House of Commons
Wednesday 6 May 1998
The House met at half-past Nine o'clock
PRAYERS
[Madam Speaker in the Chair]
Duty-free Sales
Motion made, and Question proposed, That this House do now adjourn.--[Janet Anderson.]
9.34 am
Mr. Bill O'Brien (Normanton): It is a privilege to address the House on the future of duty free, which is a thriving and successful business which started in Europe 50 years ago and generates about 60 billion ecu within the European Union. The abolition of the trade would have a significant impact on the economy of the United Kingdom and on activity in many sectors, especially jobs. Keeping duty free would generate wealth which would help to achieve desirable outcomes within EU policy objectives.
A few people in the EU decided in 1991 that selling duty-free goods to people travelling within its territory was incompatible with its internal market and that sales should stop in June 1999. Many hon. Members, Members of the European Parliament and I are convinced that the decision to abolish the trade was based on a false premise. The European Commission claimed, and member states accepted, that the internal market would rapidly reach such a level of integration that duty free would be an unacceptable aberration; June 1999 was therefore nominated as the date for abolition.
Experience has shown, however, that the internal market has not developed on the lines predicted or reached the desirable level of integration, so we request that Ministers call for an impact assessment of the abolition of duty free and that no action should be taken on the current system until the report on the impact of abolition has been presented to Parliament.
I make that plea because of information received not only from the industry on the loss of jobs should duty free be abolished, but from our constituents and from our local regional airports. I can best refer to the situation facing Leeds-Bradford airport, which serves the Yorkshire and Humberside region. A note from the director informs me that the Leeds-Bradford airport committee forecasts a throughput of about 1.4 million passengers for 1998. Two thirds of the traffic is scheduled and one third is charter, and the overwhelming majority of international traffic is to the European Union.
The airport company has been profitable since its formation in 1987. In 1996-97, it recorded a pre-tax profit of £1.3 million, a high proportion of which can be attributed to revenues raised by duty-free sales. The Transport Select Committee took evidence from regional airport operators, and we were told that about 40 per cent. of the airport's income came from duty-free sales.
I am advised that, if duty free is abolished, airports will have to increase charges in addition to the taxes that have been levied recently. Furthermore, the independent consultants Symmonds Travers Morgan have recently estimated that the abolition of duty free at the Leeds-Bradford airport could mean the loss of 70 jobs. That was calculated by forecasting the number of on-airport retail jobs in 2005 with and without duty free. The difference between those two figures was grossed up to take account of jobs arising indirectly from the economic activity in the airport. The airport is a successful business which generates employment and, if duty free is abolished, people will lose their jobs and have to go on benefit.
Passengers through Leeds-Bradford airport, many of whom are my constituents, benefit in three ways: they enjoy using the duty-free shop; they are now enjoying the extended departure lounge, the new air-bridge and the upgraded check-in concourse, which duty-free revenues have helped to facilitate; and they benefit from the fact that airport charges have not increased since 1995 because resources from duty-free sales have enabled airlines to avoid passing on any increases in charges.
Mr. Andrew Mackinlay (Thurrock):
What my hon. Friend has said is very interesting, but who would not shout foul if they were to lose a state subsidy that they had enjoyed? It is unbelievable and indefensible that anyone should argue that some limited businesses should continue to receive this state subsidy. It is time that people who do not travel stopped having to pay for the boondoggles and beanos of those who do.
Mr. O'Brien:
That is far from the real issue. No one loses out under the present system of duty free, but a substantial number of my hon. Friend's constituents could lose out if duty free were abolished. If my hon. Friend took a poll of people in his constituency, he would discover that a substantial number would argue for the retention of duty free because of the impact of the loss of revenue from duty-free sales on charges and services.
This morning, I received a letter from a constituent, Mrs. C. Eason from Stanley. She writes:
Mr. Roy Beggs (East Antrim):
That correspondence is similar to other letters that most of us have received. Has the hon. Gentleman received any request from a
Mr. O'Brien:
I have not received any correspondence or pressure, except from Government sources, for the abolition of duty free. The majority of requests that I receive are for me to fight to retain duty free--hence this morning's debate.
I shall wind up my speech, as many hon. Members wish to take part in the debate. Will the Financial Secretary tell us what rules will be put in its place if duty free is abolished? I reiterate the call for an impact assessment of the abolition of duty free. I understand that there is no argument in the Treasury about that, so our Ministers should present the case for such an assessment. I ask the Financial Secretary to consider my points carefully and to agree to request an impact assessment. I will accept the result of that assessment whether it is to abolish or to retain duty free.
Mrs. Margaret Ewing (Moray):
I apologise to the hon. Gentleman, but I shall have to leave to attend another meeting. I fully support his call for an impact assessment, although the Government seem reluctant to consider that issue. Does he accept that in the single European market it is important to ensure that beverages are taxed at the same level according to alcohol content? A campaign has been run by the Scotch Whisky Association and other organisations to ensure that there is a level playing field throughout the European Union.
Mr. O'Brien:
I hope that, if we cannot have the same level of charges throughout the European Union, we can at least narrow the gap, because the tax in some countries is 10 times higher than in others. I would find it acceptable to have a fairer application of charges. The impact assessment would help to provide information that could be used to determine that principle.
Mr. David Wilshire (Spelthorne):
I remind the House of four points. First, this debate is not about the cross-channel trade, which is duty paid. I mention that because, when I have sought to persuade some of my colleagues that keeping duty free is a good idea, they have referred to the harm done by the duty-paid trade coming across the channel. I stress that that trade will continue whatever happens to the duty-free trade.
Secondly, in case Labour Members are tempted to say that it is all very well for a Tory to argue against abolition, the records show that I opposed the Conservative Government when they supported this decision in the first place. I am not trying to make party political points.
"Dear Mr. O'Brien,
I am sure that the view of my constituent is reflected in many areas, particularly by constituents of hon. Members present.
I am writing to voice my concern regarding the planned abolition of duty free shopping in July 1999.
Duty Free shopping is part of the fun of going on holiday, everyone likes to think that they are 'getting a bargain', notwithstanding the fact that if the shops shut down what will happen to all the staff? Another set of hard working people put out of work and for what?
The general public will again lose out as it will cost extra to travel and maybe even longer journeys as I am led to believe that a loss of duty-free shopping will mean some routes closing completely.
I hope that my views will be noted as I feel strongly that duty-free shopping should not come to an end.
Yours faithfully,
Mrs C Eason".
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