Clause 6 - Regulating trade in rebated heavy oil etc
Finance Bill
6:00 pm
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
I certainly was intending to speak to the clause, and I am delighted to have caught your eye, Mr. Benton. I prefaced my intention to speak to it in my earlier reference to concerns about red diesel. The matter is something that would give any responsible person charged with consideration of the issues a great deal to think about, and certainly something to say.
I am bound to say that, having heard the hon. Member for Christchurch, I had rather hoped to have a more constructive and supportive response in tackling what is a very real problem: serious and increasing fraud involving the misuse of rebated fuel oils. All parties must take that issue seriously. I know that many right hon. and hon. Members sitting on
Select Committees that have an interest in the matter certainly take it seriously, and we do as a Government.
In the calendar year 2000, mainland diesel fraud accounted for 4 per cent. of the market and cost at least £450 million. We estimate that, with no action, that fraud will have doubled by 2005–06. At present, there is little or no control over the distribution network for red diesel and kerosene after they pass the duty point. That enables fraudsters to purchase those fuels as if they were to be used for approved purposes and then misuse them as road fuel with relatively little fear of detection. Customs has increased its volume of intelligence-based investigations into oils fraud, and we have seen a tenfold improvement in detection rates as a result. I commend Customs and Excise for its vigour, but the fact of the matter is that we lack the basic information on the distribution of rebated fuels that would help us to target our resources in Customs and Excise investigations more effectively.
Unless we significantly tighten the control regime for rebated fuels, diesel fraud will continue to grow rapidly, with serious implications for revenues, the competitiveness of legitimate retailers and hauliers and for the environment. All parties have urged us to tackle that problem. That is why the comprehensive strategy announced in the Budget is designed to reverse the growth in oils fraud, reduce the illicit market share to 2 per cent. and secure £550 million against the pre-Budget revenue baseline by 2004–05. Instead of filling the fraudsters' pockets, that money will assist in implementing our public policy proposals.