish vodka into this country unless we know, on the other hand, that our own spirit manufacturers have improved access to the markets of Eastern Europe.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

I did not say that it was our intention that this should have no effect on the trade. I said that we had no intention of producing any effect, which is not the same thing. The intention is not directed to its effect on trade but to adhering to our E.F.T.A. Convention, which we are bound to do.

The hon. Gentleman has raised fears in his own mind about the effect of the Clause. All I can tell him is that these fears are not shared by the manufacturers in this country, or they appear not to be, because the manufacturers have agreed to the Clause.

6.0 p.m.

Photo of Mr Antony Buck Mr Antony Buck , Colchester

I am sorry to ask the Financial Secretary in terms whether he thinks that the Clause is watertight, but I should be grateful if he could indicate what vodka is and whether it is sufficient to refer in the Clause to vodka consisting of spirits which have had a flavour communicated thereto or an ingredient or material mixed therewith". Is he satisfied that other items which we would not normally think of as vodka would not be exempted under the Clause?

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

If the hon. Gentleman wants a legal definition, I should want notice of that question. All I can tell him is that I come from the West of Ireland where the equivalent drink is poteen, which, as anyone with experience would know, is distilled from a remarkable variety of raw materials. Whether the same applies to vodka I do not know.

Earl of Dalkeith:

Has the Financial Secretary received any representations from the Scottish whisky industry against these proposals?

Photo of Mr John Biffen Mr John Biffen , Oswestry

As we now have vodka defined, and, as my hon. Friend the Member for Colchester (Mr. Buck) has indicated, somewhat dubiously defined, in a Finance Bill, may we now expect the Customs and Excise statistics to itemise vodka as a separate category?

Question put and agreed to.

Clause ordered to stand part of the Bill.