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23 Jan 2003 : Column 450—continued
Mr. Cook: I am delighted to assure the House and clarify that this Government have greatly increased the amount of funds going into the kind of drug treatment to which the hon. Lady referred. Indeed, recalling from memory, I believe that we are increasing the total volume by 50 per cent. There is of course pressure on the provision of residential treatment in particular. We are looking at how we can widen treatment, possibly by the use of alternatives to residential treatment. However, we have provided substantial additional resources and I have no doubt that we will continue to do so.
I was asked earlier about the business of the Northern Ireland Grand Committee. I am delighted to be able to answer my hon. Friend the Member for Thurrock (Andrew Mackinlay).
Andrew Mackinlay: I have some clout!
Mr. Cook: My hon. Friend should never underestimate his clout, which is quite considerable and taken very seriously on these Benches.
I am advised that yesterday a decision was reached to have two sittings of the Northern Ireland Grand Committee. On 4 February, it will sit at 2.30 pm to
discuss the Strategic Investment and Regeneration of Sites (Northern Ireland) Order 2003, and on 6 February it will meet to discuss the Budget (Northern Ireland) Order 2003.
Pete Wishart (North Tayside): Can we have an early and urgent statement by the Foreign Secretary, so that he can explain to the Scottish fishing community why his Department blocked any prospect of European Union compensation, seemingly to ensure that the British EU rebate would be secured? In that statement, would he describe the benefit to Scotland of being represented by a United Kingdom delegation, which has sold out not only the Scottish fishing industry but any prospect of EU compensation?
Mr. Cook: I rise wearily for the umpteenth time to try to explain to the hon. Gentleman, who represents the Scottish National party, the reality of the fishing industry: there will be no fishing industry if there are no fish.
Mr. Ken Purchase (Wolverhampton, North-East): What a surprise.
Mr. Cook: My hon. Friend is surprised by that, but I find that I am repeatedly obliged to make that point from this Dispatch Box.
It is as a result of that UK delegation that the degree of reduction was brought down from 80 per cent. to 45 per cent. Although, of course, I fully understand that the fishing community would have liked a further cut in the reduction, that would have been inconsistent with ensuring that cod stocks survive. I do not believe that that cut would have been secured by a delegation that did not have the clout of the combined United Kingdom behind it.
On the issue of compensation, the hon. Gentleman should not deceive his own people. He knows perfectly well that the British Government and the Scottish
Executive are considering ways in which they can increase support for the fishing communities. Several millions of pounds have already gone their way over the past few years in order to compensate for the pressure on the fishing industry. There will be more coming. It is important, though, that we ensure that maximum added value is provided and that we do not end up with a formula by which that added value is then reduced by the rebate.
Mr. Tony McWalter (Hemel Hempstead): Given that the Royal College of Surgeons has suggested that there should be one accident and emergency unit for every 500,000 people; that that is regarded as having considerable weight by strategic health authorities all over the country; that that threatens A and E facilities from Northern Ireland to the Isle of Wight, including—particularly as far as I am concerned—hospitals in Hertfordshire; and given that the Government have things called diagnostic and treatment centres, which seem to be a booby prize when one's A and E is shut, will my right hon. Friend agree to have an early debate on such units in our health service?
Mr. Cook: I am not sure that a debate is required, as my hon. Friend has amply and fully made his point. There is a familiar and well-known dilemma in A and E provision—specialists in the field are clearly of the view and have some weight and evidence behind them—that the more specialised the centre, the better the chance of successful intervention. The more specialised centres will of course tend to be found in areas that have the largest populations to serve. At the same time, we must balance that with ensuring fair access to A and E facilities, which is not always consistent with locating them near very large populations. Any judgment on those two aspects is a difficult one to make. It is probably not best made at the centre but by each local health board. I very much hope that both issues will be weighed carefully in order to reach the right outcome.
Excise Diversion Fraud
1.19 pm
The Economic Secretary to the Treasury (John Healey): With permission, Mr. Deputy Speaker, I wish to make a statement on this week's Court of Appeal case, known as Stockade, arising from investigations into the Fort Patrick bonded warehouse in 1996–97. Stockade is linked to the London City Bond—LCB—cases, which were investigated by Customs and Excise from 1995 onwards. I wish to inform the House of the actions that the Government have taken to deal with this series of frauds when organised criminal gangs took advantage of weaknesses in the Excise regime.
I can confirm to the House that since 1997 we have tightened Excise controls and made fundamental changes to the management of Customs cases. I can report that the independent inquiry that the Attorney-General and I jointly established in November, which anticipates the implications of LCB for cases like Stockade, is already under way. In 1998, we tightened the regulation of Excise warehouses to tackle the specific loopholes that the criminals were using in the Stockade and LCB frauds, but fraudsters and smugglers constantly change their methods, so the law enforcement challenge is continuous. In 2000, we commissioned the independent Roques review to look at Excise losses and Customs' methods of control. We accepted 62 of the 65 recommendations, and have continued to tighten the duty suspension regime since.
For the first time ever, Customs has made comprehensive estimates of the revenue losses facing all the main indirect taxation regimes, and we now have detailed strategies with substantial new resources in place to tackle smuggling and indirect tax avoidance and fraud. Investigations in Excise cases are necessarily long and complex, reflecting the scale and sophistication of the criminal organisations involved, but the prosecutions that followed in the LCB-related cases have highlighted for Customs issues about the status of informants, the handling of documentation and disclosure of information to the courts. The Government have already put in place important changes to reduce the risk from such problems, which date from the 1990s, but of course in such complex criminal investigations there will always be some cases that fail.
In legislation, we passed the Regulation of Investigatory Powers Act 2000 to establish a surveillance commissioner and set common guidelines on the use of informants for all law enforcement agencies. Statutory codes of practice enforced under the Criminal Procedure and Investigations Act 1996 govern the process of disclosure in criminal investigations. Far-reaching changes have also been made within Customs. A new chairman was appointed from outside the organisation in January 2000, and new senior staff on law enforcement have been appointed. With new case controls, training programmes and professional standards, the management of Customs investigations is being thoroughly overhauled.
In addition, from April last year and following the recommendation of the Gower-Hammond report, which the Government commissioned, responsibility for prosecution decisions and accountability for Customs'
prosecution function has been taken away from Customs and placed with the Attorney-General. Following the collapse of the London City Bond cases in the Court of Appeal two months ago, the Attorney-General and I jointly established the independent Butterfield review. Its terms of reference are to consider the circumstances that led to the termination of the LCB cases, examine the wider issues and advise on whether Customs' current criminal case handling meets statutory requirements and best professional practice. The review has unrestricted access to Customs staff, facilities and papers, and Mr. Justice Butterfield has been asked to report to us by June this year.The Government are still dealing with the fallout from events that date from the mid-1990s. We have commissioned and acted on independent reports from Roques, Butler and Gower-Hammond. We have made important changes to the way in which Customs investigations and prosecutions are handled, and the independent inquiry to deal with the concerns from this week's case is already up and running. Wherever necessary, we will do more, and the Butterfield review will play an important part in any further reform. It will be of great interest to the House, and I can confirm that a summary of the report and its recommendations will be laid before Parliament.
Mr. Stephen O'Brien (Eddisbury): I am grateful to the Minister for his statement and his courtesy in allowing me prior sight of it.
The statement is welcome, especially as we have been pressing for it. It stands in marked contrast to the Minister's written statement in November on the London City Bond case, to which he referred today. Why did the Government see fit to smuggle out a written statement then, but finally see fit to speak on the mess and confusion in Customs now? Is it because the Minister realises that there is now a massive dossier of damning indictments against the department? Can he confirm that the collapse of that action cost the taxpayer some £100 million in legal fees? Can he confirm press reports suggesting that up to £2 billion of revenue has now been lost in fraud following that failed sting operation, for which there is nothing to show? Did not the collapse of the LCB case cost the Customs solicitors office alone some £450,000?
It is a disgrace that the convictions of those involved have been overturned by the prosecutors' failure to tell the court of the entrapment techniques employed. Will the Minister admit that up to 100 other convictions are in doubt? What exactly are the implications for compensation from the public purse? It is indicative of the shambles under the Government that their own Attorney-General ordered a judicial inquiry into the national investigation service only for another case to collapse while that investigation was taking place. Is it not the case that the Government have been forced to raise the minimum indicative levels of smuggling fraud following a High Court ruling against the Minister's Customs guidance in the Hoverspeed case last summer?
Can the Minister confirm a written answer of 31 January 2002, in which his colleague, the Chief Secretary to the Treasury, the right hon. Member for Brent, South (Mr. Boateng), said that the Chancellor was not even aware of the issues resulting from the Excise diversion fraud until June 2000—three years
after he came to office? Was not the subsequent Roques report supposed to have ended the problems, and why has it failed? Can the Economic Secretary to the Treasury confirm that the Attorney-General was sent a monthly schedule of sensitive cases, including a number involving LCB, on 14 March 2001? Subsequently, has not the Customs solicitors office kept the Attorney-General abreast of developments? If it has, why has the chaos been allowed to escalate?Does today's statement that an independent inquiry is already under way into this week's events mean that the Minister has consulted the Attorney-General about extending the existing Butterfield inquiry? Is that not needed in the interests of taxpayers and public services on which revenues rely? How far-reaching will Lord Butterfield's inquiry be? Does his remit include investigation of the appropriateness of powers of prosecution? Will there be a further oral statement on the Floor of the House when the inquiry reports?
Ultimately, despite the Minister's weasel words about the mid-1990s, the real truth is that the decision to prosecute was made under the present Government. The decision to spend millions of pounds of taxpayers' money on the case and the decision not to disclose participating informants were taken under them. The collapse of potentially successful major sting action was caused by decisions taken under them. Instead of tax fraudsters, taxpayers have been stung by the Government's action. Is that not why, in a vain attempt to cover their embarrassment, all the members of the Treasury Front Bench, excluding the Chief Secretary, have had to turn out for the statement, outnumbering their own Back Benchers?
The Economic Secretary must now turn his statement into action to reassure Parliament and the public that his guidance to Customs officers and his control over the department is tenable. Was not the Chancellor's aim in paragraph B56 on page 200 of the pre-Budget report, as recorded in a Customs and Excise press release on protecting indirect tax revenues on 27 November last year, to
- "reduce the proportion of VAT which goes uncollected and produce more than £2 billion per year in additional VAT revenues by 2005–06"?
Is it not plain that since the Government came to office in 1997, Customs and Excise, Britain's oldest revenue-raising body, with a proud history of dedicated professionalism, has been reduced to a chaotic mess? It faces judicial inquiry and police investigation. Its actions have been ruled illegal by the High Court and it is losing more of the theoretical yield of VAT through avoidance and fraud than when Labour came to office. Is the latest loss of taxpayers' money not another damning example of Customs in chaos?
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