Alcohol Fraud

Wednesday 17th July 2013 Written Statements

[The Economic Secretary to the Treasury (Sajid Javid)]

I can inform the House that the Government are today publishing the response to the 2012 consultation on legislative measures to tackle alcohol fraud.

Alcohol fraud is a serious problem which HMRC estimates leads to revenue losses of approximately £1.2 billion a year. It also has a detrimental impact on the legitimate businesses attempting to compete in this sector. This is why the Government consulted last year on potential measures to deal with this problem. Measures covered by the consultation included beer fiscal marks, supply chain legislation and a registration scheme for alcohol wholesalers. The consultation also explored alternatives to these options that could assist HMRC’s enforcement strategy.

The responses to the consultation highlighted the potential anti-fraud benefits but also some considerable impacts the proposed measures might have on legitimate alcohol supply chains. After fully examining the case for and against the proposed measures, the Government have decided not to proceed with beer fiscal marks or supply-chain legislation at this time.

Compelling evidence was provided on beer fiscal marks to show that, although it could be a useful tool to counter trade in illicit products, the costs of affixing stamps to goods could be significant for the UK brewing industry and particularly for legitimate importers and exporters. Therefore, the Government will not be proceeding with the introduction of beer fiscal marks at this time to allow exploration of other, less burdensome options to address alcohol fraud.

Regarding supply-chain legislation, the consultation highlighted issues regarding the practicality and cost of introducing new “track and trace” systems across the brewing industry, as well as concerns regarding the likely effectiveness of the measure. The Government do not therefore intend to legislate for this measure at this time, but wishes to continue to explore available and emerging technologies that could help to secure alcohol supply chains. The Government will also consult shortly on new proposals to strengthen due diligence obligations of excise businesses throughout the supply-chain.

The Government note the positive response across all sectors towards the option to register alcohol wholesalers and can also see that there could be benefits in authorising this part of the supply chain, which is frequently the point at which illicit products are distributed. The Government wish to consult further with relevant sectors informally over the summer of 2013 to refine the design of a registration scheme, and fully understand the costs, benefits and implications if it were introduced. This will also include seeking views on the specific powers and sanctions that would be essential if the scheme is to be effective. The outcome of this further work will inform the Government’s future decision on whether to proceed with wholesaler registration.

The consultation also considered a large number of alternative measures, including many proposed by industry. The Government intend to progress a wider programme of change to policy and enforcement to strengthen the current “Tackling Alcohol Fraud” strategy. Full details of that programme, will be published shortly but will include steps to increase collaboration with industry and between enforcement agencies; measures aimed at tightening controls in the existing excise regulatory system; dealing more robustly with those found holding or moving illicit goods, and increasing co-operation with other EU member states.

A copy of the full response to the consultation will be available online on the GOV.UKsite at:

https://www.gov.uk/government/publications?publication_filter_option=consultations.