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8.8 pm

Mr. William Ross (East Londonderry): I listened to some hon. Members speaking at length today about whether we should go into the single currency. Those who make the excuse that the time is not right are simply refusing to take the political decision that has to be taken. That decision will not be taken on economic grounds, and every sensible body in this country knows that. It is a political decision.

Some say that the positions that they are currently adopting are temporary and that they are sitting on the fence to see whether things will improve. The plain truth is, of course, that that position has been temporary for so long that it is becoming permanent. That may be the best that we can hope for, until we have a Government who can make up their mind on that matter. Whether I will still be in the House at that time--it may be a few Parliaments down the way--I do not know. If I am not, I shall certainly encourage my successor to vote against any such foolishness--I have lived through and seen the consequences of the exchange rate mechanism.

However, I did not come here today to talk about that aspect of the Government's policy.

Mr. MacShane: The hon. Gentleman represents part of the United Kingdom, which has an interface with the eurozone countries. I hear endless complaints from the hon. Gentleman's colleagues in other Ulster parties about the difference between the pound sterling and the punt, which is now part of the eurozone. Does the hon. Gentleman see

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no advantage--no tiny advantage--in having the same currency for what is now, in effect, one economy in Ireland?

Mr. Ross: I can tell the hon. Gentleman that there is not one economy in Ireland. If he had tried to buy a house in Dublin over the past year or two, he might not be so accommodating about the euro. As it happens, I believe the fact that the economy in the Irish Republic is roaring ahead in this way--unsustainably in the long term, I think--is a clear indication of what can happen to any nation in the eurozone. But, as I have said, I did not come here to talk about that. It is a subject for debate on another day.

During the Chancellor's interesting speech, to which I listened carefully, I asked him about public sector debt in the context of his own remarks. He had spoken of the need for a sensible ratio between public sector debt and gross domestic product. I did not receive a very satisfactory answer; the Chancellor referred me to the Red Book.

Everyone has talked about the "economic cycle", not just in the present Administration but in earlier ones, but no one has ever told me how long the cycle will last. I think we should aim not just for what is described as a balanced budget, but for a budget that steadily reduces our public sector debt to nil. That would at least remove the need for high interest payments. I always think that borrowing money and paying interest at the end of the day costs the nation far more than taxing honestly to raise the money. If that were done, at least everyone would know where they stood--but I suppose that honesty is a bit too much to expect from any Chancellor when an election is approaching.

Some years ago, I raised in the House the question of science parks and Northern Ireland universities. I am glad to say that my approach eventually bore fruit, and that in the last week or so a science park has been launched in my constituency. It will deal with research and development. That is very praiseworthy, but if products emerge, how on earth are we to retain the factories in the United Kingdom that make those products unless, within the European system, we can match the tax rates applying in other countries?

I can see all the research and development work done in my constituency moving to Cork--or perhaps to Belgium or Turkey, where my local textile industry is going. It is going there for a variety of reasons--not all tax reasons, and not all the reasons cited by the right hon. Member for Wokingham (Mr. Redwood). I thought that the right hon. Gentleman was somewhat wide of the mark, in that he omitted the relative costs of wages involved in production. Hundreds of my constituents are employed in making goods for Marks and Spencer, and I took a keen interest in what the right hon. Gentleman was saying, but I thought a good deal of it was highly inaccurate. I wish he had remained to hear me say that.

My main reason for speaking in the debate, however, relates not to those matters but to the cost of road fuel in the United Kingdom. The House will recall the anger in the streets that spilled over into demonstrations in September--demonstrations that failed at the later attempt, or were defused to a minor extent, because of action taken by the Government in recent weeks.

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It is, I think, well known that Northern Ireland fuel retailers suffer rather more grievously than retailers, and indeed consumers, in Great Britain. I know many Members are vaguely aware that there is a problem; but I do not think they realise how serious it is in Northern Ireland. I am sure that not many have read the report on the subject by the Northern Ireland Affairs Committee, which was published last year, or the Government's response to it.

Members are probably even less aware of the Government's ignorance of the extent, the ramifications and the seriousness of the problem that confronts retailers of petrol and other fuels in Northern Ireland. At the end of last month, I asked the Chancellor for his estimate of the sums lost, and was referred yet again to the answer given to the hon. Member for Lewes (Mr. Baker) on 20 March. That appears to be the standard answer: it has been given to me on a number of occasions. The hon. Gentleman asked whether the Chancellor would

The Paymaster General replied:

I did not want to know what the amount was in 1998; I wanted to find out what it was in 1999 and 2000. The Government do not appear to have upgraded their estimates of the loss of revenue during the intervening time.

I asked the Chancellor yet again what was his estimate of the quantity of petroleum products smuggled from the Irish Republic and other countries into Great Britain

I was told:

The Government do not really know whether any smuggling is taking place. They have no idea.

Why is that? Does the Treasury not think it worth while at least to put some inquiries in hand in an effort to find out what the loss of revenue is? Even if it is only £100 million, that is still a considerable sum. It would certainly take care of a lot of the public expenditure problems that we have in Northern Ireland--although that is not the way in which I view what I consider to be a loss to the whole United Kingdom economy. I prefer to look at such matters from a United Kingdom rather than a narrow Northern Ireland perspective. But I do not think that anyone in Northern Ireland believes that the estimate was accurate.

Times have moved on. There has been a change of duty in the Irish Republic only in the last week. There has been a 1 per cent. cut in VAT, a cut in excise duty on diesel fuel of 7.3 Irish pence a litre and 2.4 Irish pence on a litre of unleaded petrol, to take effect at midnight. That, of course, related to 7 December. If it was worth your while to drive a car across the frontier and fill it up with petrol or diesel in the Irish Republic--perfectly legally--last week or the week before, it is a sight better to do it this week, and an awful lot of people are doing that.

I hope to explain the ramifications and how serious the damage is to a huge chunk of the economy in Northern Ireland. At present, unleaded petrol in the Irish Republic

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costs a maximum of 62p a litre, and can be bought for a good deal less. Diesel fuel costs 53p a litre. I am talking not about Irish pence, but about pence sterling. There is a huge gap between one price and another that someone can pay simply by driving across the border. If a similar loss were being experienced anywhere else, I think the Government would try to do something about it, for reasons that I will give later.

Between 1995 and 1999--these are the latest figures I have--the number of vehicles in Northern Ireland rose by 108,900, an increase of 17.8 per cent. The number of heavy good vehicles rose by only 4.5 per cent.

Those statistics prove what some of us have suspected. People move their heavy goods vehicles across the frontier into a shell company in the Irish Republic because of the huge savings in vehicle excise duty. They also benefit from the cheaper fuel. Therefore, the number of heavy goods vehicles is up slightly, but the number of other vehicles has vastly increased.

The number of private light goods vehicles has increased by 16 per cent. and two-wheeled motor vehicles are up by 43 per cent. That is a large increase, but those vehicles do not use as much fuel as heavy goods vehicles. However, between 1995 and 1999, the consumption of diesel and petrol fell from 878,900 tonnes to 498,000 tonnes--a decrease of 380,000 tonnes, or 43 per cent. According to the Library, 100,000 tonnes of fuel contains approximately 1.36 million litres. I do not have the capacity to work out the exact loss, but the idea that the Treasury cannot work it out is ridiculous.

I hope that I get real answers to my questions because the response so far has been outrageous. The House cannot be satisfied with it. I hope that the Treasury will take on board what I am saying and give me a proper answer. According to my rough calculations, smuggling caused the loss of £220 million of revenue in 1999. The problem is worse now. The loss is huge and it accumulates over the years at about that rate. It does not take long until the immense sum of £1 billion is lost to the United Kingdom Exchequer.

Some of the activities are perfectly legal. People drive back and forth across the border to fill their vehicles. We can live with that, but we cannot live with smuggling. People who drive up to 40 miles to the border to fill their vehicles and return with two or three cans of fuel in the boot are able to run their vehicles for a week before they go back to fill up again. The trouble is, however, that they are not only filling up their vehicles with fuel, but doing their shopping. The economic loss to the whole retail sector in Northern Ireland is enormous. That problem has to be addressed.

Everyone buying in the Republic pays for their shopping by credit card and, because there are 1.28 Irish punts to the pound sterling, it is well worth doing. In Northern Ireland, Tesco and Sainsbury are dropping their price to 70p or 80p a litre, but that is squeezing smaller businesses in an unjustifiable way that I bitterly resent.

The Government announced in the Queen's Speech that they would introduce a raft of Bills to get tough on crime. Some hon. Members referred to the yob culture at which that legislation is aimed, but I am concerned about massive thuggery. Criminal activity in fuel smuggling occurs on a huge scale and it has not been tackled to any extent. The real beneficiaries of that smuggling operation, which accounts for perhaps £100 million a year in lost

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revenue, are the terrorist organisations, and it is being conducted almost exclusively by the Provisional IRA. Are the Government not tackling the problem because they do not want to annoy that organisation too much in case it does something nasty?

The Select Committee was perfectly clear on the matter last year. In its report, the Financial Secretary said that the problems were brought home to him

He went on to say:

The Committee recommended that the Department of Economic Development should seek information and investigate the problem. Why has that not been done?

The Minister also agreed that there were strong signs of changes in purchasing behaviour because of the price differential. Time has moved on and it is clear that there is a real problem. There is a massive criminal operation and loss of revenue to the United Kingdom. That revenue fuels the activities of the terrorist organisations, principally the Provisional IRA. It is long past the time when the Government should have made a serious effort to destroy that criminal conspiracy and to overcome the real problem.

The Economic Secretary said in the Select Committee report that the loss of

So it is of the overall picture for the UK, but it is not small for people who own filling stations or grocery shops, or who are retailers of almost any consumable good, within 20 or 30 miles of the frontier in Northern Ireland. It is a huge economic and social problem that has to be dealt with. I do not want the Government telling me what they have done to prevent the abuse; I just want it stopped. The Government have the resources of this powerful and wealthy nation to deal with the problem. Will they please get on with it before everyone who is affected by the criminal activity of massive fraud, which has been going on for far too long, is ruined by it.

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