HC Deb 04 March 2004 vol 418 cc1032-3
2. Mr. Alistair Carmichael (Orkney and Shetland)(LD)

If he will make a statement on the independent review of spirit duty fraud levels. [158468]

The Economic Secretary to the Treasury (John Healey)

I have welcomed the review by the Comptroller and Auditor General, Sir John Bourn, of the estimates of spirits fraud. I have offered the full support and assistance of Treasury and Customs officials. The content of the review is a matter for Sir John.

Mr. Carmichael

I am grateful to the Minister for that reply, and for meeting the Scotch Whisky Association yesterday to discuss the issue of duty fraud. The association claims that the proposals that it is bringing forward would increase the tax take, and do so before the strip stamp that is being considered. The National Audit Office is also making an independent assessment of the scale of the problem. Will the Economic Secretary assure the House that we are not talking about a decision that has been made already, and that he is still listening to the industry on this question?

John Healey

The hon. Gentleman is right, and he will know that yesterday's meeting with the Scotch Whisky Association was just the latest of the many detailed discussions that my officials and I have had with the industry. The industry's alternative proposals have been worked up, and I expect to receive them at the end of the week. We will give them serious consideration, as it is clear that there is a very serious problem. No one can dispute that the public taxpayer is being defrauded of hundreds of millions of pounds that should go to the public purse. Organised criminal networks obtain large consignments of spirits that they then divert to the market through wholesalers and retailers, with the result that no one—not consumers, retailers or Customs officers—is any the wiser about the fraud that is going on. No responsible Government can do other than tackle fraud such as that in the way that is necessary.

Mr. Brian H. Donohoe (Cunninghame, South) (Lab)

Does my hon. Friend agree that there are problems with strip stamps? Where they have been implemented. it has been shown that there is more fraud, rather than less. Will he say whether the alternative proposed yesterday by the industry was acceptable? He has often agreed to meet the all-party group in the past. Will he do so again, before the Budget, so that we can put to him one last plea to accept an alternative?

John Healey

It is simply not the case that strip stamps have failed in all the countries that have introduced them. More than 40 countries, including EU member states, operate strip stamp arrangements, for quality assurance as well as for the control of fraud. We have worked very closely with the trade on this matter, looking at the logistics and practical problems that might be encountered if we decided to introduce strip stamps in the UK. I shall indeed be sure to meet my hon. Friend and his colleagues on the all-party Scotch whisky group. I have done so before, and will do so again before the Budget. Since my right hon. Friend the Chancellor's announcement in the pre-Budget report, I have taken part in a series of detailed discussions. I have met 14 separate companies in the industry. My officials and I have taken part in 38 separate meetings on these matters since the pre-Budget report. That is an unprecedented level of consultation, discussion and detailed joint working.

Angus Robertson (Moray) (SNP)

Has the Minister read the letter from Glasgow based security printers Gavin Watson Ltd., which was sent to the Chancellor on 12 December 2003, about what they say is the impracticability of the proposed Tax Stamps for spirits"? What estimate has the Treasury made of the potential for fraudulent counterfeiting of strip stamps should this daft and dangerous scheme be introduced?

John Healey

I am aware of the letter, and of the reasonable concerns that exist about any system of strip stamps and the potential for counterfeiting problems. Advice from other players in the industry suggests that such a system can be introduced and the counterfeiting problem dealt with. The question for the hon. Gentleman is whether he is prepared to back the action that we have to take to stamp out the current level of spirit fraud. If the answer is yes, I look forward to his support after the Budget for the action that we ultimately take to deal with the problem.