Examination of Witnesses (Questions 1
THURSDAY 8 FEBRUARY 2001
1. Minister, I apologise for being late. We
will certainly not protract the proceedings beyond a quarter to
(Dawn Primarolo) Sir Michael, before you start, could
I also apologise for the problems over the original date for this
meeting. I know my office spoke to you. There was confusion. I
was actually on my way to Brussels, I had to go to Brussels for
a meeting. I do apologise for any inconvenience this may have
caused the Committee and to you. It will not happen again. I will
be much more thorough in making sure that provisional dates stay
in and we do not allow anything else.
2. Thank you very much. We were certainly told
by your office that you love coming here too much to try to avoid
(Dawn Primarolo) I do not think I would go that far
but we will give it a whirl, shall we?
3. Can we start straight away with the issue
we have been in correspondence about, the Rocques report. Could
you say what deadlines have been set for the final version of
the Rocques report to be reported publicly?
(Dawn Primarolo) I have not set a specific deadline
in terms of date. What I do have is an urgency to ensure that
the outstanding questionshow much was lost between 1994-98,
how it was lost, why it was lost, what has been done to ensure
that never happens againand any other lessons that need
to be addressed are done as speedily as possible. That information
at all times, of course, has to be shared with the National Audit
Office. I want to be in a position to inform Parliament and yourselves
as quickly as I can on the outcomes and if there is any further
action necessary for Customs, what that will be.
4. Minister, the trouble with that response
is that in your letter to me you said, if I can just read out
the appropriate piece of it: "Customs tell me that although
the basic facts", which is what you have just been talking
about "have been established there is more work to be done
before firm conclusions can be reached. Customs will therefore
be asking John Rocques to carry out further analysis to complete
his work as soon as possible". The facts seem to be clear,
what seem to be now in question and possibly needing further doctoring
are the conclusions. That does not quite match up with the answer
that you gave me first of all.
(Dawn Primarolo) I think we have discussed before,
explaining to the Committee, this is about diversion fraud from
our warehouses. It happened, as I tried to explain before, Customs
knew it was happening and it was in the pursuit of evidence for
prosecutions. This is a very complex area. The discussions with
Mr Rocques, as I understand it between Customs and himself, are
specifically in relation to some of the issues in that. I think
it would be inappropriate to gradually release information. I
think that what Parliament will want to see is a full statement
and a reassurance that it has been stopped, it will not happen
again, and what measures are in place to ensure that. That is
what we are settling on. Of course, as I have said, all of the
information is available, and has to continue to be available,
to the NAO on the basis that they need to be kept informed because
of the amount of revenue.
5. Do you think it is right that Customs should
have the apparent right to reject the initial findings of an independent
investigation such as this one?
(Dawn Primarolo) Sir Michael, this is not about rejecting
findings, this is about ascertaining the facts and the necessary
steps thereafter. I would like to assure the Committee that this
is not about saying that the report has not looked at some very
complex areas and needs to, as I said before to the Committee,
covering areas like the role of the National Investigation Service,
the cases that were subsequently developed. Sir Michael, I really
can assure you personally that I am not trying to conceal anything
from the Committee or do anything that would not be proper. I
am in some difficulty without having the full conclusions and
in a sensitive area it is unwise for me to speculate. I am absolutely
of the view that I am happy to keep you informed, and the Committee
informed, and I will be available for questioning as soon as there
is more information in the public domain for that.
6. I am not trying to be clever about this but
your letter specifically says that the facts have already been
ascertained and it is the conclusions that need further work on.
(Dawn Primarolo) The facts are with regard to the
revenue lost and the fact, again as I tried to explain when I
had the opportunity to speak to you, that it happened with Customs
watching it. This is quite difficult to get across, why exactly
that happened and how it happened. It is not as if they did not
know that it was going on. Those are the issues that I certainly
want to bottom out. As you know, the reason I appointed Mr Rocques
and established the independent inquiry was notwithstanding the
fact that Customs had already undertaken an internal inquiry.
My view is that we must leave no stone unturned, and I am still
of that view. At the end of this we need to be able to draw a
line and move forward.
7. Were you concerned that Mr Rocques said in
the Financial Times last Monday that he felt the report
should be published immediately?
(Dawn Primarolo) I have not spoken to Mr Rocques and
I do not know the source of the story that was in the Financial
Times, although naturally I took note of it. I think it is
probably best that I deal with the facts of it. As I have said
before, and Members of the Committee may have some sympathy for
this, what I will need to make sure is all the questions are answered,
and answered clearly, on the outstanding items, and that is what
I am doing now, or Customs are doing now.
8. Minister, you must have some idea in your
own mind when it would be appropriate for this to be published?
Are you saying, at least internally, "I want it by such and
such a date and no longer"? Is there pressure coming from
your office on this?
(Dawn Primarolo) Yes, I would like it sorted. I think
that I, on behalf of Parliament, owe an explanation and that must
be properly presented. If it was over a period of time when I
was a Minister it may be a little easier but Mr Rocques is actually
scrutinising a period from 1994 to early 1998, of which I have
only been the Minister for six months. There is a great deal that
needs to be sorted in that period.
9. Can you give us some indication when you
think that it really ought to be out by?
(Dawn Primarolo) I cannot give you an indication.
I would not want to set a date. As I have said, I think that we
need to have these answers on the public record as soon as possible.
Chairman: Thank you. Jim Cousins.
10. I find that exchange extremely helpful and
I do understand the difficulties of the position that you have
here today. Do you feel now that the question of the revenue loss
involved in this has now finally been bottomed out?
(Dawn Primarolo) Mr Cousins, this is a matter for
the NAO as well. I am not in a position to be able to speak for
the National Audit Office or comment on their views at this time,
but naturally there has been wild speculation about the actual
loss. From my point of view it is important that we make sure
it is all agreed and made public, the actual loss, how it occurred,
why it occurred, whether it has been stoppedMr Rocques
would have come back to me during the course of his inquiry if
it had notbut also what we need to do to make sure this
type of failure does not happen again. Forgive me, but there are
some issues around the National Audit Office which I am not able
to address to you but hopefully that situation will be clarified.
11. I think I am following you.
(Dawn Primarolo) I am sorry, I am just not able to
be more specific.
12. I do not intend to press you unduly for
the actual figure, that clearly would be wrong, but just so we
are clear about this, your last remarks do not in any way imply
that there is a disagreement between the NAO and yourselves about
the actual extent of the loss?
(Dawn Primarolo) No, we do not have disagreements
with the NAO. The NAO's role is absolutely clear and independent
here, it is not negotiable. It is a matter for them because, again
as I have explained before, this is a loss that occurred over
a number of years that has not been accounted for properly to
Parliament and, therefore, the procedure needs to be gone through
with the NAO to make sure that it is now properly accounted for
and that is their responsibility.
13. The press release you issued when the inquiry
was first set up made it clear that it came after an internal
Customs and Excise assessment which was asked for by the new Chair
of Customs and Excise, Mr Richard Broadbent. The press release
does refer to "significant revenue losses" which Customs
had presumably identified at that stage before the inquiry. I
think it is appropriate to ask you are the figures that were under
discussion then and the figures that are under discussion now
of a piece or are they significantly different?
(Dawn Primarolo) I am just taking advice that we are
not compromising the NAO's position. The figure is approximately
the same, if a little lower. I am sorry, I cannot be more specific
14. That is fine.
(Dawn Primarolo) It is still a very, very significant
15. A very, very significant sum?
(Dawn Primarolo) Yes, and now you are going to ask
me what a significant sum is and I would wish I had not said that.
I think the adage is when in a hole stop digging, and I think
I should. This is a matter for the NAO. The internal report in
terms of the possible scale of the loss is of the same order as
that which has now been established is my understanding and that
is a matter that the NAO will account for.
16. Chairman, when the Paymaster General looks
at me like that and says it is a very, very significant sum, I
worry about the two bottles of Galliano I bought in Rome Airport.
(Dawn Primarolo) Two. Not litres?
17. Not litres.
(Dawn Primarolo) That will take you some time to drink.
18. Clearly this inquiry was to some degree
triggered by Mr Broadbent's own enquiries into these issues. It
was something that was generated from within Customs and Excise
by an examination that the new Chair of Customs and Excise carried
out. That, of course, is very important, but can you tell the
Committee what other specific changes and improvements Mr Broadbent
has brought about?
(Dawn Primarolo) This moves us more into the discussions
about the restructuring of the department.
(Dawn Primarolo) It ties in with other agendas to
do with Closer Working as well. I think it was on 17 January that
Customs announced a major restructuring. The restructuring of
Customs now is to divide it into two main business streams. The
first is the business service and tax element, which comprises
of all business tax and the facilitation of information of Customs,
the international movements of trade services, etc, and that has
a business focus and accounts for approximately 13,000 of our
staff and their focus is on that. Naturally what we are seeking
to do here is to deliver a service that is an improvement for
the taxpayer, for the customer, improve compliance and make sure
that the management through the organisation is properly focused
on delivering those objectives. It is in two divisions now. The
second division is the law enforcement and that comprises of all
investigation, intelligence and detection activities. That would
be all the drugs, smuggling, firearms, all the investigation service.
That comprises of approximately 8,000 of our staff. There is a
very small, and I cannot give you the number of staff because
it is very small, logistics, finance, human resources, legal section.
What Mr Broadbent and his new management team have done is considerably
reduce what was the head office function. The head office function
is basically the support for the Chairman and his team. The parliamentary
unit and all other policy development is integrated into those
two divisions which then, obviously, facilitate Closer Working,
whether it be the enforcement side with other agencies, the police,
Interpol, other intelligence agencies, and on the business side
the Closer Working Framework that is being developed and focused
on with Inland Revenue. Collections have gone, it is much more
a focused delivery of a business service.