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Mrs. Lait: May I ask the Minister to add to her reading list some books about smuggling in the 18th and 19th centuries? That would indicate to her the solution to the problem. "The Albion Tree", one of the best, is available in the House of Commons Library.
Dawn Primarolo: If the hon. Lady is seriously telling me that smuggling has been around for a very long time, I must say that I agree with her. If she is saying that we need complex strategies to tackle it, I also have to agree with that. However, I would encourage her to find a solution in this century rather than seeking refuge in the past. She might pay a little more attention to the strategies that the Government are deploying rather than lamenting the fact that we are not behaving as if we were in the 17th century: I leave that to her hon. Friends.
Several points were made about the Swedish Government's announcement on 14 April that they intend to reduce duty on cigarettes by 27 per cent. in 1999. They will achieve that by reducing specific rates. I was asked why we do not take similar action in the United Kingdom. First, we would lose £2.4 billion in a full year, which is the equivalent of 1½p on the basic rate of income tax. We are not prepared to countenance the loss of that revenue.
Secondly, I do not know the hon. Lady's position on Europe, but she seemed to imply that we should allow other member states to determine our duty rates. She prayed in aid the Swedes' activities in reducing their rates, as did the right hon. Member for Wells. That is a solution to their problem, but information from Customs and Excise and the tobacco industry suggests that the problem of smuggling in Sweden is much greater than the problem here, much as we regret our own. Customs and the Tobacco Manufacturers Association are discussing reliable methods of trying to estimate the overall scale of cigarette smuggling--a problem that, as the hon. Lady and others have said, is beginning to emerge.
In the light of our earlier debate on beer duty, it frankly beggars belief that the hon. Lady and others say that we have no enthusiasm for tackling smuggling and the
problems that it causes. Imported cigarettes and smuggling are a problem not only for the UK and other European Union member states with high-duty regimes; they are also a problem for those with low-duty regimes. The hon. Lady's causal connection between duty and smuggling is not a fair representation of the complexity of the problem.
The Government have made it clear that, on health grounds, our policy is correct. We have given more money to the health service than we would have done by linking the escalator to money moved across to the health service, as the hon. Member for Kingston and Surbiton suggested we should. I remind him that the Government have already given an extra £2 billion to the national health service. Our commitment to funding health and education is clear, in terms of priorities.
Mr. Heathcoat-Amory:
We have heard the Financial Secretary at her worst. She either could not or would not answer our questions. I remind her that she said in the House in 1995--I gave the quotation earlier--that increasing taxation is not the way to reduce consumption of tobacco or to deal with the health effects.
I asked the hon. Lady what had caused her to change to her mind. Switching from Opposition to Government has clearly had an extraordinary effect on her attitudes. Apparently she now thinks that there is no way of dealing with this problem other than by increasing prices and taxation.
It has occurred to my hon. Friends and me that the Government have changed their mind on another way of tackling tobacco consumption--through advertising. The Committee will remember that the Labour party won the election on a clear pledge to stop advertising on formula one racing cars. The Prime Minister changed his mind, and broke that pledge. It was later discovered that Bernie Ecclestone, who persuaded him to do so, had given £1 million to the Labour party. Lucky old Bernie got his bung back on that occasion, but we are left with a broken promise and the fact that the much heralded ban on tobacco advertising has not come into effect. Perhaps that is why the Government are relying more on increasing duty on tobacco.
My knowledgeable hon. Friend the Member for Beckenham (Mrs. Lait) has drawn attention to the seriousness of the smuggling or bootlegging problem and the culture of illegality to which it has led. The Financial Secretary said that she was concerned about that, but she clearly is not grappling with the problems. The proposed increases widen the gap between continental rates of duty and our own, which will make the situation worse.
The Financial Secretary said that there was a problem of young people taking up smoking, and, during our debate, other hon. Members have recognised the
seriousness of that problem. If tobacco products are smuggled in, they are made available outside Government controls on the sale of tobacco to minors. It is an unruly and anarchic market, and it leads to young people taking up smoking. For that pure health reason alone, the Government ought to think twice before increasing the escalator to 5 per cent.
Opposition Members have shown how savagely regressive this policy is. The Financial Secretary appeared entirely ignorant of that. If she did recognise it, she seemed entirely uninfluenced by it. We conclude that the Government's concern about the poor and those on low incomes is entirely synthetic. The figures I quoted earlier showed that smoking households in the bottom decile spend up to a quarter of their income on tobacco products. That ought to worry members of a party that, until fairly recently, had at least a published concern for the needy and the disadvantaged.
My final point, which the Financial Secretary continues to avoid, is that the Prime Minister recognised, before the election, that there was a problem. He said so when he was looking for votes in the tobacco industry and related industries. He promised an independent, urgent and comprehensive study. He has broken that promise. When will the hon. Lady publish the substitute study, by Customs and Excise, to inform our debates, and the public, about the real facts behind the Government's taxation policy, which is driven entirely by revenue considerations? The health issue is purely a smokescreen; it is revenue that the Government are after. If they disagree, let them publish a report on the matter.
Mr. Patrick Hall (Bedford):
Will the right hon. Gentleman give way?
Mr. Heathcoat-Amory:
The hon. Gentleman has not contributed to the debate, and I do not propose to give way to him. In any case, it is not from the hon. Gentleman that I shall get an answer to the following question, because he is not in a position to give one. When do the Government intend to fulfil their pre-election promise, on which the hon. Gentleman and others stood, to undertake an investigation of this issue and publish the results? Until that happens, we shall conclude that the clause is revenue-driven. I urge the Committee to accept our amendment.
Question put, That the amendment be made:--
The Committee divided: Ayes 106, Noes 303.
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