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Baroness Farrington of Ribbleton: My Lords, is there any other example of a private sector undertaking paying someone to take over at a time when there are

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contracts worth £18.3 million on the order books and when taxpayers have made millions of pounds worth of investment in an outstanding project? Does the Minister not accept that there appears to be one government law when it comes to private individuals protecting their interests, but that the Government pay scant regard to the interests of the taxpayers of this country?

Lord Chesham: My Lords, I have already pointed out that this arrangement is producing substantial savings to the taxpayer, and that is why it has been done. As regards the other questions, we believe that privatisation is right in this instance and there are substantial savings for the taxpayer.

Lord Rea: My Lords, can the noble Lord assure us that the new private sector management of Assessment Services Limited will continue to support the current lines of research, some of which may have no immediate pay-off but may lead to discoveries of fundamental importance in future years?

Lord Chesham: My Lords, yes. We believe that the company which has now taken over NEL will continue to provide the services required by the Government. It is a highly reputable company and we have every reason to believe that we shall get the required services from it.

Lord Peston: My Lords, noble Lords opposite have been highly supportive of the answers which have been given, so I assume that they understand what has been said.

A Noble Lord: Never!

Lord Peston: My Lords, can the Minister explain how the National Engineering Laboratory is an asset which complements the assets of the people who are obtaining it and yet the taxpayer gets no net financial benefit? Speaking in an ordinary common sense way, that makes no sense to me whatever. I should have thought that we could at the very least get a net zero outcome. If one or two of us had been involved we might have made some money for the taxpayer. Is the noble Lord aware how absurd his answers sound to ordinary lay people?

Lord Chesham: My Lords, I do not think that I would ever refer to the noble Lord as an ordinary lay person. The point is that if through privatisation we reduce the taxpayer's expenditure in the future, there is a net benefit to the taxpayer from such action.

Alcoholic Drinks: Imports from Europe

3 p.m.

Lord Boyd-Carpenter asked Her Majesty's Government:

    Whether they can give an estimate of the value of business lost to the brewing industry and to British vendors of alcoholic drinks as a result of the freedom now given to travellers in Europe to import duty free unlimited quantities of drinks for their own consumption.

Lord Mackay of Ardbrecknish: My Lords, Customs estimates that beer imports are equivalent to about

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£130 million although the brewing industry puts the figure at nearer £367 million. Customs and the UK industry estimate that in 1994 the value of legitimate duty-paid personal imports alcoholic drinks was equivalent to between 3 and 5 per cent. of the UK market which at UK retail prices would amount to between £646 million and £1,290 million.

Lord Boyd-Carpenter: My Lords, I thank my noble friend for that very revealing Answer, but can he say whether our European neighbours, particularly France and Germany, allow similar concessions?

Lord Mackay of Ardbrecknish: My Lords, as far as I understand it, single market rules apply to all members of the European Community. That is why people from certain European countries come in considerable numbers to parts of this country to shop. That is why people from the Republic of Ireland visit the North of Ireland and Wales where they can buy a number of items, including alcoholic beverages, on which the duty is lower in this country.

Baroness Elles: My Lords, does my noble friend agree that the trouble is that a great many British citizens cross the Channel in order to buy beer in Calais and bring it back here to sell, which is quite contrary to what is allowed under Community law?

Lord Mackay of Ardbrecknish: My Lords, I am grateful to my noble friend for raising that point which allows me to say that if anyone is bringing back alcoholic drinks simply in order to sell them, they are committing an offence. Since the start of the single market, Customs has detected over 5,800 offences involving something like £11 million of revenue. There have been almost 800 prosecutions.

Lord Peston: My Lords, I am afraid that it is me again--

Noble Lords: Hear, hear!

Lord Peston: --on this subject of the utmost gravity--

Noble Lords: Oh!

Lord Peston: My Lords, the one thing that I missed in the noble Lord's answer was the British Government's view of this matter. It is not a question of criticising the Community or those consumers who wish to buy in the cheapest market. Does the Minister agree that the brewing industry and the alcohol industry generally could argue that they are subject to a modicum of unfair competition? That is the essence of the matter. If individual countries fix their own excise duties, market distortions arise. One would like to know whether the Government have a view on that. It seems to me that the £367 million quoted by the brewing industry is quite a large sum of money. Do the Government think that they will be able to do anything about it in due course? Forgetting the usual answer of "We can't talk about the Budget at this point", and sticking to matters of principle, what line will the Government be taking in the longer run than next week?

Lord Mackay of Ardbrecknish: My Lords, in the longer run than next week, which keeps me on fairly

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safe ground, as I said in my original Answer, the position is that when one considers the single market as a whole there are pluses and minuses to having different rates of duty and different excise rates. However, we believe as a matter of principle that questions of taxation are for individual countries to decide and that they come clearly within what we believe is a matter of subsidiarity. The principle upon which we operate is that it is up to each country to decide on its own levels of duty and taxation.

Lord Dixon-Smith: My Lords, accepting that the last answer is correct, does my noble friend agree that current levels of duty in this country (and their disparity when compared with levels elsewhere in the EC) are increasingly, unfortunately, attracting criminal elements? Are we in danger of seeing once again the old-fashioned revenuers trying to come back as smugglers?

Lord Mackay of Ardbrecknish: My Lords, I do not believe that the position in regard to smuggling is quite that depicted in Treasure Island or other similar yarns. However, perhaps I may advise my noble friend that, as I mentioned, not only is there some distortion between ourselves and the French, but there is a distortion the other way between ourselves and the Southern Irish. We zero-rate many items, including children's clothing, which means that many people on the Continent find it advantageous to come here to shop. My noble friend should be careful about suggesting that we come to a common position. We might adopt the French position, but we might equally adopt that of the Danes, the Swedes or the Finns whose taxation on alcohol is very much higher than ours.

Lord Avebury: My Lords, does the Minister accept that his comparison of the situation with regard to alcohol with that of people coming here to shop for clothes is misleading because those who travel here from France or Germany to buy things from Marks & Spencer do not do so with a view to reselling those items in their own country whereas, as was confirmed by the answer which informed us that 5,800 offences have been detected involving a loss of revenue of £11 million, there are many other examples of people evading the rules which prohibit the resale of alcohol? Is not the Minister aware that the situation will become worse as a result of reductions in the number of Customs staff at ports and that very large sums of money, amounting to hundreds of millions of pounds, are being lost to the taxpayer?

Lord Mackay of Ardbrecknish: My Lords, I thought that I had already answered the question about people importing products for resale. It is clearly illegal and we are taking steps against it. I have no doubt that our European friends are doing likewise when the slope is in the other direction, so to speak. There will inevitably be a marginal loss to the taxpayer, but before one computes the loss to the whole of the UK industry, one must bear in mind that many of the items imported

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are spirits and, to a lesser extent, beers and that the spirit concerned tends to be whisky, which is manufactured in this country.

Lord Kennet: My Lords, the noble Lord speaks airily of "distortions", but does he agree that the argument tends towards the establishment of an excise union on top of the present Customs union?

Lord Mackay of Ardbrecknish: My Lords, I think that I have already answered that question. We believe firmly that matters of taxation are for individual countries to determine. They are not matters to be determined by the European Union.

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