Oil Companies: Northern Ireland

– in the House of Lords at 2:59 pm on 7th February 2006.

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Photo of Earl Attlee Earl Attlee Conservative 2:59 pm, 7th February 2006

My Lords, on behalf of my noble friend Lord Glentoran and at his request, I beg leave to ask the Government the following Question. In doing so, I remind the House of my interest as president of the Heavy Transport Association.

The Question was as follows:

To ask Her Majesty's Government what assessment they have made of the likely impact on the local economy and tax revenues of the proposed withdrawal of major oil companies from Northern Ireland.

Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office, Deputy Leader of the House of Lords

My Lords, the major oil companies have not withdrawn from Northern Ireland. My understanding is that for commercial reasons there has been a change of ownership in the petrol market, with the major oil companies divesting themselves of their retail assets; that is, the forecourts. The change of ownership is not thought to have had a material impact on the key economic variables that pertain to that sector or the economy as a whole.

Photo of Earl Attlee Earl Attlee Conservative

My Lords, I thank the Minister for that reply, but I think that he will understand the reasons for the petrol companies' decision. Does he recall that the fuel policy I introduced on 17 January last year provided that all heavy goods vehicles leaving Great Britain should do so with a nearly full tank of fuel? That policy also facilitates harmonising the rate of duty on road fuels between the north and the south of Ireland. Would that not do a great deal to alleviate the current difficulties?

Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office, Deputy Leader of the House of Lords

My Lords, I recall the innovative suggestion that the noble Earl made at that time and, indeed, the response from my noble friend Lord Davies of Oldham to bring the matter to the attention of Her Majesty's Revenue and Customs. On tax harmonisation, the fact is that we have a UK tax system designed by the Treasury, and there are no proposals to change it.

Photo of Lord Hylton Lord Hylton Crossbench

My Lords, has the Minister noticed in the course of his travels that at present there is hardly a single petrol or diesel outlet left within about 15 miles of the border with the Republic? Is that not due to the lack of harmonisation of tax rates?

Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office, Deputy Leader of the House of Lords

My Lords, there are several factors at play. In less than the past 10 years the supermarkets have moved into petrol retailing. Customers have decided, as indeed any cost-conscious motorist in this country does, that they will not fill up on the motorway. If one is cost-conscious, one moves off the motorway. People have chosen to take advantage of going south to purchase legitimately—it has nothing to do with smuggling. There is bound to be a change in the market. However, there are still some 400 or 500 petrol retail stations in Northern Ireland.

Photo of Lord Smith of Clifton Lord Smith of Clifton Spokesperson in the Lords, Northern Ireland Affairs

My Lords, does the Minister agree that one of the greatest losses of revenue comes from the smuggling activities of some paramilitary organisations across the border and the doctoring of agricultural diesel fuel? Does he agree that, if a blitz was made by Her Majesty's Revenue and Customs on retailing outlets, there would, given the amount of fuel sloshing around, be fairly easy pickings for it? Should it not get on and do that?

Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office, Deputy Leader of the House of Lords

My Lords, the point is well made, but there has been a lot of activity. Last week, for example, the Assets Recovery Agency froze assets worth more than £700,000 from alleged fuel smugglers. Both cases were referred by Her Majesty's Revenue and Customs. Between April 2000 and March 2005, HM Revenue and Customs seized 10 million litres of illicit fuel; disrupted 17 organised crime gangs; dismantled 77 laundering plants; seized more than 4,000 vehicles; and secured 27 convictions for oil fraud. There is a serious issue. If people in Northern Ireland complain subsequently that their engines do not work because someone doctored the fuel with acid and they did not remove the acid before the sale took place, they have only themselves to blame for buying from bucket shops.

Photo of Lord Rogan Lord Rogan UUP

My Lords, the noble Lord, Lord Smith, is correct. Does the Minister agree that the problem could be reduced if more resources were available to HM Revenue and Customs on the ground? A precedent for self-funding has been set by the Assets Recovery Agency, which uses some of the assets recovered to fund itself. Could not that precedent be adopted by HM Revenue and Customs?

Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office, Deputy Leader of the House of Lords

My Lords, I am not being over-defensive. There are serious problems, but they are being addressed. Since 2005, HM Revenue and Customs has increased the number of officers engaged in tackling oil fraud in Northern Ireland from 25 or 26 to more than 160. It has maintained that level of resource since that time. Lessons are being learnt. The Organised Crime Task Force is looking at options for how petrol-licensing powers can be announced. We have to knock the issue on the head; it is a serious problem that must be addressed. It is not all about smuggling, however. There is the issue of cross-border sales and the introduction of supermarkets into retail, which has been an innovation in the past few years but is bound to have distorted the market.

Photo of Lord Laird Lord Laird Crossbench

My Lords, is the noble Lord aware that the major problem, as we see it, is fuel laundering? Despite the fact that three plants were closed down last week, there are still nine plants in south Armagh. One of the plants was owned by a fellow called Michael Carragher, known as the south Armagh sniper, who murdered nine members of the security forces and was given a plant to launder fuel by the IRA, together with a house.

Does the Minister also recognise that there is an environmental problem? On the orders of Slab Murphy, a group of men dumped 45 tonnes of toxic acid, which was used to make 3 million litres of diesel fuel, at Conra wood on 15 January. Is it not about time that the Government clamped down on this multimillion-pound industry, which is distorting the economy of Northern Ireland and is helping the IRA to fund its illegal activities?

Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office, Deputy Leader of the House of Lords

My Lords, I have to presume that those very specific allegations have already been brought to the attention of the authorities.

Photo of Lord Cope of Berkeley Lord Cope of Berkeley Chief Whip, Whips

My Lords, does the Minister think that the noble Lord, Lord Laird, is correct in the assumption behind his remarks that most of the smuggling that HM Revenue and Customs is so vigorously tackling—as it was some years ago as I recall—is IRA-based and that the benefits of the money that should go to the UK taxpayer actually go to fund the paramilitaries?

Photo of Lord Rooker Lord Rooker Minister of State, Northern Ireland Office, The Minister of State, Northern Ireland Office, Deputy Leader of the House of Lords

My Lords, the only thing that I can do on that is refer noble Lords to paragraph 321 of the Independent Monitoring Commission report published last week, which states:

"However, members and former members of PIRA continue to be heavily involved in serious organised crime, including counterfeiting and the smuggling of fuel and tobacco . . . Overall, taking the activity of paramilitary and other organised crime as a whole, there appears to be no diminution in the amount of these illegal goods".

That was published by the IMC last week.