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The fiscal deficit—something like £5 billion—is very large for an area of the United Kingdom that has only about 1.7 million people. There is over-dependence on the public sector for employment, which cannot be good. Although there are encouraging signs, it is a big worry that the private sector is not coming on as strongly as it should be and that the level of economic inactivity in Northern Ireland is far too high. I know that the Government want to address such issues, but the continued organised crime cannot be helping. It could be said that, for the best part of 40 years, terrorism has led to the Province being relatively poorer economically than the rest of the UK, and we must address that.

The differential tax rates between the north and south are a big problem in connection not only with matters that we have heard about, such as fuel and tobacco, but with corporation tax. It is not a matter that we want to get into too deeply today, but it needs to be examined, particularly in relation to fuel. The report goes into great detail on the matter, showing that the situation is getting worse, not better. There is great intelligence and the police are doing their best, so it is worrying that the situation is getting not marginally but a lot worse. One begins to wonder how that decline will be stopped and where it will end. I am concerned about the ability of the Government—any Government, actually—to improve Northern Ireland’s economic prospects and make it more self-sufficient when there is such a degree of organised crime.

That is the situation from the economic point of view, which is bad enough, but I must also ask why all the organised crime is going on in the first place. I have always seen the financial, profit-making side of the paramilitary organisations as one of the big problems to be solved. Organised crime and its proceeds must be financing political activities to some extent. I have talked many times in the House about a meeting that I had with the former Member of Parliament Seamus Mallon in his constituency, three or four years ago, before the previous election. He said that Sinn Fein had 200 paid employees working in his area, supposedly volunteers. That came not from the DUP but from a nationalist politician. I do not know about my hon. Friends, but I am lucky if I can get 10 people on the streets. We have a by-election in Tewkesbury today, and there will not be 200 people working on it. There will be 10. I am sure that the situation is similar throughout the UK.

How on earth are Sinn Fein’s people paid for? I believe that we have the answer, which is a worrying one. My hon. Friend the Member for South-West Norfolk mentioned the Northern Bank robbery. It caused a bit of a hiccup, but not as big a hiccup as it should have caused. The Government said that the IRA did it and that members of the IRA and Sinn Fein were one and the same, yet they are determined to propel them into government in Northern Ireland. That worries me. I want to see progress made as much as anybody, and in every Statutory Instrument Committee on which I sit I begin with the words, “It is a shame that we are all here. I wish that the Assembly were up and running and carrying out this legislation.” I stick by that, but it worries me that the people who will sit in government are the very people who knew about the Northern Bank robbery and might even have been involved in committing it.

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Even more worrying is where the money has gone. Not all of it has been accounted for and it could be used to fight the Assembly elections in March. It would be amazing if it were not used for that purpose. I am sure that some of it will be used for personal gain, but some will be put towards fighting the elections. That is not only highly illegal and dangerous but very unfair to the political parties in Northern Ireland, including the Social Democratic and Labour party, which must fight the election legitimately with small amounts of money. We are all well aware of the difficulties of raising money to finance our campaigns, and Sinn Fein might have something of an advantage. That cannot be right, and it makes it more difficult to solve the problem that there seems to be a dual-track process. There is a political track and a paramilitary, financial one. It cannot be right for people to be politicians by day and terrorists by night. That is not sustainable and the Government must somehow find a way to address the problem. I am not suggesting that that will be easy, but it must be recognised that such problems are going on.

That is particularly true because of the prospect of policing and justice being devolved at some stage. I know that the Minister will talk about the triple lock mechanism, but things move on. I have spoken to Sinn Fein MPs such as Conor Murphy who have told me that they are not prepared to sign up to the policing boards until they get that devolution. I do not know whether they have changed their minds—things move on and people take different approaches at different times—but he looked me in the eye and said that they were not prepared to do that. Yet all this organised crime is going on.

The report makes it absolutely clear that organised crime is being carried out by people on both sides of the divide: the loyalist paramilitaries—I regret the use of that phrase because it is a contradiction in terms, but that is the name by which they are recognised—and the republicans. I have so far focused on the role of the republicans because they are politically represented and would be sitting in government, but for the avoidance of doubt it is important to say that the Conservative party totally and utterly condemns paramilitary activity from either side.

To say that I welcome the report seems wrong because it contains an awful lot of bad news, but it is valuable because it brings to the House the reality of life in Northern Ireland. As I said earlier, I am not sure whether everyone in England realises that everything there is not exactly right. That includes Members of the House who perhaps do not need to spend as much time on Northern Ireland matters as I do. A lot of people say, “Everything is fine there now, isn’t it?” to which I reply, “No, it’s not fine. It’s better but it is not fine. There is still a long way to go.” One great value of the excellent report is that it brings these issues before the House and gives us the opportunity to debate them.

The debate has been good-natured, unlike that on the water and sewerage statutory instrument the other day, which was somewhat more lively. Both kinds of debate have a place here in the House. I hope that the fact that today’s debate has been a lot more civilised means that we can get more out of it. I congratulate Committee members on all their hard work in
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producing the report. I note that it was unanimous, which takes some doing with Northern Ireland business. I congratulate them again on their work and I look forward to hearing what the Minister has to say.

4.42 pm

The Parliamentary Under-Secretary of State for Northern Ireland (Paul Goggins): I, too, congratulate all those who took part in this constructive debate. Particular thanks and congratulations go to the Chairman of the Select Committee, the hon. Member for South Staffordshire (Sir Patrick Cormack). I thank him for his comments at the start of his speech and for the way in which he led that long inquiry, which lasted for six months and involved a lot of hard work. I congratulate also members of the Committee and the people who came and gave evidence to it. We have heard that there was sometimes a sense of risk attached to that, and I pay tribute to those people.

Notwithstanding the remarks of the hon. Member for East Antrim (Sammy Wilson), I take very seriously the report and its recommendations. As far as I can, I deal with this issue with a sense of urgency that we should all share across parties and regardless of responsibilities. None of us is under any illusion about this issue. We recognise that serious organised crime in Northern Ireland has the capacity to undermine the positive process towards devolution and the peace there that we all want to see.

The Committee has, as ever, shone a light on a part of the UK and on issues that sometimes go unnoticed by the majority of UK citizens and, occasionally, Members of Parliament. It does an important job in that respect, especially given the risk of paramilitary organisations in Northern Ireland turning into organised criminal gangs. I openly acknowledge that that is an additional risk there that we have to confront.

The report and its recommendations have been warmly received by all the members of the Organised Crime Task Force. I chaired the stakeholder group of the task force and think that staff in the relevant agencies, particularly those who work on the front line of law enforcement in the Assets Recovery Agency, Her Majesty’s Revenue and Customs and the Police Service of Northern Ireland—often at considerable risk—feel that their work is affirmed and supported by the seriousness of the inquiry and the nature of the report.

In performing its role of scrutinising, the Committee noted that we could do more in some areas and made 59 recommendations. Clearly, we need to do more in certain areas and I am determined that we will do so. I say to the Chairman of the Committee that I intend to update the Committee regularly on our work to implement the recommendations and the outline plan that we have given.

We have heard many of the difficulties described accurately today, but we must also welcome and recognise the improvements that have been made. Hon. Members have been fair in acknowledging where there have been improvements. Three years ago, the Independent Monitoring Commission described organised crime as the

In its latest report, from last month, it said that the

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and that things with the Provisional IRA have “materially” changed.

The hon. Member for East Antrim alleged earlier that the Government are trying to paint a particular picture—I think that those were his words—but it cannot be left just to the Government to make assessments as to whether certain organisations are still engaged in paramilitary activity or the organised crime that funds it. That is why we have the IMC: to report to us what progress is being made.

The IMC has been clear in its reports, particularly the past two, that PIRA has set its face against organised crime although individual members may still be engaged in crime for personal gain. The IMC also says that dissident loyalist paramilitary groups are still engaged in organised crime. So progress is acknowledged but the difficult challenge that remains is also spelt out.

The IMC also said in last month’s report that

So it acknowledges that paramilitaries are being challenged by effective law enforcement.

Several hon. Members, including the hon. Members for South-West Norfolk (Mr. Fraser), for Tewkesbury (Mr. Robertson) and for East Londonderry (Mr. Campbell), talked about the impact of organised crime on the economy and the community, and wanted to know what more is being done on that—even since the important report was published. I can tell them that only last month, after a successful operation by the PSNI and HMRC, 3.5 tonnes of cannabis was seized in Northern Ireland.

We get used to reading headlines about those kinds of quantities of cannabis being seized but let me share with hon. Members what it means in practice. I was with the district commander for Ballymena on Monday and he told me that the supply of cannabis on the streets in that town has been radically reduced because of the seizure. It means that cannabis is not getting through in anything like the quantities that it was. We should not underestimate the importance of such a seizure in stemming the supply of that drug to local communities in Northern Ireland.

I shall visit the PSNI drug squad next week, and I shall certainly convey my appreciation of and support for its work. As hon. Members have said, those drugs and the perhaps more harmful class A drugs destroy lives and undermine communities. None of us should cease in our efforts to ensure that we challenge and tackle anyone who is involved in the supply of drugs into our communities.

I am also able to tell the House that between March and September, police seized counterfeit goods to the value of £2 million. I am sure that hon. Members will share my sense of injustice and outrage at such criminality. One can picture a member of a low-income family, in the run-up to Christmas or at a time when such issues come to the fore, seeing counterfeit goods that appear to be the real thing but cheaper, and thinking that they can get something cheap for the family. They buy those goods, and they turn out to be fake, or they do not work, or they are even harmful.
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Meanwhile, the money goes to pay for the criminal’s lavish lifestyle. The injustice is social as well as criminal. We are trying to address that issue with the public and raise awareness in Northern Ireland, so that people reject counterfeit goods, even if they are a bargain.

During the same period, more than 1 million counterfeit cigarettes were seized. That is good news, particularly because, as my hon. Friend the Member for Ealing, North (Stephen Pound) made clear, they are even more harmful than legitimate cigarettes. During the same period, HMRC closed down 12 fuel laundering plants, and I am pleased to say that they included several in what were regarded until recently as no-go areas for many aspects of law enforcement. When the hon. Member for East Antrim praised the Committee Chairman for going to Armagh to publicise the report, he made the point that it is important that such issues are confronted forcefully in those areas. Literally tens of millions of litres of illicit fuel are not on the market, and that must be good for the ordinary car user, who will not damage their engine, and it must be good for the environment, because of the damage that is caused by dumping waste products.

The Assets Recovery Agency continues to do its important work in Northern Ireland. Hon. Members will know the case of Dylan Creaven, who recently settled with the agency, and with the Criminal Assets Bureau based in the Republic of Ireland, for £18 million—the largest settlement to date. I am sure that that will be one of a growing number of settlements, as the criminals realise that we are serious about seizing assets from them. Some £11 million of assets has already been disrupted this year alone, which is 40 per cent. of the total for the United Kingdom. We can see how seriously the agency deals with those issues.

We must create a situation in Northern Ireland whereby the criminal mind concludes that it is just not worth engaging in such activity. When there is evidence, people will be arrested and prosecuted, and when the prosecution is successful, they will be sentenced appropriately. We will disrupt the criminal lifestyle from beginning to end, and when they come out of prison, we will follow them and see what they get up to. If they engage in further criminal activity, they will be dealt with.

The Queen’s Speech mentioned a new Bill from the Home Office to toughen the law on organised crime. It will introduce serious crime prevention orders, more effective use of the Proceeds of Crime Act 2002, and a facility for the greater sharing of information between public and even private bodies. It will facilitate the greater detection of organised crime.

Mr. Laurence Robertson: The Minister used a phrase about changing the mindset of criminals in Northern Ireland, and that is important. However, England has a similar problem, which is partly brought about by the high rate of tax on tobacco, alcohol and fuel. That is not a criticism of the Government, because the rate would probably have been the same under a Conservative Government. However, the rate encourages people to deal illegally in those products. The Minister may say that they are bad products, which should be taxed heavily. However, the rate is creating a problem. One in four cigarettes in England are brought in illegally, so
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there is a big problem generally. The problem is bigger in Northern Ireland, because the money is used to fund terrorism and other illegal activities. However, as a country, must not we reconsider our tax regime on such products?

Paul Goggins: I understand where the hon. Gentleman is going with that argument, and we must be sensible about setting tax rates; however, the criminal mind will continually look for the opportunity to engage in criminal activity, make a profit and accumulate criminal assets. If we rely on closing a loophole here and a loophole there, even if we are successful at closing off that criminal option, criminals will simply move somewhere else. There is no substitute for confronting the criminal, finding out who they are and what they are up to, dealing with them, locking them up and seizing their assets. In the end, that must be the way. I shall address fuel in a moment, because it was the one area of substantial difference between the Government and the Committee. In the end, however, the criminal must be confronted, whatever activity they may have been up to.

The hon. Member for South Staffordshire raised several issues about forthcoming legislation. Other Members commented more severely about what they perceive to be a lack of urgency. I shall deal with four examples, and, I hope, update and encourage Members. On charity law, the consultation closed on 13 October. We received more than 90 responses, and we are confident that the order will be laid before the House before we rise for Christmas. On taxes, we held a 12-week consultation on the draft order, which ended on 7 November. We received 53 responses and, altogether, 26 public meetings were held with people who operate in that industry. The comments were detailed and mainly positive. We are considering them, and if changes are needed, we will make them—I do not suppose that they will be large—and proceed with legislation.

On the petrol licensing scheme, the consultation started in September, and it will end on 12 January. Again, assuming that there is a fair wind, new legislation will be in place by June next year. It will be some time before new road haulage industry legislation is in place, but we are still committed to it and a thorough consultation will begin in 2007. If all goes well, we are confident that legislation will be in place by summer 2008.

On top of that, in the Bill that we introduced on Monday, we included licensing provisions for the private security industry—a major undertaking whereby all operatives in the industry will have to be licensed. There will be a thorough system of regulation, the like of which we have not seen in Northern Ireland. I can understand why people urge us to do more and to do it quickly, but we are addressing a range of issues. There is a lot of work, and we must get it right. However, no one should be under any illusion; we are following through on all issues, and we will deliver as soon as we can.

Fuel represented an area of difference between the Government and the Committee. The hon. Member for South-West Norfolk discussed the Danish model and
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asked us to reconsider it. Although there is a difference between us, we have considered the issues carefully. As was said in response to a previous report, the Danish model would be administratively more complex, and that must be taken into consideration. However, a more compelling argument is that it would create more opportunities for criminal activity, because duty would be paid further down the chain. Fuel would go missing from the supply chain, never to be seen legitimately again.

The beauty of the current system is that duty is paid as fuel leaves the refinery. If we were to make the point of sale the point at which duty were paid, any fuel that disappeared between leaving the refinery and the point of sale, would be a lost legitimate sale. Issues of administration and practical organisation lead us to conclude that we do not wish to go for the Danish model.

Mr. Fraser: Does the Minister at least accept the need to reconsider the position and conduct a comprehensive cost-benefit analysis? It may ultimately support the point he is making, but it would still be useful.

Paul Goggins: We have considered the matter carefully, and as the hon. Gentleman is keen to follow it up, I would be happy to write to him in detail and give him our information and analysis.

There are strong opinions on tax harmonisation. One view is that it would result in less revenue, and we cannot lightly dismiss that, although the Committee may say that that should be offset against potential reduction of organised crime.

Sir Patrick Cormack: Even if there were less revenue there would not necessarily be a net loss. More legitimate sales could compensate.

Paul Goggins: That is partly why I wish to make one or two further points to explain our position more fully. However, we do not believe that that argument can be made in this case. In addition, the central principle is that we cannot have different tax duty systems in different parts of the United Kingdom. To do so would indeed mean derogating from the relevant European directive. As I said earlier to the hon. Member for Tewkesbury, even if we took that step and closed down that area of criminal activity, the activity would move elsewhere. It is the criminals themselves who must be confronted.

It is interesting that differential rates in other parts of Europe do not pose the same problem. Germany and Poland have a 20p per litre fuel price difference; the difference between Spain and France is 14p, and between the Netherlands and Belgium it is 8p. In itself, a differential should not present a difficulty; the issue is the criminality that arises around it. The way forward is to confront the criminal gangs themselves, deal with them, get them locked up, seize their assets and close down their operations.

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