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Mr. David Kidney (Stafford): Would not every lorry go through fixed X-ray scanners at ports? Could not the scanners detect illegal immigrants in one lorry, and an illegal load of cigarettes or tobacco in another?

Mr. Cousins: My hon. Friend is right, of course, but he should bear in mind that using the scanners is complex. New and much larger dedicated parking areas will have to be laid out, where lorries can queue to use the scanners. Clearly, moreover, not every lorry could be scanned. Questions of intelligence, preselection and so on would therefore arise again. That only reinforces my anxiety about whether Customs and Excise is sufficiently well organised internally to be able to do the job with the greatest effectiveness.

In addition, when the scanners are put into use we shall soon hear about horrendous parking problems and delays in processing lorries and vehicles through Dover. The House had better stand ready for those complaints, because there will then be immense pressure on Customs and Excise to reduce the number of lorries that it seeks to check and scan. These are very difficult issues.

Mrs. Ann Winterton (Congleton): I have been very interested in the hon. Gentleman's remarks about the scanners that are to be introduced into our major ports. I hope that he will forgive my ignorance, but I wonder whether a solution, as far as immigration is concerned, is that lorries should pass under gantries, which can be built quite easily, and that there should be heat-seeking cameras on the top and at the sides, rather like those used by the police when they go up in helicopters to try and find people who are missing but not yet dead. Is that an

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over-simplistic view, or could it be carried out more simply than the complete scanning? Would it cost less and be easier to implement?

Mr. Cousins: The hon. Lady raises an issue that does not properly form part of this debate, and to attempt to respond to it is totally beyond my information. She speaks of immigration, which is the responsibility of the Home Office. I was seeking to draw the attention of the House to the fact that the scanners, which were acquired for the purposes of detecting excise duty evasion, may be given a new range of responsibilities as a result of other events. That will make life more difficult when it comes to detecting excise duty evasion.

There is considerable confusion of investigatory authorities in considering excise duty evasion. It was of interest to me that in its most recent report, the Intelligence and Security Committee drew attention to the fact that drug smugglers and other organisations with political purposes, which are often linked to trade in materials such as drugs, are switching their organisational skills into tobacco smuggling. It is closer to legality in most regimes than drugs, and the profits are as great or greater.

The Intelligence and Security Committee was extremely concerned about the lack of co-ordination of our investigation services in redeploying to meet that difficulty. We have the National Criminal Intelligence Service, the national investigation service within Customs and Excise, normal police arrangements and the activities of the security services. The Intelligence and Security Committee echoed the evidence of the Select Committee on the Treasury in its great concern about the lack of co-ordination and effectiveness between the various investigatory agencies.

The matter goes to the heart of the Butler report about the collapse of the Steeler case, in which those very issues are highlighted dramatically. The Government must, as a matter of urgency, address the confusion and lack of effectiveness on the part of the various arms of investigation. They are coming at the same problem from a number of different directions, using various techniques, resources and legal channels, and the result is not in the public's best interests.

Let me turn to closer working. The Committee discussed a merger of Inland Revenue and Customs. The House must confront the old Spanish--perhaps I should say Spanish-British--practice of having two distinct revenue collection agencies. Most modern revenue collection regimes have a single agency. Those who defend the practice of having two should justify it. It is not normal, and other revenue collection regimes have not found it the most efficient and effective model.

The Government, however, favour closer working between the Revenue and Customs. That requires us to confront long-established cultural differences between the two organisations--the main reason why people reject merger. We cannot escape the problem of having two organisations with different histories and cultures by simply avoiding the question of merger. That difficulty will have to be addressed if closer working is to be established.

There is practical evidence for that proposition. The Inland Revenue, which has historically not visited taxpayers in great numbers, has introduced a programme

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to increase visits. Customs and Excise, meanwhile, which has historically made many visits to those who pay VAT, is scaling back. That is an example of what closer working means, and of the difficulties involved.

The legal basis and status of investigation officers in the two organisations are hugely different. Closer working cannot overcome that. We must put investigations on a platform of common intelligence and common investigatory powers. To forestall anything that the hon. Member for West Worcestershire might say about that, I do not mean that we should always scale up the powers of the Inland Revenue to those available to Customs and Excise. We should find new, more appropriate legal powers to address issues such as electronic commerce.

The establishment of a single business register list will be an important innovation, providing an identifier and a tax collection point for Inland Revenue taxes, VAT or excise duties. The Government have launched pilots, experiments and test studies on a list, but I am far from satisfied that their approach is as well co-ordinated as it should be. Some initiatives have been taken through the Department of Trade and Industry and others through the Treasury. I wonder whether enough co-ordination or urgency is being given to a simple organisational change that could provide a platform for more effective regulation and enforcement to protect legitimate business.

Neither the Committee nor the House knows what commitment the Inland Revenue and Customs and Excise are genuinely making to closer working. There is a great deal of talk, and some money has been allocated. Mysterious switches of money are made between Customs and Excise and the Inland Revenue, but what it all actually involves remains entirely obscure. Today's debate provides a chance to begin to tease out what closer working means.

The House is in a difficult position. The scale of the problems that we detected when we made the studies that helped to produce the report has been entirely borne out by subsequent events. Looking back on the matter, there was almost an attempt to conceal from the Committee the true scale of some of the difficulties. Even while the Sub-Committee was conducting its investigations, certain matters must have been known; for example, the collapse of the Steeler case and the subsequent discrediting--fairly or unfairly--of the Customs and Excise as a prosecuting authority. I have some doubts--

Dawn Primarolo indicated dissent.

Mr. Cousins: The Minister shakes her head, so I accept that she is trying to reassure me. However, I remain concerned as to whether Customs and Excise were frank enough with us during our inquiries. We were there to help. We identified problems. They are much greater than even we had supposed. The matter is of serious public importance. It puts at risk jobs and businesses throughout Britain. The scale of abuse in the excise area and, to some degree, in the informal economy discredits some of our normal, legitimate practices.

Such matters cannot be overlooked; they must be addressed. The Paymaster General is entirely capable of shouldering the burdens and setting us on the right course. We look to her to reassure us and to tell us clearly that we are set on a course whereby these matters will be addressed.

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2.11 pm

Mr. Edward Davey (Kingston and Surbiton): I apologise to the House for the fact that, unfortunately, I shall not be present for the end of the debate. I apologise especially to the Paymaster General, because her answers and her summing up of such debates are always useful--certainly in relation to my remarks.

I serve on the Select Committee on the Treasury and attended a few of the Sub-Committee's hearings, although I did not play a great part in the inquiry. I pay tribute especially to the hon. Member for West Worcestershire (Sir M. Spicer) and to my other colleagues who undertook the bulk of the work. It is a tribute to the operation of Select Committees that when I considered the proposals and recommendations made by my colleagues, I agreed with all of them.

The report is strong; it is hard hitting. As the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) says, it raises many questions about the way in which Customs and Excise has been working for many years. We may question whether we got to the bottom of all the issues. The Sub-Committee may have to return rapidly to the issue of Her Majesty's Customs and Excise. The questions that we focused on need to be answered quickly.

Sir Michael Spicer: The hon. Gentleman reminds me that we had already agreed to return to the matter. The Liaison Committee has said that the Sub-Committee should follow up that report and we certainly intend to pursue the matter.

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