Alcohol Smuggling (Hansard, 30 March 1995)

§ 5. Mr. Alexander
To ask the Chancellor of the Exchequer what progress Customs and Excise has made in the past 12 months in tackling cross-border smuggling of alcohol. [15279]

§ 6. Mr. David Atkinson
To ask the Chancellor of the Exchequer how many Customs and Excise staff are involved in front-line work to prevent the cross-border smuggling of alcohol. [15280]

§ The Paymaster General (Mr. David Heathcoat-Amory)
Customs and Excise has some 250 staff employed directly to prevent cross-border smuggling 1171 of excise goods. There is no separation of their duties between alcohol and tobacco goods. They take vigorous action against those engaged in cross-border smuggling, and in the 12 months to 31 January 1995 they made 910 detections related to alcohol with a revenue value of £1,871,000.
Investigation staff and those employed on VAT and other customs controls also contribute to the prevention of smuggling.

§ Mr. Alexander
I thank my hon. Friend for that reply. He will be aware of the adverse tax implications of that activity. I assure him that there are adverse implications for the brewing industry due to severe inroads into its turnover. Will he assure the House that, to deal with that activity, the number of front-line staff will be increased rather than reduced—as some people think may happen—and that there will still be enough of them?

§ Mr. Heathcoat-Amory
Yes, I can give my hon. Friend that assurance. The fundamental expenditure review that we have completed shows that in some regions Customs and Excise can maintain or increase its output with fewer staff, but in the coming year there will be an increase in excise verification officers engaged in anti-smuggling activity. The matter will be kept under review to ensure that it is controlled.

§ Mr. Atkinson
Will my hon. Friend confirm that he and his European Union colleagues remain committed to the introduction of the harmonisation of duties, as well as of VAT, throughout the single market, which is the only long-term solution to the problem?

§ Mr. Heathcoat-Amory
I would go halfway with what my hon. Friend says. We would certainly wish to retain our veto over unwelcome tax proposals, so we would resist compulsory harmonisation. Within that constraint, however, we are working to lift the minimum rates of duty, especially for wine and beer, in order to iron out the current distortions between member states in the single market.

§ Mr. Roy Hughes
There is a large modern brewery in my constituency and the company which owns it complains bitterly about this illicit trade. Does the Minister accept that it could eventually affect employment, and is he examining the problem from that angle?

§ Mr. Heathcoat-Amory
Yes, we monitor closely the performance of the brewing industry and we are mindful of the employment consequences. I can therefore give the hon. Gentleman the welcome news that excise receipts from alcoholic drinks as a whole have kept up and are buoyant as against 12 months ago.

§ Mr. Mudie
In view of the Minister's complacent answers, may I ask whether he is aware of the pressure being put on thousands of small businesses—the difficulties were initially in the south but have now spread to the north—which are having great problems holding themselves together because of smuggling? Is he satisfied with the number of customs officers? In view of the pressure on small businesses, will he announce moves to increase the number in an attempt to prevent smuggling 1172 and give a more forceful answer in respect of the equalisation of duty, which is the real long-term solution to the problem?

§ Mr. Heathcoat-Amory
I have already dealt with harmonisation. We wish to see a measure of harmonisation, but it must be compatible with our ability to veto other unwelcome taxation measures. I assure the hon. Gentleman that we are not in the slightest bit complacent about smuggling. We keep the matter under review, and I am glad to say that the courts are taking an increasingly severe view of those caught smuggling. The law already allows for unlimited fines and up to seven years' imprisonment for those who are caught.