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Mr. John Burnett (Torridge and West Devon) (LD): I was hoping to speak when we reached stamp duty land tax, but perhaps I have an opportunity to say a few words now. We have in the House, though unfortunately not for much longer, the world's greatest living expert on stamp duty land tax—the Chief Secretary to the Treasury. He took the brief at the last minute and, as usual, he acquitted himself with great style and verve. He is unfailingly courteous and I view his leaving the House as a very sad loss, indeed. I want to pay tribute to him for his courteousness, his expertise and his pleasant convivial demeanour. He has added greatly to the proceedings of this place.

I should like to say a few words about tobacco products duty. I may be somewhat jumping the gun because clauses 2 and 3 refer to alcoholic liquor duties. The Economic Secretary and I have discussed at length the problems of London City Bond and Mr. Justice Butterfield's report on the hundreds of millions of pounds lost through liquor duty fraud. I am anxious to hear that Ministers have got a grip on this situation; we cannot allow such fraud to continue.

The First Deputy Chairman: We shall reach clauses 2 and 3 after we have finished debating clause 1, so the hon. Member will have an opportunity to comment further then.

Mr. Burnett: I am grateful: I believe that the smuggling involved cigarettes as well as liquor, but I could be wrong and stand to be corrected. I shall give Ministers ample advance warning—about a minute—that I hope to hear what they have done in respect of the Butterfield report and its recommendations. We cannot allow any recurrence of this sort of fraud when hundreds of millions of pounds are lost to the Revenue. When that happens, who picks up the Bill? It is our fellow citizens and taxpayers of this country.

Mr. Fallon: I rise briefly to follow up the point made by my hon. Friend the Member for Rayleigh (Mr. Francois) about the report of the Treasury Sub-Committee on excise duty fraud. Given how little time remains for the Government to reply, it would be helpful if a Minister clarified whether we will receive a full Government response to our recommendations, which are very relevant to the three questions that my hon. Friend proposed. Before the House dissolves on Monday, perhaps we could have such a reassurance.

Mr. Timms: The inflation increase in clause 1 maintains the high real price of cigarettes. The aim is to encourage people to smoke less or to quit, and to discourage children and young people from taking up the habit. The organisation Action on Smoking and Health has welcomed the proposal.

The hon. Member for Rayleigh (Mr. Francois) is right to raise the issue of smuggling. The Government have acknowledged that that is a pressing and important problem, and we have taken effective action over an
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extended period to address it. As a result, tobacco smuggling is being contained. In the past four years, Customs and Excise has succeeded in halting the previous rapid growth in cigarette smuggling, and in reducing the market share for illicit cigarettes to the current level of 15 per cent. That is still too high, but it is significantly lower than previously.

The total number of cigarettes smuggled into the UK each year has been reduced by more than 5 billion sticks, a fall of more than a third. In the same period, when cross-channel passenger smuggling was cut by more than three quarters, there has been a rise of 33 per cent. in legal cross-border shopping for alcohol and tobacco. That clearly shows that an effective balance has been struck between maintaining the rights and opportunities of shoppers and cracking down on smuggling.

The hon. Member for Rayleigh mentioned hand-rolling tobacco specifically. As he will know, the Budget statement acknowledged explicitly that the pattern of smuggling for such tobacco is different, and made it clear that the Government are responding accordingly. I can reassure him that the very effective focus on tackling smuggling will be maintained through the forthcoming merger of the Customs and Excise and the Inland Revenue. I agree that it is important that that focus is not lost, and assure him that it will not be.

Mr. Francois: I heard what the Minister said, and do not wish to detain the House for long, given the present circumstances. He acknowledged the specific problem in relation to hand-rolling tobacco—on behalf of the industry, I thank him for that—but made no specific suggestions for further Government action to combat it, which will disappoint retailers around the country. With an election pending, it is only fair to warn him that we intend to do what we can to warn retailers that the Government do not take their concerns seriously.

Mr. Timms: That is a very unfair response. The Government have brought about a very dramatic reduction in the smuggling of tobacco and cigarettes. The problem is being contained, and that certainly was not the case under the previous Conservative Government. That is a reflection of the vigour with which we have pursued the problem, and we will ensure that we continue to apply the same vigour in the future.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Mr. Burnett: On a point of order, Mrs. Heal. I have been asking all day for a copy of the regulations governing inheritance tax on pre-owned assets, which were published a week or two ago. Vote Office staff have been unable to get hold of those regulations, even though they will be debated in connection with clause 98. I should be grateful if you would do all that you can to ensure that a copy of those regulations is made available to the Committee.

The First Deputy Chairman: Ministers on the Treasury Bench will have heard what the hon. Gentleman had to say, but I am afraid that there is nothing that I personally can do. However, I think that the message will have been conveyed.

Clause 2 ordered to stand part of the Bill.
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Clause 3

Rates of Duty on Wine and Made-wine

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

The First Deputy Chairman: I call Mr. Michael Fallon—I mean Mr. Michael Jack.

4.45 pm

Mr. Jack: That is the second time today that my name has not been called correctly, but perhaps it will be third time lucky.

Can the Minister satisfy my curiosity about the relative rates of duty per hectolitre on the wines described in the clause. The table in the clause starts with a reference to the percentage of alcohol by volume of the wines that are subject to the tax, so I conclude that the principal purpose of the clause is to tax the alcoholic content of the wine. However, I note that the duty rate on still wine—

is £167.72 a hectolitre. I also note that within that category a wine that might be partially fermented—it would have the name frizzante, for example, if it was Italian—would be taxed at that rate and not at the much higher rate of £220.54 a hectolitre on wine that is fully sparkling.

It might be argued that that covers the majority of champagnes, for example, which are more expensive and could stand a higher rate of duty. However, the spumante-type sparkling wines and the cremant de Loire are lower-priced wines but have an alcoholic content of around 12 per cent. and seem to bear a disproportionately high rate of duty compared with the more expensive champagne-type wines and certainly more expensive than a wine with a higher alcoholic content in the first category that I mentioned. The rate of duty per hectolitre seems to be irrational if the duty rate relates to the alcohol content of the wine.

Those of us who enjoy wine and occasionally venture to sparkling wine—I am thinking of those of us who will want to celebrate the Conservative victory in the election on 5 May—would like a clear explanation of the duty rate differentials.

Mr. Timms: The Bill uprates the duty on still wine by 2.6 per cent., but there is a freeze on the duty on sparkling wine. The industry has argued for the differential between sparkling and still wine to be eliminated and by uprating the duty only on still wine we have narrowed that differential because the rate of duty on sparkling wine is unchanged. The hon. Gentleman's point is a reflection of historic development over an extended period. We believe that it is right to narrow the differential and that is why there is an increase in the duty on still wine but not that on sparkling wine.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.
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