HL Deb 12 June 1997 vol 580 cc977-9

3.21 p.m.

Lord Campbell of Croy asked Her Majesty's Government:

Whether they will support the European Union's proposed FISCALIS programme, which is due to start in 1998 and which is intended to reduce fraud in VAT and in excise duties by improving co-operation between member states.

Lord Haskel

My Lords, may I congratulate the noble Lord on his alertness at picking up so early the FISCALIS proposals because they have not yet been considered in detail at European Community level. So in a way the Question is a little premature. However, while endorsing the FISCALIS programme in principle, the Government's full support must be subject to further consideration of the costs and resources involved. The Government are determined to work with the European Commission in developing co-operation with EC authorities as a means of combating fraud within the Community.

Lord Campbell of Croy

My Lords, I thank the noble Lord for his Answer. I agree that this is an early stage, but it cannot be too soon to start considering the scheme which has been put forward. Does the noble Lord agree that while the European Commission can provide help and co-ordination, the curbing of fraud must mainly depend on the willingness of authorities in member countries to increase their vigilance and clamp down on transgressions? Can the British Government stimulate other governments in the Community to catch and prosecute their nationals who indulge in fraudulent practices? I confidently expect to receive support for what I say from the noble Lord, Lord Bruce of Donington, whom I am glad to see in his place. The noble Lord has made a study of this subject over several years.

Lord Haskel

My Lords, the proposed arrangements under the FISCALIS programme, particularly the improvement of IT systems, are based very much on work which has been done in the United Kingdom. So the noble Lord can be assured that work will be carried out within the United Kingdom on this very important project. The whole programme is designed with co-operation between European Community countries in mind. I am sure therefore that the benefit of experience in the UK will be made available to the other European countries.

Lord Bruce of Donington

My Lords, is the noble Lord aware that one of the difficulties that must be facing Her Majesty's Government in this regard is the failure of the Commission's proposals to make adequate distinction between fraud and irregularity and its failure generally to take account of irregularity which, according to British law, in many cases is already fraudulent? Will the Government give consideration to the view already widely held, not only in the United Kingdom, that the nature and form of Commission legislation in many spheres is in itself an open invitation to fraud?

Lord Haskel

My Lords, I am not sure that I can respond to the second part of the noble Lord's question. As to the first part, most of the tax at risk is excise duty. There is no evidence of significant fraud as a result of intra-EC VAT systems. VAT losses attributable to the single market are estimated at about £150 million. As regards excise goods, Customs and Excise estimates that revenue—that is, excise duty and VAT—evaded through abuse of personal importation rules for alcohol and tobacco is about £770 million a year. That is large-scale commercial fraud. There are possibly other significant but unquantifiable losses.

Lord Mackay of Ardbrecknish

My Lords, do the Government agree that not only is there fraud on VAT and excise duty across the Community, but, as the noble Lord, Lord Bruce of Donington, has told us on a number of occasions, there is fairly massive fraud in the European budget itself, especially in the common agricultural policy? Can the Minister assure the House that the Government will be every bit as determined as the last Government to pursue fraud in the Commission, at European level and also at member state level?

Lord Haskel

My Lords, I can certainly assure the noble Lord that this Government will be as diligent as the previous one, and far more diligent, I hope, in pursuing fraud.