Illegal Alcohol and Tobacco Sales

Debate between Jesse Norman and Cathy Jamieson

Tuesday 27th March 2012 Westminster Hall

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

It is a pleasure to have you as Chair this morning, Ms Dorries. I congratulate the hon. Member for Hereford and South Herefordshire (Jesse Norman) on securing the debate, and on giving a very good outline of some of the issues.

We have heard a wide-ranging debate covering the amount of money lost to the Treasury through illegal sales of alcohol and cigarettes, and also issues relating to health, smoking, alcohol and so on. I will not stray too much into that territory. However, I was a member of the Scottish Government when Scotland was the first part of the UK to introduce a ban on smoking in public places. That ban was not universally popular at the outset, but I think it has been proved to be the right thing to do. The idea that some policies on health are unpopular but ultimately turn out to be the right thing to do has run through the debate, and I may return to it.

The hon. Member for Hereford and South Herefordshire made the point that this is the tip of the iceberg. People try to avoid paying their fair share of tax in a whole range of areas. Illegal alcohol and tobacco sales are an important part of that, but not the only part. I think the hon. Member for North Antrim (Ian Paisley) mentioned that people try to avoid the appropriate duty on fuel, as well as on tobacco and alcohol. The hon. Member for Hereford and South Herefordshire talked about shops selling under the counter and the amount of goods seized, and how those shops and premises are back in operation a few weeks later. That not only results in a loss to the taxpayer, but has very little deterrent effect. It almost sends a message to people that they can pretty much do what they like—they can take it as a business loss and simply get back up and running again, rather than changing behaviour. I think that the hon. Gentleman felt that there needs to be a change in legislation.

I was surprised that the issue was seen as one for the Treasury Minister only. Tie-ups happen between Her Majesty’s Revenue and Customs, the UK Border Agency, police and local authorities in terms of licensing and trading standards, which indicates that this is a wider issue than just money lost to the Treasury. Many hon. Members have talked about a cross-cutting approach, and that is worth considering.

The hon. Member for North Antrim gave a very powerful description of this serious multi-million pound organised crime industry, if I can call it that. Of course, we will always see situations where some people will try to make a few extra pounds for themselves at a local level by bringing back a quantity of cigarettes or alcohol products if they have been in another country. However, it is absolutely right to focus on those who are seriously involved.

As the hon. Member for North Antrim will be aware, when businesses are shut down as a result of effective action, product substitution occurs: they move on to another product to make money to fund whatever other activities they wish to fund from the illicit gains. Therefore, these issues sit across Departments. I hope that the Minister will say how she will ensure that the Government are able to deal with issues that relate not just to the Treasury—of course, such issues are very important—but that they will begin to consider the deterrent effect of appropriate sentencing for those who persist in breaking the law.

Closure orders were considered in Scotland, particularly in relation to alcohol. For premises that persistently sold to underage drinkers or persistently broke the licensing laws, legislation was introduced to provide the opportunity to shut them down—a message to the retailer and to the local community.

[Jesse Norman]

To be clear, that would close down retailers who have breached the law by selling to underage drinkers, but are otherwise legal in their operations. I also have it in mind to target retail outlets that are not doing any legal trading—they have been set up simply for the purposes of the illegal sale of alcohol and cigarettes.

[Cathy Jamieson]

I hear what the hon. Gentleman says, which is very important because there are two separate issues. If an operation is set up simply for the purposes of selling illegal products or trading illegally, that should be taken very seriously with the full force of the law, not only with an appropriate sentence when it is brought to court, but with the ability to act quickly to stop these activities. That needs to be considered.

The hon. Member for North Antrim talked about the report published by the Northern Ireland Affairs Committee. I will certainly read that with interest, as I am sure other hon. Members will. His contribution, and the contributions of my hon. Friend the Member for Stockton North (Alex Cunningham) and the hon. Member for Bristol West (Stephen Williams), highlighted the consideration of smoking policies more generally as they relate to health, as well as to business and trade.

There was a fairly lively debate on the issue of plain packaging. I am not a smoker. I have never been a smoker, and in my former careers I took a fairly dim view of smoking generally. Therefore, I think that the Government should take an interest in anything that can be done to deal with health issues, but it must be done in a way that makes sense and is enforceable. I take the point that many people who work in the industry are worried about their jobs. We have to have some cognisance of that in our discussions.

My hon. Friend the Member for Stockton North mentioned some of the work that was done by the Labour Government. I had no wish to make this a party political debate—that is not a criticism of my hon. Friend—because I think all hon. Members share common ground in trying to deal with these important issues.

My hon. Friend also raised one of the more serious issues: the so-called tab houses, which have been the subject of responses to parliamentary questions and on which work has been done previously, with a particular focus on the introduction of children to smoking. We are also concerned about whether children and young people are being introduced not just to smoking, but to crime, drug misuse and other activities in which they should not be involved.

In debating these issues, it is important that we do not focus simply on packaging. There will be different views about how much packaging and branding impact on consumer behaviour—I am sure that there are plenty of PhD theses about that, even if they are not in this room—and that debate will continue. One important point, which my hon. Friend mentioned, is how we deal with the problems of criminality relating to these issues. Again, I do not wish to make this a party political point, but the appropriate number of people must be involved in intelligence-led policing and the joined-up approach between policing, trading standards, licensing authorities and the UK Border Agency. There would be concern that elements of that approach rely on many people who are sometimes described as the backroom staff in police forces. None the less, they are the ones who gather the intelligence, analyse the data and information and do the forensic work to track down some of those involved in serious and organised crime. That will be important as we consider a way forward.

As well as discussions on smoking and the impact on health, we also heard from the hon. Members for Great Yarmouth (Brandon Lewis) and for Burton (Andrew Griffiths), the chair of the all-party parliamentary beer group, particularly about duty stamping. Again, that is controversial and both hon. Gentlemen are putting forward viewpoints on how this would work in practice and what the impact on the industry would be. Will the Minister reply to the hon. Gentlemen’s questions, which I should also like to pose?

We heard about some technical issues in respect of duty stamping and whether it would be the correct option. Have the Minister and her colleagues considered forming a working group, bringing together different industry interests to look at what is technically the best way to work on avoidance of duty and whether duty stamping is the correct way to take this forward? If other options are being considered, perhaps the Minister could lay those out for us today, because we will have to consider this matter in more detail as we debate it, following on from the Budget.

Overall, we have had a useful debate. It is clear that there are different interests and views across the political parties, and within them, particularly on plain packaging on cigarettes. I should like briefly to highlight another issue relating to tobacco. Work done by HMRC on avoidance considered what it called the tax gap. In 2009-10, the spirits duty gap was 3.4%, the beer duty gap was 14%, the gap in cigarette duty was 10% and in respect of hand-rolling tobacco the duty gap was estimated at 46% and had reached a high point of 50% in 2008-09. We have not looked at that in detail this morning. None the less, there could be greater focus on that area as we move forward.

In conclusion, we have had a good debate. We have covered smoking and issues to do with the duty stamp, about which, I hope, we will get more information. We have heard about enforcement issues and about how we have to take health policy into account. We have heard how important this matter is for the Revenue and for business. But the important message that must be taken away by the Government is that we have to find solutions to all the problems that have been identified. I reiterate the point that has been made: having a lead Minister or someone identified to work on the cross-cutting agenda and take this forward would assist the process. I hope that the Minister addresses that point as well as the other questions that have been raised this morning.