EXPORT ENCOURAGEMENT (Hansard, 13 March 1967)

§ Mr. Bernard Weatherill (Croydon, North-East)

I beg to move, That leave be given to bring in a Bill to encourage exports by extending the purchase tax relief available to bona fide tourists to the United Kingdom. My object in seeking to bring forward this Bill is to encourage exports by giving incentives to tourists to spend money in Great Britain. The Chairman of the British Travel Association, in his annual report last year, had this to say: … 2,776,000 visitors came to Britain from abroad, an increase of 13 per cent. over 1964. The money which they spent here—including fares paid by them to British carriers—amounted to £321 million, an increase of 4 per cent. He went on to say that … tourism has established itself as our fourth largest earner of foreign currency—and, as far as American dollars are concerned, the largest of all. The foreign revenue we derive from tourism now ranks with that earned by the 'classic' tourist countries, France and Italy—countries which were engaged in a world-wide policy of advertis- 2 ing their attractions long before the British Travel Association was founded. Our foreign revenue, in fact, exceeds those of two other well-established tourist countries, Switzerland and Austria, which can also claim a long history of tourist promotion. Later in his report the Chairman points to the fact that by 1970 he estimates that there would be 5 million visitors to this country and that the opportunities for expansion in the tourist trade were almost limitless. He goes on to say: This will be done in the face of considerable difficulties due to our geographical position. We are one of the northern countries of Europe, and the main trend of tourist traffic is always to the south. We lack the powerful magnet of the Mediterranean sun, which confers on all those countries bordering the Mediterranean a special tourist attraction. I submit that we have an advantage which some of those other countries do not possess, and that is in the variety and quality of our goods. Many of them are subject to Purchase Tax and are, therefore, more costly than they need be. At the moment the only way in which Purchase Tax may be avoided is to complete a P.T. 40 and then the article has to be sent back to the boat or plane. The articles may not be taken out of the shop for use in the country without payment of Purchase Tax. At this point I should declare an interest, because I shall have to quote from my personal experience to show how sales are lost. As the House may know, in my spare time I run a tailoring business, and we do a substantial export trade, much greater 3 than the sales that our export rebates show.

We do a very substantial business with the Continent, and it is worth saying that for clothing it pays foreigners to come to this country to buy their clothes, because not only are they cheaper but the quality is better than in any other country in the world. All too often customers are passing through, perhaps on their way to the United States, and they may want to take the clothes with them, or they may be visitors from America and wish to use the clothes while in England. They may be going to the Continent and would like to use them there, leaving for America via Genoa.

All too often the customer says: If I cannot take these things with me I will have to leave it until I return which may be in two or three years. This is magnified dozens of times throughout the West End and the country. It is an old saying that a bird in the hand is worth two in the bush. We cannot afford to let one single franc or dollar go out of our hands. The French have a system whereby specified retail shops give a discount of 20 per cent., provided payment is made in travellers' cheques. This is in effect a relief of sales tax, and I wonder if we cannot do the same.

My Bill seeks to do this and to give to bona fide visitors to this country who pay in travellers' cheques or foreign currency, on production of a passport and on completion of an appropriate form, relief from Purchase Tax on any article which may then be taken and used in this country. There would be a tremendous stimulus to foreign visitors to buy British. I can almost hear people saying to their wives, for instance, "Wait till you get to Britain to buy that cashmere sweater because you will get a 10 per cent discount".

There is another reason, subsidiary, perhaps, but important nevertheless. Under the Companies Bill which is now in Committee, all traders must disclose their export turnover. A man who sells a cashmere sweater from a shop in Stratford-on-Avon or Princes Street, Edinburgh, contributes to the export drive in 4 just as big a way as if he had sold the article in Paris or New York, and he does so without any expenditure of foreign exchange. It is right and fair that those who actively seek to do this should have credit for their exports and also should have the export rebate.

One store in Regent Street, by no means a very large one, has told me that it did over £170,000 worth of foreign export business with visitors to this country last year. The visitors paid in travellers' cheques and foreign currency, but they had to pay Purchase Tax as well, so the store got no credit for the exports. They were treated as home sales and did not show in the export rebate figures.

I am advised that to achieve this objective would require only a fairly modest amendment to Section 18 of the Purchase Tax Act, 1963. I am advised, also, that there are no international complications. I am convinced that we cannot afford not to make this simple adjustment to the existing regulations. It would give a tremendous stimulus to overseas visitors to spend more of their money in this country. It would encourage our traders to set themselves out to sell to visitors in this country, and it would make a considerable contribution to our foreign currency earnings. It would end confusion and frustration. It is right and fair to do it. I am sure that it would be profitable. I hope that the House will give me leave to bring in the Bill.