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 shall happily do that, but first I shall address the points made by the hon. Member for Christchurch. I am grateful to the right hon. Member for Fylde for raising that issue again. He did raise it on the Floor of the House and I will deal with it in detail in a moment.
The Government are determined to introduce to distributors of rebated fuels a system of approval that I do not believe is disproportionately burdensome on the industry. The system will require distributors to tell us about the supplies that they make and to take reasonable steps to check that their supplies of rebated fuels are made only to customers who intend to put them to an approved use. Only those trading in these fuels will need to be approved, and end users of the oils will not be affected. The scheme will, therefore, radically improve our control over the distribution of rebated fuels and will provide a regular flow of information about their distribution and use, which will help Customs to improve its intelligence, its ability
to identify potential misuse and its ability to target the use of anti-fraud resources effectively.
We consulted the industry closely on the introduction of the scheme. The hon. Member for Christchurch said ''You can target it, but you don't accept everything that it says.'' No, we do not accept everything that it says. We consulted it, and we met it some of the way. Some of what it had to say had force and we accepted the arguments; other arguments we could not accept. I have placed in the House copies of the regulatory impact assessment and a summary of the responses received to the consultation. I do not believe that, if the hon. Gentleman reflects on those, he will find our response wanting.
Is the estimated revenue yield from the strategy realistic? The answer is yes but I would say that, wouldn't I? The reason why I say that the estimate is based on sound analysis and cautious assumptions is that, in 2000, mainland diesel fraud accounted for 4 per cent. of the market and cost at least £450 million. We estimated that, with no action on our part, the fraud would double by 2005–06. That was the basis of the revenue projections in the pre-Budget report. The strategy announced in the Budget will radically enhance our capacity to control the oils distribution network, making it far harder for fraudsters to get hold of rebated fuels and misuse them. We estimate that this strategy will reduce the market share of illicit fuel to 2 per cent. by 2005–06. It is the impact of this estimate against the previous revenue base line that has been scored in the Budget projections. Hence the saving of £550 million by 2005.