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House of Lords

Tuesday, 13th March 2001.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Hereford.

National Assembly for Wales: Legislation

Lord Roberts of Conwy asked Her Majesty's Government:

    When the draft protocol between them and the National Assembly for Wales relating to legislation and published in February 2000 is to be finalised.

Baroness Farrington of Ribbleton: My Lords, the protocol was drafted before we had the experience of the legislative process in the previous Session. It needs some amendment in the light of that experience, and discussions are taking place between the Secretary of State for Wales and the First Minister. Although the protocol has not been finalised, there has been excellent co-operation between the Assembly and the UK Government on primary legislation relating to Wales.

Lord Roberts of Conwy: My Lords, I am grateful to the Minister for that reply. There has been considerable delay, the draft protocol having been published more than a year ago. Can the Minister assure the House that that has nothing to do with the fact that certain Members of the Assembly want to see more primary legislative powers transferred to them, particularly in relation to devolved issues? Can she further assure the House that the delay has nothing to do with any failure by the Westminster Parliament to meet the Assembly's legislative needs?

Baroness Farrington of Ribbleton: My Lords, as the noble Lord is aware, the Westminster Parliament has not failed to meet the needs of the Assembly, as is shown by the valuable contributions which he made to the Special Educational Needs and Disability Bill and the positive attitude of Members of your Lordships' House towards the Children's Commissioner for Wales Bill.

The question of whether individual Members of the Assembly would like powers over primary legislation is not in any way intervening. There are no major problems. As noble Lords will be aware, it often takes longer to deal with the details of drafting than to negotiate around major differences of opinion and view.

Lord Thomas of Gresford: My Lords, in the light of the happy relationship between the Liberal Democrats and Labour in Wales, does the Minister agree that the primary legislation passed in this Parliament relating to Wales should, as a matter of constitutional

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convention, reflect the agreed policy of the National Assembly for Wales? Does she appreciate the problems which will otherwise arise should the Welsh executive be of a different political colour from the government here?

Baroness Farrington of Ribbleton: My Lords, I should dread to think that the noble Lord, Lord Thomas of Gresford, did not believe that all groups within your Lordships' House have a positive relationship in approaching legislation and policy. The Assembly will consider which legislation it feels to be appropriate. There will be no question of there being a difference of opinion between the Westminster Government and the Welsh Assembly in legislation put forward in Westminster.

Excise Fraud: Scotch Whisky

2.40 p.m.

Lord Campbell of Croy asked Her Majesty's Government:

    Whether large amounts of Scotch whisky have been taken from bond, without payment of tax, and fraudulently delivered to the home market instead of being exported.

Lord McIntosh of Haringey: My Lords, losses of excise duty on spirits during the period 1994-98 were reported by the National Audit Office on 9th February. It is not possible to say how much whisky was involved without research involving disproportionate cost.

Lord Campbell of Croy: My Lords, I am grateful to the Minister for that Answer. When the subject was previously raised at Question Time, the Government indicated that additional special investigators had been assigned to the case. Can the Minister confirm that the report of the National Audit Office indicated that the criminal practice continues, involving much falsification of documents?

Lord McIntosh of Haringey: My Lords, the report of the National Audit Office to Parliament on 9th February did indeed identify large-scale fraud and a weakness in control within Customs and Excise, which made the fraud possible. The weakness involved Customs and Excise officials allowing spirits to continue leaving the bonded warehouses in the hope of following them up to find the ultimate destination. That did not work as well as it ought to have done. As a result, there were substantial losses.

However, that practice was stopped in 1998 and physical controls were reintroduced at bonded warehouses. When the matter was reported to Ministers in the middle of last year, the Paymaster

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General took immediate action, reporting to the National Audit Office and commissioning an independent report on the matter.

Lord Elton: My Lords, if the Government do not know how much whisky has gone astray, how can they say that the cost of discovering how much was involved is disproportionate?

Lord McIntosh of Haringey: My Lords, I did not make myself clear. The Government know how much spirit has gone astray. The only way of identifying what proportion of that is whisky as opposed to gin and vodka would be if the individual administrative documents were analysed separately. That is the exercise which would be too costly to undertake.

Lord Tomlinson: My Lords, is there not a liability on the freight forwarder in relation to the documentation? Is not the freight forwarder required to have insurance against the likelihood of this type of fraud? What steps have been taken against the freight forwarders involved in unloading these spirits on to the home market in order to recover the duty that has been lost to Her Majesty's Treasury?

Lord McIntosh of Haringey: My Lords, this is not an issue of freight forwarders. The owners of the spirits place their product in the bonded warehouses owned by warehouse-keepers. The owners are entitled to take the spirits out of the bonded warehouse. It is the responsibility of Customs and Excise to ensure either that they are exported so that no duty is paid, or, if they are to be used in the home market, that duty is paid. That is the process over which Customs and Excise have failed to exercise adequate control.

Lord Campbell of Croy: My Lords, does the Minister agree that the distilling industry is not at fault in this criminal practice? It is likely to be gangs of criminals formed especially for the purpose who are carrying it out.

Lord McIntosh of Haringey: My Lords, that is certainly the case. It is not the distilling industry which is responsible. As the noble Lord, Lord Campbell of Croy, rightly says, these are gangs of criminals. I am not minimising the extent to which matters have gone wrong, but there have been 97 convictions and 300 years of prison sentences.

Lord Pearson of Rannoch: My Lords, can the Minister give the value of the spirits that have gone missing? How much is actually involved in the overall racket?

Lord McIntosh of Haringey: My Lords, the National Audit Office's report of 9th February gives a figure of £668 million. That is a very large figure. I should add that even that large figure represents only one per cent of alcohol tax in this country.

Lord Newby: My Lords, one of the consequences of the large loss of revenue is that a decision has been

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taken to transfer responsibility for the Customs and Excise prosecution service to the Attorney-General. Can the Minister give us the rationale for that decision?

Lord McIntosh of Haringey: My Lords, as the noble Lord knows, the Attorney-General has published on this matter within the past 24 hours. Although there will still be a prosecution service within Customs and Excise, it will be subject to independent scrutiny. The Attorney-General would confirm that that decision was not taken simply on the basis of the fraud--the subject of this Question--but on wider considerations.


2.46 p.m.

Lord Blaker asked Her Majesty's Government:

    What is their current policy towards Zimbabwe.

Baroness Ramsay of Cartvale: My Lords, we deplore the breakdown of law and order in Zimbabwe and state harassment of the media, the judiciary and members of the Opposition. We are working with the international community to maintain pressure on the Zimbabwe Government to restore the rule of law and implement macro-economic reform.

In view of the deteriorating situation, my right honourable friend the Foreign Secretary announced on 1st March the withdrawal of the British Military Advisory and Training Team from Harare by the end of March. Your Lordships will recall that a national arms embargo has been in place since last May.

Lord Blaker: My Lords, I thank the Minister for her reply. In addition to the problems which the Minister mentioned, is not the economy in a terrible state and do not breaches of human rights occur every day? Does not the situation in Zimbabwe endanger the stability of the whole of Southern Africa? Furthermore, does not the matter call for international remedy? What are the United Nations, the Commonwealth, the European Union, the Group of Eight and the Southern Africa Development Community doing about the matter? We should bear in mind that the United Kingdom is a member of four of those five organisations.

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