Clause 2. — (Drawback on Tobacco.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 15th June 1966.

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Question proposed, That the Clause stand part of the Bill.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

The Committee will not wish to deal with the Clause in great detail, but in view of the confusion which arose on Clause 1, and the great difference between the Minister's interpretation and what seemed to us to be a reasonable interpretation of it, it would be as well to hear from the Government precisely what the Clause is intended to do.

As we understand it, it will enable firms who operate duty-free shops in airports to obtain drawback on tobacco more easily. Where the tobacco is warehoused in preparation for such a shop it will be easier for the shop to claim drawback. It is well known that during the General Election the Chancellor made reference to an increase in the amount of duty-free spirits which travellers would be allowed to bring in. He did not cover the question of cigarettes, but we understand that it is a purely administrative provision designed to facilitate the mechanics of the matter. We welcome the provision as a simplification of Customs procedures.

It is also relevant to ask a question concerning the word "leaving" in paragraph (a). The paragraph refers to persons leaving the United Kingdom by air". We may presumably ask whether consideration has been given to the possibility of similar facilities being granted in respect of people returning to this country by air. We find ourselves in an extraordinary situation, in which a certain brand of British cigarettes can be exported to Calais and bought there by a British tourist returning to this country, who can bring them in duty-free. This means that the profits presumably accrue to the people retailing those cigarettes in Calais.

The magazine Which? carried out a survey relating to the purchase of British duty-free products at Continental airports by people coming back to this country. Can the Minister tell us whether this provision can be extended so that it covers people both leaving and arriving? We should be grateful if he would tell us if this is the correct interpretation of the Clause.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

The hon. Member for Worthing (Mr. Higgins) has correctly stated the effect of the Clause. It falls into two parts. The first deals with the extension of airport shop concessions. The Clause regularises an extra-statutory concession which has been in operation for some time, because it was obviously reasonable to do this. Duty-free shops have been set up at the principal airports in order to enable duty-free sales to be made to persons leaving the United Kingdom by air for destinations abroad. The object is to increase our export earnings by encouraging tourists to spend their currency in this country instead of abroad. That practice is adopted in many other countries.

It is not the intention to extend the provision to returning passengers, because such passengers are in the same position when they land here as is someone who has never left the country at all, and people would think it very unfair that such travellers should be able to buy in this country duty-free goods which people who remained here could not. The returning passenger has his concessionary allowances, which were recently increased, for goods which he buys abroad, and this has greatly simplified the Customs procedures for both visitors and British tourists on returning to this country. But I have never heard it suggested before that the duty-free shop facilities should be extended to returning passengers.

The second part of the Clause deals with a small point to facilitate the export of tobacco from this country. As the Section in the Customs and Excise Act is drawn at the moment, it limits the payment of drawback of tobacco duty on tobacco exports to tobacco which is exported by a tobacco manufacturer unless he has a licence. The result is that a person who is not a tobacco manufacturer but who wants to export on drawback has to take out a tobacco manufacturer's licence, on which there is minimum duty of five guineas a year. This, we feel, is an unnecessary irritant and hindrance, and we thought this was a convenient opportunity to remove it.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

I do not think that the hon. and learned Gentleman the Financial Secretary has got the point which my hon. Friend the Member for Worthing (Mr. Higgins) was making. He stated that the object of part of the Clause was to facilitate exports from this country. While accepting that there are difficulties in this, surely it is just as good and will result in a saving in foreign exchange if people who bring in British merchandise which they buy abroad are enabled to purchase it in the concessionary shops before they enter the country and thus pay sterling for it rather than buy it abroad where, although it is British merchandise, they still have to pay sterling and spend foreign exchange. It would seem to me, therefore, that although this idea has not been proposed before, it might be helpful.

The Financial Secretary said that this suggestion, if put into effect, would enable people coming into this country to buy duty-free articles which they could not buy other than in an export shop on an airport, and which the ordinary public could not buy. But they already do that by means of the concession that travellers are allowed on re-entering the country. Therefore, the point is not really valid.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I wish to congratulate the Financial Secretary on having made perfectly clear the reason why one is permitted to go to a duty-free shop on the way out from the country, and divorced his remarks from any suggestion that this was a privilege conferred on the travelling public. My only concern is to ensure that this sensible measure should be sensibly administered.

My mind is fogged by the formalities. Passengers are asked to produce their tickets. Surely they would not be in the place where they are without tickets. They then have to fill up a form. I do not know who reads those forms. One has to get an application form in order to buy a bottle of whisky or 200 cigarettes. Who reads these forms afterwards, and of what possible value are they?

I am not trying to hold up the proceedings. I do not want to delay the Financial Secretary's reply, but I am making the same point as I made on a previous Clause, namely, that the whole of our Customs administration is too fogged with regulations, the purpose of which has been forgotten.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

Mr. MacDermot To the hon. Memoer for Yeovil (Mr. Peyton) I would say that there have been extensive attempts at evasions of duty by abusing these duty-free shops. This is one of the reasons why there have to be the strict controls which he apparently finds irritating but which I think most people have come to accept. I have found similar procedures in foreign countries. There are similar forms to be filled up there.

I would only remind the hon. Gentleman that if, when he is abroad, he buys s packet of English cigarettes, the loss of sterling to this country is balanced by the foreign currency which will have been paid to get the cigarettes abroad.

5.45 p.m.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I agree with the Financial Secretary about the forms. I certainly do not agree with my hon. Friend the Member for Yeovil (Mr. Peyton), for I feel that there would be a great deal of abuse if the situation were eased much more than it is at the moment.

I should, however, like to mention a somewhat different point. I find that when I go to Jersey, which is within the orbit of this country—in other words, I am not really going to a foreign country—I am entitled to concessionary liquor and cigarettes, but that when I go to Dublin, which is in a foreign country, I am told that I am flying on an internal air route and that there are no concessions. I should like to know the reason for this discrimination against the Southern Irish.

Photo of Mr Norman St John-Stevas Mr Norman St John-Stevas , Chelmsford

In welcoming this small concession from the Financial Secretary, may I express the hope that it will form part of a general improvement and speeding-up of Customs arrange- ments at London Airport to coincide with the coming into operation of the new cargo terminal in December, 1968.

Photo of Mr Antony Buck Mr Antony Buck , Colchester

Will the Financial Secretary clarify one small point? This Clause deals solely with tobacco. What other concessions will be dealt with? Are they still on an entirely ad hoc concessionary basis or are they provided for elsewhere? I apologise for my ignorance about this.

Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North

We need the special concession for tobacco for this reason. Section 183 of the Customs and Excise Act only provides for the payment of tobacco duty drawback on United Kingdom manufactured tobacco which is warehoused for use as stores or for exportation by post. It was to overcome those narrow words that we introduced this amendment in this Clause.

Question put and agreed to.

Clause ordered to stand part of the Bill.