The Parliamentary Under-Secretary of State for Northern Ireland (Dr Andrew Murrison)
I am very grateful for this timely debate. The motion, tabled in the name of the right hon. Member for Belfast North (Mr Dodds) and his DUP colleagues, is a good one and we support it. I am conscious that many in this House have given a great deal of attention over the years to the various issues under discussion. For example, I am happy to acknowledge the work of the Northern Ireland Affairs Committee in its 2012 report on fuel laundering and smuggling. I also pay tribute to the work of the British-Irish Parliamentary Assembly, whose committee report, “Cross-border Police Cooperation and Illicit Trade”, which was published last month, the Government are studying closely. I also congratulate the hon. Member for South Antrim (Dr McCrea) on presenting his remarks in typically robust fashion. I will try to address the points he has raised as far as I can.
The motion lists a schedule of serious criminal activity, but before I address each of them in turn I want to put on the record the fact that crime rates overall in Northern Ireland are low and that Northern Ireland is a safe place to be. I say that because it is important to pay tribute to the various agencies that operate in Northern Ireland for the work they do in ensuring that safety, and to give a message to those who are looking at Northern Ireland as a good place to invest and a good place to be. Many of us grew up in the 1970s and ’80s and, although we did not live in Northern Ireland, every night we saw images on our television screens that portrayed a very different Northern Ireland. That is, mercifully, a thing of the past and, in order to foster the economic security that goes hand in hand with security, we need to give the right message to those who may be seeking to invest in Northern Ireland. I know that the hon. Gentleman feels as strongly as I do about that.
The DUP is right, however, to bring the issues under discussion to the attention of the House. Northern Ireland has particular issues regarding criminality. It is a very particular place and the challenges are peculiar to Northern Ireland, and we cannot ignore them. We owe it to people in Northern Ireland to address them to the best of our ability.
The hon. Gentleman effectively described the situation of fuel laundering, which is a clear and present danger that is particular to Northern Ireland, given that it has the United Kingdom’s only land border. Fuel laundering and fuel smuggling come at a great cost to the Exchequer, honest businesses and the environment. The hon. Gentleman also touched on the possible cost to security. The Government take the problem of oils fraud and crime very seriously indeed. The hon. Gentleman should be assured of that and I hope to be able to give him some examples of the efforts we have made to drive it down. Moreover, with the assistance of the agency to which he referred, I hope we will have further successes in the months and years ahead.
Fuel duty plays an important role in a range of Government objectives—social, environmental and fiscal. Fuel duty is also the fifth largest revenue stream for the Government at around £27 billion a year. Clearly, we cannot ignore it. The rates of fuel duty for all of the UK are set by the Chancellor, taking a wide range of factors into consideration. To support motorists and businesses, the Government cut fuel duty in March 2011 and have cancelled all subsequent planned increases until the end of the Parliament, a point I touched on during Northern Ireland questions earlier today.
The Government have a comprehensive strategy in place to tackle fuel fraud and crime. The oils anti-fraud strategy was originally launched in 2002, as the hon. Gentleman has said, and has driven down the estimated illicit market considerably in both Great Britain and Northern Ireland. Indeed, the latest tax gap figures published by HMRC indicate that the estimated illicit market share for diesel for Northern Ireland has fallen from 26% to 13%. By any measure, that is quite an achievement. The strategy was aimed at making it much harder for fraudsters to obtain rebated fuels, and to track and analyse the supplies of them, including a requirement for all dealers to register and submit returns. The registered dealers in controlled oil scheme has been a key weapon in our fight back against fuel fraud.
In Northern Ireland, the Government have close and productive co-operation with the Northern Ireland Executive and with the authorities in the Republic. Co-operation and intelligence sharing through the Organised Crime Task Force and the cross-border fuel fraud enforcement group has been invaluable in applying multi-agency pressure to tackle oils fraud, including fuel smuggling and laundering.
Ian Paisley (North Antrim) (DUP)
On combating fuel fraud, will the Minister confirm that the new fuel marker that is about to be introduced in Northern Ireland has no roadside test capability whatsoever and that, therefore, the Government are about to put in a marker that cannot be tested on our roadsides?
Dr Murrison
The road marker has been a long time in the making. It has been trialled both in the UK and in the Republic and both countries are happy with it. I am assured that it will be robust and that it is extremely difficult to remove.
Ian Paisley
I will have an argument with the Minister about its capability in a moment, but I am asking a specific question about roadside testing. We cannot combat crime if we are not able to stop someone who has the fuel and test it at the roadside. One of the requirements of the IMS test was to have roadside capability, so will the Minister confirm that the Dow marker has no roadside capability?
Dr Murrison
What I can confirm is that the marker is capable of being discovered; otherwise, frankly, there would be no point in having it, would there? What would be the point of going to the expense of putting in a marker if it was not possible for criminal justice agencies to determine whether the material was illicit or not? [Interruption.] Perhaps I will be able to come back to the hon. Gentleman’s remarks later, but if I cannot deal with them satisfactorily perhaps the Under-Secretary of State for the Home Department, my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley), who will be in the hot seat shortly, will be able to shed some further light to his satisfaction.
In the financial year 2013-2014 alone, HMRC dismantled 38 laundering plants, closed 79 huckster sites and seized more than 500,000 litres of illicit fuel in Northern Ireland. I accept that the hon. Member for South Antrim is frustrated by the failure to eradicate this particular form of criminality, but that is quite an achievement and it represents considerable downward pressure on organised crime in Northern Ireland. Although we are all impatient for more, we sometimes have to celebrate successes as well as take note of failures.
Mr Nigel Dodds (Belfast North) (DUP)
The Minister refers to progress, but what about the issue mentioned by my hon. Friend the Member for South Antrim (Dr McCrea) about the lack of prosecutions and of people being put through the courts and convicted? A lot of people in Northern Ireland, and, indeed, anyone watching the debate, would find it incomprehensible given the scale of the illegal activity that so few people are brought before the courts.
Dr Murrison
There have been prosecutions and perhaps I can enlighten the right hon. Gentleman about them later in my speech. Clearly, we all want to see prosecutions for criminal activity and the hon. Member for South Antrim rightly highlighted the introduction of the NCA into Northern Ireland, which everybody in this House would welcome, I hope. We are doing that to drive down further organised criminal activity in Northern Ireland and to get the convictions that the right hon. Gentleman seeks.
Dr McCrea
Does the Minister not realise that the community finds it absolutely abhorrent that filling stations that sell illegal fuel are not only not prosecuted but open the following week to sell fuel again? In many cases, the community has seen such filling stations closed down on a number of occasions without any court case following.
Dr Murrison
I would certainly share the hon. Gentleman’s frustration if there has been criminality without prosecution. Of course, these matters do not rest with me but when crime exists we want it to be expunged and dealt with. I would start to part company with the hon. Gentleman, however, on the suggestion that there has been some complicity or a deal done. I have seen no evidence to suggest that that is the case. I can understand his suspicion, of course, but I would like to downplay some of his suggestions that in some way agencies have been allowing things to go on or have not been prosecuting or pursuing cases when, of course, the law would require them to do so. That is a very serious charge and were there to be substance in it I would expect it to be reported to the appropriate authorities and investigated.
Keith Vaz (Leicester East) (Lab)
I join the Minister and others in welcoming the fact that the NCA will now have a remit in Northern Ireland. I congratulate the DUP and all those who pressed the Government and other bodies to ensure that that happened. Given that the NCA now has this much wider remit, as the Select Committee on Home Affairs has recommended in the past, will it receive any additional resources to deal with these issues?
Dr Murrison
Part of the difficulty, of course, has been that the PSNI has had to deal with a lot of these matters itself. The Chief Constable will say that he is well resourced, but he has been subject to considerable restraints, as have all police forces in the United Kingdom in recent years. That inevitably has an impact on what he can do. The fact that the NCA has not been able to operate at anything like its fullest extent in Northern Ireland has meant that there has been a deficit in policing in Northern Ireland. That is now, mercifully, being remedied so that the people of Northern Ireland can benefit from the full entirety of policing to which they are entitled. That will clearly have resource implications, which I hope will be beneficial, for the PSNI.
On the question of concerns about the lack of custodial sentences, after running a consultation in summer 2013 the Northern Ireland Department of Justice implemented legislative change in December of that year allowing the referral of unduly lenient excise fraud sentences to the Court of Appeal. The consultation and the resulting measure had the Government’s full support, of course. I can report to the House that in the period 2013-14 six individuals were prosecuted for fuel fraud in Northern Ireland. I accept that that is nothing like enough, given the extent of the problem, but it gives the lie to the suggestion that there have been no prosecutions as there clearly have. However, I would share the assertion made by the right hon. Member for Belfast North (Mr Dodds) that there need to be more. I hope that the introduction of the NCA will play a part in that.
On the specific issue of fuel laundering—
Dr Murrison
I will in a minute.
Hon. Members might be aware that the UK has worked closely with Ireland to identify a new fuel marker. It will come in in May and represents a significant improvement on the current fuel marker. It gives much more protection against fraud.
Dr Murrison
I think that we have exhausted this particular point, and I did say that I would come back to the hon. Gentleman. However, I said that I would give way to my hon. Friend the Member for Amber Valley (Nigel Mills).
Nigel Mills
While we are talking about the lack of prosecutions, the sentences that are given out are somewhat more lenient than we might hope for an offence of such seriousness. Does my hon. Friend agree that there is a problem in that a lot of people perceive fuel laundering and illegal sales of tobacco to be victimless crimes whereas—this is certainly the case in Northern Ireland—they are serious organised crime offences that fund other serious activity and should be treated with that seriousness by the public, by all the authorities and by those who give out the sentences when people are caught?
Dr Murrison
I agree it is not a victimless crime, as is clear from the figures I have trotted out—there is the cost to the Treasury alone. All of us who rely on the largesse of the public services we enjoy are victims of this crime, so I would certainly agree with my hon. Friend. On the leniency of sentences, I will be interested to see what the Court of Appeal decides.
David Simpson (Upper Bann) (DUP)
I think the Minister said—I stand to be corrected on the exact wording—that the Government were confident that the marker would work, but a test carried out in Bellingham with Queen’s university and others, to which HMRC had to be dragged kicking and squealing, along with the Irish Revenue, proved that the Dow marker could effectively be removed by simple distillation. We must have confidence in the marker, but this one cannot do it.
Dr Murrison
I am certainly not going to assert that any marker or anything added to a substance is incapable of being removed, but clearly it is perfectly possible to launder fuel at the moment—it happens all the while—and although the pattern of fuel laundering is changing, as was touched upon by the hon. Member for Belfast East (Naomi Long), nevertheless it remains and brings with it financial and environmental costs, and costs in terms of criminality, security and all the rest of it. I am advised that the new marker, which we will introduce in May, is an improvement on what we currently have.
Dr Murrison
I am sorry if the hon. Gentleman does not agree, and I am sorry if I cannot give him an absolute assurance that any substance we add could never be removed, but he will have to accept that it is an improvement on what is happening at the moment, which is patently inadequate.
Dr Murrison
Well, I look forward to the hon. Gentleman’s remarks when he makes his contribution.
Mention has been made of fraud and tobacco—topical given the deferred Division at lunchtime. To be clear, our aim is to maintain the downward pressure on the illicit market in cigarettes and hand-rolling tobacco. HMRC’s anti-smuggling strategy is effective and has been adapted continuously to deal with changes in criminal behaviour. Since HMRC first launched its strategy to tackle tobacco smuggling, the illicit cigarette market has reduced by half and the illicit hand-rolling tobacco market by a third, which is substantial.
The motion refers to greater co-operation between the PSNI, the NCA and HMRC on combating serious criminal activity. This cuts to the heart of today’s debate and the point on which we pin so many of our hopes for the future. Extensive multi-agency cross-border co-operation is a key element of the operational response to fuel fraud. HMRC chairs a multi-agency cross-border fuel fraud group that meets quarterly and has representatives from HMRC, the Northern Ireland Department of the Environment, the NCA, the PSNI, the Northern Ireland Environment Agency and their Republic of Ireland equivalents. This group shares intelligence and information on operational activity, as well as co-ordinating joint operations. The joint UK-Irish project that identified the new fuel marker is a prime example of that co-operation, notwithstanding the remarks from hon. Gentlemen this afternoon.
I am delighted that the House has agreed legislation to extend fully the remit of the NCA in Northern Ireland. This follows the vote in its support last month in the Northern Ireland Assembly. Serious and organised crime groups do not operate in isolated pockets of each region, and nor do they respect borders or force boundaries. The PSNI estimates that there are between 140 and 160 organised crime groups active in Northern Ireland and 800 active criminals. Nearly one third of these groups are assessed as having links to international criminality, and another third are linked to criminality in the UK and the Republic of Ireland.
Since it was created just over a year ago, the NCA has begun to make a real impact on the threat to the UK from serious and organised crime, but until now the fight against such offences in Northern Ireland has been inhibited. There have been a number of significant PSNI investigations that the NCA would have been better placed to lead, given that key criminals and their associated infrastructure have been based outside Northern Ireland. It has also been difficult for PSNI to access the specialist resource and capability that the NCA holds. Northern Ireland has been left at a greater risk from child sexual exploitation, cybercrime and economic crime because the specialist resources that the NCA has developed have not been available.
Civil recovery has been affected. Since June 2013, civil recovery investigations are down by more than 50% and property-freezing orders by more than 70%. This is worrying, because denying criminals the proceeds of crime is one of the most effective ways we have of disrupting their activities. However, the NCA will soon be able to deal with serious and organised criminals—no matter where they are—and I am confident that the people of Northern Ireland will now have the same protection against serious and organised crime as those in the rest of the UK. That is surely their right.
As I have said, we do not doubt the seriousness of these types of criminal activity and the harm they cause to society and security. We and devolved colleagues are, as I have outlined, working in co-operation with partners elsewhere to address these problems vigorously. There is often close co-operation with counterparts across the border, and I would say that it is increasing, but we need at all times to ensure that the fullest pressure is maintained on the perpetrators, wherever they may be, and the Government will seek to go on doing just that.
David Simpson
My hon. Friend is absolutely right to ask that question. Someone was sleeping on their watch, if indeed they were watching at all.
I have another question for the Minister. Why would the Government not support their own world-leading British science company when its fuel markers are the only IMS-proven indelible markers that are recommended? I want to ask him a further question. Given that the IMS is a joint UK-Republic of Ireland process, why was a single Dow marker IMS awarded when the Government knew that they needed a minimum of two indelible markers? I have asked a series of questions. I do not expect to get the answers today, but it is important that we try to get to the bottom of this.
Dr Murrison
Perhaps I can write to the hon. Gentleman with a fuller account if he wants me to. This whole debate appears to be revolving around the Dow marker. That is fine, but hon. Members need to understand that the tendering operation was free and open. The Government are bound by rules in that respect, so there was no shady deal in which a British company was disadvantaged or in which Dow was given preference. That would have been madness. The alleged laundering method does not appear to be a viable large-scale proposition. I cannot give the hon. Gentleman the assurance he seeks that a marker exists that can never be removed. The experiences in the laboratory and in the field are very different, as I think he will probably, on quiet reflection, understand.
On the other point about markers and whether we would be able to detect at the roadside whether something was illicit or not, clearly we are not going to remove the marker we already have until we are completely happy with the new one and it is proven. So the hon. Gentleman can be assured that the two will run in parallel and, thus, there will be no disadvantage. I am hopeful that the new marker will be an advantage, but certainly we will be running the two in parallel. I hope that gives him some reassurance.
David Simpson
Not really, but I will say something about the process. My understanding is that a year ago the Dow marker was tested and found not to work, yet a year down the road we are introducing it. I cannot understand that. If something does not work, why are we spending millions of pounds on introducing it? We are trying to get to the bottom of this and we need the proper marker introduced.
David Simpson
We do not necessarily have to take the cheapest option—it has to work.
Dr Murrison
I understand that 23 markers from 12 companies were assessed side by side, and clearly the one that worked was chosen. I hope that is helpful.
David Simpson
As I have said, time will tell. I think this is going to be an expensive exercise that will be proven in time to be not as effective as the Minister has been led to believe.
Naomi Long
There is no doubt that that is a concern, and it has been a concern for some time. There is evidence that when HMRC or the PSNI has turned up on site, people have scattered and taken with them some of the critical evidence, which suggests that they were aware that those organisations were coming. Obviously, we can look at that in two ways. The first is that someone could be tipping off those launderers. The alternative is that these are complex organisations that have their own intelligence. They are observing the movements of the police, HMRC and others in the area and may well become aware that operations are moving against them. In some ways, we need the intelligence on the legal side of the fence to be much more robust than the intelligence on the other side. We should not rule out the possibility that the criminals themselves are gathering intelligence about what is happening in their neighbourhoods that helps them to evade capture.
I want to move on to the wider issue of the impact of this crime. I have referred to the fact that this is not a victimless crime, and it is worth talking now about some of the victims.
Dr Murrison
The point about intelligence is well made. It is important not to provide organised criminals with information if we can possibly avoid it, which recalls the letter from my right hon. Friend the Member for Loughborough (Nicky Morgan) to the Chair of the Northern Ireland Affairs Committee. I have not seen the letter so cannot comment on it in any detail, but I think it is probably wise not to put such a letter in the public domain if it would give succour to organised criminals. We must be careful not to display our tactics and what we do to those who might wish to make use of them in a way that is contrary to national security or good order.
Naomi Long
I understand the Minister’s point, but there is a wider point about how Members can raise their concerns about these issues. They have done so via correspondence and in private evidence sessions, as the Northern Ireland Affairs Committee has done here with Her Majesty’s Revenue and Customs and in other places. It appears not to have been taken seriously. That is the concern expressed by Members on this side of the Chamber. I certainly would not wish to put anything into the public domain that would give any succour or encouragement to any criminal; neither would I want to rely on a marker if there was evidence that it could be easily removed.
We also need to acknowledge that this is a multi-billion pound business for the people involved. Whatever marker is used, they will invest in the technology that will allow them to evade it. All that we are trying to do—all that we can ever do in these circumstances—is stay ahead in the game. We need to be realistic about the fact that when it comes to protecting the public, what we are trying to do is stay ahead of the criminals in the technology we use: they will no doubt be chasing that technology as soon as it is included as a marker.
As I said, I want to move on to the wider issue of the impact on the victims. I have already mentioned that this is not a victimless crime. I want to talk about the wider impact of fuel smuggling and fuel laundering and the wider counterfeiting of consumer goods. The motion ranges slightly wider than fuel, although fuel obviously exercises us all because of its significance. There are two separate but linked issues. The illicit and counterfeit goods themselves have an element of risk attached to them. They defraud the public. People often purchase inferior goods in the belief that they are getting the real thing, and that in itself can be extremely dangerous.
For example, when fuel is stretched rather than laundered or smuggled, it can seriously damage vehicles. Often the people who purchase it are unaware that it has been stretched. There are two classes of people in that regard: those who know that they are buying fuel at a ridiculously low price and that they are risking their vehicles; and those who stop at what looks like a reasonable petrol station and purchase fuel, only to find out subsequently that it has damaged their vehicles because it was illicit. That is a different issue, but it causes real damage to vehicles, and is the public need to be made aware of that. Frankly, it may well provide a bigger deterrent against buying laundered fuel than almost anything else we could say to motorists.
Counterfeiting also places the public at risk in other ways. Reference has already been made to the discovery that some counterfeit cigarettes contain asbestos. Counterfeit cigarettes sold in Northern Ireland in the past have been found to contain arsenic. The people who make these products do not really care what goes into them or what impact they might have on health. When people purchase counterfeit and illicit goods, they are placing themselves at considerable risk. Another example is that of products made of flammable materials being brought into the household. People might think that those products meet the regular standards, unaware that they are actually bringing materials into their home that could put their family at serious risk.
I also want to highlight the conditions of those involved in counterfeiting these goods, because often they are being held against their will in other countries, having been trafficked as slaves in order to produce them. The abuse often reaches much further than consumers and the public here in Britain; it also affects those producing the goods further afield.
As the hon. Member for East Antrim (Sammy Wilson) rightly, if rather surprisingly, said, significant environmental damage is caused when people get involved in fuel laundering. The mess that is left around the countryside in Northern Ireland not only costs millions of pounds to clean up but will take many years to be ameliorated. It will leave an almost indelible mark on parts of our countryside, on our water supply, and on many other things, so these illicit and counterfeit goods have a significant impact on the public.
The other aspect is smuggled goods—the stuff that is brought in through smuggling routes. Those who open up those routes do so not for one particular set of goods; once they are available they will use them for anything. When they have good routes for smuggling fuel, consumer goods or cigarettes, we can be sure that they will use the same routes for smuggling people and drugs—and all human misery is there. It is about opening up routes around the world so they can smuggle goods, and they do not care whether it is people or goods being trafficked.
In all cases, whether counterfeiting and laundering or smuggled goods, people are evading their tax and Revenue payments. That brings us back to the issue of robbing public services. Those who purchase cheap cigarettes or cheap petrol and diesel, and thereby counterfeit goods, may think that it makes no difference. However, when they turn up at the hospital and face long waiting times for accident and emergency services, or cannot get a bed and are lying on a trolley for 48 hours, they should realise that those problems are due to money not going to the Revenue. We have to be honest with the public and say: “You are only stealing from yourself when you purchase goods in this way; you are not doing anything to help your own situation.” We need to try to disabuse people of the notion that this is a victimless crime.
In Northern Ireland, as several hon. Members have said, this has a more sinister element in that much of the money raised in this way is being funnelled into further illegal activity and, in particular, paramilitary activity. That should be a matter of concern to us all. We want a stable and peaceful future, but most of all we want a safe and secure future for the people we represent. We need to say to people: “When you purchase smuggled goods at the petrol pump or elsewhere, bear in mind the fact that you are putting money in the pockets of people who are quite happy to set out with murder in mind and take lives for political gain. Those are the people who benefit from this.” It is not only republicans but loyalists who are willing, through organised crime, to work in drug smuggling, drug dealing, counterfeiting, and all the other things. Criminals will work together where there is money to be made. That will be more important to them than any political objectives they may claim to have, and much more important than the lives and the security of the people in their communities.
It is important in this debate that we spend a little time considering the fact that this is not a victimless crime but a complex and difficult one that requires a multi-agency approach. I have no doubt that the agencies are pushing very hard to bring it to an end, but we need to secure public support. With that support, it will be much easier to find those who are behind these smuggling rings, hold them to account in the courts, and see them serve jail time for what they are doing. I commend the hon. Member for South Antrim for bringing this motion to the House.
Ian Paisley (North Antrim) (DUP)
At the outset, I congratulate my hon. Friend the Member for South Antrim (Dr McCrea) on securing this very important debate and on introducing it in such a powerful way. I thank all Members from across the House who have spoken, but I pay particular tribute to the hon. Member for Birmingham, Erdington (Jack Dromey), the Labour Front-Bench Spokesman. He has put on the record some incredibly startling facts that require answers.
Last week, Alan Bennett, the famed playwright, when interviewed on “World at One”, was asked to outline for us the most important achievement of this nation. After pondering on whether it should be the National Trust or our physical heritage, he said very clearly that it was English hypocrisy.
I am sick, sore and tired. We have heard a unified voice from this side of the House, whether nationalist or Unionist. We are sick, sore and tired of the hypocrisy that is fed to us by the shovel-load: that we are somehow thick Paddies who have no idea of what is going on in our country when it comes to crime, and that if we dare to expose anything about it, we are told, “Hush, hush, you’ll tip the criminals off.” Anyone would think we were a bunch of suckers when it comes to dealing with crime, but we have lived among these criminals for decades. We see how they work. We see the evil they bring upon our society. We want it dealt with and we want it dealt with now. We are saying that with a unified voice on this side of the House, across all parties. We are no longer prepared to be fed, quite frankly, the bull that we are being fed: that this matter is being dealt with by officialdom.
Alan Bennett was right when he pointed to hypocrisy. I see it in the officials that I meet and have met daily since 2009 and since entering this House. We have tried to deal quietly and discreetly with the issue of how we can tackle serious and organised crime in our society. All we get, frankly, is this hypocrisy: it will be dealt with, it will be dealt with. Well, five-and-a-half years later it has not been dealt with. Since 2009, when I came off the Organised Crime Task Force board, I have not seen one single inch of progress. I have heard a lot of platitudes. We on this side of the House are sick, sore and tired. We want something done. We want something done urgently. We want something done that is effective and actually makes a difference. I believe we are all on the same side and want to see the criminals beaten, but officials are dragging their feet when it comes to sorting out this problem. I hope they can get to grips with it.
Last week, a national newspaper report by Brian Flynn dealt with a number of crime issues and I want to address those listed in the motion. The first is the smuggling of tobacco products and the impact it has on our economy. Every crate of smuggled tobacco products puts £1 million into the coffers of the criminals, and 40% of all cigarettes smoked across the United Kingdom are either counterfeit or smuggled. The vast majority of that money goes into the coffers of the IRA. In fact, last year it was estimated that it achieved about £22 million from that enterprise.
Some of us take a different view of plain packaging, but under new regulations it is estimated that the profit margin will increase to €120 million, which is £87 million. That is enough money, as we would say locally, to choke a donkey. The people engaged in this serious organised crime are rubbing their hands in glee at the prospect of plain packaging after today’s vote because, whether we are for or against plain packaging—I respect the views of those who support it for health reasons—the legislation is defective on the issue of tracking and tracing.
At present, the manufacturing of cigarette boxes involves placing an electronic track-and-trace system in each box. The legitimate manufacturer of the cigarette packet gives those track-and-trace numbers to the police and customs, and the police can at any time place the packet on a hand-held machine in order to see the date and location of manufacture. Under the defective delegated legislation that went through the House today, that has been removed and packs cannot have track-and-trace. The Government have told me privately, “We’ll introduce it later on,” but apparently the earliest it can be introduced under the delegated legislation is in about three years. There is a bonanza coming for the next three years, because cigarette packets will have no track-and-trace capability. Criminals out there are rubbing their hands in glee because an effective security measure has now been removed from cigarette packets. The hypocrisy stinks to heaven.
The second issue that has taken up a lot of time in this debate is that of fuel laundering and fuel fraud, and it is a most serious crime. The hon. Member for Birmingham, Erdington asked some very serious questions. Indeed, he and my hon. Friend the Member for Upper Bann (David Simpson) asked 13 specific questions that have not yet been answered, and this House is entitled to answers.
Why would the Government continue in January 2015 to designate in legislation the Dow fuel marker when they knew a year ago that it was not fit for purpose, being completely launderable using basic science? The Hydrocarbon Oil (Marking and Designated Markers) (Amendment) Regulations 2015 will come into force on 1 April and they indicate the precise ingredients of the Dow marker. Under law, believe it or not, we have to tell the world what makes up the Dow marker. That is how pathetic the hypocrisy of our country is: we have to tell the criminals that publicly. The Minister said tonight that the Labour Front-Bench spokesman, the hon. Member for Birmingham, Erdington, should not have read out a letter as it could have tipped certain people off, yet we publish in black and white the exact ingredients that go into the Dow marker. The statutory instrument is well timed, because it comes into effect on 1 April, April fools’ day. What fools we are for just going along with that and accepting the regulations, which publish what will be in the fuel and tip off scientists, legitimate and otherwise, about what is in the recipe for the Dow marker and what they therefore need to do to remove it.
If the marker was effective, that would not matter, because we would have those people and could prevent them from doing that. However, it is not effective and the Government knew that it was not effective a year ago. The Opposition spokesman put on the record the letter from 9 July 2014 from the then Treasury Minister, the right hon. Member for Loughborough (Nicky Morgan), to the Chairman of the Northern Ireland Affairs Committee, the hon. Member for Tewkesbury (Mr Robertson), telling him that the information about the theoretical weaknesses in the fuel could alert fraudsters. The idea was that he should just hush it up and not tell anyone and the Government would keep working on it. The Government then went on to say that there was insufficient evidence to show that the process of distilling the fuel was
“a viable option commercially on a large scale for effective laundering of rebated fuels, although HMRC are continuing to investigate these claims.”
I will come to the question of whether that can be done effectively and economically, but let me turn first to the question of hushing things up. Members of the Northern Ireland Affairs Committee were prepared to sit for some time and give the Government the opportunity to change things and to make a move. We waited from last July and promises were made through August, September and October. Bigger promises were made in December and, at the turn of the year, we were told that things would be changed. They have not been changed and the April fools’ day legislation will be put in place without a single jot or tittle removed from it. The legislation, which will be pushed through, will push through a defective marker that the criminals will welcome and that they know they can remove.
How do I know that it can be removed? Today, we have placed in the Library a report that was confidential until yesterday, written by four academics, one from Queen’s university. The report, entitled “Distillation of fuel markers”, makes a number of startling claims, which I want to put on the record. In its opening section, it states:
“Distillation is a very simple and highly cost-effective way of removing a marker and has a key advantage over many of the methods cited above in that there is no laundering residue for the criminal to dispose of.”
My hon. Friend the Member for East Antrim (Sammy Wilson) can rest tonight in the knowledge that in future when criminals distil fuel and remove markers from it there will no longer be terrible sludge and waste pumped into our rivers. This marker is so simply removed that it can be distilled off the top of fuel without creating any terrible after-pollution. The simplicity of the distillation process is incredibly beneficial to the criminals.
The report goes on to state:
“Given the simplicity of distillation it is apparent that an authority would be foolhardy to employ a marker whose boiling point fell just in or entirely outside the boiling range of the fuel to be protected.”
That is exactly what Dow has done. It has created a marker that is effective until just below boiling point, so people can boil the marker away without causing any harm and it vanishes up into the heavens. It is the devil’s share. He gets his share and the criminals get theirs. That is what is happening as a result of the new fuel marker.
The report stated that the academics took a British piece of scientific equipment, a marker that was found worthy of being put into British fuel, and tested it against the Dow marker. It stated this, after testing both markers:
“These results clearly indicate that the Dow marker can effectively be removed by simple distillation and successfully separated from the diesel distillate.”
In other words, the fuel can be separated completely from the marker and sold as unabated fuel that is no longer marked.
Dr Murrison
The hon. Gentleman is making a speech in his usual robust fashion, but it is important to put on the record the difference between a laboratory analysis and scaling up to field operations. I think he needs to reflect that in his contribution.
Ian Paisley
I am delighted by that, because I am going to reflect that point now and I thank the Minister for encouraging me to do so. The then Treasury Minister said that there was insufficient evidence that the process was a viable commercial option, which I think is the point the Minister has just made: “Yes, you can do this in a lab, but could you really do it in the field?” Well, the report that is now in the Library goes into this, under a section entitled, “Economics of distillation”:
“The capital cost of a distillation plant suitable for laundering out a marker from fuel is low. Cost for off the shelf plant can be as little as…£12k”.
For an initial outlay of £12,000 for a small plant, the criminals could make about £16,000 per day, after they have laundered the product, or 5.8 million quid a year—that is pretty economical in my books; that is pretty cost-effective. I will come to the in-field testing in a minute, so I hope the Minister will brace himself, because it gets even better.
The report goes on:
“Even taking into account the worst case scenario presented above, a 160kW distillation laundering plant would generate huge profits with a payback in just under a fortnight. If this process was refined with heat regeneration and vacuum distillation, it would be quite feasible to double the capacity of this system. A small 1MW industrial unit could operate 6 of these 160kW systems, generating clear profit of approximately £92,000 per day and a payback period of less than 2 weeks. Such a 960kW laundering facility would be capable of generating an annual profit of approximately £33.5 million.”
This is a feasible, cheap alternative for gangsters and criminals. This report, which is in the Library of the House, is by a credible group of scientists and, critically, presented in such a way that if it is wrong, the Dow Chemical Company could sue the pants of these people. But it won’t go near it—it won’t even address the points made.
I understand that in-field testing was carried out on four occasions. The one at Bellingham, which my hon. Friend the Member for Upper Bann (David Simpson) mentioned, was not a small test; it was a test of 30,000 litres of fuel distilled successfully—it was just distilled off. Another test was carried out in Northern Ireland, and another test of a similarly large quantity, carried out by a scientist, Professor J. J. Leahy, in the Republic of Ireland, also proved that this material could be distilled off. Queen’s university also carried out a test, but sadly, after it reported privately to officials last year, the official response to the professor at Queen’s university was this: “You’d better tell us where that illegal plant you’ve just set up is, because we want to put it out of business.” I can take a joke, but I do not think that was a joke—it is almost like they were telling him for daring to undermine what officials were doing. It is hypocrisy.
The Parliamentary Under-Secretary of State for the Home Department (Karen Bradley)
I congratulate the hon. Member for South Antrim (Dr McCrea) on introducing the debate and the hon. Member for North Antrim (Ian Paisley) on his concluding comments. It has been an interesting and passionate debate and in my closing remarks I will endeavour to address the points that were made.
As we heard, serious and organised criminal groups do not operate in isolated pockets. We know, for instance, that they exploit the land border between Northern Ireland and the Republic of Ireland. As the motion reminds us, they are engaged in a range of crimes, including fuel smuggling, the supply of counterfeit medicines and electrical goods, and fraudulent trading in numerous products to evade VAT or make illegal repayment claims. VAT fraud associated with tobacco and alcohol has become more sophisticated and more multinational, and the internet has opened more opportunities for the criminals. The cost to the Treasury is substantial and the impact is felt in communities throughout Northern Ireland.
A number of hon. Members referred to the fact that these are not victimless crimes. The hon. Member for Belfast East (Naomi Long), my hon. Friend the Member for Amber Valley (Nigel Mills) and the hon. Member for Foyle (Mark Durkan) made that point explicitly, and they are right. The effect of fuel laundering, which has been a major part of the discussion, means that it is clearly not victimless. The hon. Member for Belfast East spoke about the impact on the vehicles of unsuspecting purchasers of illicit fuel. The impact on us all from the loss of that tax revenue means that we have less tax from which to pay for much-needed teachers, nurses and police officers. People purchasing that fuel are aiding and abetting the criminals. This is not victimless crime. The people involved in such criminality are not cheeky scoundrels. This is serious crime that is a threat to us all.
Our strategic approach needs to be tightly co-ordinated to counter that threat; otherwise, serious and organised criminals will exploit the gaps. We need to ensure that measures are in place relentlessly to disrupt serious and organised criminals, stop people getting involved in crime and strengthen our protection against the criminals. The UK Government and the Northern Ireland Assembly are doing exactly that. The launch in 2013 of the National Crime Agency and the serious and organised crime strategy represented a step change in our approach. The NCA and the 4 Ps strategy are already making a difference, leading to a more co-ordinated response across the whole United Kingdom. As a result, we have improved our understanding of the threat, strengthened co-operation with partners, invested in better capabilities and introduced important new legislation.
Implementation of the serious and organised crime strategy is consistent with the approach in Northern Ireland, where the Organised Crime Task Force enables law enforcement agencies to work alongside other Government bodies and the private sector to share knowledge and tackle organised crime in partnership and to deliver the objectives of Northern Ireland’s organised crime strategy for 2014-16. Leading the operational fight are the PSNI, HMRC and the National Crime Agency.
The NCA works closely with its partners to investigate the activities of organised criminal groups, including those involved in fuel smuggling, fuel laundering and the counterfeiting of consumer goods. The NCA is a key member of the OCTF in Northern Ireland, providing specialist knowledge, support and expertise. It continues to support the PSNI through the exchange of intelligence and information relating to Northern Ireland, including instances where the situation has required constabulary powers to be exercised. The NCA is undertaking civil recovery investigations in Northern Ireland, where fuel laundering and cigarette smuggling are believed to be the underlying criminality.
It is clear that fuel smuggling and laundering is a major problem in Northern Ireland. I was interested in many of the points that were raised, including the comments of the hon. Member for Belfast East about criminals. If something seems too good to be true, it probably is too good to be true. This is a supply chain issue that the hon. Member for Foyle and I explored at length when we served together on the Committee considering the Modern Slavery Bill. He is right to commend the Bill for covering Northern Ireland where necessary, as does the remit of the commissioner. He made an interesting point about the impact on human trafficking and modern slavery. Sometimes we say that the criminality of organised crime groups lies in drugs trafficking, firearms trafficking or people trafficking, but in reality those groups are involved in all forms of criminality. That was brought home to us all by the dreadful case of the container in Tilbury docks with 35 Sikh people in it, including one who, sadly, died in transit. Part of the investigation of that incident involved a fuel laundering plant. That brings it home that this is not a victimless crime; it is a crime that affects us all, and those criminals are nasty people who want to harm us and are prepared to go to great lengths and hurt many people through different types of criminality to make money from organised crime.
We have heard from my fellow Minister, my hon. Friend the Member for South West Wiltshire (Dr Murrison), that the Government have a comprehensive strategy in place to tackle fuel fraud and crime and it is working. HMRC’s latest figures indicate the illicit market share of diesel for Northern Ireland has fallen from 26% to 13%. Co-operation and intelligence sharing through the Organised Crime Task Force and the Cross Border Fuel Fraud Enforcement Group has been invaluable in tackling oil fraud, including fuel smuggling and laundering, and I remind the House that in 2013-14 HMRC dismantled 38 laundering plants, closed 79 huckster sites and seized over half a million litres of illicit fuel in Northern Ireland.
As has been said, a new fuel marker will come in on 1 April. Many Members, including the hon. Members for North Antrim, for East Antrim (Sammy Wilson), for Belfast East and for Upper Bann (David Simpson)—and I am sure there were more—raised that point.
Ian Paisley
The Minister refers to some of my party colleagues. My hon. Friends the Members for South Antrim (Dr McCrea) and for Upper Bann (David Simpson) mean no discourtesy to the Minister, whom I know they are very fond of, but they have had to leave the Chamber because of a meeting tomorrow morning with a Minister in Northern Ireland. I hope the Minister will appreciate that they had to catch their flight.
Karen Bradley
I appreciate that intervention, apart from anything else because I am not going to have to answer yet another question from those hon. Gentlemen, who gave me a significant number to try to address. I do understand completely the time pressures we all face, however.
I understand that HMRC is making sure it has the best and most appropriate roadside marker testing equipment, further to strengthen testing capability. From day one of the new marker implementation, its road fuel testing units will be able to use their existing battery of tests to identify suspicious samples, and I should repeat the point that this is not a replacement marker initially; this is a running-alongside marker with the existing marker, to ensure we have full evidence and information. I also understand that, in addition, HMRC expects to have ground-breaking roadside testing equipment by the summer.
The hon. Member for North Antrim made a number of points and I understand that HMRC has written to him on many of them, in particular the point about the new marker being easily laundered and that that can be done on a commercial scale. I urge him to provide details of any trials about which he believes HMRC may be unaware. It does want to review the report he has laid in the House, and it will respond to him. The Government will of course review the report as well, and HMRC has investigated whether this can be done on a large scale. The hon. Gentleman says he has seen the test to prove that that is the case. If he provides that evidence to HMRC, it will review the report and write to him, but the only large-scale test that we are aware has been undertaken, which was with 25,000 litres, fully supported HMRC’s conclusion that this is not easily translated to large-scale operations in the field. We do take these claims very seriously, however, and HMRC will look at any reports that the hon. Gentleman provides.
The hon. Member for South Antrim talked about the number of arrests and prosecutions for this crime. In the period 2011-14 there was a total of 56 arrests for fuel fraud, and 47 of them were in Northern Ireland, while just nine were in the rest of the United Kingdom. We have not, of course, yet got the full figures for 2014-15, but the latest information is that there were 25 arrests, 13 of which were in Northern Ireland and 12 in the rest of the UK. That shows that we take this crime very seriously, including in Northern Ireland.
Confiscation was also mentioned. In 2013-14, the last year for which we have figures, £113,001 was applied on confiscation orders relating to this type of crime, of which £113,000 related to confiscation orders in Northern Ireland, with only £1 relating to the rest of the United Kingdom. The hon. Member for Birmingham, Erdington and I have enjoyed many debates on the topic of asset recovery, and we agree that we want to see more confiscation orders and more recovery. The Government take this issue seriously and progress is being made.
HMRC’s anti-smuggling strategy is effective, and we continuously adapt it to accommodate changes in criminal behaviour. Since it was first launched, we have reduced the illicit cigarette market by half and the illicit hand-rolling tobacco market by a third, but we all recognise that more can be done. The hon. Member for East Antrim contributed to yesterday’s debate on the order to bring the National Crime Agency into Northern Ireland. I want to put it on record that, in regard to the priorities for policing and the NCA in Northern Ireland, the Northern Ireland Policing Board will agree the NCA annual plan. That will allow key crime types, which may include fuel laundering, to be prioritised for the NCA in Northern Ireland.
One of the blockages to having full support in Northern Ireland has been the limit to the NCA’s ability to provide support to HMRC and the PSNI in Northern Ireland. That related to the powers issue, and thankfully that issue is now resolved. Yesterday, we debated and approved in Committee here, and in another place, the draft Crime and Courts Act 2013 (National Crime Agency and Proceeds of Crime) (Northern Ireland) Order 2015. The order will enable the NCA to operate with police powers in Northern Ireland from around the end of May. It puts in place accountability arrangements for the NCA that have been agreed with the Northern Ireland parties. It also extends civil recovery provisions and civil recovery investigation provisions under the Proceeds of Crime Act 2002 to Northern Ireland. This will increase activity and improve performance, alongside the efforts of other accredited financial investigators in Northern Ireland, such as the Serious Fraud Office, the PSNI and the Environment Agency. Perhaps that will answer the question from the hon. Member for Foyle about waste crime.
We are also strengthening the provisions of the Proceeds of Crime Act through the Serious Crime Act 2015. The hon. Member for Birmingham, Erdington and I served on the Committee that considered that legislation. Its provisions will make it harder for criminals to move, hide and use the proceeds of crime through the better enforcement of existing court orders and the better recovery of hidden assets overseas. These steps are important, as denying criminals the proceeds of crime is one of the most effective ways of disrupting their activities. We agree that, so far, not enough has been recovered, but with these enhanced powers, the NCA, working with law enforcement, will be able to recover more. I urge the courts to ensure that confiscation orders are applied whenever possible, and that compensation orders for victims are also put in place.
The hon. Member for Foyle also raised concerns about engagement with communities. The Crime and Courts Act 2013 (National Crime Agency and Proceeds of Crime) (Northern Ireland) Order 2015 that we approved yesterday provides that the Northern Ireland Policing Board must make arrangements for obtaining the co-operation of the public with the NCA in the prevention of crime. The hon. Gentleman will recall that, as part of the Justice Minister’s proposal paper, there will also be a requirement for NCA officers to have a duty to secure the support of, and to act in co-operation with, the local community. Additionally, the order provides that the NCA’s director general must obtain the Policing Board’s prior consent to the Northern Ireland aspects of the NCA’s annual plan.
Serious and organised criminal groups do not respect borders or force boundaries. The PSNI estimates that there are around 150 organised crime groups active in Northern Ireland. Nearly a third of those groups are assessed as having links to international criminality, and another third are linked to criminality in the rest of the UK and the Republic of Ireland. HMRC operates across the UK as a whole, and the National Crime Agency has both national and international reach. They are working more closely than ever before with the PSNI and other partners to disrupt organised criminal groups undertaking fuel laundering and smuggling in Northern Ireland and to deny criminals the proceeds of that crime. As has been said, we will not oppose this motion, and I want to thank everybody for the debate. I look forward to Northern Ireland seeing the benefits of the NCA that the rest of the UK has benefited from since October 2013.
Question put and agreed to.
Resolved,
That this House notes with concern the continued prevalence of serious organised criminal activity in Northern Ireland on a cross-border basis in relation to fuel smuggling, fuel laundering and the counterfeiting of consumer goods; recognises that this has had a significant and detrimental impact on HM Treasury; regrets the lack of prosecutions in relation to this activity; and calls on the Government to ensure greater co-operation between HM Revenue and Customs, the National Crime Agency and the PSNI so that this criminal activity can be eradicated.