Asked by
To ask His Majesty’s Government what assessment they have made of
the (1) jobs created, (2) revenue generated, and (3) tax receipts
generated, by the introduction of arrivals duty free at UK
airports.
The Parliamentary Secretary, HM Treasury () (Con)
Duty free on arrival would place additional pressure on the
public finances, to which excise duty makes a significant
contribution. Any loss in tax revenue would have to be balanced
by a reduction in public spending, increased borrowing or
increased taxation elsewhere. Although there are no plans to
introduce such a scheme, the Government keep all taxes under
review.
(LD)
I thank the Minister for that Answer. Is she aware that arrival
duty-free stores have had considerable success in Norway and
Switzerland, where they provide additional commercial revenue
streams for the airport to supply growth, and that passenger
spending would increase by 30% if they were brought in in this
country? Will the Minister ask the Treasury to commit to discuss
arrival duty free with airports and ports and explore the
wide-ranging economic benefits for the UK through consultation?
(Con)
My Lords, we welcome engagement on this issue, and we have heard
the case put forward for duty free on arrival. As I have noted,
the Government believe it would place additional pressure on
public finances. One challenge is that any potential uplift in
spending potentially displaces spending with other domestic
duty-paid retailers and therefore could compete against them. The
Government would also need to be confident there was adequate
infrastructure and resourcing to combat fraud and ensure
compliance. We have no plans to consult on duty free on arrival,
but we keep all taxes under review and we consider all available
evidence as part of the tax-making policy process.
(Lab)
My Lords, I am delighted that the Government are not looking at
this but, if they were to do so, would they look at the alcohol
harm that could be caused by the increase of cheap alcohol?
(Con)
My Lords, public health considerations are a consideration in the
decision-making process. I am sure the noble Baroness will
welcome both the changes that we have made to the system for
alcohol duty, relating it to strength, and the decision in the
Budget around uprating.
(Con)
My Lords, Brexit has presented the travel industry with a wealth
of opportunities, and the clear advantages of permitting
duty-free purchase on arrival into UK airports would provide us
with a level playing field along with our global competitors in
this area. Will the Minister urge the Secretary of State and the
Chancellor to reverse the current situation, which is damaging
our tourist sector and our world-class retail sector?
(Con)
My Lords, I have set out the position on duty free on arrival,
but of course my noble friend is right that, following our exit
from the EU, we have been able to introduce changes. One of those
changes has been outbound duty-free sales of alcohol and tobacco
for passengers travelling to the EU from Great Britain, including
by rail and on board cruise ships. That is a new opportunity for
retailers to offer that service.
(Non-Afl)
My Lords, I think what the noble Lord, Lord Goddard, said was
very sensible and I hope there will be a proper review of this
matter. As the noble Baroness is the Minister who has been
responding to me on my duty-free Question, could she now please
give us a plain and simple answer for why, if Northern Ireland is
still part of the EU, duty free cannot be got from Northern
Ireland to Great Britain? More importantly, if you can get duty
free from anywhere in Great Britain to the rest of the EU, why
can we not get it from Belfast?
(Con)
My Lords, Northern Ireland enjoys frictionless trade with both
the rest of the UK and the EU, and the Government are committed
to ensuring that that remains the case. Introducing duty-free
shopping for goods moving between Northern Ireland and the rest
of the UK or the EU would undermine that commitment.
(Con)
My Lords, it may well be that the introduction of duty free has
been one of the fantastic benefits of Brexit, but it seems odd
that the Government have taken the opportunity of Brexit to get
rid of tax-free shopping. That means that wealthy tourists who
used to come here and shop now go to France, Germany, Spain and
Italy. It hits our regional airports and our small manufacturers.
The change has been opposed even by the Scottish National Party,
which must be a clue that the Government have got this
catastrophically wrong. Will the Minister keep this policy under
review and eventually change her mind?
(Con)
My noble friend is a persistent campaigner on this issue. He is
right that, in leaving the EU, we were not able to maintain the
previous policy of offering tax-free shopping to non-EU citizens
only; it would have to be extended to all visitors, which would
come with a significant cost. However, I reassure my noble friend
that we keep all taxes under review, and we welcome
representations to help to inform future decisions on tax policy.
(Lab)
My Lords, the Government were slow to back the tourism sector
during the coronavirus pandemic, U-turning on a special deal for
airports and airlines and missing the opportunity to tie support
to green initiatives. Their flip-flopping on the issue of
tax-free shopping for international visitors and slowness on the
issue of arrivals duty free have led many in the sector to
question whether the Treasury truly understands the challenges
that the industry faces. What plans, if any, do the Government
have to bring forward a cross-departmental strategy for boosting
British tourism?
(Con)
My Lords, I reassure the noble Lord that the Government fully
understand the contribution that tourism makes to our economy. To
pick up his point about the Covid pandemic, through the pandemic
the UK Government provided over £37 billion to support the
tourism, leisure and hospitality sector in the form of grants,
loans and tax breaks. Since then, the Government have contributed
to various successful campaigns to stimulate recovery, including
the £10 million National Lottery Days Out scheme and efforts by
VisitBritain to deliver its international marketing campaign.
(Lab Co-op)
My Lords, following the question from the noble Lord, Lord
Vaizey, who mentioned the Scottish National Party, is the
Minister aware that in Scotland we have had a Minister for
Tourism—which includes what we are talking about in this Question
today—since 1999, but the current Government of Scotland have
made no such appointment? Instead, they have appointed a Minister
for Independence, when the Prime Minister has rightly ruled out a
referendum. As a Treasury Minister, will she get her officials to
look into this unauthorised expenditure by the Scottish
Government?
(Con)
My Lords, I will say that it shows that the Scottish Government’s
priorities lie in the wrong place, instead of seeking to address
the priorities of the people of Scotland, whether it is tourism
or improving their health and education systems. I think the
people of Scotland would welcome a greater focus on those issues
and less of a focus on something on which we recently had a
referendum that settled the issue.
(Con)
My Lords, further to the answer that my noble friend has given,
surely this is a question of the propriety of the use of public
funds. The Scottish Government are involved in spending public
money on a matter for which they have no rights. If these people
were in local government, they would be being surcharged.
(Con)
My Lords, I will repeat what I said to the noble Lord, Lord
Foulkes, that this absolutely demonstrates that the priorities of
the Scottish Government lie in the wrong place and are not
aligned with the people in Scotland.
(LD)
My Lords, returning to the abolition in 2020-21 of the right to
reclaim VAT on purchases made in high-street shops, I think the
Minister said that nowadays that would cost a considerable
amount. But the tourism and retail industries contest that claim.
It is two years since that decision was made. Surely the Treasury
has up-to-date details.
(Con)
The noble Baroness is right that there are direct costs of
offering any scheme through VAT being refunded but there may be
indirect benefits in terms of stimulating tourism and other
spending. The Treasury seeks to take both those issues into
account when looking at these issues. When the decision was taken
to withdraw VAT-free shopping for visitors, the Treasury also
held a round table with the industry to hear those views. As I
said to my noble friend Lord Vaizey, we continue to welcome
representations to help to inform future decisions.
