UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1504 -i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Northern Ireland Affairs Committee

Fuel Laundering and Smuggling

Wednesday 14 September 2011

MIKE NORGROVE CBE, JOHN WHITING, ALAN LEE and PAT CURTIS

Evidence heard in Public Questions 1 - 68

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Oral Evidence

Taken before the Northern Ireland Affairs Committee

on Wednesday 14 September 2011

Members present:

Mr Laurence Robertson (Chair)

Mr Joe Benton

Oliver Colvile

Lady Sylvia Hermon

Dr Alasdair McDonnell

Ian Paisley

David Simpson

Mel Stride

Gavin Williamson

________________

Examination of Witnesses

Witnesses: Mike Norgrove CBE, Director of Excise, Customs, Stamps and Money, HM Revenue and Customs, John Whiting, Chair, Cross Border Fuel Fraud Enforcement Group, HM Revenue and Customs, Alan Lee, Regional Director for HMRC Criminal Investigation, and Pat Curtis, Customs Specialist Investigations Manager, HM Revenue and Customs, gave evidence.

Q1 Chair: Good afternoon. I welcome our witnesses. We met certainly three of you in Belfast recently, but it is good to have you here for this formal evidence session. I also welcome Members of the Northern Ireland Assembly and Business Trust, whom I had the pleasure of meeting earlier this morning. We have a fairly tight schedule. Perhaps I may start by asking: how big is the problem of fuel laundering in Northern Ireland? What scale are we talking about, just to give the Committee an idea of the size of the problem?

Mike Norgrove: Thank you, Chairman. If I may introduce my third colleague, Patrick Curtis, who is our national oils lead based in Belfast but covers the whole of the UK. As to my two other colleagues, Alan Lee is deputy director of criminal investigation for Wales, the west and Northern Ireland; and John Whiting, whom you know, is our assistant director in Belfast.

Ian Paisley: Before Mr Norgrove gives evidence, perhaps I may declare an interest. For two years I was a member of the Organised Crime Task Force and worked fairly closely with most of these gentlemen, particularly Mr Whiting. I think I need to put that on the record.

Oliver Colvile: Chairman, I should also declare that I was taken to the cricket by a Japanese tobacco company-the test match.

Q2 Chair: How big is the problem?

Mike Norgrove: As to the scale of it, it is a great start to mention the OCTF because the scale of the problem is such that we can begin to solve it only with bodies of that kind. We measure the tax gap, which is the most important thing we are trying to close, for diesel in Northern Ireland at about 28% for the last recorded year, 2008-09. That adds up to a loss of duty to the Exchequer of about £160 million. The most important difference between that tax gap and all others that we publish for cigarettes and alcohol is that it includes perfectly legitimate cross-border shopping, which in the North of Ireland we just cannot distinguish from the illicit. That is a bit of a handicap but because of the nature of the border it is not possible for us to estimate the split between legitimate cross-border shopping and illicit use.

Q3 Chair: You have partly answered the next question. It is a problem because of the border, largely?

Mike Norgrove: It is not just the border; it is also to do with the nature of the differential in price in the North, because of duty, between red diesel and white diesel for road use. Even if there were no border-even if there were no other countries involved-there would still be an incentive to launder or smuggle fuel, taking advantage of the big duty differential between rebated fuel and fuel for road use. At the moment that differential is about 46p per litre. Even without the border there would be that incentive. Of course, the misuse of red diesel is also discernible in the rest of the UK. Great Britain has itself a considerable problem of red diesel misuse, so it is not just the border. But, as the Chairman will know, the border presents some unique challenges. Criminals use their operations on either side of the border to frustrate the efforts of law enforcement officers, which in turn requires us to work ever more collaboratively with our colleagues in the Republic.

Q4 Chair: Who are the baddies in this respect? Are they paramilitary organisations or gangs that may exist even in the rest of the UK? Who are the people we are really targeting?

Mike Norgrove: Both those sets. The profit margins are such that it will attract all kinds of criminals. Historically, there has been a link between this crime and terrorism. It is a way in which paramilitary organisations have funded themselves in the past. Not all of those people have disappeared and the incentive to smuggle is still there. Nevertheless, it is not restricted exclusively to those; there are also organised criminals on both sides of the border and in Northern Ireland and GB who dabble or major in this but also operate tobacco crime, alcohol smuggling and so on. It is a wide range of criminal activity: large and small, organised and less organised, paramilitary and non-paramilitary.

Q5 Chair: To understand the complexity of it and putting it in very simple terms-maybe your colleague at the end will answer-can you give us a very quick overview of red, white and green diesel? What is the problem with that?

Pat Curtis: In the oil sector we have basically three types of fuel. The range is a bit wider than that. We have fully duty-paid fuel, which is used mostly on the roads; we have rebated fuels, which means we have the duty and we discount it. That is mostly agricultural fuel. That also includes kerosene, which is the third sector we look at. Because of the nature of the use to which that is put the duty on kerosene is zero. In simple terms, kerosene is at zero rate of duty; red diesel-agricultural fuel-is approximately 13p, or slightly less, per litre; and petrol and diesel come in at about 59p. That is the spread. As already mentioned, the activity is to gain the advantage between the duty rates and fuel types.

Q6 Ian Paisley: Perhaps I may confirm the number of which you spoke. How much do you think the British Exchequer loses per annum on fuel laundering?

Mike Norgrove: For the UK as a whole it is almost £1 billion. On laundering only, it is difficult for us to split the duty we lose between laundering and mixing, which is another practice to which we will no doubt come, and straight smuggling. We do not have that breakdown.

Q7 Ian Paisley: Would it be accurate to say that it is about £300 million per annum? Are you able to give us even a guide? In response to a parliamentary question Parliament was told on 6 July 2011 that between £280 million and £300 million a year was lost because of fuel laundering in the UK. I want to get an idea of the extent of the fuel laundering aspect of it.

Mike Norgrove: I am afraid that is not a figure I have seen. We have not hazarded guesses or made estimates as between the laundered and smuggled or the mixed.

Q8 Ian Paisley: Would it be right to say that the loss is hundreds of millions of pounds?

Mike Norgrove: Yes, I think it would be fair to say that.

Q9 Mel Stride: On the issue of laundered fuel, do you have some measure of how much worse it is proportionally as an issue in Northern Ireland than in GB? Perhaps you could use as a measure the percentage of fuel that is used by people that is laundered. Is it markedly higher in Northern Ireland than in the rest of GB?

Mike Norgrove: Because we do not have estimates of the split between laundered and mixed in either the North or GB we do not have that.

Q10 Mel Stride: What would the position be across those two categories?

Mike Norgrove: The overall tax gap on diesel is about 4% in the UK as a whole. We think it is more like 28% including cross-border shopping in the North, but the danger of the comparison between 4% and 28% is that the latter will include a great deal of perfectly legitimate cross-border shopping by individuals and companies, so even that figure is not as tight and accurate as we would like.

Q11 Mel Stride: But you would be reasonably confident in saying that the problem would be several times worse in Northern Ireland than in GB across these two categories?

Mike Norgrove: I do not have any science on which to base that.

Q12 Mel Stride: The gentleman at the end looks as though he may have a comment.

Pat Curtis: If I may put a slightly different slant on it, we have had more detections of laundered fuel in Northern Ireland than the rest of the UK. One of the reasons for it may be that we have allocated time for the staff to test new trends and methods occurring in the fuel industry in Northern Ireland. We selected Northern Ireland as a place to try this out. Some of the new detection techniques have been very successful. Currently, these are being rolled out to the rest of the UK mainland, so it is early days for us to give you a current figure about the difference. Is it our expectation that we will have a balanced view of laundering on the UK mainland and Northern Ireland? Potentially, yes; we really do not know. But new detection techniques had to be developed in one location to start with and we picked Northern Ireland for that. So, they may give a false indication of the concentration of the problem in one geographical region.

Mike Norgrove: It would perhaps be worth adding that one factor unique to Northern Ireland is that there is a more readily accessible availability of green diesel to launder from the South than on the mainland just because of the intervening water. That is a particular circumstance in the North.

Q13 Mr Benton: I go back to the Chairman’s initial question about the scale of the problem of smuggling, laundering etc. As a general point, do you feel hampered in any way by inadequacy of manpower in detecting these things? A general complaint I have heard certainly in England is about inadequate manpower in terms of the investigatory aspects of this. Is this a problem, or would you say that your particular branch of the service has adequate manpower?

Mike Norgrove: I don’t think that any enforcement organisation or revenue authority would turn down extra staff, but I don’t think the problem at the moment has at its heart a lack of resources or funding. In the last spending round HM Revenue and Customs were successful in obtaining additional funding. Once they had taken into account our efficiency savings, which like most departments were up to 25%, we were granted an extra £917 million to spend, not on oils alone, but on exactly this kind of enforcement work, which will generate another £7 billion. So we are now getting quite a big injection of funds to tackle crime, evasion, fraud and also avoidance. We are in the process of spending that money. As to Alan and John’s resources over the coming years, they are in the unique position of recruiting and moving additional staff into their areas of work across criminal investigations, so at the moment resources are not our biggest problem.

Q14 Lady Hermon: To follow on from that point, have HMRC missed, as we in Northern Ireland have, the excellent work of the Assets Recovery Agency and its director, Alan McQuillan? Have you felt a difference-the loss of that-in your work in Northern Ireland in tackling smuggling?

Mike Norgrove: The work that that organisation did passed to the Serious Organised Crime Agency quite recently. This is not a big issue on my agenda at the moment. I do not know whether my colleagues want to add anything.

John Whiting: We have an excellent relationship with the Serious Organised Crime Agency. A team of people previously employed in the Assets Recovery Agency are currently employed in the Serious Organised Crime Agency. We have the same excellent relationship with them as we had with ARA. We have referred some of the work that we cannot do, either because it is particularly difficult for us to gather the evidence or there are cases where for some reason we have had a failed prosecution, to the Serious Organised Crime Agency. They are adopting that work and have had some spectacular successes.

Q15 Lady Hermon: Would you describe the merger between the Assets Recovery Agency and SOCA as a seamless change?

John Whiting: I would not necessarily say it is seamless; it would be difficult for me to comment, but I have not seen a change or a drop-off in terms of their acceptance of work from HMRC. I receive requests from them regularly for additional referrals, so they are looking for work from me and they have never turned anything down.

Q16 Lady Hermon: Would you be concerned that that very good working relationship which you have just described would perhaps be damaged by the new creation of yet another national crime agency?

John Whiting: I would hope that it is not harmed. Certainly, none of my colleagues in SOCA have yet complained that they anticipate any particular problems, but clearly I would be concerned if anything was going to happen that might harm that relationship.

Q17 Lady Hermon: Is it a fair summary that HMRC in Northern Ireland dealing with fuel smuggling would prefer to see SOCA continue its valuable contribution?

John Whiting: I would hope that the same level of service as currently exists continues.

Q18 David Simpson: Gentlemen, you are very welcome to the Committee. I am sure you will gather from the questions thus far that this is a thorny issue. In Northern Ireland all forms of smuggling have been going on across the border right from partition, for many, many years. As Ian Paisley has said, laundering fuel, tobacco or whatever the case may be, is costing us hundreds of millions of pounds. There is a feeling among the business community and others within Northern Ireland, rightly or wrongly, that there is an acceptable level of such smuggling because it is virtually impossible to detect it 100%. Therefore, we live with a tolerable level of it. Mr Curtis mentioned detection. I want to ask about prosecutions. When it comes to roadside checkpoints and the new ultra-low sulphur test and all the rest of it carried out on diesel, how many successful prosecutions have HMRC managed to get to the courts?

Mike Norgrove: In Northern Ireland, I think the figures covering the last few years are in the memorandum that we provided to the Committee. Thank you for the welcome to the Committee. I was lucky enough to give evidence to this Committee when Peter Brooke chaired it at least 13 years ago. I think the memorandum sets out the correct statistics. Going back further, John can recall some of the cases over the last 10 years.

John Whiting: In the last 10 years we have achieved many prosecutions-I do not have the figures at my fingertips but my colleague has-but only four people have been put in custody.

Q19 Lady Hermon: Would you like to elaborate and explain why it is so many prosecutions fail?

John Whiting: That is not due necessarily to failed prosecution. We have had many successful prosecutions with the result that there is a suspended sentence. That is still described as a conviction, but these individuals have not gone to jail.

Q20 Lady Hermon: What was the average sentence for those who were successfully put behind bars?

John Whiting: I think three were in terms of months and one individual went to prison for two and a half years. That is the last custodial sentence for an oils fraud, which was two years six months.

Mike Norgrove: That was back in 2002.

Q21 Lady Hermon: Can I presume, hopefully, that in addition to a sentence of imprisonment, or a slap on the wrist, assets have been recovered from them, or at least HMRC have recovered a huge amount of money from these individuals? Therefore, is it money that HMRC wish to recover?

John Whiting: To be clear, HMRC conducts an investigation. As part of our investigation we apply a number of tools. We will seize the goods and assets that we find at the scene, whether it is vehicles or fuel; we will go through a process of restraint and confiscation in terms of assets that we identify, and ultimately the sentencing is decided by the courts. It is not the wishes of HMRC but those of the judiciary that are being carried out. There is a range of features, civil and criminal. Obviously, the bulk of the people that we have put through the courts have been dealt with by suspended sentences which have attached to them, where appropriate, confiscation of assets.

Q22 Ian Paisley: I echo David’s words of welcome. I understand the very difficult job that you have to do against probably some of the most horrible people operating in the community, who would not think twice about knifing and killing you on this issue. I understand that the circumstances are difficult, but there are issues here which go right to the heart of how our economy is supposed to function effectively and efficiently. You provide a guesstimate of hundreds of millions of pounds’ worth of crime and unfortunately only four prosecutions in 10 years have succeeded.

John Whiting: To be clear, those are four custodial sentences. We have had many more successful prosecutions.

Q23 Ian Paisley: I am not blaming you for the failure of our courts.

John Whiting: But, to be clear, we have had dozens of successful prosecutions in that period.

Q24 Ian Paisley: John, there is no good spin on that. As someone said, you can’t polish it. Those figures cannot be polished. I made a trawl through press releases on fuel laundering. It concerns me that we do not have an accurate figure. According to the press releases alone, which your organisation, the police and others put out, there have been 14 major seizures from or closures of fuel laundering plants and arrests over the last 12 months. These are multi-million-pound seizures involving companies with 2 million litres of illicit diesel plants on which £1.3 million of excise duty would have been paid. That is for the last 12 months alone. On the basis of those press releases the figures I come up with are well in excess of £300 million in Northern Ireland alone. We need to get from you, maybe in private if that is easier to do, a far better idea of the real extent of it. We must get to grips with this-the Nelson’s eye that is being turned to it. You talk about the tools available to you to deal with it. I almost feel sorry for the agencies, because you seem to have 18th century tools to try to deal with a 21st century problem. That is not good enough. We have to try to change that. I want to see these so-and-sos stopped dead in their tracks by something that stops them from committing this crime and robbing people and the Exchequer of hundreds of millions of pounds.

Mike Norgrove: We feel equally strongly, Mr Paisley. You mentioned a figure of hundreds of millions. I want to make sure I have not misled you. That figure might be true for the UK as a whole but our published estimates of diesel fraud are up to £160 million but that includes cross-border shopping on diesel and maybe £30 million on petrol. It would not be right to say that we have evidence of hundreds of millions. Extrapolating the seizures we make and plants with the capability of laundering hundreds of thousands of litres, the figures we then quote are how much duty would have been avoided had they sold all that amount, so that is a fair interpretation.

As to 18th century tools, thank you for your kind words about the circumstances in which our people work. I was in Belfast a couple of weeks ago and in Dublin the week before last. It is not just the dedication, and the work carried out in horrible circumstances and going into dangerous places, but the innovation of Patrick and his team and the road fuel testing unit to find new ways to tell whether red diesel has been laundered, whether there is kerosene as well as diesel in the fuel and whether solvents have been added to petrol. That innovation has come partly from the Laboratory of the Government Chemist, forensic scientists and so on but principally from our own staff like Pat. They are working innovatively right at the cutting edge of science and technology. I would like to pay tribute to the work they do, as well as the work of our criminal investigators.

Q25 Ian Paisley: But the material does not stand up in a court of law; there seem to be so many loopholes around it.

Mike Norgrove: I think it stands up in a court of law, but John’s point is that even when people are convicted the sentence rarely involves custody.

Q26 Chair: Surely, by definition it must be very difficult for you to estimate the amount of money being lost.

Mike Norgrove: It is. As to oils, it is particularly difficult to calculate. The general principle in HMRC is that we do at least try to calculate the tax gap. We do not simply say, "It’s big; let’s try to do something about it." We calculate the difference between what we should collect and what we do collect on tobacco, alcohol and a range of excise duties and other taxes. On the 21st we shall be publishing our latest estimates. Oils are particularly difficult because you have to make an estimate of the total miles travelled, which comes from Department for Transport surveys, then look at the relative efficiency of the different sorts of vehicles involved, whether it is cars, lorries or vans, and whether it is petrol or diesel. That formula is incredibly complex and our scientists and analysts have to work on that with the statistical service. Mapped on to that is our own clearance data, which is factual. We know how much duty people are paying us. One interesting phenomenon is that if we thought diesel fraud was bigger than we had previously expected that would mean only that petrol fraud was less, or vice versa. We are pretty sure about the totality of what we are losing, because we know the duty receipts and other data about miles travelled and the efficiency of vehicles, but it is tough.

Q27 Oliver Colvile: Are you saying that if you had tougher laws and there was mandatory sentencing of people who had been nicked for playing around with contraband that would push up the numbers of people being sent to prison? Is that something you would want?

Mike Norgrove: Your first condition was about having tougher laws. I do not think the laws themselves are inadequate; it is the interpretation of the offence and the decisions by the judiciary.

Q28 Oliver Colvile: I have always rather taken the view that the judiciary interprets the law in the way in which it should, and it is our job as politicians to make sure we lessen the wriggle room for people to be able to do things. Do you also feel that if there were more cases of people going to prison for illegally laundering tobacco, petrol, oil or whatever, it would have a significant impact on deterring others from participating in this criminal activity?

Mike Norgrove: Yes, I do. Some of the £900 million-odd to which I referred earlier will go to what we call volume crime and extra resources for investigators in order not just to bring those people to book but to deter others. Therefore, I am with you entirely.

Oliver Colvile: My personal view-no doubt we will end up discussing it-is that we should be drawing this to the attention of the Home Secretary.

Chair: It will form part of the report.

Q29 Mel Stride: I want to turn quickly to the smuggling of other products. In terms of lost revenues, how does tobacco and alcohol smuggling compare with fuel smuggling in Northern Ireland?

Mike Norgrove: The markets are smaller, and for other products we think the illicit share is also smaller. Again, it is quite difficult to be precise. We shall be publishing some figures next week, but in each case it is certainly a smaller problem. Tobacco is a particularly interesting example at the moment, because the Republic of Ireland finds itself the target of smuggling both as a destination but also as a transit point through to us and other parts of western Europe. Ireland is being targeted. For example, as a new trend exports from Dubai’s free zone and China come into Ireland and then into the UK and beyond. That is an emerging and increasing worry for us, but certainly oils are the biggest of the three by a long chalk.

Q30 Mel Stride: What would be the drivers of the fact that less of it is going on with cigarettes and alcohol? Is it the duty rates? Is there less money in it because the margins of avoiding duty are less than in the case of fuels? What makes that less attractive?

Mike Norgrove: It is probably a matter of history but, as you have said, the problem with oils has been with us for a long time. Other smuggling has always gone on as well, but the technology is available in the island of Ireland and the expertise and some of the funding of this sort of activity, which has been profitable in the past, has been used to regenerate it and so on. There has been a history of it, but there are signs of those same criminals now branching out into other products.

Q31 Mel Stride: Are these gangs tending to diversify into these other areas?

Mike Norgrove: The best organised ones are.

Alan Lee: We have examples of people in respect of whom we are pursuing intelligence in relation to tobacco and, by the time we reach the point where we can intercept the individuals with a view to prosecution, they have diversified. We go into premises and the commodity we expected is not what we find; it is another one altogether. For example, we may target an individual or gang in relation to cigarette smuggling that we know is taking place, but when we conduct our executive action we discover that they are also involved in alcohol distillation or smuggling or fuel laundering. We have a particularly nimble and ingenious opponent in this area of crime.

Q32 Mel Stride: I want to return very quickly to the law and sentencing. What you are saying, I think, is that the law is there and is robust enough but the sentences being handed out tend to be too soft, and that may be for a variety of reasons. Is one of the potential reasons that the prosecution are not efficient and effective enough? I often hear from the police on other matters, "We take people before the courts but at the end of the day we are just not sufficiently prepared; the defence are much better, and that is why we do not get the result we feel we should get."

Alan Lee: I don’t feel that is an issue in this particular case. One thing we are trying to do in Northern Ireland is send a strong deterrent message. If I may, Mr Simpson, I should like to give you an assurance that there is no tolerable level that we would accommodate in relation to fuel adulteration or fuel smuggling. Although I have a small presence of criminal investigators and other personnel in Northern Ireland, if the quantity of activity rises I have over 400 investigators here in GB whom I will move into Northern Ireland for any particular operation to face any particular risk. We believe that the legislation is robust enough and that the conduct of investigative activity and the quality of evidence we present is adequate and professional. For a variety of reasons-it is not for me to say here-in Northern Ireland we do not get the scale of deterrent sentences that occurs here in Great Britain. One of the things we are anxious to do is deter. The only way we can deter is through collaborative action by the Organised Crime Task Force to make sure our interventions are successful, but in order to send a truly deterrent message it is important that upon conviction-as Mike said, we do secure them-we get deterrent sentences and proceeds of crime and confiscation orders to send a message to those who are contemplating joining this particular area of criminality.

Chair: Maybe that is something we can pursue.

Q33 Mel Stride: You say that in GB generally we are getting the sentences required but not in Northern Ireland. You tantalised us by saying that perhaps this is not the place to discuss it. Why are we not getting the results in Northern Ireland?

Alan Lee: I really do not think it is a matter for public discussion.

Chair: We will look into it.

Q34 Lady Hermon: We had reference in an earlier question to the devolution of policing and justice to the Northern Ireland Assembly.

Chair: We are coming to that.

Lady Hermon:I was not going to eat into Gavin’s question. In light of the devolution of police and justice to the Assembly, have HMRC made representations in the past 12 months to the Assembly and Justice Minister about improving or topping up sentences?

Alan Lee: Personally?

Lady Hermon: Yes.

Alan Lee: I have spoken to David Ford and through the OCTF we have raised this matter with him.

Q35 Lady Hermon: Are you able to tell the Committee whether it was a positive and encouraging response, even at this early stage?

Alan Lee: Certainly Mr Ford was extremely sympathetic.

Q36 Lady Hermon: Extremely sympathetic in terms of toughening sentencing?

Alan Lee: In terms of following up the concerns we raised.

Chair: I think we will have to look into this.

John Whiting: To be quite clear, David Ford has no control over the judiciary. The judiciary is completely independent, and we respect that.

Chair: We understand that.

Q37 Gavin Williamson: In relation to fuel fraud it is often said that it is not just down to HMRC or PSNI; it is very much a collaborative approach, but in the past some Government agencies and departments have seen it very much as HMRC and PSNI having to sort it out. Has that approach changed recently?

Mike Norgrove: I think it has. In a moment I will bring in John as chair of the OCTF. There is now a genuine buy-in by other departments, from trading standards to the Department of Environment and so on, to tackle this problem collaboratively. There has been a real sea change in recent times. It is a multi-agency and cross-border approach. As to the cross-border aspects, Alan and I were in Dublin on 2 September to meet Josephine Feehily, Chairman of the Office of the Revenue Commissioners. That meeting, which was a whole-day meeting, could not have been more profitable. We were at one on all the issues. Occasionally, there were some interesting differences of perspective and we learned from each other there, but collaboration, which has always been good on the operational side, is also now excellent on the policy side. We are getting the HQ teams to talk about the way in which, for example, we control registered dealers in controlled drugs. That sort of cooperation is working.

Q38 Lady Hermon: On cross-border co-operation, can you tell us a little more about the Cross-Border Fuel Fraud Enforcement Group, which is a short title? In particular, who takes the lead in those discussions, which were very fruitful in the early part of September? Who takes the leads within the Organised Crime Task Group, and to whom do you account and report?

Mike Norgrove: I will give you a simple answer and hand over to John. We take the lead.

Lady Hermon: Excellent.

Mike Norgrove: And John chairs that group.

Q39 Lady Hermon: We are going to hear from the horse’s mouth. Tell us.

John Whiting: Clearly, David Ford is the chair of the Organised Crime Task Force. He chairs the stakeholder meeting, which we attend, and there is a strategy group. Below that, there are nine sub-groups, one of which is the neatly-named Cross-Border Fuel Fraud Enforcement Group.

Q40 Lady Hermon: Give us an idea of its size and of what it consists.

John Whiting: We are meeting tomorrow in Dublin. Normally, there are about 20 attendees. There is a good gaggle of people from HMRC.

Lady Hermon: I am sure it is quieter without Mr Paisley being there.

Ian Paisley: But it’s not as much fun, John.

John Whiting: I am afraid he has never attended that one. From Northern Ireland we have participants from the PSNI, including PSNI C1, which is the crime operations, but also their roads division, because there is a significant role to do with vehicles that move this product around the Province. Therefore, we want to use as many tactics as we can. We have representation from the Serious Organised Crime Agency, which represents both the former ARA side and the more operational side. We have representation from the Health and Safety Executive, who also join us in a Northern Ireland fuel forum, which is a forum made up of the 26 councils. We have representation on that particular group. We also have very active membership from the Northern Ireland Environment Agency, which more and more participates in our operations, especially in relation to laundering plants where there is toxic waste. Effectively, we replicate that with membership from the Revenue Commissioners in the Republic of Ireland, Criminal Assets Bureau and Garda Siochána, including their roads people, and the equivalent of the Environment Agency in the South.

Q41 Lady Hermon: Do you meet alternately in Northern Ireland and the Republic?

John Whiting: We meet every three months. We take it in turns to meet North and South. I chair every meeting. You probably accept that there is perhaps a sensitivity about the fact that a UK organisation chairs the meeting, but there was Irish ministerial approval for that to take place because it was recognised that it was a particular problem for us. As Mr Williamson mentioned earlier, there was a recognition that HMRC themselves could not try to deal with this problem. Some of our success in taking out laundering plants over the past 12 months, which Mr Paisley mentioned, and even before, is the result of the co-operation and collaboration that we have achieved through the cross-border group. It is an understanding, and it is both in terms of developing intelligence and taking that into operational delivery and arrests, and then, very practically, looking at what we have achieved following arrest and what is the best solution. The best solution might not be to prosecute the individual that we have dealt with.

To give you one example, in a joint operation the principal was just South of the border but the smuggling was first into the South and then back into the North. We have taken a very small aspect of that for a Northern Ireland prosecution. The principal was in the South. Therefore, rather than spend five to 10 years trying to extradite that individual from the South and bring him before the courts in Northern Ireland, we have adopted the pragmatic solution of saying to the Criminal Assets Bureau that it should target that individual. He also has assets in the UK, so we have made that particular referral to the Serious Organised Crime Agency, which would have been ARA. We are trying to move effectively and quickly to strip them of their assets.

Q42 Lady Hermon: As a matter of curiosity, how stiff are the sentences in the Republic of Ireland? Is it in your best interest to leave the individual South of the border?

John Whiting: The Criminal Assets Bureau will deal with them civilly. They operate a bit like the Assets Recovery Agency, so that will not be a criminal case there either. I am not certain of their recent successes in terms of custodial sentences. They may be similar to our own.

Q43 Lady Hermon: Is that information you can provide to the Committee? Over 10 years, six people have gone behind bars in Northern Ireland. I would like to see the equivalent figure over the same timespan in the Republic.

Mike Norgrove: We can also send you details of who is on the committees and groups we mentioned.

Q44 David Simpson: A very small point: whenever we listen to the structures of this, with the greatest respect, great organisation of HMRC and the assets recovery agencies in both Northern Ireland and the Republic of Ireland, is it a case of deterrent? With all the resources that you guys have at your disposal, why is it increasing? The figures I have received show that in Northern Ireland it is increasing, whether it be fuel or tobacco. The other day £3 million worth of cigarettes was caught the other day.

Ian Paisley: £8 million was recovered yesterday in Dublin Port.

David Simpson: Why is that? Is it the deterrent itself, whether it be a custodial sentence or whatever it may be? You talked about prosecutions. How many of the people who get a slap on the wrist with a suspended sentence or whatever reoffend and you bring them back again? Is the bottom line here the deterrent? Are you saying to us that you have almost all the resources that you need to do the job but somewhere along the line there is a stumbling block and something is going wrong? Ian Paisley and others have said that we are losing millions in revenue. Surely, something can be done about this to try to minimise what is happening.

Mike Norgrove: We do not think the problem is increasing. We have no evidence to suggest that it has got worse. Figures in the public domain show that the diesel tax gap in Northern Ireland has gone from 40% in 2004-05 to 28%.

Q45 David Simpson: I am sorry to cut across you, but a moment ago you said you did not have the figures for the approximate loss of revenue. If that is the case, then surely there is a possibility that you are not aware of all the laundering that is ongoing.

Mike Norgrove: It is always possible that laundering is happening. Cross-border shopping will fluctuate according to the duty and exchange rates at any one time. At the moment the euro is quite weak. We have no evidence to suggest that the illicit side is increasing but we think our effectiveness is. These guys are taking out more laundering plants than ever before. They will always be attractive to criminals because the economics of the crime are such that they do not need big set-up costs. The equipment is available on eBay, as it were, and the transport costs are not huge. They are prepared completely to flout any health and safety or environmental restrictions. They dump acids, bleaching agents and so on into lakes and rivers, and recently by a school. They are prepared to go to any lengths to make these profits. Therefore, of course that will always be a difficult problem, but we do not believe it is getting worse and that our weapons are proving less effective than they ever have been.

That is not to say we cannot do better. We are determined to produce a more deterrent effect through our labours. I think we also need to change the mindset. The police have a campaign running called Changing the Mindset. In the past this has been seen as a victimless fiscal crime and not as heinous as some crime that can happen. We need to make much clearer the environmental damage that is being done to where we live, our schools and so on and that this is not a victimless crime. In that way we think the deterrent can help.

Q46 Gavin Williamson: What you said about it being regarded as a victimless crime is interesting. Are the public starting to understand the implications of it and are you getting more tip-offs, or are you finding that that is not quite the case yet?

Alan Lee: I think awareness of the harm involved in this crime has become more acute. We ran a campaign recently called Fuel Fraud-It’s a Dirty Business with lots of media advertising. We have recently reconfigured the memorandum of understanding with the Environment Agency in Northern Ireland with a view to trying to standardise the frequency with which we prosecute jointly where we discover fuel laundering so that the prosecution team levies charges in relation not only to fiscal loss but also to environmental damage. That twin-track levying of charges is raising the mindset of everybody that this is not a victimless crime; there is significant harm. As Mike said, we have discovered toxic waste that has been abandoned within yards of a school. We have seen it seeping into rivers.

One benefit we want from devolution in Northern Ireland is closer working with MPs on a local basis to get people to understand that there is huge harm as a consequence of fuel laundering; it is not just about fiscal loss. The revenue and duty we lose is further exacerbated by the clean-up costs inflicted on the people of Northern Ireland to dispose of this waste safely. We are trying to leverage in the mind of the public the fact that there is significant harm attributable to this particular activity. We think that is starting to get through. We are now in the middle of the renegotiation of an MOU with the Environment Agency to have twin-track charges laid.

John Whiting: As part of the Cross-Border Fuel Group we took the very deliberate step to increase publicity of our activity. If you go back five years, you would see very few inches of print relating to Customs and Excise, now HMRC, activity. We took the very deliberate step to increase the media coverage we were seeking. That started off by taking television crews with us as we went on operations, and we have managed to keep that. That is the reason Mr Paisley has access to all those successes. We had some of those successes previously, but we have a lot more of them because we have a lot more people doing it, and we have better intelligence because we are working with other agencies to develop that intelligence.

Lady Hermon: It is very warmly received by the public. It does increase their confidence in what HMRC is doing in Northern Ireland, so please keep that up, if not extend it.

Q47 Oliver Colvile: Bluntly speaking, my taxpayers in Plymouth Sutton and Devonport have to pay more money because these criminals are behaving in this way.

Mike Norgrove: Yes, exactly.

Q48 Oliver Colvile: How has the devolution of policing and justice affected your work?

Mike Norgrove: The biggest single point I would pick up is the one to which Mr Lee just made reference, which is that this gives us enormous opportunity to engage in local initiatives and to work closely with communities, local councils and so on to bring this home to people. It has been beneficial. For example, we are looking at extending to diesel the Petroleum Licensing Regulations. At the moment they are restricted to petrol, unlike in the South. We are working on that post-devolution to see whether we can extend it to diesel fuel to control garages across the piece.

Alan Lee: The other major advantage for Northern Ireland is the difference in the computation of the asset recovery incentivisation scheme. Whereas prior to devolution the computation of any funding that would come back to the agencies and the local courts would go via this particular location, now we will be able to work more closely because the moneys and assets we recover in Northern Ireland under the scheme will now be more applicable directly to Northern Ireland.

As to working more closely with local authorities under the petrol licensing regulations, if we can get round the semantics of the word "petrol" and can add the word "diesel" we can start to close down more and more places and revoke licences. Looking at the deterrent effect, it is not just about the deterrence of prosecution. We want to look at every aspect within our own agency’s powers but also within those of other bodies, so revocation of licences might even mean approaching other licensing authorities in terms of people who drive commercial vehicles. Can we do something in relation to revocation of licences if they are discovered with an unsafe vehicle transporting pots full of diesel? We are looking at every possible option we can think of, some of which I do not want to go into here, to deter, disrupt and dismantle the major groups behind this activity.

Q49 David Simpson: Alan, you mentioned that the process had changed somewhat and that revenue would go back into or stay in Northern Ireland. Through the old Assets Recovery Agency process, my constituency managed to avail itself of some funding from assets recovery and feed that back into community organisations. Is the point you are making a further elongation of that?

Alan Lee: Yes.

Q50 David Simpson: Money can be put into cross-community projects or whatever aimed at young people. I do not believe it was a large amount of money.

Alan Lee: It has not been in the past. You may find the figure goes up because it will be directly attributable to the Province. All of us have to accept that the scheme is designed primarily to further the law enforcement effort, so the actual use to which this funding can be put has certain markers and strictures upon it, but it will now be far more straightforward for us to understand how much money will be coming back into the Province, how the division of those moneys can be made and the uses to which it can be put.

Q51 David Simpson: Do you find all the agencies with which you work in Northern Ireland co-operative? Could they be more co-operative, or are you satisfied with the level of response and co-operation that you are getting?

Alan Lee: Yes, absolutely; 100%.

Q52 Ian Paisley: I want to ask about your relationship with the Republic of Ireland. I welcome the fact there is good cross-border co-operation in this. If we are losing hundreds of millions in tax revenue they must be losing something similar. Given that we have bailed them out to the tune of £7 billion, effectively they are losing our money. We want to make sure we clamp down and hold on to this money. I know that yesterday there was a seizure by the authorities of £8 million worth of cigarettes in Dublin Port. That is most welcome, given the impact that will have in my own constituency. In paragraph 6.2 of your submission you write that you work very closely with the Republic’s state lab and LGC Forensics "to improve the effectiveness of fuel testing, and we are securing support for a more robust European marker to be added to rebated fuel." You go on to elaborate on that in 8.4 by saying you are looking to develop new and improved means of roadside lab testing. How far along is that? Are you at the point where you could do a pilot of some of that work, or are we in a long, protracted procurement process that could mean we are sitting here for another few years waiting for this advanced technology to come into your hands?

Mike Norgrove: We have with us a great expert in Mr Curtis, so I will defer to him in a moment. To give the broad position as to where we are, we are trying to operate at two levels at least: the immediate and medium term. For the immediate, we believe we are on the threshold of finding a strengthening of the current marker-we will not go into details here, but can do later-which we think will at least double the cost to launderers of removing it. That is an immediate benefit which we think we will have in place and are piloting with Pat right now. There are also enhancements of current techniques. For example, the solid phase extraction test invented by Pat and his team is proving particularly effective and is being shared with our colleagues elsewhere. There is some immediate work and there are immediate benefits that are not just jam tomorrow.

Nevertheless, in the slightly longer term we are working in two capacities: one is across the whole of Europe and the other is with the Republic of Ireland. We think the European marker is not effective enough and we desperately need a new one. Pat has started the initiative of sharing ideas. 14 other countries are already interested, and we are looking for an event to be held in Brussels next year under the Fiscalis initiative. I think that will start to gather pace with European minds coming together. The other day I was talking to my Hungarian opposite numbers for whom this is a big problem; it is all over Europe.

Independently, we are working particularly closely with the Republic on something which, if the European one failed or even succeeded, we would want to develop together. Therefore, on a separate twin track we have gone out with a request for information to providers out there to come up with new ideas about what is out there in the market that could really help us in the longer term. We have had some very interesting replies which we are discussing with them-nothing that has yet shot the lights out, but maybe we can come to that in a later session. It is promising. You are right. That is something we will probably have to wait a little while for before we go out to tender.

Q53 Ian Paisley: Can you define "little while" and "long term"? Are we looking at years, months?

Mike Norgrove: I would have thought we would want to go out to tender within a year. Pat?

Pat Curtis: We are pursuing three strategies. The first one, which we can fully control, is to try to improve the detection methods at the roadside. You have heard about the XRF machine. In Belfast we found out that we could test fuel at the roadside for sulphur content. That was to stop the smuggling of fuel because the UK had ultra-low sulphur diesel in the UK market but our colleagues in the South had not introduced it for two years after the fact. From that, we found out that agricultural fuel had a higher sulphur content than ultra-low sulphur diesel, so even though the launderers were attempting to remove the dyes and markers we could test the sulphur content and it would give us a result. The success of that was so great that not only did our colleagues in Dublin buy into it, but they actually changed the legislation and used sulphur as a marker. As of October, our colleagues in the Czech Republic, who have come over for training in Belfast, will have purchased their own machine for fraud detection in that country.

Our on-field detection techniques have a history of improvements. The most recent one, which Mike mentioned, is the solid phase extraction test, some of which you would have seen when you were in Belfast. I can explain that in more detail after the session, if you wish. There are other things we have been looking at jointly with our colleagues in the South. We have jointly formulated a new roadside test to check solvents in petrol and even the mixing of kerosene and petrol. This is not limited to the diesel market; it is a wider concern and possibly is not recognised yet.

Perhaps I may tell you, jokingly-forgive me-about a test we devised after months of working on the detection of diesel in petrol. Petrol is a more hazardous substance, as you appreciate, than diesel. I had concerns about the way staff handle it on the road etc and what sort of chemical test they can carry out on petrol. After a couple of months of trying every high tech method we could think of and asking scientists to come up with something, the test that was evolved by the staff, and-which we did not tell the trade at the time-involved photocopying paper. We told the trade when we carried out the test that the paper had been designed specially for the test. Basically, the test consisted of cutting photocopying paper into finger shapes and dipping it into the petrol. Petrol evaporates very quickly, as everybody knows, but there are warnings on retail sites that if you stand near diesel you will draw it into your car because it does not evaporate. If there is diesel content in petrol when it evaporates you think somebody has left a chip on the piece of paper; it leaves a greasy stain. It was as simple as that. Do not take that simplicity as meaning that somebody worked it out in an hour. A lot of background work went into it. It shows that we have been pursuing a lot of innovative ideas.

The other strand, which again I will explain further after the meeting-I will try to give a date to Mr Paisley-is that we are taking what we have currently and trying to make it better. All the markers consist of a recipe. We want to see whether we can tweak the recipe that fits in with the current legislation and has no impact on the trade, especially in cost. We think we have a result on that. We believe strongly that we can have this in place by March next year at the latest.

Q54 Ian Paisley: That would be fantastic.

Pat Curtis: I have to explain: this is a temporary matter; it is not the answer to all our problems.

Ian Paisley: It is a pilot.

Pat Curtis: The cost will be a fair bit higher than a doubling of the cost to customers out there but, more importantly, until they find out what it is we have done we will have a step ahead.

The third strand is that for years we have realised that the Euro marker has problems, which is why the UK decided to retain its existing marker and add it to the Euro marker. When Brussels said we must have the Euro marker everybody introduced it. Our colleagues in the South have it; every European country has it. But even back then we also retained our UK marker because it was recognised very early that the Euro marker was not as robust against professional launderers. But it did not seem to be an issue in Europe, so this marker was introduced. We want to see whether we can replace the Euro marker and improve it. That is a costly, costly event. We suggest that we must get backing from Europe and Brussels, so we have gone out to other Member States and asked them a range of questions. Have they got issues? Some Member States have come back and said that they do not have a problem. Our question is whether they have looked for it. They will ask, "Why should we look for it? We have not had a problem." We have to reeducate them.

We had a team from the Czech Republic over for a full week for training in Belfast. They went out live to laundering plants; they appeared in some of our television coverage. As I explained, they took our techniques back to their country. We have a request from the German customs for the same facility. More importantly, at the moment 14 countries have said they are very interested in joining up and doing a workshop. This workshop, for which we are currently requesting funding from Fiscalis, will be held in Belfast and led by us because we see ourselves as the lead. But the whole idea behind it is to see what is out there and also to raise the interest in Brussels so that the UK does not have to fund the Euro marker replacement and we do it as a European initiative.

Q55 Ian Paisley: We have not rigorously tested this yet in terms of questioning, but we have received written submissions that there are technologies out there that make fuel nonlaunderable and that they could be introduced almost immediately. We understand that one of these has been introduced successfully in Brazil and has reduced their cross-border smuggling by hundreds of millions, or whatever currency is used in that country. There appear to be products out there. Are you saying you may be prepared to test some of those products, or is it your own product that you will test in March?

Pat Curtis: No. Mike has already mentioned that formally we have put out an expression of interest European-wide to see what is out there.

Q56 Ian Paisley: That went out in 2009?

Pat Curtis: Yes.

Q57 Ian Paisley: It is now 2011.

Pat Curtis: Yes, 100%, and I am aware of the product that you are talking about. I cannot apologise but I do apologise at the same time for saying that it takes a long time to look at what is out there, because we have to get approval. It would be a very costly exercise if the Department made a decision to introduce whatever marker it was, it turned out to be effective but somebody defeated it in six months’ time.

Q58 Ian Paisley: Is it possible to pilot this stuff?

Pat Curtis: This is currently being piloted. As to the marker you are talking about, we are in phase 9 after exchanging information back and forth, because we have found strange quirks in it. For example, for one marker that passed many of the known laundering techniques we suddenly found that it deteriorated if it was kept in plastic containers. If you put it in an IBC the plastic affected what I call a DNS dye marker. It takes a while for chemists to work that out. We also have a sub-group on markers from the cross-border meeting, which I chair. We had our fourth joint meeting with the State Laboratory from Dublin, the LGC in Headington, the Revenue Commissioners and myself. We do the package together; we share the whole decision; we divide up the research. They are carrying out some of the research into the markers that have been introduced to us. Our LGC also carries out some research. We have opened the facility for people to come out with our vehicles and see what it is we do and what equipment we have. We are looking very closely at it. I respectfully say that if you know some of the companies involved they will tell you that they are working with us on a weekly basis.

Q59 Ian Paisley: What could this Committee do by way of a recommendation that would help you make progress and get to the point you want to get to? Ultimately, we will have to make recommendations. What should we recommend? As to what you are doing, from a technological point of view, are there things we could recommend that would assist you and give you muscle to achieve the goals that you have outlined to us?

Pat Curtis: If I am being candid and honest at this stage, it is still an early stage for us. I know there is frustration that it may take a year or two years to come out, which is why we are actively looking at the development of detection techniques at the road as a stopgap and improving the existing marker. There will come a stage very soon, when we get in all the foreign expressions of interest and are coming to a solution, when we may come to the Committee and ask for support for this because we need all the help we can get to deliver this. That is one of the reasons why we went to the other Member States to see whether they had chemists so we could spread the technological research and we were not blinkered about what we thought was on the market in competition with us. There could be another item out there in the market that will work effectively. We want to be really, really sure that when we make a decision it will be effective for at least a reasonable period.

Q60 David Simpson: As a point of clarification, under the current process if you take a sample of diesel how quickly do you get the results?

Pat Curtis: We would have the results within three minutes.

Q61 Dr McDonnell: I raise a technical point. Mixing, stretching or laundering fuel generally require those who are doing them to have a certain amount of equipment and technical knowledge and to change their methods constantly to stay ahead of whatever counter-measures you may have. Do you believe you have enough technological resources to stay ahead, or are you struggling? Are they getting ahead in the technology race?

Pat Curtis: The big issue here is the fact that nobody knows what is in the market and how effective the different types of solvent are. Until we make the detection we are not in a position to look at the whole market globally and say, "All the product here is of interest to us." We will always be on the hind step of somebody who comes across something, on Google or whatever, and introduces it into the market until we make the detection. What we are doing now, which has been quite effective to date, is to look at the low-grade technical research. I classify myself as being at that level because I am not a scientist. At that level you ask the most mundane, simple question which, like the piece of paper I mentioned, sometimes produces more effective results than a high technological solution. At the same time, we recognised that we needed to move from the Local Government Chemist solely, which is why we have introduced the State Laboratory as a joint working group. If we could introduce more chemists from different Member States we would do it. I may not be as skilled as is needed to answer that question 100%.

Q62 Dr McDonnell: The next question is a corollary of that and may also be difficult to answer. To what extent do you feel you can win with technology? Do you feel that the expense of the technology of developing all the work you are talking about, is cost-effective? In other words, do you get enough revenue in to pay for it?

Mike Norgrove: Whatever strategy we follow has to be multi-faceted. There is no silver bullet in this. The criminal investigation, which generally is a relatively expensive technique, is one that has particular outputs and so on. That in itself is not sufficient. I need to have perhaps boys and girls to be out on the road testing fuel day in, day out, seeing what is going on and finding out what the criminality is day to day. Equally, my people who are making the legislation with you, setting the policies and so on, have got their own job to do to try to close as many loopholes as possible. Therefore, a strategy may have a dozen different facets. Each in itself is not sufficient but each is necessary. Therefore, the techniques we use are more than paying for themselves, especially some of the recent innovations that Pat has come up with, even selling some of the product that we have come across.

Pat Curtis: The techniques that we are currently using are extremely cost-effective. They also have to be cost-effective because they have to be effective on the roadside. We cannot set up a laboratory in a building and work there. We have to do some balancing. To give an example, in the solid extraction test we recognise that launderers can launder the product very efficiently. The teams created a miniature laundering plant that laundered the product even more efficiently than the launderers can, and what we launder out shows us what they have left behind, and we make the detection based on that. The question is: why can they not replicate that? While the test for us may cost £2 or £3, to do it in commercial quantities is not cost-effective for the launderer. That is one of the levels at which we pitch our detection techniques. That is a relatively recent innovation.

Q63 Dr McDonnell: It has been suggested to us that the problem with fuel laundering could be dramatically reduced or eliminated if there was no such thing as red diesel or green diesel, and farmers and others were allowed a rebate system, a bit like the VAT system where you claim back money. Would that system work, and how effective do you estimate it would be?

Mike Norgrove: You can imagine that we have looked at every possible solution to this. We live in a crazy world where we mark petrol and diesel. It is not where we would ideally want to be. So of course we have looked at this from time to time. The Danes once introduced this; our Irish colleagues quite recently were interested in the idea; but every time we have gone into it in great depth we think it opens up more opportunities for fraud than it would close. You will know as well as I about VAT carousel fraud, which is essentially a repayment fraud. That is now happening on income tax self-assessment and tax credits. These are all repayment frauds where effectively we are giving money to people who are not entitled to it. This is one of the subjects that we discuss with our Irish colleagues south of the border. The current system seems like the worst of all systems except for all the alternatives, but we are always looking for better.

Chair: Like democracy.

Mike Norgrove: I can give you a longer answer. I gave my Irish opposite number, Josephine Feehily, the Chairman of the Office of the Revenue Commissioners, a four-page brief as to why we think this cannot work and why it would disadvantage small farmers, and why not only would it be open to abuse by fraud but it would be expensive to administer. I would love it to be a solution, but we do not believe it is one.

Q64 Mr Benton: What effect has the licensing of petrol stations had on the level of non-duty fuel sales?

John Whiting: Do you mean the petroleum licence?

Mr Benton: Yes.

John Whiting: This is the issue that we are trying to address with the Assembly, in that in the past we have referred to them filling stations where we have discovered laundered fuel being sold. There is not an issue with diesel in respect of the petroleum licence, so the councils have been reluctant to revoke the petroleum licence because it is a problem that relates to diesel. That is why at our request the Justice Minister, David Ford, has written to Arlene Foster, the Minister responsible for the Department of Enterprise, Trade and Industry, seeking a change in the legislation solely in Northern Ireland. This is a particular issue in Northern Ireland and therefore we seek a particular solution. Therefore, if we can get an extension of that legislation to include diesel, if a filling station is found to be selling laundered or smuggled diesel we can then refer it to the councils and seek revocation.

Another issue is that we would perhaps seek for the licence to relate to the premises rather than the individual, which would prevent a relation or friend taking on the licence and carrying on the business in the guise of a puppet. These are areas which we are trying to address. We have quoted some big figures relating to these problems. A lot of the problem now does not relate to smuggling; I bought petrol in the Republic of Ireland last week and it was almost as expensive as that which I buy in Tesco in Northern Ireland. Our problems now are mainly around laundering and mixing.

Q65 Dr McDonnell: Yet there is diesel advertised somewhere just South of the border at 1.20 a litre and North of the border it is 1.40 or 1.38.

Mike Norgrove: That is a suspiciously low figure. I would not want to cast aspersions on the retailer, but that is a very low figure.

Dr McDonnell: It is a reasonable figure in terms of the exchange rate, because £1.20 is roughly €1.40. Our diesel is roughly a quid pro quo.

Q66 Lady Hermon: Surely, there cannot be any good reason why Arlene Foster’s Department would even hesitate to extend the legislation on petrol to include diesel. Are you hopeful? Are you smiling that you are not hopeful? Why is that?

John Whiting: I am smiling only because we have been through a process where that request was made and the Department said, "This would put us out of step with the rest of the UK."

Q67 Lady Hermon: What is devolution about if not to put us out of step with the rest of the UK?

John Whiting: That was precisely my point.

Q68 Lady Hermon: Are we able to see a copy of that letter from the Department? I am very disappointed.

John Whiting: I have not seen a copy of the letter; it is simply that the Department of Justice has advised me.

Lady Hermon: I am shocked.

John Whiting: But David Ford has recently gone back to them, so we are hopeful. I have asked that David Ford presses on that, because clearly it is an important issue for us.

Lady Hermon: We will all write to David Ford.

Chair: We may try to take evidence from certain Ministers in Northern Ireland. Thank you for the evidence so far. I also thank those in the public gallery for attending, but perhaps they would now vacate the room.

Prepared 27th September 2011