HL Deb 31 March 1994 vol 553 cc1197-9

Lord Boyd-Carpenter asked Her Majesty's Government:

Whether they are aware that the European Commission is proposing to permit wines and beers to be imported into the United Kingdom for their own use by United Kingdom residents who order these commodities by post and do not need to visit the country from which they are imported; what is the anticipated loss of revenue to the United Kingdom; and what action they propose to take in the matter.

The Parliamentary Under-Secretary of State, Department of Employment (Lord Henley)

My Lords, I have seen reports which suggest the provisions my noble friend outlines. However, United Kingdom law provides that private individuals must travel with their personal imports of alcoholic drinks and tobacco in order to be eligible to relief from United Kingdom excise duty and VAT. On 2nd March 1994 the EC commissioner responsible for taxes stated at a press conference that the Commission's interpretation of Directive 92/12 was the same as that of the British Government.

Lord Boyd-Carpenter

My Lords, is my noble friend telling the House that the position remains that you have to go and collect your goods rather than order them on the telephone?

Lord Henley

My Lords, put very simply, yes.

Lord Cockfield

My Lords, while one can have not the slightest sympathy with the Government for the difficulties that they face as a result of these developments, which were entirely their own responsibility and about which they had been warned again and again, does my noble friend agree that what really matters is the damage that is being done to the industry in this country? What do the Government propose to do about that?

Lord Henley

My Lords, I do not believe that any damage is being done to the producers of alcoholic drinks and tobaccos in this country. They are not affected. It is possible that some retailers are being affected. Their loss of revenue as a result of additional cross-border shopping could be as much as £200 million. I think that I quoted a figure of £170 million last time I dealt with this question. That is certainly less than the anticipated loss of £250 million. I have to say that, despite that slightly lower figure, revenue receipts during 1993 were in fact higher than in previous years. That seems to support the view that the much greater losses that were feared from increased cross-border shopping have not been suffered.

Lord Peston

My Lords, I take it that the Answer to the actual Question is precisely what the noble Lord, Lord Boyd-Carpenter, wanted to have confirmed: that there is no problem in relation to the specific case of importing by post. Can the Minister confirm that? Will he also agree that once there is a single market the term "free trade" implies that people will try to shop where it is cheapest? There is no way round that. That is the consequence of the single market. It is also the consequence of having different excise duties in different countries. You cannot get rid of the laws of economics simply by saying that you do not like them.

Lord Henley

My Lords, in relation to the second part of his question, the noble Lord is perfectly correct. There is nothing that I could disagree with. As regards the first part of his question, he is right. There was a misinterpretation by some people in Brussels of Article 8 of Council Directive 92/12. However, it seems pretty clear from the article, which states: As regards products acquired by private individuals for their own use and transported by them", that mail order shopping would not entitle people to the same reliefs and that goods must be transported by the people concerned.

Lord Harmar-Nicholls

My Lords, is my noble friend aware that there will be some muted satisfaction that we have recognised the problem being faced by retailers in off-licences in the south of England? However, in regard to the remark about having to like the law that you have, I thought that God made government so that government would make laws that you like in order to avoid the kind of antagonism and damage which the present law is causing to retailers.

Lord Henley

My Lords, I believe that we have the laws that we like. I am aware that, as my noble friend puts it, some retailers, particularly in the south east, have suffered a degree of financial loss as a result of increased cross-border shopping. But one can overestimate the degree of that loss. As I said, revenue receipts during 1993 were higher than in previous years, which seems to suggest that the losses are not as great as all that, and that much cross-border shopping represents new consumption.

Lord Bruce of Donington

My Lords, will the noble Lord agree that this may be one of the instances where the single market is not all that it is claimed to be and that there are certain disadvantages inherent in it which are already acknowledged by massive exemptions in the case of the common agricultural policy? Will the noble Lord give an undertaking that the Government will investigate the whole issue? For some of us the loss of £200 million of revenue is a matter of some significance, as indeed the noble Lord has repeatedly said in other spheres of economic activity.

Lord Henley

My Lords, I fail to see quite how the CAP comes within the scope of this Question.

I accept that £200 million is a significant figure. We anticipated the figure to be somewhat higher at £250 million. However, to harmonise all excise duties, for example with the French—they would be the main beneficiaries of any cross-border shopping—would cost some £3 billion to £4 billion. I think that even the noble Lord would accept that that loss would be much greater. As I made clear on a previous occasion, the Chancellor will continue to assess excise rates according to his own judgment on various issues relating to the economy, social factors and health.

Lord Boyd-Carpenter

My Lords, will my noble friend confirm that where someone travels overseas and brings back various bottles or other dutiable goods, real supervision is exercised to make sure that that person does not then resell them in this country?

Lord Henley

My Lords, yes, I can give the assurance that products brought back should be for personal consumption. I also assure the House that Customs have set up various teams of excise verification officers who will investigate importations. Customs are certainly not complacent and will continue to act vigorously to protect both United Kingdom revenue and United Kingdom trade.

Lord Cockfield

My Lords, is there not something slightly inconsistent in the replies that my noble friend has been giving? If there is a loss of revenue of £200 million, does that not indicate a sizeable diversion of trade? Is not that diversion of trade to the detriment of industry in this country?

Lord Henley

My Lords, I said that there was a loss, but overall revenue had increased. The total harmonisation of excise duties would cost some £3 billion to £4 billion, as I made clear to the noble Lord, Lord Bruce of Donington.