Several hon. Members rose--

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. An Adjournment debate is a Back Benchers' debate and hon. Members should follow the example of the hon. Member for Dover (Mr. Prosser) and be brief.

10.5 am

Mr. David Chidgey (Eastleigh): Your words, Mr. Deputy Speaker, have penetrated my head very clearly and I shall do my best to summarise my points.

There are four important points to consider and it is interesting that hon. Members on both sides of the House are showing genuine concern about this issue. What is the purpose of banning duty-free sales? As I understand it, it is part of a grand design for the single market, which was set down in the 1980s, the aims of which are perfectly laudable from where I stand. What would be the benefits? The benefits, we believe, would be the equalisation of taxes and duties across the borders of the independent states of the European Union and freedom of trade without barriers, which, again, is a laudable aim. There is the added advantage, as the hon. Member for Thurrock (Mr. Mackinlay) has continually reminded us, of increased taxes to the Exchequer--perhaps.

What would be the disbenefits? Already this morning, hon. Members have talked of their concerns for their regional and local economies, the threat to transport links and the effect on bootlegging of duty-paid sales, which is a far more serious problem than people have said. What would be the reasonable gains from banning duty-free sales to the economic stability of the European Economic Community, to the social and economic goals of the EU and to our citizens?

It was the view in the 1980s that a single market would rapidly reach such a level of integration that duty and tax-free goods would become an unacceptable anachronism and something of the past. The view was that, within a single market, indirect taxes would all obey the same rules and same tax rates, and that the same exemptions would apply throughout the EU. There would be steady progress towards fixed harmonisation throughout the EU.

Those aims are laudable. My party and I are happy to support them and have long supported them, but the reality is that little progress has been made in the past 20 years. There is no immediate prospect of uniform indirect tax systems or rates. In that context--we must consider this--banning duty-free sales in isolation has that great danger of putting the cart before the horse.

I am greatly in favour of removing any distortions that exist in competition because of duty free, distortions between different modes of transport--sea, air, road and rail--and distortions between duty-free and duty-paid goods that are on sale in our retail outlets. Abolishing duty free could strengthen the policy of freedom of trade throughout the European Union, removing the barriers that we have been trying to remove for so long. It could bring extra revenue to the Exchequer and remove the subsidy about which the hon. Member for Thurrock

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What would be the disbenefits of banning duty-free sales? There is genuine cross-party concern about the impact on our regional and local economies. Yes, we have seen the figures that have been thrown out by several studies, admittedly supported by people who have an interest in this: I accept that. However, the studies are there, and the figures show that perhaps 140,000 jobs will be affected. The business currently provides that number of jobs.

Mr. Mackinlay: Will the hon. Gentleman give way?

Mr. Chidgey: I will continue, if I may. Although we have enjoyed the hon. Gentleman's sedentary interventions in this debate, I will continue with my speech.

Some estimates show that 20,000 jobs are directly at risk. I do not pretend to know whether those figures are valid, but the concern exists. There is therefore a need to examine the matter in detail.

I should like to speak briefly on behalf of my own constituency. In Eastleigh, we have the headquarters of one of the best-known distributors of duty-free goods--[Interruption.] I accept that I am speaking on behalf of my constituency--as I think every hon. Member should do. Several hundred jobs are at risk in that firm.

Manchester airport is one of the few municipal airports in the United Kingdom to plough its profits back into investing in its infrastructure. I am told by employees there that there is one extra cabin crew member on every charter flight leaving Manchester airport to sell duty-free goods. Those jobs would go if such sales were abolished. Therefore, those at Manchester airport, too, have genuine concerns.

There is genuine concern also about the viability of many of the cross-channel ferry routes, and of ferries across Europe, if duty-free sales are banned. We must consider the possible impacts of ending the sales. In Hampshire, the Portsmouth and Southampton ferry ports have invested very heavily over the years in the operation of cross-channel ferry services.

I will not deal with the matter of bootlegging sales--as it has already been covered quite adequately in the debate--or with the anomalies that will arise because of the different duty rates applying on the continent of Europe and in the United Kingdom. Those anomalies are the real problem. We have made no progress in harmonising duty levels among the European Union member states--although we surely must try to do so.

I ask the Financial Secretary to realise that, although we may have set off with great ideas of harmonising tax and duty across the European Union, the harmonisation process has stalled. Although the European Parliament has brought that fact to the attention of the European Commission--which, in 1991, made promises to undertake an impact study of the effect on the regions of banning duty-free sales--many people across Europe are concerned that, when push came to shove, the Commission reneged on its promise, despite the fact that,

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When the matter was brought to the attention of the Financial Secretary to the Treasury, she said that she understood the point on jobs made by the hon. Member for Slough (Fiona Mactaggart), and that

"The Government's position, therefore, continues to be to support the demands for a review of the impact of the duty-free regime ending in June 1999."--[Official Report, 15 January 1998; Vol. 304, c. 480.]

Time is running out. There is growing acceptance in member states of the need for a review of the policy. I urge the Government to add their weight, while they hold the presidency of the European Union, to calls for a detailed study of the effects of abolition in advance of harmonisation of general taxes and duties, and for concrete proposals to deal with the disbenefits that regions may suffer from abolishing duty-free sales, which will severely affect local economies. Such action would be in the interests of the United Kingdom. It must be in the interests of the European Union, and also of common sense.

10.12 am

Mr. Ivan Henderson (Harwich): I support an assessment of the impact that abolition of duty-free sales may have on constituencies and regions such as mine. My constituency contains Harwich international port, which operates ferries to and from Hamburg in Germany, Holland, Denmark and Sweden. Last year, 1.8 million passengers passed through our port. The average passenger spend on duty free was estimated at £20 per head, for a total of £36 million. Those figures show the impact of duty-free sales on the port's finances.

Duty-free sales do not benefit only shipping companies and airlines. In my constituency, local shops, regional tourism, restaurants, hotels, and bed-and-breakfast facilities all benefit from passengers who use the port and make duty-free purchases. If ferry ticket prices were to increase because of abolition, that would surely have an impact on the economy of both Harwich and the region.

In recent years, my area has suffered unemployment levels of more than 9 per cent., and things are only now starting to improve a bit. Although the Government's new deal is helping employment levels in my area, we cannot afford to allow anything to jeopardise that growth.

Ferries in Harwich carry freight, too. If that freight stops coming to Harwich, dockers' jobs will be affected. If shipping in Harwich is curtailed, seafaring jobs--which have been badly affected over the years--will be adversely affected. We finally have a Government who are examining ways of helping the shipping industry to grow--preserving a part of my constituency's, and our country's, proud heritage.

Let us make no mistake about the effects of abolishing duty-free sales. The evidence shows that, in my constituency, the first jobs that will go are British shipping jobs. My constituency once had hundreds, perhaps thousands, of seafaring jobs; we are now down to 58 such jobs. I do not want those remaining jobs to disappear, simply because an assessment was not made of the impact of abolishing duty-free sales.

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Like other hon. Members who have spoken in the debate, I have received many letters not only from constituents but from employees working for ferry companies, dock companies and other parts of the industry that might be affected by abolishing duty-free sales. Those people tell me that they are concerned about keeping their jobs. I have not received one letter from someone at a local shop or supermarket saying that we should do away with duty-free sales or that they would benefit from abolition. Local business people realise the benefits that they receive from duty-free sales on ships and from passengers passing through our ports. Passengers visit our shops and stay in our hotels and bed and breakfasts, creating security for those working in those industries.

I urge the Government to support an assessment of the impact of abolishing duty-free sales, not only on United Kingdom employment but on European employment. I am certain that my constituency will be affected if duty-free sales are abolished, and that we will consequently suffer job losses.