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23 Jan 2003 : Column 459—continued
Madam Deputy Speaker (Sylvia Heal): Order. I make a plea for brevity, so as to allow as many hon. Members as possible to be called. Of course, I also have the main business to protect.
Mr. Nigel Beard (Bexleyheath and Crayford): May I congratulate the Government on the statement and on the steps that have been taken over some years to remedy the record of grossly inadequate direction and management in Customs and Excise, which stretched back way before 1997, when this Government took office?
What is being done to remedy the position whereby cigarettes are being exported duty free to Andorra and smuggled back to this country? Is that one of the cases that will be reviewed?
John Healey: I accept my hon. Friend's criticism, as I know will Customs, about previous management problems. The strengthening of the board of commissioners, the appointment of a new chief executive on the law enforcement side and a raft of new staff have all helped to reinforce the capacity of Customs to deal with things in a better way.
On the serious problem of tobacco smuggling, my hon. Friend will be aware that the Public Accounts Committee recently conducted an inquiry and published a report. He will therefore know that Customs is working with each of the major UK tobacco manufacturers on detailed information about production, markets and exports. That will be encapsulated in what we call a memorandum of understanding, which represents a determination to disclose information and co-operate with Customs to stamp out widespread tobacco smuggling. He will be aware that one of the major companies, Imperial Tobacco, is now working more closely with Customs. We have not yet reached a point at which we feel that we can sign that memorandum of understanding, but I can tell him that the signs are at least encouraging.
Mr. John Bercow (Buckingham): I am a great admirer of the Economic Secretary, as he knows, but he really must answer directly the very pertinent inquiry posed to him by my hon. Friend the Member for Eddisbury (Mr. O'Brien). What is the expected impact of the collapse of these cases on the Treasury forecast of an additional £2 billion in revenues by 2005–06 from anti-VAT fraud measures? That forecast was made by the Government at paragraph B56 of page 200 of the pre-Budget report only a few months ago.
John Healey: The figures to which the hon. Gentleman refers are the projected revenue gains that we will achieve from the new anti-VAT fraud strategy that we have put in place—a result, in part, of the additional resources that we are putting into Customs. Those figures were audited, discussed and developed
with the National Audit Office. As the publication to which he referred suggests, they take their part in the projection of public finances for the future.
Mr. Nick Hawkins (Surrey Heath): These are very serious matters, as the Minister knows. Will he confirm that the Butterfield inquiry will take into account all the views of all the counsel involved in the cases that have collapsed? As one of the two shadow Law Officers in the House, I have had discussions with one of the counsel and I think that that would be very helpful.
Will the Minister assist in arranging for his noble Friend the Attorney-General to meet me and my hon. Friend the Member for Stone (Mr. Cash) to discuss the implications of these collapsed cases? Will he concede today that whatever the date when the fraud started, all the relevant decisions that have led to the cases' collapse have been taken since this Government came to power? The decision to prosecute, all the decisions about how the evidence was to be presented and, most crucially and culpably, the decision not fully to disclose the role of prosecution witnesses to the defence have led to the collapse of the cases. Will he now confirm that he recognises that all those Customs and management decisions were fatally flawed and that that is what is costing huge amounts of taxpayers' money and will carry on costing more when compensation claims are taken into account for these and future collapsed cases arising from this shambles?
John Healey: There will always be problems with individual cases, no matter how good the systems and the decisions that are taken, when the complexity of the criminal investigations and prosecutions is such as it was in the series of cases in question. The Butterfield inquiry is an independent inquiry conducted by an esteemed and highly regarded High Court judge. It is proper that it is independent, so the judge will make decisions about how he conducts it. On the basis of the enormous amounts of material relating to the cases that we have already forwarded to the judge, it is clear that he is taking extremely seriously the need to get to the bottom of exactly what went on in the LCB-related cases.
I shall pass on to the Attorney-General the hon. Gentleman's request for a discussion on some of these matters.
Mr. Michael Jabez Foster (Hastings and Rye): May I congratulate my hon. Friend on the efforts that he has made to get to grips with this problem? May I also encourage him not to take the soft-touch and let-them-off-the-hook attitude of Opposition Members when people commit such offences and there is reasonable evidence to prosecute?
John Healey: My hon. Friend is absolutely right that a tough prosecutions policy is an important part of the armoury that any law enforcement agency, including Customs, has for dealing with organised, systematic and often international criminal fraud gangs.
Adam Price (East Carmarthen and Dinefwr): I am grateful for having had advance sight of the statement. On the collapse of an earlier case, Mr. Justice Foley accused the national investigation service of Her Majesty's Customs of having a culture of recklessness—
his words, not mine—and referred to a catalogue of illegalities. Will the Minister explain why Customs and Excise should not be brought into line with the police and stripped of control of its own prosecutions? Will he confirm whether any members of the national investigation service are currently suspended pending criminal investigations?
John Healey: I am glad that the hon. Gentleman received a copy of the statement. The courts made no suggestion of systematic corruption or criminality by Customs in any of the cases that the statement covers. I have dealt with control of the prosecution several times already. From April last year, the responsibility for the prosecution and accountability are matters for the Attorney-General, not Customs. That is proper.
Mr. Peter Kilfoyle (Liverpool, Walton): Although I am a great admirer of the work of rank and file Customs officers, who have a difficult job, will the Economic Secretary assure us that we shall have full disclosure of all the details of the corruption and ineptitude that characterised the Charrington and Haase-Bennett cases, especially the use of criminal informers? Hitherto, senior management of Customs and Excise has been marred by evasion and obfuscation about information that should be in the public domain. Will my hon. Friend guarantee that that will be replaced by a policy of openness and transparency?
John Healey: I am certain that Customs and Excise has never previously published more information about its activities, estimates and analysis of the fraud and smuggling that confronts us. It has never published more about its work and the way in which it makes decisions.
My hon. Friend mentioned the use of informants in two cases. This afternoon, I am dealing with matters that are connected with the LCB case. The use of informants, and disclosure of information about that, is central to questions about the safety of the cases and the convictions. They will also be central to the Butterfield review and inquiry.
Mr. Jonathan Djanogly (Huntingdon): In January 2002, I posed seven written questions to the Chancellor on the activities of Customs and Excise on the London City Bond fraud trial. Indeed, one was mentioned earlier. Although the Chief Secretary's answers were opaque to say the least and no action ensued, they revealed a murky trail of Customs and Excise not informing Ministers about what was going on, hundreds of millions of lost pounds—owing to criminals being allowed to pursue fraud on the basis that it might lead to catching larger fry—and failed prosecutions.
The Economic Secretary said that we should not base conclusions on one trial. We are not doing that. How many investigations have taken place? I believe that the figure is almost 200. If so, how can he claim that he is about to launch his investigation? Why has not that happened previously? Why has the problem been
allowed to continue for so long? Why has a full investigation by the Government not taken place to date?
John Healey: The independent report that we commissioned from Roques in 2000 considered some of those questions and problems; the independent review that we commissioned from Butler also did that. The hon. Gentleman is right to draw attention to the scale of the revenue loss that was caused to the country when the frauds were perpetrated. I have already told hon. Members that in the LCB case alone, there was a loss of £340 million. The Roques report covered that period and calculated that the total Excise loss from fraudulent activities was almost £700 million. I remind the hon. Gentleman that that happened when the previous Government were in charge.
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