Jesse Norman (Hereford and South Herefordshire) (Con): It is a pleasure, as always, Ms Dorries, to serve under your chairladyship today.
I am grateful to colleagues from across the House for their support in this debate, and to the Economic Secretary and shadow Economic Secretary, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), for attending. Many issues will be raised in this debate—including, I am sure, the issue of duty and minimum alcohol pricing. I will restrict myself to describing and discussing the core issue of the illegal smuggling of tobacco and alcohol.
Such smuggling is becoming a serious issue in Herefordshire, particularly in Hereford city itself. My investigations have made clear to me what will already be apparent to many Members—namely, that such smuggling is only the tip of an iceberg and only the beginning of a much bigger problem nationwide. In that context, I especially want to pay tribute to PC John Yarwood, who is the Hereford city beat manager; to Councillor Mark Hubbard, who first brought this issue to my attention; and to the trading standards team at Herefordshire council, who have been fighting to keep the smuggling under control.
The problem is easily stated. A number of shops in my constituency persistently sell illegal tobacco and alcohol under the counter. A regular pattern is emerging: the shops are raided by the police and HM Revenue and Customs, goods are seized and fines are imposed. But weeks later, exactly the same thing happens again—the shops are raided, goods are seized and fines are imposed. And so it goes on. In the past 18 months, some 360,000 cigarettes have been seized in Herefordshire alone.
That pattern does not happen by accident. There is a simple explanation—the profits to be made from illicit sales far exceed the losses from fines and seizures. A single lorry-load of cigarettes can be worth £1.5 million in profits to the smugglers. Costing just 9p, a pack of 20 cigarettes has something like a 4,000% mark-up when it is sold on the street.
It has been reported that HM Revenue and Customs seizes some 1.7 billion illegal cigarettes every year. As a whole, tobacco trafficking is estimated to cost the taxpayer £2 billion a year and alcohol trafficking £1.2 billion a year. So this is very big business. In effect, the fines and seizures have become just another cost of doing business—literally, a licence to smuggle. It appears that they have little or no deterrent effect. Many of these shops have had their alcohol licences revoked, but that has proven to be little or no deterrent against illegal sales.
These actions make a mockery of the law and our law enforcement agencies, and they need to be stopped. They cause a huge loss of tobacco and alcohol duty to the taxpayer, they undermine the sales of law-abiding businesses on the high street and of distributors, and there is nothing to prevent under-age sales and illegal working in these shops; one man arrested in a raid in Hereford last year had been awaiting deportation since 2008. They also create serious additional hazards to health.
Someone smoking a smuggled cigarette could be smoking anything, just as someone drinking a smuggled bottle of spirits could be drinking anything. These products are not subject to the same rigorous controls as the legal products. Generally, they are made in backstreet premises in countries far distant from the UK, and they are specifically made to be smuggled. Moreover, there is evidence that illegal tobacco and alcohol outlets are often used to fund organised crime on a far wider scale.
However, the problem goes much deeper than that. There appears to be no way in law to prevent these shops from reopening and no clear line of accountability within Government. The issue sits unhappily poised between HM Revenue and Customs, which reports to the Treasury; the UK Border Agency and the police, which report to the Home Office; and licensing policy and trading standards officers, which report to local councils. I am extraordinarily grateful to the Economic Secretary for coming today, but she cannot be expected to answer questions about policing or border controls. Those topics are for the Home Office, not the Treasury.
I am aware that the Government have taken important steps to address the issue in recent years—providing extra resources during the next four years to increase investigations, intelligence and enforcement; expanding the work of HMRC overseas to tackle importation into the UK at source; and developing new technology and resources to strengthen our borders. I am also aware that, at least in theory, HMRC has a range of penalties at its disposal, including the seizure of goods, civil penalties, fines of up to £5,000, criminal prosecution and the recovery of criminal assets. However, those penalties are not anything like enough. I repeat that a single lorry-load of cigarettes can be worth £1.5 million in profits to the criminal rings behind it.
Furthermore, recent history has not been encouraging. Far from raising their game during the past 10 years, I understand that HMRC and the UK Border Agency have been doing worse over that time: they seized fewer cigarettes and less rolling tobacco in 2008-09 than in 2000-01; they have seized fewer vehicles; and fewer people have been sentenced for tobacco smuggling.
What can we do? I suggest three things. First, we need more information. Is it true that HMRC has been less effective and not more effective during the past few years? How many prosecutions have there been? We need regular and detailed data on prosecutions and seizures. Secondly, it is not enough for the police and HMRC just to be able to seize goods and impose these relatively modest fines. They need to be able to close down premises for significant periods when there have been repeated violations of the law. That may require new law-making.
Finally, there is a clear case for having a Minister who is specifically charged with dealing with the issue and able to work across Departments to be as effective as possible. I note that the Minister with responsibility for broadband, my hon. Friend the Member for Wantage (Mr Vaizey), works across both the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport. Perhaps there is scope for similar joint-reporting lines across HMRC, the Treasury and the Home Office in this area.
Andrew Griffiths (Burton) (Con): I thank my hon. Friend for securing this debate. As the chair of the all-party group on beer, I recognise his commitment to the brewing industry; he has been a great supporter of it since he has been in this place. Does he share my concern about the Government’s recent estimate of alcohol smuggling into this country? They estimated that the equivalent of 28,000 lorry-loads of alcohol come into this country every year, which is about 538 illicit movements per week. If so, does he also share my view that if such a massive amount of alcohol is being smuggled into this country, the problem lies with the customs authorities, which are not policing our borders efficiently and effectively?
Jesse Norman: I thank my hon. Friend and colleague for his intervention and questions. He puts his finger on the scale of the problem and he must also be right that the UK Border Agency is not being as effective as it should be in preventing this illegal importation of goods. That is a further element to be addressed by a Minister with the kind of joint-reporting lines that I described earlier.
Let me sum up my argument. Better information, new powers and better co-ordination between Government agencies are all required. Those three steps could make a crucial contribution to tackling the scourge of alcohol and tobacco trafficking, and I am sure that I speak for all Members in Westminster Hall today when I urge the Government to consider those steps carefully as they develop their thinking in this area.
[The full debate can be found here.]