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Question put and agreed to.

Bill ordered to be brought in by Jim Dowd, Andy Burnham, Sir Sydney Chapman, Siobhain McDonagh, Mr. Andrew Miller, Mr. Andrew Mitchell, Mr. Colin Pickthall, Mr. Greg Pope, Mr. Stephen Pound, Bob Russell and Brian White.

Telecommunications (Permitted Development Rights) (Amendment)

Jim Dowd accordingly presented a Bill to amend the Town and Country Planning (General Permitted Development) Order 1995 to require that the erection of a telecommunications mast can only take place under permitted development rights when it has been shown that the operator has complied with the Code of Practice of the operators of mobile telecommunications system: And the same was read the First time; and ordered to be read a Second time on Friday 21 May, and to be printed [Bill 95].

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Orders of the Day

Finance Bill

[1st Allotted Day]

(Clauses Nos. 4, 5, 20, 28, 57 to 77, 86, 111 and 282 to 289 and Schedules Nos. 1, 3, 11, 12, 21 and 37 to 39)

[Relevant Document: The Third Report from the Scottish Affairs Committee, Session 2003–04, HC419, on The Proposed Whisky Strip Stamp.]

Considered in Committee.

[Sylvia Heal in the Chair]


Clause 4

Duty Stamps for Spirits Etc

Question proposed, That the clause stand part of the Bill.

12.46 pm

The Economic Secretary to the Treasury (John Healey): I welcome this opportunity for the Committee of the whole House to examine clause 4 of the Finance Bill. Since December, I have had the chance to debate in the House the issues at the heart of the clause, to deal with a range of written and oral parliamentary questions, to give evidence to the Select Committee on Scottish Affairs, to discuss the concerns of the all-party Scotch whisky group and to meet individually hon. Members from all parties. I recognise the level of interest from all quarters of the Chamber and, in particular, from hon. Members from Scotland. I welcome the Scottish Affairs Committee report published yesterday, which makes a number of useful points to which we shall give further consideration.

This Committee is an important opportunity to debate in full the problems of spirits fraud and our plans to tackle them, set out principally in clause 4 and the accompanying schedule. Clause 4 is unusual. It is not just a provision that puts an announcement from the Budget or the pre-Budget report into law; it follows almost three years of detailed discussion and examination of alternatives by the Government and with the alcohol industry. Let me be clear: if there were a serious alternative to duty stamps that could deliver a similar impact on fraud, we would take it. The simple fact is that during those three years of detailed work with the industry, no one has come up with such an alternative. In the absence of effective alternatives, duty stamps for spirits are necessary to counter spirits fraud, which is a major criminal industry, deceiving consumers, undermining legitimate producers and traders and defrauding the Exchequer of several hundred million pounds each year.

John Robertson (Glasgow, Anniesland) (Lab): Would the Minister, even at this late date, still accept an
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alternative if one were found, and move forward with it, or has he finally drawn a line under the matter and decided that he is going for strip stamps?

John Healey: I am emphasising one point now, and I shall come to another, related point later. The point that I emphasise now is that three years' exhaustive work by the Government and with the industry has failed to produce a set of alternative measures that would have a similar impact on fraud. I therefore do not want to encourage my hon. Friend to hold out hope that somehow, a magic solution might be found in the coming months.

Mr. Alistair Carmichael (Orkney and Shetland) (LD): What would the Minister say to the front-line customs officers whom we met last week with the Scottish Affairs Committee, who described the strip stamp as just one more hurdle that those involved in the illicit trade would inevitably overcome?

John Healey: If the hon. Gentleman will bear with me, I will discuss how duty stamps will assist in our efforts to increase the risks and decrease the profits associated with fraud by putting up extra barriers. Law enforcement agencies in every sector face continually and rapidly changing responses from fraudsters and smugglers. It is beholden on such agencies to attempt to get one step ahead, as the proposals in the clause seek in part to do. A number of measures, on which I shall touch, will significantly reduce the risk of counterfeiting, and of fraudsters successfully overcoming the proposed duty stamps.

Duty stamps will strike at the heart of the problem by putting an end to taxed and illegally untaxed spirits sitting side by side in warehouses, on lorries and on shops' shelves, with traders and consumers having no means of telling one from the other, and the authorities having no clear means of detecting—let alone proving—knowing complicity in fraud. Duty stamps will provide a clear identifier that duty has been paid, and although I make no claim that they will eradicate fraud entirely, they will radically restrict both the opportunities for, and the profitability of, spirits fraud.

I introduce the clause in the full knowledge that—as is already clear—some Opposition Members might oppose it.

Pete Wishart (North Tayside) (SNP): Will the hon. Gentleman give way?

John Healey: May I first finish this point? Those Members will doubtless argue that they are not complacent, and will assert their determination to drive fraud from the spirits market. They will doubtless dispute the fact that the scale of fraud justifies duty stamps, and dispute their likely impact on fraud and their fairness in respect of the legitimate trade. They will doubtless argue the case for the industry's alternative proposals, or urge further delay so that more discussions can take place. I propose to deal with each of those issues in turn. I now give way to the hon. Member for North Tayside (Pete Wishart).

Pete Wishart: It is not just the Opposition parties in this House who oppose strip stamps; so do the Scottish
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Parliament and the Scottish Executive. I challenge the hon. Gentleman to name one representative body in the industry—in fact, anybody outwith the Treasury—who thinks that this is good idea.

John Healey: I do not expect the industry to like our proposal; I am arguing that we must accept that there is no alternative, and work to put this regime in place. The interests of the industry and of the hon. Gentleman's constituents are now best served by working with the Government, through the industry associations, to ensure that we can put in place a proper duty stamps regime that will bear down on fraud, while imposing the lightest possible cost on the companies that need to comply.

Mr. Michael Weir (Angus) (SNP): The hon. Gentleman is being very careful to describe the stamps as duty stamps rather than strip stamps. One problem is that the stamps have to be placed over the bottles, and the necessary equipment is expensive. Is he hinting that he has an alternative in mind, or is he determined to go ahead with such stamps, which have been described to us as

John Healey: Having read the Scottish Affairs Committee's report, I am aware of the description that the hon. Gentleman cites. I have chosen to use the phrase "duty stamps", and I am aware that the Committee is interested in the idea of incorporating what is essentially a duty stamp into the labels on bottles. We are prepared to consider it, but I should caution Members that there are a number of fundamental flaws with such an approach. I do not want to raise hopes unnecessarily, but equally, I certainly would not rule it out. It is one of the useful ideas in the Select Committee's report, and we will give further consideration to it.

Mr. John Lyons (Strathkelvin and Bearsden) (Lab): A number of Members have serious doubts about the viability of strip stamps; indeed, countries throughout Europe and in the far east have moved away from them because of their experiences. What does the Treasury know that those countries do not?

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