Examination of Witnesses (Questions 40-59)
MR RICHARD BROADBENT AND MR MIKE WELLS
MONDAY 25 FEBRUARY 2002
40. Could you say why you did not start publishing estimates of the amount of money being lost four or five years ago?
(Mr Broadbent) Because the estimates were not made, they were not available.
41. They were not made?
(Mr Broadbent) No.
42. I am puzzled about that statement because I heard you say something similar to the Chairman. You said that this was a problem no-one knew anything about. The Northern Ireland Affairs Select Committee was looking at this some years ago, it was taking evidence three years ago and a whole range of people from the Legitimate Oil Pressure Group to the Petrol Retailers' Association in Northern Ireland to the CBI in Northern Ireland, to the IBEC/CBI Joint Business Council in Ireland to the Road Haulage Association and the Treasury itself all in March and April 1999 had estimates. When you said they were not made, what did you mean?
(Mr Broadbent) I am sorry, in the earlier remark I was referring to the generality of estimates across all our regimes. You are of course quite right that an estimate of revenue loss for 1998 was published for Northern Ireland on oil fraud and cross-border shopping in 1999.
43. May I check? When you said this was a problem no-one knew anything about, that was actually incorrect.
(Mr Broadbent) My recollection of the exchange was that we were talking about excise generally, but if it was in relation to this then I apologise.
44. What I do not understand is why, if all those other bodies had information and estimates three years ago, Customs and Excise did not?
(Mr Broadbent) In the case of Northern Ireland oils fraud an estimate of revenue loss from fraud and shopping in1998 was published in a PQ by Customs and Excise in 1999.
45. That was the first time?
(Mr Broadbent) That was the first time and that was the one estimate which was published.
46. We have all been sent a copy of a letter from Mr Thomas Palmer of the Petrol Retailers' Association. In one of the appendices, there is a chart showing the consumption or the deliveries of fuel into Northern Ireland. Indeed in the Northern Ireland Affairs Select Committee report there is a chart which uses quite similar numbers. It is clear that in 1994 there were something like, according to Mr Palmer's chartand it is reflected in this bar chart566,000 tonnes of petrol. That went down successively: in 1995 it was down to 522,000, in 1996 it was down to just over 500,000, by 1997 it was 466,000, five years ago. It had fallen by 100,000 tonnes over those four years during a period in which the total amount, including the Republic, of consumption was increasing overall. Did nobody in Customs and Excise stop and query this? You must have noticed your revenue was going down. It was obvious, because you can easily measure it, that the total deliveries were going down. Why did nobody four or five years ago notice that something was going on?
(Mr Broadbent) May I apologise again for my mistake? As opposed to the generality of frauds, in the case of Northern Ireland, there was data available earlier and I believe that a focus was brought to the problem certainly by 1996-97. The issue arose then as to the nature of the problem. It is very difficult to determine in Northern Ireland how much the problem is quite legal cross-border shopping. There is a land border, there are many crossing points and there is a very high statistical likelihood that a lot of the effect is legitimate.
47. It is cross-border shopping.
(Mr Broadbent) It would probably be economic for almost all hauliers and a large proportion of motorists to cross-border shop. It is quite legal. So there was an explanation for the fall in deliveries but there was also no doubt, certainly from 1996-97, that there was considerable illegal activity going on. At the time there was a very, very difficult political situation. Some resources were applied to the job, in retrospect I would say somewhat tentatively.
48. Perhaps I could ask you about resources. I understand that the resources have now been increased and the Financial Secretary made a statement on this which Mr Palmer refers to in his letter. Mr Boateng, the Financial Secretary, said on Radio 4 on 15 February apparently that the number of Customs officers had been increased to 160, which is the figure referred to in the NAO report. Could you say when the number was increased to 160?
(Mr Broadbent) It was increased from a very low level in 1999-2000 of 25 to the current level of 163.
49. When was it increased to 160?
(Mr Broadbent) In was increased in 2000-01. Currently it is 163 and it got to that point on 1 January in the current year.
50. Are those 160 looking at hydrocarbon oils full time?
(Mr Broadbent) They are dedicated to hydrocarbon oils.
51. Are they based permanently in Northern Ireland?
(Mr Broadbent) Not all of them are based permanently in Northern Ireland. We cannot simply add to the resource in Northern Ireland on a fixed cost basis. We have to be quite flexible about how we resource Northern Ireland.
52. How many of them are based permanently in Northern Ireland?
(Mr Wells) Around 140.
(Mr Broadbent) I think I remember that 20 of them are a mobile strike force based in GB. Some of them of course cannot be based in Northern Ireland but that is a smaller number.
53. How many of those are what one might call operational field staff and how many are support staff?
(Mr Broadbent) About 100 per cent are operational staff.
54. So the support staff are
(Mr Broadbent) They are using the infrastructure of the organisation. I think it is, although I do not want to claim too much for it, something to the credit of the organisation that we have increased the resource five-fold based on the existing infrastructure of the organisation and done it quite quickly to some extent bringing in resources from GB.
55. The Chairman asked whether you were getting to grips with the problem and you said you thought you were. Mr Norgrove from Customs and Excise was asked the same question in March 1999. The Northern Ireland Affairs Select Committee asked him whether, in terms of increasing incidence, he was getting to grips with the problem. He answered basically yes, he was encouraged and one or two recent and future developments encouraged him to believe that he would be increasingly on top of this problem. That was three years ago. You said in answer to the Chairman a minute ago that you also thought you were getting to grips with it, but you said that the problem was little short of a disaster.
(Mr Broadbent) I do not want to be pedantic, but my recollection of the exchange with the Chairman was that we were talking about the regime as a whole. I do not want us to trip up on this because I trip myself up on it as well. The situation in Northern Ireland is wholly different from the situation in the mainland. In the case of Northern Ireland we did come to it slightly late. I agree with that. There were some reasons for that which were also to do with the very difficult situation in Ireland, which has certainly improved in recent years and perhaps that improvement has allowed us to do more to some extent. Doing more has had an impact. Deliveries this year are actually 108 per cent of last year; they have gone up for the first time in five years. We are not by any means in a situation where we can say the job is done. In Northern Ireland the situation is extremely serious.
56. Do you think you have the confidence of the legitimate petrol retailing community in Northern Ireland?
(Mr Broadbent) The petrol retailing community in Northern Ireland are very worried and they have good reason to be worried, but I do believe from closed door conversations with them that they do have some understanding of the complexities of the situation.
57. Mr Palmer refers in his letter to an advertisement which appeared in the JOB FINDER section of the Belfast Telegraph in September last year. 1,200 replies were received. Were you aware that they were lying unopened and unprocessed in a warehouse in Belfast until 11 February this year?
(Mr Broadbent) No, I was not aware of that. I am not sure how he is aware of it either, but I was certainly not aware of it.
58. That is what he says in his letter.
(Mr Broadbent) I have not seen his letter.
59. 18 weeks after the closing date, they apparently are now in the hands of an agency for processing. It does not sound like a huge commitment to getting the problem sorted out.
(Mr Broadbent) I do not know what job advertisement he is referring to. I have not seen his letter.