Mr. Wilkinson: My right hon. Friend is making an extremely important practical point. What would be the position of passengers who wanted to fly, for example, to Basle in Switzerland? The airport for Basle is located at Mulhouse in France, so would those passengers be eligible for duty free by virtue of their tickets to Basle, because Switzerland is not in the European Union? What would be the eligibility of passengers flying to a non-EU country, who were diverted to an EU country because of weather or technical reasons?

Mr. Heathcoat-Amory: My hon. Friend is applying his ingenuity to asking practical questions to which I do not have the answers. I know that the ending of duty free and the subsequent pricing decisions raise complex issues, which must be addressed well beforehand to give ferry companies and airlines the opportunity to make appropriate purchasing and pricing decisions.

There is an almost overwhelming case for a study. The Government said that they would not oppose a study and then said that they would support one. In the light of this debate, they need to press for a study. We know that some member states are sympathetic to that. I ask the Financial Secretary, on behalf of other hon. Members who have spoken, what discussions have taken place with the Commission and other member states with a view to obtaining an impact study to deal with the legitimate concerns raised in the debate, such as the economic and employment consequences and the practical issues that have been exposed.

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10.47 am

The Financial Secretary to the Treasury (Dawn Primarolo): I shall take no lessons from the right hon. Member for Wells (Mr. Heathcoat-Amory) in addressing the serious problems about which my hon. Friends have spoken. After the right hon. Gentleman's Government unanimously agreed with every member state that duty free should be abolished in June 1999, they increased tobacco tax every year from 1991; they increased the duty on beer in 1992, 1993 and 1995, and they increased the duty on wine in 1992, 1993, 1994 and 1995. He knows full well that the decisions on duty free were not predicated on an assumption of tax harmonisation. He has alleged that the Government are not taking responsibility for the position into which his Government locked this country--an allegation which is breathtaking in its contempt for my hon. Friends.

Mr. Blunt: Will the Financial Secretary give way?

Dawn Primarolo: I have been given hardly any time to wind up the debate and I will attempt to answer the questions raised by my hon. Friend the Member for Normanton (Mr. O'Brien) and other hon. Members. I shall cover our inherited position; what is happening at a European level; what the future regime may hold for us; and smuggling.

The other issue on which the debate was predicated was that everyone likes a bargain, and that, somehow, duty-free goods are a bargain. I urge hon. Members to look in some of the superstores in this country, which sell, for example, perfume that is cheaper than that in duty-free shops. I also urge them to look through catalogues to compare prices to see whether people really are getting a bargain.

In congratulating my hon. Friend the Member for Normanton on securing this debate, I should remind the House that the unanimous decision to end duty free was taken in 1991 by the Council of Finance Ministers, which included the then Chancellor, Norman Lamont. The decision is not in this Government's gift. Strictly, therefore, duty free should have disappeared in January 1993 with the completion of the single market. Had it done so, this debate would not be taking place. It is true that the Government managed to get a concession and that the Council subsequently agreed to allow duty free to continue for another six and a half years until June 1999 in order to allow operators time to adjust and explore alternatives. The decision was not tied to any question of harmonisation. The matter is one of unanimity among member states; it is not a matter for the United Kingdom in isolation.

Mr. Blunt: Will the hon. Lady give way?

Dawn Primarolo: I should like to make my points. I shall not give way in the short time available.

The European Commission has already made the position clear. The EU Commissioner for taxation and the single market has said that he has no intention of making a proposal. Only Ireland is publicly supporting the case for extension.

Since the single market was established, the duty-free issue has been discussed on two occasions in the Council of Finance Ministers. On 11 November 1996, the question

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The matter was discussed in the Council as recently as 9 March. The Government's position was that they would not oppose any moves by the Commission to undertake a study into the effects of abolition, particularly if it considered the successor regime. Whatever hon. Members have been told by those campaigning to keep duty free, it was made clear that there was no enthusiasm among the Finance Ministers of other member states to reopen the matter.

The issue was also discussed, under the British presidency, in the EU Transport Council on 17 March--which is more than happened under the previous Government's stewardship--at the request of the Irish, who pressed the case for a study. Although a number of Transport Ministers supported it--[Interruption.]

Mr. Deputy Speaker: Order. The debate has been good natured so far. Let us not spoil it in the last few minutes.

Dawn Primarolo: The Conservatives want to cover up their lack of action. They are being less than honest about the position that their Government took.

There was no consensus at the Transport Ministers' meeting. Indeed, the Netherlands and Denmark opposed the idea of a study. However, the matter is again on the agenda for the Council of Finance Ministers meeting on 19 May. The Government will again offer no objectionto the study, but the likelihood is--[Interruption.] Conservative Members forget that we have the presidency and that we must ensure that it is used in order to forward decisions, not manipulate them. I must say in all honesty to my hon. Friends that the likelihood of a consensus on a study, let alone any desire to extend duty free beyond 1999, is very remote. Despite what my hon. Friend the Member for Dover (Mr. Prosser) and others have said, other member states are not clamouring for an impact study. Indeed, they do not support the suggestion, let alone the suspension of abolition. Having set out the position, I shall turn to how we can try to take forward this very important debate.

Mr. Gordon Prentice (Pendle): What weight does the Minister give to the recent decision of the European Parliament?

Dawn Primarolo: I think that the question is, rather, what weight the Council of Ministers will give to that decision. My hon. Friends' points about the likely impact on jobs and the nature of the future regime are crucial. We should spell out that, although the industry was given six and a half years in order to help it adjust to the abolition of duty free, it has had no enthusiasm for actively pursuing the question of what a successor regime may look like. It is important that the Government, with the industry and the Commission, do not allow chaos to occur in June 1999, but address the very questions that have been posed in this debate. How do we have a successor regime? How do we ensure that we protect

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Mr. John McDonnell (Hayes and Harlington): I welcome the Government's decision not to oppose the Irish proposal as a positive move. Heathrow is in my constituency, and 2,000 jobs are at risk. When we have experienced the loss of jobs in my constituency in the past as a result of Government and European policy on, for example, the arms and defence industry, we have been offered direct Government and European assistance through Konver. If we cannot block this measure, we should at least undertake an impact study. We should also be arguing for additional financial assistance to tackle potential job losses in constituencies such as mine.

Dawn Primarolo: I should make a number of points on the DETR study and the jobs issue. There is a huge range of speculation on how many jobs could be at risk.

The DETR study, which I am sure all my hon. Friends have studied very closely, estimates that, following abolition, 2,700 jobs could be lost, of which only one third would be in the UK, and that that would depend crucially on the nature of the successor regime and several discussions on it. Obviously, it is incredibly important that such discussions take place exactly to minimise the impact of the chaos that my hon. Friends have highlighted, which could ensue if the ostrich approach to policy--to pretend that duty free will not end in 1999 and that somehow, at the eleventh hour, there will be a suspension of a decision--continues. In the Government's assessment, there will not be such a suspension. We are moving to deal with all the possibilities, which is a darn sight more than the Conservatives ever did when they were in power. They are shedding crocodile tears about people's jobs, yet they failed to remind the industry that it had just six and a half years.

The Government take very seriously the issue that they have inherited from the previous Government. The Government will not promise miracles because we cannot deliver them. Even though we will not stand in the way of a study, and even though we want to see the impact of the successor regime on jobs, there is, in our estimation, no realistic prospect of an extension. If there is no consensus for a study at the Council of Finance Ministers in May, we should do our best to protect jobs and our interests, and make sure that we have a sensible regime after the chaos left behind by the Conservative Government.