Tobacco Smuggling (Hansard, 11 July 2000)

§ Lord McIntosh of Haringey
My Lords, the Paymaster General announced on 22nd March the Tackling Tobacco Smuggling strategy and a £209 million investment to implement it. That strategy is designed to reverse the trend of tobacco smuggling within three years and reduce it to below current levels in the longer term.

§ Lord Faulkner of Worcester
My Lords, I thank my noble friend for that reply. However, is he aware that, if current smoking trends continue, tobacco will kill 1 billion people in the 21st century, which is 10 times more than in the whole of the 20th century? Of those, three-quarters will be in developing countries. Is he familiar with the report of the Health Select Committee in another place which describes how companies such as BAT, Gallaher and Philip Morris are targeting the Third World and also contains serious allegations that BAT has been involved in smuggling? Is he yet in a position to announce 129 whether the Government accept the committee's recommendation that BAT should be subject to a Companies Act investigation?

§ Lord McIntosh of Haringey
My Lords, we are certainly well aware of the serious health implications throughout the world, and particularly in developing countries, of continuing and rising levels of tobacco smoking. So far as concerns the Health Select Committee, we are considering its recommendations and shall respond in full in due course. It would not be right for me to respond to a specific recommendation before the full response has been prepared and submitted to the committee. Customs and Excise has not received evidence that UK tobacco manufacturers have committed criminal acts relating to tobacco smuggling into the UK. However, if any evidence is produced, Customs and Excise will of course investigate fully.

§ Lord Clark of Kempston
My Lords, does the Minister agree that, in view of the fact that, so far as concerns the Chancellor of the Exchequer, the loss of revenue since 1997 has tripled, surely that must point to the fact that the draconian tax on tobacco smoking is detrimental to our revenue? Will he say whether the Taylor report will be published and whether it recommends that VAT or tobacco duty should be reduced? When will the Government stop saying that taxation under this Government has been reduced? If one takes into account direct and indirect taxation, it has increased enormously.

§ Lord McIntosh of Haringey
My Lords, I shall certainly not underestimate the cost to this country of tobacco smuggling. We estimate that that cost now runs at approximately £2.5 billion, which is 25 per cent of tobacco revenue. As to the Taylor report, that was a private report to government and we do not intend to publish it. However, the Tackling Tobacco Smuggling White Paper, which we published in March and which I referred to in my first Answer, implements many of the recommendations which Mr Taylor made to us.

§ Lord Hardy of Wath
My Lords, does my noble friend agree that, so long as a wide and unharmonised gap exists between the price of tobacco products in this country and in our neighbouring EU states, there will be a temptation and incentive to smuggle and such crime will continue? Do the Government appreciate that that means that many young people will have access to less expensive tobacco or cigarettes outside the normal and lawful system which governs the retailing of those products, and that, in addition to the burdens and loss faced by the Treasury, the effect on the retail trade is serious?

§ Lord McIntosh of Haringey
My Lords, it is common ground that too many people smoke and too many people smoke smuggled cigarettes. That is damaging both to health and to taxation. However, there are two ways of approaching that as a problem. 130 One is the solution proposed by the noble Lord, Lord Clark, to reduce excise duties. That might help in one sense but certainly would not help from the health point of view. The other is the course that we are taking: to crack down on smuggling itself. The strategy which we published involves disruption of the supply chain, improved intelligence at ports and inland distribution points, confiscation of assets, and more and better human and, indeed, technological resources to catch those who carry out the smuggling.

§ The Earl of Northesk
My Lords, perhaps I should say that I am definitely not a non-smoker. Can the Minister confirm that, after drug smuggling, tobacco smuggling is the second biggest criminal activity in the UK, far exceeding the level of benefit fraud identified in the report of the noble Lord, Lord Grabiner, on the informal economy? That being so, how does the Government's spending on the problem compare with the resources that they commit to deal with benefit fraud?

§ Lord McIntosh of Haringey
My Lords, we are prepared to spend what is necessary to tackle tobacco smuggling. I have outlined some of the things that we are going to do. Our proposals involve considerable extra expenditure, including nearly 1,000 additional staff for Customs and Excise. If we found it necessary or appropriate to spend more money, I am sure that we would do so. Given that we are losing £2.5 billion a year, the programme is not constrained by cash.

§ Lord Peston
My Lords, does my noble friend recall that the policy of raising excise duty at a rate higher than inflation was introduced by the previous Conservative government? That was very much to the credit of the then Chancellor, the noble Lord, Lord Lawson, and we strongly supported that policy at the time, when we were in opposition. Would my noble friend be impressed if the Conservatives occasionally supported the Government in pursuit of a policy that is very beneficial to the nation—and also happens to help the Treasury?

§ Lord McIntosh of Haringey
My Lords, I noticed that the opposition to excise duties on tobacco came from the noble Lord, Lord Clark, on the Conservative Back Benches. He was not supported by his Front Bench. It would be helpful if the Conservatives supported us now as we supported them then.

§ Lord Shaw of Northstead
My Lords, is the Taylor report available to the Comptroller and Auditor General?

§ Lord McIntosh of Haringey
My Lords, I do not think that it is a financial report, so it does not come within the scope of the Comptroller and Auditor General's responsibilities. If I am wrong, I shall write to the noble Lord.