Finance Bill

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Mr. Adrian Bailey (West Bromwich, West): I have heard assertions that Government policy is not scientifically based, but does the hon. Gentleman agree that that using what is swept up in stadiums after football matches provides an irrational and illogical basis on which to make Government financial policy?

Mr. Davey: I agree, but the hon. Gentleman's Government have published two reports: the Taylor report and the Rocques inquiry. They have commissioned them, they are there, they have been completed, and we would like to have them published so that we do not have to rely on such a ``poor''—I put that in inverted commas—amount of evidence. However, it is the only evidence that we have to go on.

10.30 am

Mr. Letwin: I am sorry to intervene again on the hon. Gentleman, but while I thoroughly endorse what he is saying about the reports and the need to have them published, I hope he would agree that we would not want to have on the record the assertion that the pack test is poor. It is an imperfect measure, but quite a statistically significant sample is being operated on and, as far as I am aware, there is a reasonable expectation that that sample is random.

One does not imagine that people going to football matches are particularly inclined to be smugglers. We do not know of any reason to suppose that the two are correlated. So if they are honest tests, and I do not think that it has been asserted that they are not, and if they are statistically significant tests, and it has been well established that they are, and if they are likely to be based on a random sample, and they probably are, then far from being poor, they are a reasonable basis for estimation, although I completely accept that it would be better if we had the Government figures.

Mr. Davey: The hon. Gentleman will agree that I put the word ``poor'' into inverted commas, because it is relative. Compared to some of the analysis I assume that the Government have done, it is not as good a test. However, the hon. Gentleman is right that it is potentially an extremely accurate test. We just do not know whether it is, though, because we have not seen any other evidence, and it is difficult to put it into context. Perhaps Customs and Excise have based their own analysis in these reports on such taxes. We do not know. I would like to have been able to give the hon. Gentleman a better answer.

Mr. Bailey: Will the hon. Gentleman give way?

Mr. Davey: In a moment. Because the hon. Gentleman's Government are failing to be open and transparent, we are unable to answer such questions. Before the hon. Gentleman intervenes, I hope he will criticise his own Government and have the courage of his convictions to say ``Look, I would like to know the truth behind this, so please publish these reports that you have already on your desks.''

Mr. Bailey: To continue that line of argument, which I cannot help thinking has become somewhat convoluted, does the hon. Gentleman agree, given that most football grounds ban smoking, one could argue that the cigarette packets left in grounds after matches are from people who may be more predisposed towards illegal activity than would be normal. If one wants to take that as the basis of the test, it would be equally logical to make those assumptions in any further projections.

Mr. Davey: That intervention is quite worrying. I hope that there are not many West Bromwich Albion fans among his constituents who might feel that that was a slur on their behaviour.

Mr. Banks: There are not many West Bromwich fans, full stop.

Mr. Davey: I am not sure whether the hon. Member for West Ham was privy to much information on that point when he was Minister for Sport. I must reject the intervention by the hon. Member for West Bromwich, West, and just repeat that the taxpayer has already paid for detailed work. Unfortunately that work is not before the Committee today, which I much regret.

If the clause is put to the vote, I will recommend to my hon. Friends that we abstain. In the past we have supported the Government, but if they cannot explain themselves and promise to publish the reports before Parliament is dissolved, so that the country can see the basis on which tax policy has been based, or at least before the election, even if hon. Members cannot do so before it is dissolved. At least that would move the debate on in a proper way. It is not right to continue to support the Government if they continually hide the reports and take the information away from the British people.

I shall listen with even greater attention than usual to what the Financial Secretary has to say. This is an incredibly serious issue involving millions, or perhaps even hundreds of millions of pounds, that should go to the Exchequer, and which affects thousands of businesses throughout the country. The Government cannot continue to hide behind excuses when they have the information to hand.

Mr. Banks: I would normally come to the Finance Bill Committee to get a free box, which I am delighted to hear I will receive in due course. My membership of the Committee is made doubly worthwhile by some of the interesting points raised by the hon. Member for Kingston and Surbiton. I was unaware of the package test and sweeping up at football grounds as a way of producing evidence to evince arguments. I am a regular supporter of my club and a season ticket holder at Stamford Bridge, where the most that anyone sweeping up would find would be fingernails and broken hearts. It would be a very non-scientific way of discovering a correlation with the suicide level.

Smuggling, in technical terms, starts when someone brings in cigarettes that he may have declared are for personal consumption, but is then tempted to put them on sale, using friends in the tobacco industry and the retail trade in pubs and tobacconists to reprocess them. It started in the EU; as soon as restrictions on the amount of tobacco and alcohol for personal consumption were lifted as part of the single market, there was an irresistible temptation to claim that such goods were for personal consumption, when evidently they could not have been. Some people will always try to make money from opportunities that arise.

Can my hon. Friend say whether most of the smuggled tobacco products come from outside the European Union? The black market smuggling trade started within the EU. I warned the previous Government about that—it is all in Hansard—but they said, ``Nonsense. That will not occur.'' But it was so predictable; one did not have to be an expert to see what would happen.

Mr. David Taylor (North-West Leicestershire): Does my hon. Friend agree that at least this Government did what the previous Government did not do and invested real extra resources in combating tobacco smuggling? In the hour that this Committee has been sitting, another 2 million illicit cigarettes have been brought into the country. One per cent. of GDP is related to tobacco smuggling, and the Government are at least trying to combat it.

Mr. Banks: My hon. Friend asks me an obvious question. Of course, I accept what he says; I speak as a party loyalist, for God's sake, but that does not mean that I cannot nitpick about Government policy from time to time. I want effective policy to be made more effective. However, enforcement measures are necessary only because of the problems caused by the differential duty rates between the United Kingdom and the rest of the EU. As a passionate and firm believer in the EU and the single market, I saw, down the line, one of the great advantages of an equalisation of duty rates across a range of products. It is nonsense for people to take vans from this country to France to load up with goods, many of which have been produced in this country, and to bring them back. It is about time we addressed the principle of tobacco duty, as well as its effect on the retail trades. Governments have always been disingenuous in their approach to tobacco duty. All Governments have at some point argued that tobacco duty should be increased on health grounds, to limit the consumption of tobacco, but would all Governments really want tobacco duty completely eliminated because no one smokes any more? I suspect not, because the duty makes such a significant contribution to Treasury receipts. If the Government were looking seriously at the issue from a health point of view, they should ban tobacco. As we know, tobacco-related diseases kill something in excess of 120,000 people—I do not know the precise figure—in this country alone.

Because no Government would want all tobacco duty eliminated, we have to be more honest. Are we looking at tobacco duty as a way of raising revenue or as a way of limiting consumption on health grounds? Are we looking at both? No Governments have responded to those fundamental questions. We want to be seen to be doing something to restrict smoking but do not want totally to eliminate it because of the revenue implications. I will get in and out of this point quickly: one reason why I have always believed in the legalisation of cannabis is because Governments could put duty on it. In response to arguments about health, I would say, ``Well, ban tobacco rather than cannabis''—but I do not want to embarrass my hon. Friend the Financial Secretary more than I have already.

The Government must address the issue. Governments should welcome reduced yields, providing the smuggling element has been reduced, because that would mean that not so many people were smoking—but, as I said, I am not sure that that is what Governments want. All Governments have got themselves into a problem over that and I am sure that when my hon. Friend replies he will explain the logical position of the Government.

Mr. Howard Flight (Arundel and South Downs): It is certainly sensible that the Government have got off the escalator but the 6p increase and pro rata equivalent increase in rolled tobacco still increases the price differential between here and continental Europe and in the bootleg market. I call for a stepping back and rethink because the policy on the taxation of tobacco has become counter-productive.

I should declare an interest as a smoker—I should also welcome your chairing our deliberations, Dr. Clark. Over the past four years, cigarette smoking has gone up by 6.5 per cent. The Government sneaked out some figures earlier this month announcing that the revenue loss has been £3.7 billion. Theoretically, the tax on cigarettes should be aimed at the most effective point on the curve, both to discourage smoking in terms of demand and price and to deliver Government revenue. The first reason is health-related, the second pragmatic. However, we have clearly gone massively too far in the other direction because we are in the territory of diminishing returns on both fronts. We are not achieving the objective of discouraging smoking and we are losing revenue like billy-oh.

On reducing smoking and associated matters, we are also causing harm. The group among whom smoking has most increased is the young, particularly young women. The policy on duty is divisive because the affluent can pop across to France and buy all the cigarettes that they want cheaply. Those that get sucked into smuggling are very much the less affluent and those who are not close to the channel ports. On Second Reading, the hon. Member for Barnsley, Central (Mr. Illsley) had the honesty to admit that in his constituency one can hardly buy cigarettes other than on the black market. Small shopkeepers have been driven out of business and the constituency has become a black market territory. I was slightly horrified—although I did not believe it—to hear the hon. Member for West Ham talk even of the suggestion of banning. In my mind is the United States experience of prohibition. Whether we have absolute banning or the existing taxing strategy, it inevitably leads to bootlegging; that fact is as old as the hills.

10.45 am

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