Beer Imports (Hansard, 30 October 1997)

§ 14. Mr. Blizzard
What steps he will take to recover revenue lost from bootleg imports of beer. [12662]

§ Dawn Primarolo
The Government take excise smuggling and fraud very seriously. Customs is currently deploying addition officers to front-line work in the Dover area to counter those involved.

§ Mr. Blizzard
I thank my hon. Friend for that reply. Brewers in my constituency will welcome the deployment of extra staff and the review of the matter. Does my hon. Friend agree, however, that the scale of bootlegging is so large that French beer occupies about 5 per cent. of the British market and 70 per cent. of it is smuggled beer? That represents a huge loss to the public purse and a huge threat to the British brewing industry and to jobs. It is also resulting in gangs being involved in violent criminal activity. Does my hon. Friend accept that the root cause of the problem is the large differential between the rates of duty on French and British beer? Will she therefore seriously consider the case put to the Treasury that if beer duty were reduced by 20 per cent., within three years there would be a net gain to the Exchequer and an increase in employment of some 60,000 jobs?

§ Dawn Primarolo
As I have said to my hon. Friend, to put the matter in proportion, the loss to the Treasury from smuggling was something like £120 million in 1996–97, against a total income of £4.9 billion in duties from beer. That estimate is based on figures agreed by the brewers. Although my hon. Friend is absolutely right to draw attention to the problems of growing crime and its associations with extensive importing of French beer, the answer is not harmonisation of duty rates. The answer is collaboration, as we have demonstrated through the review that we have set up to tackle excise fraud, to deal with crime and competitive issues and address health issues.
Frankly, I find the idea that we could cut our duties—as the brewers propose—and lose £3 billion in revenue and somehow make that up in increased consumption in three years a little hard to believe.

§ Miss McIntosh
Is the Minister prepared to look at the facts and figures provided by the Wines and Spirits Association, which confirm the point made by the hon. Member for Waveney (Mr. Blizzard) that millions of pounds are lost to the Treasury from bootleg imports not only of beer but of wine and spirits, including the produce of the Chancellor's and my own country, Scottish whisky? Most of the duty on Scottish whisky is lost through bootlegging. Does the Minister agree that it is a misuse of public resources to increase the use of agents to apprehend bootleggers and that, as the hon. Gentleman suggested, the money could go to the Revenue as genuine income?

§ Dawn Primarolo
When the Conservative Government reduced duty on Scottish whisky, the producers responded by putting up the price, not putting it down. If the case was so strong that a price reduction was necessary to assist in combating smuggling, perhaps they should have reflected on the increase before they implemented it. All producers—of wine, spirits and beer—are actively involved in the Government's review. Discussions are under way about the exact scale of the problem and agreement will be reached in solving it in partnership between industry and Government.