HL Deb 19 October 1982 vol 435 cc3-6

2.43 p.m.

Lord Boyd-Carpenter

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what reply they have sent to the EEC Commission in response to that body's purported instruction to remove duty free concessions on sales in aircraft and at airports of goods produced outside the EEC.

Lord Cockfield

My Lords, we have agreed, in common with the Governments of the other member states of the European Community, that with effect from 1st January. 1983, the relief from customs duty and agricultural levies hitherto given on goods intended to be landed by intra-Community travellers as personal allowances shall be withdrawn. The existing reliefs from excise duties and VAT, which account for most of the benefit on personal purchases, will continue to be given.

Lord Boyd-Carpenter

My Lords, I thank my noble friend for that extremely informative reply. May I ask him whether the Government will continue to bear in mind, as from their decision they plainly have borne in mind, the fact that duty free sales contribute a major element to the finance of airlines, which are going through a period of great difficulty, and also make a major contribution to the finance of the British Airports Authority?

Lord Cockfield

My Lords, I understand entirely the point that my noble friend is making. Indeed, in the discussions which led up to the final decision we made the point very, very firmly indeed that the exemption from excise duties and VAT should continue. We received specific assurances on that point.

Lord Winstanley

My Lords, is the noble Lord aware that some of us would shed few tears if the whole pantomime of duty free goods on aircraft disappeared altogether? Is the noble Lord aware that sometimes the duty free arrangements appear to be what is colloquially known as a rip-off, under which our wives are persuaded to buy things they do not want at prices far in excess of those for which they could have obtained the same goods in a cash-and-carry at home?

Lord Cockfield

My Lords, there are always some people who deplore the minor advantages which give pleasure to other people.

Lord Ponsonby of Shulbrede

My Lords, to follow up this Question from the noble Lord, Lord Boyd-Carpenter, is the noble Lord aware that the duty free sales contribute something like £100 million a year to keeping down fares both on aircraft and on ferries and that if they were abolished there would be a very substantial increase in fares? The noble Lord did assure the House that so far as Brussels is concerned there is not too much danger that they will be abolished, but can he also assure the House that there is no danger of the European Court ruling that the concessions are not entirely within the rules of the European Community?

Lord Cockfield

My Lords, I clearly have no power to influence any decisions that may be taken by the European Court. We have no reason to believe that there is anything illegal in the exemption from VAT and the excise duties. This is a matter upon which we have taken a very firm line and we shall continue to do so. May I quote the words actually used in the European Parliament by Commissioner Tugendhat on 15th June. What he said was this: We certainly do not wish to go any further than we have done. The overwhelming bulk of sales in duty free shops, goods of Community origin, are quite unaffected by this. That is the Court's judgment.

Baroness Jeger

My Lords, could the Minister say whether any thought is being given to the possibility of passengers picking up their duty free goods at the port of arrival so that there is a great saving in the shuttling of bottles all around the world?

Lord Cockfield

My Lords, that is a suggestion which has been made on a number of occasions. It has been considered, and I gather that it would give rise to considerable difficulties.

Lord Molloy

My Lords, may I ask the noble Lord whether it would be possible for the representations of the noble Lord, Lord Boyd-Carpenter, to be taken on board by the Government and for representations along the lines which he has suggested to be adopted by the Government and made to the EEC?

Lord Cockfield

My Lords, I have made it clear in the replies I have already given, and I understood that this had been accepted by my noble friend Lord Boyd-Carpenter, that there is a very clear distinction between import duty—customs duty—and agricultural levies on the one side and excise duty and VAT on the other. It is only the first items which, so far as this country is concerned, are of very limited importance to intra-Community travellers. It is only in respect of those items that the ruling applies. So far as the other items are concerned, we propose maintaining our objection to any attempt to abolish the exemption.

Lord Ponsonby of Shulbrede

My Lords, am I not right in saying that, as from 1st January next, a state of confusion may exist in a place like Terminal I at Heathrow, where passengers travelling from Terminal 1 to Mexico will be able to buy duty-free American cigarettes although passengers travelling to Brussels will have to pay a different price for the same goods?

Lord Cockfield

My Lords, the Question does not relate to travellers to Mexico, however desirable a destination that might be.

Lord Ponsonby of Shulbrede

My Lords, my point is that travellers using the same terminal who are going to Brussels will not have the benefit of the concessions with regard to goods which are manufactured in America, like American cigarettes, which will accrue to passengers to Mexico who use the same terminal.

Lord Cockfield

My Lords, the actual administrative arrangements for dealing with these matters have been discussed in detail with the operators of the duty free shops concerned. An arrangement has been arrived at under which the relevant duty will be collected from the operators, who will then pass it on in the price. I would doubt in these circumstances—because the amounts involved are very small indeed and so most purchases are not affected at all—whether difficulties of the kind which the noble Lord has in mind would arise; but I am very willing to have the matter looked at and will communicate with the noble Lord.

Lord Kennet

My Lords, are the Government aware that a great many airline pilots do not much like carrying people with a lot of little fire-bombs all over the world? There was recently an accident when a re-fuelling team on the ground managed to set fire to a British Airways aircraft and the only people who were hurt were those people who were hugging their duty free liquor to their bosoms as they jumped out.

Lord Cockfield

My Lords, I think it might be valuable to draw the noble Lord's remarks to the attention of people intending travelling on airplanes hugging bottles of duty free liquor to their breasts.