Memorandum submitted by HM Customs and Excise (CUS 2)
1. This memorandum is in response to the invitation from the Scottish Affairs Committee to give evidence to its inquiry into aspects of the Customs Service in Scotland.
INTRODUCTION
2. Customs and Excise is organised into two main areas of activity: Business Services and Taxes (BST) and Law Enforcement (LE). BST has a resource allocation of just over 12,000 staff and LE has just over 7,000. At the Committee's request this memorandum focuses on the Department's LE activity.
3. It is the Department's LE arm that deploys resources across the UK to combat revenue evasion and smuggling. LE has three operational arms, Intelligence, Investigation and Detection. These are split into regions across the UK, the LE North Region consists of Scotland, Northern Ireland, North West and North East England.
4. Intelligence produces strategic, tactical and operational intelligence assessments on specific problems, including for example, class A drug smuggling and major revenue evasion threats. These intelligence assessments are fundamental to the development and management of LE operational strategies and guide the deployment of our Investigation and Detection resources.
5. Investigation has overall responsibility for HMCE's criminal investigation activity, working closely with other law enforcement agencies, both internationally and in the UK. Investigation deals with the most serious aspects of those crimes for which HMCE has law enforcement responsibility.
6. Detection provides the first line response to those individuals and organisations that are determined evaders of our controls. Detection resources include flexibly deployable anti-smuggling teams and specialist skills, such as those of the Road Fuel Testing Units.
7. HMCE's objectives are set out in the Department's Public Service Agreement (PSA). This sets two objectives which govern our law enforcement activity:
— to collect the right revenue at the right time from indirect taxes; and
— to reduce crime and drug dependency by detecting and deterring the smuggling of illegal drugs and other prohibited and restricted goods.
The department is also responsible for tackling criminal assets and money laundering, primarily in relation to offences for which it is the lead enforcement agency.
8. This memorandum focuses on two key result areas under the PSA:
— action to reverse the trend in tobacco smuggling; and
— action to combat the supply of class A drugs to the UK market.
RISKS—TOBACCO
9. Initially the problem of tobacco smuggling was confined to cross-Channel smuggling; particularly of hand rolling tobacco. However, the majority (70 per cent-80 per cent) of tobacco now smuggled into this country comes in bulk consignments in freight and roll on-roll off lorries. Most of the remainder is smuggled through the Channel ports—the so called "white van trade".
10. By March 2000 Customs estimated that 18 per cent of cigarettes smoked in the UK were smuggled and without action this would rise to 25 per cent of the market by 2001 and 33 per cent of the market by 2003.
11. The Paymaster General announced on 22 March 2000 the Government's new strategy to tackle tobacco smuggling ("Tackling Tobacco Smuggling" was published by HMSO in March 2000). The strategy aims to put smuggling into decline within three years through:
— disruption all along the supply chain involving a step change in interception rates;
— improved intelligence to optimise interception rates and target major inland distribution;
— extra resources (human and technological) to enhance the vigour and scope of the enforcement effort;
— targeted measures to apply effective sanctions to those caught;
— increased emphasis on asset confiscation; and
— enhanced working with Government agencies abroad and in the UK.
12. This is a national strategy that encompasses all the constituent parts of the UK, reflecting the nature of the cigarette smuggling problem.
13. As with other parts of the UK, the illicit cigarette market in Scotland is supplied by a variety of routes and smuggling methods. Whilst some cigarettes do enter the Scottish market directly from overseas, the vast majority enter the UK through the cross-channel ports in Southern England.
14. Action to tackle the illicit cigarette market in Scotland cannot be confined to action taken in Scotland. Activity by Customs officers throughout the UK affects the Scottish market. Similarly, Customs are taking action against a number of Scotland-based criminal organisations who are supplying markets in other parts of the UK.
RESULTS—TOBACCO
15. The Chancellor announced the first year results of the tobacco strategy in his Pre-Budget Report on 27 November 2001. These show that Customs are on track to deliver their key outcomes, confirming that the analysis of the problem was sound and the operational responses have thus far been effective. In 2000-2001, Customs:
— hit their key target to hold the market share of smuggled cigarettes in the UK to 21 per cent, thereby succeeding in slowing the growth in cigarette smuggling;
— seized 2.8 billion cigarettes—1.9 billion in the UK and 0.9 billion overseas;
— disrupted or dismantled 56 major excise smuggling gangs; 43 of them involved in large scale tobacco smuggling;
— reduced cross-Channel 'bootlegging' of hand rolling tobacco by 81 per cent; and
— seized assets to the value of £8.34 million.
RISKS—CLASS A DRUGS
16. HMCE is the lead agency for UK action to combat the supply of class A drugs and chairs the Concerted Inter?agency Drugs Action (CIDA) group. CIDA leads the operational activity of the all UK departments and agencies working to combat class A drug supply. The Scottish Drug Enforcement Agency (SDEA) is an active member of the group. CIDA estimates that up to 40 tonnes of cocaine and 30 tonnes of heroin are targeted on the UK market each year. CIDA has therefore established operational strategies to tackle cocaine and heroin supply at all points along the supply chain, with the objectives of:
— taking out bulk movements—particularly at or near source where they are most vulnerable;
— disrupting or dismantling the criminal groups responsible for supplying class A drugs; and
— removing the assets of drugs criminals.
17. The main UK points of entry for class A drugs are the ports of South East England dealing with freight and tourist traffic from Europe. A significant, but lesser, problem is posed by the main UK international airports—particularly Gatwick, Heathrow and Manchester.
RESULTS—CLASS A DRUGS
18. In 2000-2001, Customs:
— prevented £1,523 million worth of class A drugs entering the UK, exceeding the target of £1,320 million;
— seized 7.4 tonnes of cocaine, 2 tonnes of heroin and 1 tonne of other class A drugs;
— disrupted or dismantled 50 class A drug trafficking organisations, against a target of 47;
— realised £6.9 million against confiscation and forfeiture orders, against a target of £6.6 million; and
— was instrumental in the seizure of 47 tonnes of cocaine and 0.5 tonnes of heroin overseas, where the drugs were not destined for the UK.
RESOURCE DEPLOYMENT
19. HMCE's approach to effective law enforcement is to:
— develop a clear assessment of the problem to be tackled;
— establish an appropriate strategy, or programme of action, to achieve a defined outcome; and
— deploy resources in line with the strategy, where intelligence indicates that they will have maximum impact on the problem.
20. In developing its operational strategies, HMCE takes into account a wide range of factors, including intelligence assessments, economic analysis and the structure and scale of traffic movement. Our aim is to ensure that resources are deployed where they are best able to impact on the overall problem.
21. In total, HMCE deploys just over 7,000 Law Enforcement staff across the UK, including 1,391 in LE's North Region.
22. The table below shows how LE resources for the North Region are deployed:
| |
Scotland |
Northern
Ireland |
North
West |
North
East |
|
Intelligence |
57 |
27 |
58 |
63 |
|
Investigation |
82 |
29 |
175 |
159 |
|
Detection |
148 |
124 |
257 |
212 |
|
Totals |
287 |
180 |
490 |
434 |
23. Flexibility in resource deployment is vital to HMCE's effectiveness. We have established both National and Northern Strike Forces of detection staff that can be mobilised to respond quickly to identified threats anywhere in the UK and Northern Region respectively.
24. Whilst not currently assessed as a high threat, the extensive Scottish coastline does pose particular problems for land-based staff. HMCE addresses the maritime smuggling risk using its modern cutter fleet—including two vessels brought into service in early 2002. These are designed to be capable of deployment offshore for extensive periods, countering the threat of smuggling into remote parts of the UK coastline.
25. Detection staff are also supported by the use of detector dogs, a key anti-smuggling resource available for deployment in Scotland. In common with our other resources they are deployed according to intelligence and risk. We have amalgamated small dog units to provide increased efficiency and flexibility of deployment. Ten dogs are currently available for deployment in Scotland from Manchester and Hull. The dogs are capable of detecting class A drugs, tobacco and currency.
26. HMCE works closely with law enforcement and intelligence agencies throughout the UK and overseas. Of particular note in Scotland is HMCE's relationship with the Scottish Drug Enforcement Agency (SDEA). HMCE's drugs investigation activity is closely integrated with the SDEA and therefore has a direct contribution to SDEA outcomes.
CONCLUSION
27. HMCE is focused on the delivery of the government's priority outcomes, deploying resources against clear operational strategies to maximise their impact on identified problems, including tobacco smuggling and class A drug trafficking.
28. HMCE actively manages its operational strategies and resource deployments to build on success and ensure maximum impact is maintained. This is evidenced by our tobacco strategy results, where we have met or exceeded our key targets. The successful principles of the Tackling Tobacco Smuggling strategy are now being applied to other areas of smuggling and fraud, such as oils and alcohol.
29. HMCE resources are mobile, multi-functional and able to be deployed swiftly to counter threats. Our results across the UK have demonstrated the success of such a policy which this financial year has resulted in a 76 per cent cut of the amount of revenue lost from cross channel smuggling of tobacco and alcohol, against a target of 10 per cent. Such results have real impact across all parts of the UK and are achieved with proven strategies and the most effective deployment of our resources.
March 2002
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