Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. Minister, I apologise for being late. We will certainly not protract the proceedings beyond a quarter to twelve.
  (Dawn Primarolo) Sir Michael, before you start, could I also apologise for the problems over the original date for this meeting. I know my office spoke to you. There was confusion. I was actually on my way to Brussels, I had to go to Brussels for a meeting. I do apologise for any inconvenience this may have caused the Committee and to you. It will not happen again. I will be much more thorough in making sure that provisional dates stay in and we do not allow anything else.

  2. Thank you very much. We were certainly told by your office that you love coming here too much to try to avoid us.
  (Dawn Primarolo) I do not think I would go that far but we will give it a whirl, shall we?

  3. Can we start straight away with the issue we have been in correspondence about, the Rocques report. Could you say what deadlines have been set for the final version of the Rocques report to be reported publicly?
  (Dawn Primarolo) I have not set a specific deadline in terms of date. What I do have is an urgency to ensure that the outstanding questions—how much was lost between 1994-98, how it was lost, why it was lost, what has been done to ensure that never happens again—and any other lessons that need to be addressed are done as speedily as possible. That information at all times, of course, has to be shared with the National Audit Office. I want to be in a position to inform Parliament and yourselves as quickly as I can on the outcomes and if there is any further action necessary for Customs, what that will be.

  4. Minister, the trouble with that response is that in your letter to me you said, if I can just read out the appropriate piece of it: "Customs tell me that although the basic facts", which is what you have just been talking about "have been established there is more work to be done before firm conclusions can be reached. Customs will therefore be asking John Rocques to carry out further analysis to complete his work as soon as possible". The facts seem to be clear, what seem to be now in question and possibly needing further doctoring are the conclusions. That does not quite match up with the answer that you gave me first of all.
  (Dawn Primarolo) I think we have discussed before, explaining to the Committee, this is about diversion fraud from our warehouses. It happened, as I tried to explain before, Customs knew it was happening and it was in the pursuit of evidence for prosecutions. This is a very complex area. The discussions with Mr Rocques, as I understand it between Customs and himself, are specifically in relation to some of the issues in that. I think it would be inappropriate to gradually release information. I think that what Parliament will want to see is a full statement and a reassurance that it has been stopped, it will not happen again, and what measures are in place to ensure that. That is what we are settling on. Of course, as I have said, all of the information is available, and has to continue to be available, to the NAO on the basis that they need to be kept informed because of the amount of revenue.

  5. Do you think it is right that Customs should have the apparent right to reject the initial findings of an independent investigation such as this one?
  (Dawn Primarolo) Sir Michael, this is not about rejecting findings, this is about ascertaining the facts and the necessary steps thereafter. I would like to assure the Committee that this is not about saying that the report has not looked at some very complex areas and needs to, as I said before to the Committee, covering areas like the role of the National Investigation Service, the cases that were subsequently developed. Sir Michael, I really can assure you personally that I am not trying to conceal anything from the Committee or do anything that would not be proper. I am in some difficulty without having the full conclusions and in a sensitive area it is unwise for me to speculate. I am absolutely of the view that I am happy to keep you informed, and the Committee informed, and I will be available for questioning as soon as there is more information in the public domain for that.

  6. I am not trying to be clever about this but your letter specifically says that the facts have already been ascertained and it is the conclusions that need further work on.
  (Dawn Primarolo) The facts are with regard to the revenue lost and the fact, again as I tried to explain when I had the opportunity to speak to you, that it happened with Customs watching it. This is quite difficult to get across, why exactly that happened and how it happened. It is not as if they did not know that it was going on. Those are the issues that I certainly want to bottom out. As you know, the reason I appointed Mr Rocques and established the independent inquiry was notwithstanding the fact that Customs had already undertaken an internal inquiry. My view is that we must leave no stone unturned, and I am still of that view. At the end of this we need to be able to draw a line and move forward.

  7. Were you concerned that Mr Rocques said in the Financial Times last Monday that he felt the report should be published immediately?
  (Dawn Primarolo) I have not spoken to Mr Rocques and I do not know the source of the story that was in the Financial Times, although naturally I took note of it. I think it is probably best that I deal with the facts of it. As I have said before, and Members of the Committee may have some sympathy for this, what I will need to make sure is all the questions are answered, and answered clearly, on the outstanding items, and that is what I am doing now, or Customs are doing now.

  8. Minister, you must have some idea in your own mind when it would be appropriate for this to be published? Are you saying, at least internally, "I want it by such and such a date and no longer"? Is there pressure coming from your office on this?
  (Dawn Primarolo) Yes, I would like it sorted. I think that I, on behalf of Parliament, owe an explanation and that must be properly presented. If it was over a period of time when I was a Minister it may be a little easier but Mr Rocques is actually scrutinising a period from 1994 to early 1998, of which I have only been the Minister for six months. There is a great deal that needs to be sorted in that period.

  9. Can you give us some indication when you think that it really ought to be out by?
  (Dawn Primarolo) I cannot give you an indication. I would not want to set a date. As I have said, I think that we need to have these answers on the public record as soon as possible.

  Chairman: Thank you. Jim Cousins.

Mr Cousins

  10. I find that exchange extremely helpful and I do understand the difficulties of the position that you have here today. Do you feel now that the question of the revenue loss involved in this has now finally been bottomed out?
  (Dawn Primarolo) Mr Cousins, this is a matter for the NAO as well. I am not in a position to be able to speak for the National Audit Office or comment on their views at this time, but naturally there has been wild speculation about the actual loss. From my point of view it is important that we make sure it is all agreed and made public, the actual loss, how it occurred, why it occurred, whether it has been stopped—Mr Rocques would have come back to me during the course of his inquiry if it had not—but also what we need to do to make sure this type of failure does not happen again. Forgive me, but there are some issues around the National Audit Office which I am not able to address to you but hopefully that situation will be clarified.

  11. I think I am following you.
  (Dawn Primarolo) I am sorry, I am just not able to be more specific.

  12. I do not intend to press you unduly for the actual figure, that clearly would be wrong, but just so we are clear about this, your last remarks do not in any way imply that there is a disagreement between the NAO and yourselves about the actual extent of the loss?
  (Dawn Primarolo) No, we do not have disagreements with the NAO. The NAO's role is absolutely clear and independent here, it is not negotiable. It is a matter for them because, again as I have explained before, this is a loss that occurred over a number of years that has not been accounted for properly to Parliament and, therefore, the procedure needs to be gone through with the NAO to make sure that it is now properly accounted for and that is their responsibility.

  13. The press release you issued when the inquiry was first set up made it clear that it came after an internal Customs and Excise assessment which was asked for by the new Chair of Customs and Excise, Mr Richard Broadbent. The press release does refer to "significant revenue losses" which Customs had presumably identified at that stage before the inquiry. I think it is appropriate to ask you are the figures that were under discussion then and the figures that are under discussion now of a piece or are they significantly different?
  (Dawn Primarolo) I am just taking advice that we are not compromising the NAO's position. The figure is approximately the same, if a little lower. I am sorry, I cannot be more specific than that.

  14. That is fine.
  (Dawn Primarolo) It is still a very, very significant sum.

  15. A very, very significant sum?
  (Dawn Primarolo) Yes, and now you are going to ask me what a significant sum is and I would wish I had not said that. I think the adage is when in a hole stop digging, and I think I should. This is a matter for the NAO. The internal report in terms of the possible scale of the loss is of the same order as that which has now been established is my understanding and that is a matter that the NAO will account for.

  16. Chairman, when the Paymaster General looks at me like that and says it is a very, very significant sum, I worry about the two bottles of Galliano I bought in Rome Airport.
  (Dawn Primarolo) Two. Not litres?

  17. Not litres.
  (Dawn Primarolo) That will take you some time to drink.

  18. Clearly this inquiry was to some degree triggered by Mr Broadbent's own enquiries into these issues. It was something that was generated from within Customs and Excise by an examination that the new Chair of Customs and Excise carried out. That, of course, is very important, but can you tell the Committee what other specific changes and improvements Mr Broadbent has brought about?
  (Dawn Primarolo) This moves us more into the discussions about the restructuring of the department.

  19. Yes.
  (Dawn Primarolo) It ties in with other agendas to do with Closer Working as well. I think it was on 17 January that Customs announced a major restructuring. The restructuring of Customs now is to divide it into two main business streams. The first is the business service and tax element, which comprises of all business tax and the facilitation of information of Customs, the international movements of trade services, etc, and that has a business focus and accounts for approximately 13,000 of our staff and their focus is on that. Naturally what we are seeking to do here is to deliver a service that is an improvement for the taxpayer, for the customer, improve compliance and make sure that the management through the organisation is properly focused on delivering those objectives. It is in two divisions now. The second division is the law enforcement and that comprises of all investigation, intelligence and detection activities. That would be all the drugs, smuggling, firearms, all the investigation service. That comprises of approximately 8,000 of our staff. There is a very small, and I cannot give you the number of staff because it is very small, logistics, finance, human resources, legal section. What Mr Broadbent and his new management team have done is considerably reduce what was the head office function. The head office function is basically the support for the Chairman and his team. The parliamentary unit and all other policy development is integrated into those two divisions which then, obviously, facilitate Closer Working, whether it be the enforcement side with other agencies, the police, Interpol, other intelligence agencies, and on the business side the Closer Working Framework that is being developed and focused on with Inland Revenue. Collections have gone, it is much more a focused delivery of a business service.

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