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Session 1997-98
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Standing Committee Debates
Finance (No. 2) Bill

Finance (No. 2) Bill

Standing Committee E

Tuesday 12 May 1998


[Part II]

[Mrs. Gwyneth Dunwoody in the Chair]

Finance (No. 2) Bill

[Continuation from column 108]

8.30 pm

On resuming--

Mr. Fallon: Thank you, Mrs. Dunwoody. I hope that you enjoyed the dinner to which your long hours of patience have undoubtedly entitled you.

I was attempting to summarise the debate because I sensed that the Committee wanted to come to a conclusion on it. I said that it was one sided. We had a glimpse of the real world--of the seaside, leisure parks, the Royal British Legion, social clubs in villages and towns up and down the country, and Conservative and Labour clubs. I ended by saying that it was to the shame of Labour Members that my hon. Friend the Member for Maldon and East Chelmsford, the shadow Treasury Whip, had to make the case for the continuance of a Labour club and for its very survival as a non-profit-making club.

My hon. Friend the Member for Guildford spoke eloquently about Truro Conservative club. His portrait no doubt still hangs there after his successful campaigning in Truro. He made a point about the revenue take.

The hon. Member for Twickenham was, I fear, so terrified by your ruling, Mrs. Dunwoody, that he has not been seen since. I do not know whether you can issue an instruction allowing him back into the Committee if he can decommission his piece of equipment.

The Chairman: Order. I should explain that the hon. Member for Twickenham kindly wrote me a little note explaining why he had to go. He was extremely sorry and apologised to me and to the Committee.

Mr. Fallon: I am grateful to you, Mrs. Dunwoody, for making that clear. We are, however, not sure whether the hon Member for Twickenham will come back. He made the important point about the Royal British Legion clubs, which are non-profit making and which have to compete with pubs and other commercial activities. He also made the important point that it was a bit early for the Government to judge the effect of the 1996 deregulation order. It would have been better for them to assess the order's effect and to think through what they were going to propose.

My hon. Friend the Member for Bognor Regis and Littlehampton amazed us with the depth of his experience in this country's arcades. He rightly spoke up for the seaside resorts, and he made an important point. Our resorts depend on attractions, and jobs depend on the tourism that they bring; all that is at risk under the Bill.

The debate has been worth while. First, it has highlighted the Government's failure to wait for the effects of the previous Government's deregulation to work through; and, secondly, it has highlighted the Government's failure to consult properly. The Financial Secretary made two specific apologies. She could not dodge the commitment to consultation that she made just three years ago. In mitigation, she claimed that the criteria for pre-Budget consultation had been met. That is not BACTA's view. A spokesman said:

    ``I cannot see how we failed the tests it''--

the criteria--

    ``contained. Important changes both to the rates and to the way they have been implemented and decided upon warranted pre consultation with BACTA.''

The Financial Secretary's defence, therefore, falls.

I should also tell the Financial Secretary that when my right hon. Friend the Member for Wells made similar changes in January 1995, he said:

    ``I also undertook that the detailed and specific amendments, which will give effect to the proposal, will be exposed to the industry and to hon. Members who want to comment on them.''--[Official Report, Standing Committee D, 31 January 1995; c. 29.]

We undertook consultation; she did not.

Finally, the amendments have exposed the Government's failure to offer any clear rationale for the swingeing increases that are proposed. The Minister offered only two of the flimsiest possible reasons. First, she said, ``The industry can afford it.'' Then she said, ``But, I was wrong about that back in 1995.'' Those two reasons, taken together, simply cancel each other out.

The amendments would ensure that the industry is protected from the worst of the damage that the Government are now wreaking upon it. Conservative Members have to stand up for the sea fronts, for the leisure clubs and, above all, for the Royal British Legion and the Conservative clubs--even for the Labour clubs.

Mr. Ruffley: Disgraceful!

The Chairman: I trust that that remark was not directed at the Chair.

Mr. Ruffley: I assure you, Mrs. Dunwoody, that it was not.

Question put, That the amendment be made:--

The Committee divided: Ayes 10, Noes 17.

Division No. 3]

Clifton-Brown, Mr. Geoffrey
Davey, Mr. Edward
Fallon, Mr. Michael
Gibb, Mr. Nick
Hammond, Mr. Philip
Loughton, Mr. Tim
Ruffley, Mr. David
St. Aubyn, Mr. Nick
Whittingdale, Mr John
Woodward, Mr Shaun

Ainsworth, Mr. Robert
Alexander, Mr. Douglas
Davies, Mr. Geraint
Gardiner, Mr. Barry
Hall, Mr. Patrick
Hanson, Mr. David
Johnson, Mr. Alan
Leslie, Mr. Christopher
Love, Mr. Andy
Moonie, Dr. Lewis
Plaskitt, Mr. James
Primarolo, Ms Dawn
Southworth, Helen
Stewart, Mr. Ian
Thomas, Mr Gareth
Touhig, Mr. Don
Twigg, Mr. Derek

Question accordingly negatived.

Clause 12 ordered to stand part of the Bill.

Clauses 13 and 14 ordered to stand part of the Bill.

Clause 15

Fiscal representatives

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

Mr. St. Aubyn: I shall speak only very briefly, Mrs. Dunwoody. [Hon. Members: ``Hear, hear.''] I am glad that my decision is popular with the Committee.

I am concerned about the proposal that fiscal representatives should provide security. In some cases, fiscal representatives may be dissatisfied with the amount of duty that has been levied on them. Will the clause allow them rights of appeal and, if so, how will their security be treated during the course of such an appeal?

Dawn Primarolo: The hon. Gentleman perhaps misunderstands the option that is offered in clause 15 with regard to passenger duty.

The clause will provide an additional degree of revenue protection and make it easier for certain foreign airlines to comply with the air passenger duty law by offering them choice, flexibility and a potential reduction in their compliance costs.

Under current law, any aircraft operator without a business establishment in the United Kingdom that operates chargeable flights from UK airports is required to appoint a fiscal representative who will be liable for the airline's duty debts. The Bill will not alter the provisions of the existing legislation in that respect.

A number of airlines have been unable to find representatives who are willing to take the risk of duty liability. In such circumstances, the clause will provide that the airline will not be brought under revenue control, the duty will not be secured and the airline will therefore be in breach of the air passenger duty law. It will be the fact that the airline cannot find a fiscal representative that puts it in breach of law, not the issue of whether it is prepared to meet its air passenger duty liabilities.

The clause will enable airlines to appoint ``administrative representatives'' who will be responsible for keeping records and accounts but will not be liable for the duty debts of their principals, on condition that the airlines provide security for the duty.

The Government are thus offering a choice to airlines that are experiencing difficulties in acquiring a fiscal representative. If the commissioners were to ask the airline for further security in such a situation, that request would be appealable. The Government are trying to ease the difficulty that some airlines experience when attempting to comply with the original APD law that was instituted by the previous Government. I believe that it will be a helpful measure.

Mr. St. Aubyn: I understand what the hon. Lady has said, which highlighted the reason why I asked my question in the first place. If an unfair assessment is made, as a result of which security is drawn down, I am concerned that the airline's right of appeal could come after that point. Will its right of appeal pre-empt the drawing down of security or, as the Minister's words seemed to imply, will the appeal only pre-empt a further demand for additional security?

8.45 pm

Dawn Primarolo: The current position is that security is calculated by the airline based on the commissioners' directions. There would be no right of appeal on that. If the commissioners asked for further security, that would be appealable. I understand the hon. Gentlemans's point. The new clause allows overseas airlines the option of paying security and having a fiscal representative responsible only for the records. They are required to do one or the other.

Security is calculated by the airline, based on the commissioners' directions, so there should be no difficulties there.

Mr. St. Aubyn: It is important that we clarify the point. If I understood the Minister correctly, she said that the original security may be seized by Customs pending an appeal, but that Customs may not demand additional security while the appeal is taking place. That begs the question, as the business carries on operating--which it will no doubt want to do while the appeal is being heard--what happens to further liability for duty during that period? Will the Government stay their hand, or will they invent a further demand for security outside the appeal process, which negates, in its own way, the comfort that the Minister is trying to give to airlines in that position?

Dawn Primarolo: The hon. Gentleman does not understand the position. The commissioners' directions are in a public notice. Security is based on duty, liability and past compliance. The company can agree on that security. Its fiscal representative will then have a lesser responsibility. The hon. Gentleman talked about drawing down security. The security would be the company's liability to pay its tax to release it from the requirement on fiscal liability, which is the current regime.

Airlines therefore have two options. They can operate under the current regime or under this regime. In both cases, the liability is calculated on the basis of their duty liability. I fail to see the hon. Gentleman's point. He is trying to make it sound as though the commissioners dream up a liability and draw down on the security totally unreasonably. That is not the way that APD works. The clause does not change the way it works or the calculations of liability.


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Prepared 12 May 1998