Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses(Questions 240-259)



  240. With respect, I can understand all of that, we have been through that with your predecessors and your predecessors' predecessors and we note that time after time your manpower has been cut and you have been starved of manpower. That is a fact, is it not? If not, put in a table showing your manpower from 1980 to today and that will meet our needs I think, I do not need an answer on that. You will let me have that?
  (Mr Broadbent) Yes. Manpower has declined year on year every year for the last 10 or 15 years.[9]

  241. Coming back to Imperial, you said you are having an exchange of letters with them with the hope of getting a memorandum. How long have you been in this exchange of letters with them?
  (Mr Broadbent) We have been talking to Imperial, as to the other manufacturers, for over 18 months.

  242. So you started with them at the same time as the other manufacturers?
  (Mr Broadbent) Yes.

  243. When did the other manufacturers sign the memorandum with you approximately?
  (Mr Broadbent) Gallaher is the only one which has signed, and signed quite recently. The process has really been understanding the problem, understanding with the companies what they can do to help us, putting—

  244. I did not ask for the process, I just asked when.
  (Mr Broadbent) Gallaher signed their memorandum last week, the others have not yet signed.

  245. Are you near to signing with them?
  (Mr Broadbent) Discussions are progressing with particularly BAT, as I mentioned. There are three major manufacturers.

  246. Imperial is the one dragging its feet or with whom the negotiations are proving most protracted, shall we say?
  (Mr Broadbent) Yes.

  247. At what level are you negotiating with them?
  (Mr Broadbent) Chief executive level.

  248. At chief executive level, I see. Is there any sign, or is it too recent, where the memorandum has been signed that there are any consequential benefits from the memorandum?
  (Mr Broadbent) The memorandum is a new initiative and, as I say, the first one was signed last week so I think it is a little early yet to judge.

  249. It was only that recent. Just before you came here effectively.
  (Mr Broadbent) As it happens yes but not for that reason.

  250. I am sure not. They would not have known you were coming here, would they? They do not have PR people or anything like that in the tobacco industry to give them advice and guidance. I am going to jump around a bit. You mentioned Regals and Superkings, did I misunderstand you, and I do not mean this nastily but you mumbled slightly on one of the key words, or it is my geriatric hearing, did you say they have a very small share of the legal market or did I misunderstand the adjective that you used?
  (Mr Broadbent) Their share of the legal market is smaller than their share of the smuggled market.
  (Mr Wells) About 10% of the legal market.

  251. They make up what percentage of the smuggled market as far as we can establish?
  (Mr Wells) About 50%.
  (Mr Broadbent) We estimate about 50%.

  252. To someone naive and looking at it in an unsophisticated way like myself it almost looks as though they are manufacturing for smuggling. I am sure that is not true but it could look like that.
  (Mr Broadbent) As I say, the issue with the memorandum is it is important to us that we are clear about the company's commitment before we sign a memorandum with any company.

  253. What is stopping you signing this one? Is it because they are slow in responding or that you have less conviction in their commitment?
  (Mr Broadbent) I do not think we are ready to sign a memorandum with them because to sign a memorandum, which is essentially a statement of intent, a statement of best practice, to be meaningful has got to be based on a period of a working relationship. That is why these memoranda are being signed after 18 months' experience. With Gallaher we are very satisfied and we have signed a memorandum to enshrine that; with Imperial we are not.

  254. It does seem quite a coincidence, as I think everyone will have observed, they have such a small domestic share and such a large illicit import share. We can draw our own conclusions from that even if they are erroneous. Tell me, how many cigarettes did you confiscate last year?
  (Mr Broadbent) As I said, we do not have the final figures.

  255. Just ball park.
  (Mr Broadbent) In broad terms I believe the number is going to come out at roughly the same level as the previous year. In the previous year it was 2.77 billion.

  256. How much?
  (Mr Broadbent) It was 2.77 billion in the year before.

  257. That is quite a cigarette mountain, is it not?
  (Mr Broadbent) It is.

  258. What do you do with them once you confiscate them?
  (Mr Broadbent) I am afraid we destroy them but we have recently—

  259. How do you destroy them?
  (Mr Broadbent) We have recently learned to destroy them in a slightly cleverer way. We turn quite a lot of them now into power station fuel.

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