HL Deb 14 December 1993 vol 550 cc1266-8

2.53 p.m.

Viscount Hanworth asked Her Majesty' s Government:

Whether the imposition of lower rates of duty by other European countries, particularly on beer and cigarettes, has a detrimental effect on the competitive position of British industries which produce these goods and whether in the long term the high rates of duty in the United Kingdom are in the interest of either the Treasury or the public.

Viscount St. Davids

My Lords, the duty charged on beer and cigarettes imported commercially from other EC member states or elsewhere is the same as that charged on beer and cigarettes produced in this country. The level of UK duty alone, therefore, has no detrimental effect on the competitive position of the British brewing and cigarette industries in relation to commercial sales within this country. In setting duty rates the Chancellor takes into account a number of factors, including the competitive position of the industries.

Viscount Hanworth

My Lords, I thank the noble Viscount for that reply, but I cannot accept what he says. In France, apparently, the duty on beer is one-seventh in many cases of what applies here. Therefore, a large number of cheap beers are being brought over here and the same applies to cigarettes. Surely that cannot be in the interests of the industry or the Treasury?

Viscount St. Davids

My Lords, the fact that the rate of duty was not increased in the November Budget should be of some help to UK brewers competing with personal imports of beer. However, the decision by private individuals to shop in another EC member state does not depend solely on the duty differential. The total price is usually the governing factor.

Lord Astor of Hever

My Lords, is my noble friend concerned when Customs fear that over 50 per cent. of beer imported through Kent goes straight to street markets, boot sales and small shops for resale, all avoiding UK tax?

Viscount St. Davids

My Lords, estimating the effects of cross-border shopping is complex and surveys differ widely in their forecasts. After making allowances for pre-existing levels of cross-border shopping, the element which represents new business, and the difficulties in obtaining properly representative samples, it is not clear that the effects are anything like as significant as the media and lobbyists make out. The position is being closely monitored in the interests of government revenue and UK trade.

Lord Mason of Barnsley

My Lords, the Minister must be aware (must he not?) that cheap foreign beer and cigarette imports are bound to be detrimental to our competitive position? Is it not also the case that Norwegian salmon is being dumped in western Europe, threatening jobs in the salmon fish farming industry? Given that imports of cheap coal lead to the closure of British coal mines and that imports of cheap tobacco from Europe will inevitably close British tobacco factories, does the Minister not agree that the answer to the first part of the original Question is "Yes" and that such factors are detrimental to our trade and economic position?

Viscount St. Davids

My Lords, as I said to the noble Viscount, Lord Hanworth, the total price of beer is usually the governing factor. In the case of tobacco products, the greater part of personal imports into the United Kingdom is of tobacco products made in the United Kingdom. Therefore, there is no loss to the UK tobacco industry.

Lord Clark of Kempston

My Lords, does my noble friend agree that a level playing field within the Community means that there should be harmonisation of Customs and Excise duty? When does my noble friend think that that will come about so that we do not have the position whereby it is cheaper to go over in a lorry and pick up at a much cheaper price beer that has been produced here and exported to France?

Viscount St. Davids

My Lords, the Government do not consider that harmonisation is necessary. Member states must be free to set the most appropriate rates which they think necessary for their own particular circumstances.

Lord Stoddart of Swindon

My Lords, is the noble Viscount aware that his statement that it does not hurt the British competitive position has met with some incredulity throughout the House? Has he consulted the cigarette and beer manufacturers to find out their view? Is it not a fact that as a result of our policy the British Treasury is losing revenue while the French are gaining and that French retailers are making profits that are lost to our own?

Viscount St. Davids

My Lords, it is for my right honourable friend the Chancellor of the Exchequer to set the rates of duty he considers appropriate.

Lord Peston

My Lords, if the noble Viscount is right that the price differential is not due to our very high excise duties and taxes, then must it not be the case that he is also arguing that our producers are ripping off the consumer by having high margins? Is that what the Minister is saying? Is he denying what was said by the noble Lord, Lord Clark: that a country such as ours operating on the basis of free trade cannot have indirect taxes very different from those of our competitors? Does the Minister agree that that is a question of market economics and not what the Chancellor believes? It is the way markets work.

Viscount St. Davids

My Lords, as I said, the Government do not consider that harmonisation is necessary.

Lord Brabazon of Tara

My Lords, when my noble friend Lord Caithness answered a Question on similar lines on 25th November, at col. 341 of Hansard, he said that it was estimated that there would be a full year revenue loss of £250 million from increased cross-border shopping. Can my noble friend confirm that that revenue loss includes the loss of direct taxation from the British brewing industry (in corporation tax, and income tax from their employees) and from the retail trade, particularly in the south of England?

Viscount St. Davids

My Lords, I can confirm that the revenue losses expected for 1993–94 are the projected £250 million. I cannot give my noble friend any further information on the loss of taxes from such companies.

Lord Ennals

My Lords, can the Minister give some information in relation to cigarettes; first, about the extent of the import and export of cigarettes between ourselves and other countries, and secondly, what effect the tax measures actually have upon sales here and abroad?

Viscount St. Davids

My Lords, this is an extremely complex subject. I do not have the figures to hand, but I shall write to the noble Lord.