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An estimated 1.4 million pints of beer are brought across the channel every day. That amount is thought to be increasing. I cannot be certain about that, because the Government have not produced recent figures, despite promising to conduct a study.

That leads me to another Labour broken promise. This is quite a startling one, because it comes from the top--from the Prime Minister. He wrote in The Licensee, the main trade magazine, on 1 May 1997--a significant date--that the Government should

"initiate an urgent independent and comprehensive study, analysing the extent and effects of both smuggling and illegal cross channel shopping".

He also said:

"We are not going back on a single promise, not a single promise."

Well, he broke that one. He has not set up an urgent, independent and comprehensive study. Instead, a Customs and Excise study was announced in the pre-Budget report last November. That report is not available to the Committee.

I asked the Financial Secretary to publish the report. I received a written reply on 25 March that did not answer the question. She simply said:

"The Government will be taking action to clamp down on smuggling and fraud and . . . will announce their Proposals for doing this as part of the outcome of the Comprehensive Spending Review."--[Official Report, 25 March 1998; Vol. 309, c. 202.]

She said that nothing would be published before then. She did not say whether the study by Customs and Excise would be published and, if not, why not.

The Government have published a slightly hilarious document called "Your Right to Know". It was produced by the Chancellor of the Duchy of Lancaster and prefaced by the Prime Minister, setting out all sorts of wonderful ways in which the public--and presumably the House of Commons--would be better informed. In his introduction, the Chancellor of the Duchy of Lancaster says:

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"Openness is fundamental to the political health of a modern state."

He also says:

"It is a new balance with the scales now weighted decisively in favour of openness."

The Prime Minister talks disparagingly about the traditional culture of secrecy and how all that will be broken down by giving people the legal right to know. Of course, that was all just waffle.

Mr. Cranston rose--

Mr. Heathcoat-Amory: I am sure that the hon. Gentleman wants to be helpful again.

Mr. Cranston: I thank the right hon. Gentleman for giving way yet again. I should like to be helpful. Will he support the freedom of information legislation?

The First Deputy Chairman: Order. We shall not go as far as to debate any freedom of information legislation that might be brought before the House. We shall stick to the clause.

Mr. Heathcoat-Amory: I shall obey you, Mr. Martin. I should love to give the hon. Member for Dudley, North his answer. When we see the Bill, I shall tell him whether we will support it.

The Government have published an expensive glossy saying that we all have a right to know. It is obvious that we have a right to know only what the Government think that we ought to know. Although the smuggling and illegality in the smoking and drinks trade are important matters that concern the Committee, we clearly have no right to know the conclusions of the Customs and Excise review.

That would not matter if the Prime Minister had kept his promise and initiated that

"urgent, independent and comprehensive study",

which would not be conducted by Customs and Excise because, although it is a splendid department, it is part of the Government. This is a particularly stark example of a promise being broken by the Prime Minister that is very much to the detriment of the House. It will impoverish our debate on this important subject.

I return to the amendment before us. The point which I wish to leave with the Committee is that, although we recognised in government that there was no quick fix in this respect, we nevertheless recognised, in freezing duty on beer, that the gap between duties had eventually to be closed. As an interim measure, when I was doing this job in the Treasury, I committed additional resources to tackling smuggling and illegality on the ground. That was never going to be a substitute for tackling the causes of crimes.

When in opposition, the Prime Minister used to talk about tackling not just crime but the causes of crime. As the great economist Adam Smith first pointed out, smuggling is largely a crime induced by the Government. If they establish through the taxation system a clear incentive to smuggle, they can hardly be surprised that people take advantage of it. The only solution is gradually

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to move in the direction of continental rates of duty. As a very large budget surplus looms, this Finance Bill is a very good opportunity to make such a move.

I know that one or two of my hon. Friends wish to contribute to the debate, so I simply urge the Committee to support the amendment.

The First Deputy Chairman: Order. Perhaps the right hon. Gentleman is mistaken; there is no amendment before the Committee. He was speaking to clause stand part.

Mr. Heathcoat-Amory: I apologise, Mr. Martin, although the effect will be the same if we vote against clause stand part.

Miss Anne McIntosh (Vale of York): I hope that my comments will be helpful to the Government but will support the remarks of my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory).

I am concerned about the problems of bootlegging--otherwise known more politely as smuggling--which are not addressed in clause 1. The differentials between duty paid in this country and in other European Union member states invite people to smuggle on an increasingly large scale. The worry for the Financial Secretary to the Treasury must be that the loss of revenue to the Treasury is as high as it is. From the figures that I have, I believe that revenue to the Treasury would increase if rates of duty went down and volume of sales in this country correspondingly went up. In addition, the costs of the increased number of Customs and Excise agents used to apprehend suspected smugglers would be saved. I know that we are still waiting for proposals.

Dawn Primarolo: So that I do not misunderstand the hon. Lady's point, will she say whether the economic model to which she is referring is the Oxford model commissioned by the Brewers and Licensed Retailers Association? Knowing that will help me in my response.

Miss McIntosh: I might need to do some more research, but from work which I did earlier, I understand that the loss of revenue to the Treasury is £978 million--regardless of the cost of the agents whom the Government are minded to introduce to apprehend smugglers.

I am also concerned that, at this quite late stage of the British presidency of the Council of Ministers, the Government are so far not using their office to act to remove the distortion of trade and competition caused by divergence between rates of excise duty in different member states. I understand that the Financial Secretary or her colleagues could instruct the Commission to prepare a report that the Council could discuss. Without that instruction, the Council is open to a charge of neglect of duty, because it is obliged to report every two years on the distortions to competition and trade caused by the differentials in duty.

The rates of duty paid in the UK distort the market in drinks--particularly wines, beers and spirits--between the UK and other European Union countries. I understand that Customs and Excise admits that, if it is lucky, it catches only 5 per cent. of suspected smugglers. There is a huge loss to the Revenue in terms of excise duty, but

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there is also a large cost to the Treasury of employing existing Customs and Excise agents and any future agents yet to be appointed.

It seems odd that the approach of the Government discriminates against home-produced wines, beers and spirits. I regret the fact that clause 1 refers only to the problem of wines. I wish to give an example from this year's statistics on Scotch whisky. The excise duty on a 70 cl bottle of Scotch whisky--which costs £10.70--is £5.48. The VAT is £1.59, making a total tax of £7.07--66 per cent. of the cost of the bottle. That means that Scotch whisky is taxed more heavily than any other alcoholic drink--particularly with regard to alcoholic volume.

The First Deputy Chairman: Order. Perhaps I may remind the hon. Lady that we are dealing with beer duties. Perhaps she could talk about them, because there are problems there as well.

Miss McIntosh: I am most grateful for your guidance, Mr. Martin, but the point which I am trying to make is that clause 1 should address excise duty charged on the alcohol content of each alcoholic drink. I am against clause 1 because it fails to do so. The duty charged on beer, wines and spirits is higher in the UK than the duty charged on any other European Union-produced products in their own country. The Government are directly discriminating against our own products in their home market, so I cannot support clause 1.

Mr. Edward Davey (Kingston and Surbiton): All of us would want to claim some expertise in this area. As a new Member of Parliament, find the temptation to list all the wonderful pubs and publicans in my constituency almost too great to resist. However, I am sure that you would intervene, Mr. Martin, and call me to order should I do so.

I want to address the main point of principle. The issue for any Government setting excise duties for beer--and other alcohol or tobacco products--is to try to strike a balance between the need to raise revenue, the need to ensure that health and social issues are properly dealt with, the need to support the strength and well-being of the industry, and the need to prevent too great incentives for smuggling.

The Government have got it right in the Bill. There is a very modest increase nominally--which is not an increase at all in real terms--and a very small amount of revenue is being raised. On balance, the Government have got the different factors right.

There are concerns on the health and social side which can be tackled in a number of ways, one of which is price. If we saw a significant reduction in alcohol duties--which seemed to be the implication of the proposals from the right hon. Member for Wells (Mr. Heathcoat-Amory)--there would be worrying side effects in terms of alcohol consumption, particularly by young people. We need to bear that in mind. However, there are other ways in which to pursue those health and social objectives. I hope that the Government will examine them.

In my short time as Member of Parliament for Kingston and Surbiton, I have noticed some problems in the licensing laws. This matter does relate to the clause, Mr. Martin, because it is one alternative to seeking higher increases in duty. In Surbiton, a rash of new pubs has

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opened. The local authority, magistrates and local police have opposed the granting of the licences. The Government inspector, sitting in Bristol, far away from Surbiton high street--[Interruption.] The Financial Secretary to the Treasury seems to be concerned. This is not an anti-Bristol, but an anti-licensing regime, point.

As the Government inspector was in Bristol, clearly he had no idea of the impact on the local community of that significant increase in a short period in the number of pubs in Surbiton's high street. Elected representatives in Surbiton were well aware of that impact and, working with police and magistrates, wanted to reduce the significant increase in licensed premises because of its bad social side effects.

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