§ 2.46 p.m.
§ Lord Campbell of Croy asked Her Majesty's Government:
§ What progress has been made in reducing fraudulent disposal within the United Kingdom of alcoholic liquor, after it has been taken out of bond without payment of excise taxes, for the supposed purpose of exporting it abroad.
§ Lord McIntosh of HaringeyMy Lords, Customs continue to pursue vigorously those involved in excise duty fraud and have had notable successes. Figures for this type of fraud are not recorded separately, but it forms a high proportion of the achievements of the Customs National Investigation Service. In the financial year 1995–96 the revenue evasion-prevented value of cases was some £150 million and in 1996–97 it rose to £572 million.
Lord Campbell of CroyMy Lords, I thank the noble Lord for his reply. Since his reassuring Answers to my Question on 30th June, at least one large racket has been broken up, with convictions of the culprits. Is he aware that that confirms our impression that his power and influence extend far beyond this House? Is he satisfied, though, that the special investigators whom he mentioned then can now detect the sophisticated forgeries which play a major part in these frauds, and which are so damaging to industry and retailers?
§ Lord McIntosh of HaringeyMy Lords, I cannot tell a lie: I did not do it all by myself. The noble Lord is of course right. The assignment of 130 additional investigators under the spend-to-save initiative has been notably successful. However, I fear that the ingenuity of fraudsters advances as well as the skills of the investigators.
§ Lord Mackie of BenshieMy Lords, how did this type of evasion become so profitable and so widespread? Was it due to a reduction in staff in the Revenue? How did it happen? It used to be that one could hardly get a nip in a distillery and now apparently the land is flowing with duty free alcohol.
§ Lord McIntosh of HaringeyMy Lords, legitimate duty free goods form a separate issue. As the noble Lord will be aware, it is planned to come to an end in July of next year. As to his first question, there has been an increase in the amount of fraud over a considerable period. There are many reasons for that. They include, but are not dominated by, differences in duty.
§ Lord Mackay of ArdbrecknishMy Lords, is not part of the problem that, as a result of the single market, we have had to take certain steps with regard to excise duty and how people can take whisky out of bond for export which allow these crooks to get into the business? Does the noble Lord realise that I greatly welcome his assurances that steps are being taken, and 995 will be taken legislatively if necessary, to prevent that? Does he further agree that the problem is not just one for the Excise, it is one for legitimate businessmen who find that other businessmen can, by buying this whisky which was due for export, indulge in predatory pricing?
§ Lord McIntosh of HaringeyMy Lords, I am grateful to the noble Lord for nearly everything he says. He is right to say that we are taking action to review—if that is not a dirty word, too—the whole issue of fraud, smuggling and cross-border shopping. That was announced in the July Budget. The results of the inquiry are in their final stages and will be used in the run up to the forthcoming Budget. Concurrently, a high level group of states of the European Union is due to report by March this year. Therefore, as the noble Lord suggests, a great deal is going on.
§ Lord Campbell of AllowayMy Lords, as part of the review system, could consideration be given to offering the bond system so that a rebate is paid against viable shipping or transport documents at the time the goods are removed from the warehouse for export? In other words, could we not introduce a new system which could be verified at the time with documents that are difficult to forge because they can be checked by Customs and Excise?
§ Lord McIntosh of HaringeyMy Lords, the noble Lord's question contains two aspects. The first is a review of whether and when duty should be paid. Drawback fraud—that is when duty is paid and then claimed back as though the goods had been exported—is an important source of fraud and I do not think that the noble Lord's solution would work well. Secondly, documentation is as simple as it can be consistent with keeping proper records. The difficulty is the sophistication of those who continue to forge the documentation. We spend a great deal of time on checking cases of fraud and forged documentation.
§ Lord Stoddart of SwindonMy Lords, my noble friend mentioned the end of duty free shopping next year. Is he aware that many people are concerned that the end of duty free shopping will cause not only a great deal of discomfort to the ordinary public but will result in the loss of more than 100,000 jobs? Has my noble friend had representations from my old trade union, the Amalgamated Engineering Union—I declare an interest—which is concerned about the matter and is mounting a national campaign to oppose it?
§ Lord McIntosh of HaringeyMy Lords, I am aware of the concern and that claims of job losses are circulating. They seem to the Government to be grossly exaggerated. The ending of duty free shopping has been presaged for many years as a natural and necessary part of the single market. The continuation of duty free shopping would require the unanimous vote of all states.