HL Deb 17 February 1994 vol 552 cc287-9

3.16 p.m.

Lord Mottistone asked Her Majesty's Government:

Whether the new practice of examining thoroughly 5 per cent. of common agricultural policy goods cleared through ports is being challenged with the European Commission, and whether there is any risk of it being extended to other ports in addition to Felixstowe.

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

My Lords, the practice of examining 5 per cent. of common agricultural policy goods exported from the Community to third countries has for some time been a feature of EC law. The examination requirements apply to traffic at all ports.

Lord Mottistone

My Lords, I thank my noble friend for that Answer. That the practice has existed for some time does not quite coincide with my information. As I understand it—and I hope my noble friend will agree—it is a practice which has grown up relatively recently. Does he accept that it is strange that although the practice is meant to apply to goods that are not subject to local export control there is an order at the moment waiting at Sheerness from a large exporter which was sealed by the customs at LEC on 21st January and yet is to be examined by the customs at Sheerness? That is bad for British trade and for British shipping. Both sectors have grumbled to me. It is also most unreasonable that such special measures should be taken when goods are being exported by reputable companies in this country? Those companies have a reputation to maintain. They take enormous steps not to cheat, whatever the regulations may be. Can the situation be modified so that procedures are carried out quickly?

Lord Henley

My Lords, my noble friend asks a number of questions. I am not sure that I can respond in detail to the specific question relating to the case at Sheerness. However, I am prepared to look into it. Where local export controls are made use of, there should be less examination at the port. Obviously, we must get the right balance between the appropriate controls so as to protect Community funds and the funds of this country against fraud, while not impeding trade. We therefore negotiated further flexibility in the scheme and from January of next year the minimum examination rate in each of the 17 product sectors will be 2 per cent. but with an overall rate of 5 per cent. That will allow customs officials to exercise a certain degree of extra risk analysis whereby the low refund sector, such as processed goods—obviously, it will be considerably less broad because there is a low refund—will experience much lower rates of checking while those with high refunds, such as cereals, where checking is much easier, can continue to be checked at a higher rate. The checking of those should be easier and cause less disruption.

Lord Bruce of Donington

My Lords, is the noble Lord aware that in so far as the goods referred to in the Question relate to the export of intervention stocks to third countries with a view to securing export refunds, it is absolutely vital that a good sample of the goods is inspected rigorously at the port of exit in order to prevent fraud? It is widespread among those samples that have so far been made and reported on by the Court of Auditors as well as our own National Audit Office. Will the Minister ensure that the regulations are rigorously enforced?

Lord Henley

My Lords, I think I can say with all sincerity that I greatly welcome the noble Lord's question. It is right to achieve some sort of balance between impeding trade and combating fraud. We believe, and certainly Customs and Excise believe, that there is scope for considerably greater flexibility. That is why the extra flexibility that I mentioned has been negotiated. The absolute flat rate of 5 per cent. in all sectors is possibly over-rigorous. We hope that the greater flexibility, to which I referred, and the greater use of risk analysis will allow the pursuit of fraud to be continued while not impeding trade.

Lord Mackie of Benshie

My Lords, was not the basis of the Question that British exports are being held up as a result of delays by customs officials who come under the Minister? Can he do anything to speed them up?

Lord Henley

My Lords, the exporters themselves can make progress towards speeding things up. First, they can pack their goods in a suitable manner that makes it easy for customs to get access to those goods. More importantly, exporters can choose to have their goods controlled by customs inland at their own premises. Therefore—and I refer again to the case mentioned by my noble friend Lord Mottistone—there should be considerably more cursory examination when the goods reach the port.

Lord Eatwell

My Lords, does the Minister agree that the possibility of fraud and indeed the need for checks arise only because of the structure of agricultural protection maintained under the common agricultural policy? Will he tell the House how much the checks cost? Does he agree that the expense of making them is yet another charge which the economic folly of the CAP imposes upon every family in this country?

Lord Henley

My Lords, I cannot answer the precise question that the noble Lord asks about the cost of each examination. We believe that the impact of CAP reform in time will reduce the export refunds and consequently the need for such rigorous controls.