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Mr. Doug Henderson (Newcastle upon Tyne, North) (Lab): I have no constituency interest in the matter, but I have a union interest—over many years, my trade union has been involved in the whisky industry and
 
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other spirit industries. I also represent the taxpayers of Newcastle upon Tyne, and I want to examine their interests and those of the industry.

If the public had known about the extent of the fraud in the whisky industry three years ago, they would have said to the Government, "Get on with it. Why should we waste taxpayers' money? That money should come back to the taxpayer." We have an obligation to ensure that the public's interests are looked after. I recognise that one cannot ignore the industry and the people who work in it, and I would not wish to do so, but there needs to be a very tough approach to such fraud.

2.30 pm

Angus Robertson: The hon. Gentleman is absolutely right that we should all keep the taxpayer in mind. In view of that, does he not agree that it is imperative for the Government to outline the scope of potential fraud before introducing strip stamps, which may be a significant disbenefit to taxpayers' interests?

Mr. Henderson: I do not see how that can be done until the Government have set out their objectives in Parliament, but instead of saying, "We're going to take on this fraud and this is how we're going to do it", it is much better, as the Economic Secretary said, to have discussions with the industry. The industrialists and trade unionists whom I know would want to have detailed discussions on such a matter, and that makes sense.

I am a Scot, although I do not represent a Scottish constituency, and I sometimes treat myself to reading The Herald, The Scotsman, and, for football purposes, the Daily Record. When I do so, I often see the Scottish National party making assertions implying that the nasty English Government and nasty English fraudsters are ripping off a Scottish industry. SNP Members have been well behaved in the debate so far, and I expect that to continue, but they should bear it in mind that this issue affects the whole of the UK, including Scotland. I do not see how people can be criminals involved in fraud in the Scottish whisky industry unless they have at least bunged the lad on the door of the whisky distillery before they remove the produce.

Angus Robertson: The SNP, like all parties, is opposed to criminality wherever it occurs. Can the hon. Gentleman back up his assertion by giving the dates of those articles in The Scotsman, The Herald or the Daily Record?

Mr. Henderson: I would be happy, if I am allowed to, to place in the Library several back copies of The Scotsman and The Herald that would make it obvious to any reader that my assertion is accurate.

Mr. John McFall (Dumbarton) (Lab/Co-op): If my hon. Friend refers to a debate that took place in the Scottish Parliament a couple of weeks ago, he will see that the SNP tried to claim exclusivity in defending the Scottish whisky industry in relation to fraud and tax. In the all-party group on Scotch whisky, Members of all parties—including, for the past 17 years, myself—have been involved in defending the interests of the industry.

Mr. Henderson: I am grateful to my hon. Friend for highlighting that important point. For many years,
 
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Members on both sides of the House have been tough in arguing for the Scottish whisky industry. I am not suggesting that the Scottish nationalists have not said their bit or that they should not be entitled to say their bit, but the suggestion that they are the leaders in this campaign must be rejected.

I want to make one observation and ask two questions. My observation is this: I would have thought that the Government would be sympathetic to the idea of acting in a partnership with the industry by adopting its counter-proposals—of which there are 17—if they thought that there was any prospect that that would deal with the problem, because it would avoid all the industry opposition to strip tops on bottles that the Government knew would arise.

The report by the Scottish Affairs Committee contains 17 recommendations. I want to draw the Committee's attention to three. Proposal five is:

Proposal six is:

Proposal nine is:

Mrs. Irene Adams: Will my hon. Friend give way?

Mr. Henderson: I just want to finish this point. The industry's proposals seem to be a long list of red tape. If that was not the case, Customs and Excise and the Treasury might well have been susceptible to its influence.

Mrs. Adams: Will my hon. Friend make it clear that he is talking about the industry's proposals, not those of the Scottish Affairs Committee?

Mr. Henderson: If I gave the impression that these are the Select Committee's proposals, I apologise, but I think that I said that they are the industry's proposals, which are helpfully set out in the Committee's report.

Mr. Weir: Will the hon. Gentleman give way?

Mr. Henderson: I am tempted not to, but I suppose that I should.

Mr. Weir: The hon. Gentleman mocks the industry's proposals, but does he not realise that its evidence to the Scottish Affairs Committee made it clear that the difficulty lies not with the distillers, but further down the chain with the warehousemen, distributors and retailers? The Government's proposals are the wrong way round, because they attack the distillery industry instead of the other links in the chain.

Mr. Henderson: I have some sympathy with the hon. Gentleman's point. However, if it was possible to deal with the problem further down the line, I am sure that it would be done. If we are to know which bottle is licit and
 
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which is illicit, some kind of marking must be put on it before it leaves the bottling plant. It could be over the top of the bottle or around the side—I am not familiar with all the various technologies. If there is a newer technology—

Angus Robertson rose—

Mr. Henderson: I have given way generously, and I want to finish this point. If there are other technologies that can deal with the problem, I am not resistant to them, and I should hope that the Government would not be. There has to be something that identifies the bottle that everyone accepts and will be absolutely clear in any future legal challenge.

Angus Robertson: The hon. Gentleman is making the case for marking bottles clearly. He said that he may not be au fait with all the ins and outs of the industry, so let me tell him that every single bottle of Scotch whisky that is produced is already clearly marked with a lot number that makes identifiable the bottle, the distillery, and the time of bottling. Is that not good enough?

Mr. Henderson: No, it is not, because it does not say whether the duty has been paid. That is the key issue to be tackled, because it is the basis of the fraud.

I think that I have made enough of my observation. I did not intend to spend so much time on it, but I have been generous in giving way.

I want to put a couple of questions to the Minister. Is the £3 million fund for capital investment assistance an annual figure? Is it set in stone, or might the Government be persuaded to adjust it depending on what they find out from the industry about its needs? I understand that the technology will incur disproportionate costs among small producers, so assistance has to be geared towards them. If the industry says that there is a need for additional support within the European Union rules, will the Government consider that?

My second question in linked to that issue. Have discussions taken place with the Department of Trade and Industry on the extent to which any regional assistance might be made available to the various bottlers in industry, obviously not just in Scotland but throughout the whole of the United Kingdom? Is that a possible other source that could be tapped to try to deal with the issue?

What has been the effect of the tax freeze on the price of a bottle of whisky over the years that it has been frozen? I think that the Economic Secretary said that it was 36p a bottle, which compares to a cost of approximately 13p a bottle without additional state aid on the introduction of the Government's proposals. There are many arguments about whether this is an effective system or not, but it cannot be argued that the introduction of this measure without modification
 
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would cause a major loss of jobs as a result of Government action, because the Government have actually boosted jobs by freezing that tax.


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