Revenue Losses from Smuggling and Cross-Border Shopping (Hansard, 5 July 2001)

§ Lord McIntosh of Haringey
My Lords, Customs and Excise does not have estimates for the current financial year. However, the revenue lost from tobacco smuggling for the calendar year 2000 was published on 7th March and was estimated to be £2,890 million for cigarettes and £890 million for hand-rolling tobacco. The Government's strategy for tobacco smuggling is still in its early stages, but with more front-line staff and new x-ray scanners being put in place, and the cigarette pack marks which came into force last week, Customs and Excise will be able to take even more effective action against the criminals involved in tobacco smuggling.
Estimated revenue losses from cross-border shopping for the calendar year 1999 were £185 million for cigarettes and £35 million for hand-rolling tobacco. Customs and Excise does not have estimates for the revenue lost from the smuggling or cross-border shopping of fuel.

§ Lord Dubs
My Lords, I thank my noble friend for what is a moderately encouraging Answer in terms of the Government's decision to take action. Does he agree that the fact that an enormous amount of tobacco product and petrol enters our country in this way undermines both our public health and environmental policies? Does he also agree that it is very damaging in terms of the overall approach by the Government? Can anything be done in conjunction with our European Union partners to set up more effective controls at the points of entry or, indeed, can we persuade our European partners to show the same concern for the health of their people and for the environment as we show for ours?

§ Lord McIntosh of Haringey
My Lords, my noble friend Lord Dubs is of course right to point to the reason why we have tobacco and fuel duties on the one hand, it is for health reasons; on the other, for environmental reasons. However, it is not a matter of resiling from those health or environmental objectives. The damaging issue we must address is that of organised criminal gangs. That is the fight which I attempted to describe briefly in my first Answer, and it is ongoing. I do not believe that it is for me to make recommendations to our partners in the European Union about their taxation policy any more than we would wish them to make recommendations to us.

§ Lord Taverne
My Lords, do not the figures which the Minister announced demonstrate that, although there is no case for the harmonisation of direct personal taxation, under the single market there is every reason to promote the harmonisation of excise duties and, of course, preferably the harmonisation of excise duties upwards throughout the European Union?

§ Lord McIntosh of Haringey
My Lords, I have just resisted the temptation to express views on the taxation policies of other members of the European Union. I persist in my view that that is the right 869 position for this Government, just as it is right for the Government to take their own decisions about excise duties.

§ Lord Faulkner of Worcester
My Lords, what progress has the Department of Trade and Industry inquiry made into the alleged role of British American Tobacco in the tobacco-smuggling scandal? When might we see a report on that?

§ Lord McIntosh of Haringey
My Lords, the DTI investigation into British American Tobacco does not involve smuggling into the United Kingdom but, rather, South America and elsewhere. I do not believe that that matter follows on from the original Question on the Order Paper.

§ The Earl of Northesk
My Lords, I remind your Lordships that I am a smoker. We on these Benches applaud the efforts of Her Majesty's Customs and Excise to implement the Government's policies to combat smuggling. That said, is it the case that Mr Martin Taylor's report contained a recommendation to cut duty as a means of curbing the involvement of organised gangs in smuggling? Furthermore, is it not the case that in the 12 months since the Chancellor of the Exchequer ignored that advice, according to the Treasury's own figures, the smuggling of tobacco has leapt by 40 per cent?

§ Lord McIntosh of Haringey
My Lords, of course it is up to those who are consulted and invited to give advice to provide independent advice. That is what they have done. However, I have already made entirely clear that the Government's position is that it is for government to decide the level of excise duty. It is important that we make every effort, as we are doing, to combat organised crime. I happen to shop in Holloway Road in North London. Three weeks ago, 20 or 30 people there were selling clearly smuggled tobacco. I was pleased to learn that a crackdown on that practice took place last weekend and that that particular outlet was wiped out.

§ Lord Glentoran
My Lords, is the Minister aware of the serious effect that price differentials is having in the country of Ireland? In the border counties, smuggling allows paramilitaries and other gangs to make huge gains and it puts businesses in Northern Ireland completely out of business. The price differential is such that even local farmers drive across the road where they can buy their fuel at approximately half the price that is charged in Northern Ireland.

§ Lord McIntosh of Haringey
My Lords, a combination of problems is involved. I agree that that is a serious problem when there is a land frontier with another member of the European Union. We build revenue into our estimates and accept that there is legitimate cross-border traffic in this case and across the Channel. We are concentrating our efforts on the criminal aspects of smuggling and cross-border traffic.

§ Lord Rea
My Lords, can my noble friend say whether there is any truth in an article in today's 870 Independent, which stated that the Government will introduce their own Bill to prohibit tobacco advertising rather than rely on the more chancy procedure of a Private Members' Bill? Is he also aware that if they do that, the health of the nation will improve and that the image of the Government in the eyes of all health professionals, which is presently at rather a low ebb, would greatly improve?

§ Lord McIntosh of Haringey
My Lords, I read that report. My noble friend is as well informed as I am about that matter, which is not covered by the Question on the Order Paper.

§ Lord Dubs
My Lords, would my noble friend confirm that the Government's public health and environmental objectives will not be altered and that there will be no lessening of the level of duties on tobacco products and petrol?

§ Lord McIntosh of Haringey
My Lords, I hope that I have made it clear more than once that one reason for the level of excise duty on tobacco is the preservation of personal health and, in relation to fuel duties, the protection of the environment. Those have always been high priorities for the Government.