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Mr. Heathcoat-Amory: I believe that my hon. Friend the Member for West Worcestershire (Sir M. Spicer) may reply on new clause 4. However, given that we are also discussing amendment No. 26, which is in my name, I shall respond briefly--although it is difficult to respond to the Financial Secretary to the Treasury because she did not answer any of the points made by Conservative Members. I have seldom heard such an inadequate and evasive response. She read out parts of her brief, all right, but she did not answer the points that we raised in debate.

Mr. Bennett: On a point of order, Mr. Deputy Speaker. It is highly unfair to criticise my hon. Friend for not replying to some of the points of the debate, as the hon. Member for Cotswold (Mr. Clifton-Brown), who made some substantial points, did not even stop to listen to the reply.

Mr. Deputy Speaker (Mr. Michael Lord): That is not a point of order for the Chair.

Mr. Heathcoat-Amory: All that the Financial Secretary did in response to the matters that we raised was to say that our amendment was confused. It is not at all confused; it is quite simple.

We are saying that the Chancellor promised an emergency Budget to implement a windfall tax, and we expected precisely that. Instead, he introduced a 100-page Finance Bill, including this huge and unexpected hit for all who transport goods, drive cars or vehicles of any type or use heating oils.

Our message could hardly be clearer. We believe that the date of any increase should be returned to what it was in the original Budget statement in November 1996, which we understood that the Government had taken over. They took over all our expenditure targets. We assumed that, in the absence of anything to the contrary in the Labour manifesto, Labour would take over the projected revenue increases as well, with the single exception of the windfall tax. We were wrong about that and so were the British people.

What the hon. Lady has not dealt with is the fact that this big increase in duty has a large and damaging effect on the individuals whom we represent--we went into that in some

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detail--and on industrial costs, with which the House should certainly deal. The Government say that they are interested in competitiveness, but they do nothing about it. It also has a damaging effect on the retail prices index, which has gone up as a direct result and which affects the economy generally, and on public services. The hon. Lady did not even attempt to defend the Government, who have reduced real expenditure on public services by £3 billion this year. That figure comes from independent sources and it is interesting that the hon. Lady did not attempt to contradict it.

We can therefore take it that it is an established fact that public expenditure in real terms will fall by £3 billion in the remainder of the current financial year and by £5.25 billion in the next financial year. I do not want to worry Labour Members. They may not have thought that they had come into the House to increase public expenditure, but I am sure that they did not expect to have to defend a real reduction in public expenditure. That is what we have established, and the Minister is entirely silent on it.

In the light of the wholly inadequate response to the points raised, I signal that we shall press the amendment to a vote when we reach that part of our proceedings.

5 pm

Sir Michael Spicer: The Minister raised two arguments against new clause 4, one of which is certainly inaccurate and the other probably is. First, she argued that the product would be imported. This country has plenty of rapeseed and a large blending industry, so how does she know that the product would have to be imported? It was a strange argument for her to put forward. Secondly, she argued that it was product-specific. The new clause makes it clear that it is impact-specific, not product-specific. It simply asks for exemptions for products whose emissions can cause cancer, so I do not understand why the hon. Lady had to draw on that argument.

The Minister said nothing specific about the review. She talked in general terms about the cross-impact of all forms of emissions and their cost on the environment. As she has now promised the House that there will be a report, will she be more specific about when the report will be issued and what its general scope will be? At least we shall have elicited that from her.

Now that the Bill has raised petrol duties to such an extent, I should have thought that the Financial Secretary could at least hold down to the present level the duties on the products mentioned in the new clause. That would please some Labour Back Benchers because it would have the effect on the environment to which I alluded, and which she accepts, but would also have a desirable effect on the renewable industry, which would have an extra market.

The Government take little notice of what their Back Benchers think. I appreciate that in return they get little response from them. Labour Back Benchers sit mute for most of the time, except when they are making maiden speeches, and they find even that difficult to do. I accept that the Minister can ride roughshod over her Back Benchers, but I should have thought that this measure, at least, would please them.

Given the Minister's view, I will let the Opposition vote down the measure, to show at least that the Government's actions are different from the rhetoric that they espouse outside the House.

Question put and negatived.

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Clause 7

Rate of duty on spirits

Mrs. Margaret Ewing (Moray): I beg to move amendment No. 32, in page 5, leave out lines 27 to 29.

New Members may not be aware of my long-standing interest in the whisky industry, but I represent the part of the United Kingdom with the largest number of distilleries per square mile. I therefore follow with great interest the significance of any change in taxation and duty as it affects employment in my area. The industry is vital not only in Moray but throughout Scotland and the United Kingdom.

May I insert an element of humour into the debate? On Saturday I visited Dufftown highland games. Dufftown is known as a town founded on seven stills. A story that is reputed to have emerged from the games over the years is that the annual raffle for a gallon of Grant's Scotch whisky became a matter of great concern when the bottle disappeared at one stage and was never recovered. Bodyguards now guard the raffle stall whenever the games are held. I bought a raffle ticket, but so far I do not seem to have been lucky because I have had no information about it.

On a more serious note, we should consider the employment aspects of the industry. Some 71,300 people in the United Kingdom depend on the Scotch whisky industry, according to a prestigious report produced by the Fraser of Allander Institute. That is three times the number of jobs dependent on computer manufacturing and four times the number dependent on the pharmaceutical industry. In Scotland, 14,000 direct Scotch whisky jobs support 47,460 jobs in our nation. Anyone reading those figures will realise that I am discussing a serious aspect of the economy as a whole, and the opportunities for employment that it offers.

The amendment seeks to stop the increase of duty on spirits as from 1 January 1998. During the Budget speech on 2 July, the Chancellor of the Exchequer said:

So many reviews are now taking place that we must address the immediate impact of some of the decisions that have been taken. As someone who has lived her life in politics as a democrat, I always welcome reviews, but, as people are saying in Scotland recently, the Government now have more reviews than there usually are at the Edinburgh festival fringe. According to my latest count, there are just short of 40 reviews and no date has been set for their finalisation.

Having raised duty, albeit on an inflation-only basis, the House has not sent a good message to this vital industry. VAT and duty on Scotch whisky amount to two thirds of the retail price of a bottle of Scotch. When taxes rose in 1992 and 1994, the home market and tax revenues fell; when taxes were held steady in 1993, and cut in 1995 and 1996, revenues improved. The Scotch whisky industry does not need such an increase at this time.

I have long argued in the House that there should be a level playing field in terms of taxation on spirits. It is only fair at this stage to mention William McKelvey, convener of the all-party Scotch whisky group, who retired through ill health at the last election. He and I, and various other

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hon. Members, regularly met the Paymaster General and others to argue this case strongly. The single European market has done nothing to help the Scotch whisky industry, which is discriminated against in the context of duty on wines and beers, yet the industry earns more than £2.2 billion a year to offset the balance of trade problems faced by successive Governments.

The amendment would send out a clear message to the Scotch whisky industry that the Government have taken on board the importance of the industry. The increase should not be brought in on 1 January 1998, but should be postponed until a review has taken place.

When the Financial Secretary responds to the debate, will she advise me what steps have already been taken to implement the review, and with whom the Government are consulting--whether with the Scotch Whisky Association, the various organisations involved in the whisky industry, or the all-party group, which has been re-established and is one of the most effective groups in the House? Can she give me some details? When will the review be forthcoming? The whisky industry wants to know whether new Labour has a new message for an old and traditional industry.

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