| Previous Section | Index | Home Page |
10.32 am
Mr. Kelvin Hopkins (Luton, North): I add my voice to the unanimous view expressed by hon. Members this morning. I am happy to do so. Many of my constituents work at London Luton airport, in duty free and other parts of the air travel sector. Many thousands of jobs in Luton depend on the airport's success and the economics of the airport's operations and the airlines that use it are crucially affected by duty-free shopping.
If duty free is abolished next year, as currently planned, jobs in Luton will be lost, directly in duty-free sales and indirectly elsewhere. The airport's income will be substantially reduced and landing charges will be forced upwards. The price of tickets will inevitably rise and passenger numbers will fall. Abolition will also affect domestic flights that are not involved in duty free and, most crucially, the new low-cost airlines, Easyjet and Debonair, which have made a major contribution to our airport's current levels of growth and prosperity.
The Duty-Free Confederation provides statistics which suggest that landing charges will increase by an average of 20 per cent. and that the cost of package holidays and fares on the new low-cost scheduled airlines will also increase by up to 20 per cent. Luton airport overwhelmingly caters for those two markets.
I speak on behalf of my constituents and the economy of the Luton area, but even if I did not have a constituency interest, I would still argue the case for retaining duty free. First, many thousands of jobs all over Europe will be lost if duty free goes. With 18 million people unemployed in the EU, killing off more jobs for no good reason makes no sense. Secondly, there will be chaos when it goes because no practical replacement regime has been proposed. Thirdly, the UK Exchequer will lose, as inevitably there will be a surge in duty-paid sales to UK travellers in France, Spain and elsewhere to replace duty-free purchases. Job losses in the UK will also adversely affect the Treasury.
The problem that the Government face is essentially political, yet a strong stand by the British Government at ECOFIN would be welcomed at home and on the continent. All the major EU nations will support a decision to make the necessary legislative change to require an impact assessment study of the abolition of duty free and to secure the necessary delay. The Italian Parliament has already proposed a delay until 2002.
Several smaller nations also support our position. The only nation that opposes it is Denmark, but the indications are that it would not use its veto at ECOFIN. The best evidence suggests that the United Kingdom would be very popular at ECOFIN if it took a strong stand on the issue. We would be rocking no one's boat by taking a strong stand during our current presidency of the EU. Indeed, it would be expected of us because Britain would be affected more than any other country by the abolition of duty free.
Mr. Syd Rapson (Portsmouth, North):
Let me first declare an interest as a member of Portsmouth city council, which still owns the port. I support the request for an impact study, which is not much to ask and was promised previously. Without an impact study, we will not know the effects of abolishing duty free and therefore we will not be able to ameliorate them, as is required by European legislation. One of the strengths of the EU is that it has put in place directives requiring the amelioration of the effects of the policy, as was mentioned by the hon. Member for Eastleigh (Mr. Chidgey).
I speak on behalf of my constituency, and I am sure that the hon. Member for Portsmouth, South (Mr. Hancock) would do the same. Portsmouth owns the port, which has two substantial operators, P and O and Brittany Ferries. Each year, the negotiations are very keen, as hon. Members would imagine. It is an excellent business. We squeeze as much as we can out of the operators, and the profits help to reduce the council tax, which is the lowest in Hampshire and no doubt in the south of England. The abolition of duty free would have the knock-on effect of forcing up our council tax and I could speak for about five hours on the resulting impact on the area.
The channel tunnel severely undermined our trade, which suffered a 15 per cent. drop last year. Having overcome that unfair attack, we now face the possibility of another 15 per cent. cut if duty free is abolished. Therefore, I hope that the Minister will listen to our requests for an impact study so that Europe can use its power to ameliorate the effects of the policy before it comes into force.
Mr. John Smith (Vale of Glamorgan):
If we are successful in getting an impact study, does my hon. Friend agree that it is vital that it should examine the role of regional airports in emerging regional economies throughout Europe, especially in the single European market? Air travel is the cutting edge of business communication and it may not be fully appreciated what effect any increase in costs to regional airports such as Cardiff international airport could have on the regional economy.
Fiona Mactaggart (Slough):
I recognise that the previous Government participated in the initial decision to abolish duty free. However, the present Government
Abolishing duty free will destroy the jobs of many of my constituents in Slough who work at Heathrow airport, which is probably one of the largest employment centres in the United Kingdom. Jobs in the duty-free regime carry on their backs other jobs that also generate income for the Treasury through taxed sales associated with duty free.
Duty free is not a subsidy from the taxpayer to the traveller; it is partly what oils the travel and tourism industry. About half of the £53 million of profit from sales at Heathrow is from duty-free sales. Those sales would generate about £5 million to the Treasury in duty. On that basis, it would take 88 years for the Treasury to receive the £440 million that Heathrow has already invested in the Heathrow Express.
Mr. David Heathcoat-Amory (Wells):
There has been an impressive and almost unnatural degree of harmonisation across the Chamber on this subject. The only Labour Member who intervened to speak against duty free has since fled the field and left the Chamber entirely to hon. Members who appear to support the case for continuing the duty-free concession.
The subject was well introduced by the hon. Member for Normanton (Mr. O'Brien), who made as good a case as possible for continuing duty free. His arguments have been supported on both sides of the House. Ending duty free will have consequences for employment, as well as wider trade, social and economic consequences.
The hon. Member for Dover (Mr. Prosser) made the point that duty free may reduce the incentive to smuggle by providing an alternative, legitimate concession. If that concession ends next year, there could be an additional wave of smuggling, with which the Government are already grappling.
The previous Government recognised that duty-free sales in a single market could not continue for ever. With the abolition of frontier checks and of the fiscal frontier, they had to end. We argued for a lengthy transitional period. Norman Lamont wanted that to be between 10 and 15 years, but an end date was agreed. However, it is fully consistent with that to argue at the very least for an impact assessment because certain trends and developments predicted at that time, and on which the decision was based, have not materialised. The main consideration is that the wide duty differential, particularly between the United Kingdom and the continent, has if anything widened.
The Government are partly responsible for that because, whereas we froze the duties on alcoholic drinks in our last two Budgets and cut the duties on spirits, they have increased the nominal rates. One could say that, with the strengthening of the pound, which makes it cheaper to purchase goods on the continent, legally or illegally, the problem has worsened and the differential has increased.
There is therefore a strong case for a study of those trends and developments and consideration of whether the member states that made that early decision would have done so if they had known what would develop later.
There are also practical measures, which have not been discussed as much as they might have been. For example, if duty-free sales end next year, it must be decided what duty rate will apply to sales on ferries and aeroplanes. Should sales on a ferry be priced according to the duty rate of the country from which the ferry leaves? That would mean that a ferry travelling between the United Kingdom and France would have to change its duty structure and prices depending on which direction it was sailing.
10.38 am
| Next Section
| Index | Home Page |