Examination of Witnesses(Questions 200-219)
MR RICHARD
BROADBENT AND
MR MIKE
WELLS
MONDAY 29 APRIL 2002
200. What is the average fall when you introduce
the scanners?
(Mr Broadbent) I do not think we have had scanners
in operation long enough at ports to know the answer to that really.
In most ports it has only been a few months, six months, that
the scanners have been there.
201. Was Southampton the first one?
(Mr Broadbent) No, it was not. It was one of the early
ones, I think.
202. The question that did strike me was it
seems rather odd if you have really been able to reduce the problem
down to four-fifths of what it was, and you seem to indicate if
the seizures are down by four-fifths then probably the smuggling
is down by four-fifths. If that is correct, if there is a straight
forward correlation there, then the fact that smuggling dropped
by four-fifths in that one port I would have thought gave you
a very good incentive to introduce the scanners a lot more quickly
than you did and I am surprised you have only got the 12 now and
I am surprised you are still waiting to get up to the 20 that
is recommended.
(Mr Broadbent) I think first of all that particular
drop in Southampton was not just due to the scanner and if there
was a drop the pattern we have seen in other ports has been it
has been a deterrent and diversion effect. I think the scanners
are very important but I would not draw the conclusion from that
that you can put the scanner in the port and it drops off very
fast.
203. Let me put the question to you another
why. Why has it taken so long to get the scanners in, it looks
like they are a very good idea?
(Mr Broadbent) There is a number of reasons. First
of all, these scanners are built for us, nobody else is doing
this, so we have basically had to get involved in the design and
construction of the scanners. We are on the verge of ordering
some more. It takes four or five months to build each one to our
specifications. The second thing, as we were discussing earlier,
is these are complex bits of machinery and a major constraint
is training quite large numbers of staff, and I think it is probably
fair to say we under-estimated how many staff, to operate them
and to interpret the images. Then, of course, we have to negotiate
with the ports. We cannot just put a scanner in a port, we have
to negotiate with the ports and get structured and often do building
work and the ports have to employ more staff and often buy more
plant. It is quite a big programme. We do believe the scanners
are performing and we will go on steadily increasing their number
locked into our ability to resource and position them effectively.
204. Does the Customs service have any rights
over the design of ports? For example, if a port is redeveloping,
do you have the right to say "we have got to have space for
where we want to move vehicles so we can scan them properly"?
(Mr Broadbent) Yes. I believe the technical position
is that the ports are required to co-operate with us but we normally
find it sensible to work in co-operation with ports, not least
because the problems can often be—
205. Sorry, are required to co-operate with
you after they have gone through the planning process and designed
their port and built it or are required to co-operate with you
when they are designing that port?
(Mr Broadbent) Most ports were built quite a long
time ago and most of the problems—
206. Some are being redeveloped.
(Mr Broadbent) You will find that land is very often
at a premium at ports. In some ports, for example, we are increasing
our examination rates by a factor of ten and this is an enormous
increase. A port has got itself invested and deployed to allow
for a certain examination rate and if we take Felixstowe it has
gone from ten examinations a day to 70 and will shortly be 100.
It is quite difficult for the port overnight to change everything.
A bit like tobacco companies, I have to say the co-operation of
individual ports is a bit different. I think particularly the
ro-ro ports, which are usually the most constrained in terms of
size and have the biggest premium on throughput, have the greatest
difficulty in coping with our requirements.
207. I come back to my original point. When
they are redeveloping do they have to co-operate with you in the
design or do they only have to co-operate with you as best they
can once the port has been redeveloped or built or whatever?
(Mr Broadbent) I just turn to my colleague as to what
the decision in law is.
(Mr Wells) All ports are required to be approved by
Customs and Excise but, as Mr Broadbent has said, of course many
ports are already preconstructed and have existed for many years.
If I give you an example: at Shell Haven on the Thames, which
is being constructed at the present time, we are fully engaged
in the process of the construction of that port and have been
in discussion with the owners of that port as to the sites that
we would look to use.
208. If you had to agree it then in a sense
you have a veto, you can say that you need to have a certain amount
of space for your scanners to work.
(Mr Wells) It is a very absolute position with the
port, a once-off, and that does not help you with an ongoing port
with existing infrastructure like Dover, which has been configured
over many, many years.
209. Can we move on to paragraph 5.24, the seizure
of vehicles. I think you were saying earlier that you only seize
vehicles if the duty evaded is worth more than £50,000 because
it has to be proportionate.
(Mr Broadbent) That was in relation to heavy goods
vehicles. That is guidance that we issue to make it clear to people
how we will exercise our discretionary powers.
210. That was because under, what, human rights
you have to make it proportionate?
(Mr Broadbent) It is very important for any sanction
we impose that people know what the sanction will be and that
we are proportionate to the issue.
211. What makes me slightly surprised is that
you can only seize an HGV if the duty that is being evaded is
more than a certain amount but you can seize a van regardless
of how much. I can understand you saying that since the HGV costs
£100,000 it is disproportionate if you seize it when the
amount of duty being evaded is less than half the cost of the
HGV. But if it is a question of proportionality, you would think
that the half the value would apply just as much to a van worth
£10,000?
(Mr Broadbent) This is quite a technical area.
(Mr Wells) The issue is not one of our ability to
seize vehicles. They are all liable to seizure and we seize them
all. The question is whether we choose to exercise our discretion
to restore the vehicles. In the case of heavy goods vehicles we
have picked £50,000 because that tends to be the differentiation
between smaller quantities that are in the cab of the vehicle,
ie the driver himself is smuggling, and the much larger quantities
that tend to be the freight consignment itself. Clearly where
the driver of the vehicle has smuggled maybe a couple of thousand
cigarettes it would be a disproportionate impact on the haulage
company to seize their vehicle and not restore it. Clearly, they
are in a slightly different position from a situation where the
individual with their own vehicle chooses to use it for smuggling.
212. What happens to seized vehicles?
(Mr Broadbent) We destroy them.
213. You do not re-sell them?
(Mr Broadbent) With cars we used to have a policy
of re-selling them. The trouble is they go back to the market
as second-hand bangers and we find smugglers buying cheap second-hand
bangers.
214. Not particularly cheap if they are worth
up to £100,000 each.
(Mr Broadbent) I am sorry, I thought you were asking
about cars.
(Mr Wells) In the case of HGVs or high value cars,
we try to find ways of selling those where we are satisfied that
they will not get back into the hands of smugglers, for example
selling them overseas and we have sold some in the Middle East,
but clearly where we feel that that is unlikely and they will
get back into the hands of smugglers, in particular low value
vehicles, then we destroy those.
215. Apparently there are exceptional circumstances
in which you do restore small vans. What exceptional circumstances
would those be?
(Mr Wells) For example, there are situations where
we feel it would be inappropriate not to do so for humanitarian
reasons. Somebody may be seriously ill or they may have small
children with them.
216. It is basically humanitarian?
(Mr Wells) There may be other circumstances. This
is particularly so following a recent Court of Appeal case where
people are smuggling not for profit. In other words, and this
is relatively unusual, people who are bringing back goods for
sale at cost price to others without the intention to make money
for themselves in the process, perhaps not realising that that
is in fact illegal. In that context we have concluded, indeed
the Court of Appeal has suggested that it would be disproportionate
to not restore those vehicles. In those sorts of circumstances
we would consider restoring them.
Mr Rendel: Thank you.
Chairman: Thank you, Mr Rendel. Mr Barry
Gardiner?
Mr Gardiner
217. Can I start off by congratulating you for
the job that you have done. I think that it is very good to see
that this Report implies that the increase at least in smuggling
has stabilised, the rate of growth has reduced, and we wish you
well for getting it down to the levels that you project. You mentioned
three tobacco companies. I am sorry I do not keep abreast of this
world. You mentioned Gallaher's who had signed a memorandum of
understanding with you, you mentioned Imperial who, as I understand
it, have not signed a memorandum of understanding with you. Who
was the third manufacturer that you were talking about that manufactures
in this country?
(Mr Broadbent) The third major supplier is BAT.
218. And they have also not signed a memorandum
of understanding with you?
(Mr Broadbent) That is correct, although there are
no particular difficulties in our discussions with BAT about a
memorandum. I should make it clear in relation to Imperial that
it is more our reluctance to sign the memorandum than Imperial's
because to sign a memorandum you have got to be clear that the
other person is committed in spirit as well as to the letter of
the memorandum.
219. That is very helpful. You would say at
the moment you are not satisfied that Imperial Tobacco Company
is committed in spirit to the memorandum?
(Mr Broadbent) In recent meetings with Imperial we
have made it clear to them that there are five or six areas where
we need to see evidence of their commitment before we would sign
a memorandum of understanding.
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