(Except clauses 1, 3, 7, 8, 12, 20, 21, 25, 67 and 81 to 84, schedules 1, 18, 22 and 23, and new clauses relating to microgeneration) - Clause 6

Part of Finance Bill – in a Public Bill Committee at 1:15 pm on 10 May 2007.

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Photo of John Healey John Healey The Financial Secretary to the Treasury 1:15, 10 May 2007

Welcome back to our proceedings, Mr. Gale.

The hon. Member for South-East Cornwall made a reflective contribution. He mentioned a concern that I am well aware of because I see the Tobacco Alliance every year in the run-up to the Budget, but which no one else has mentioned—the impact of smuggling and bootlegging on independent tobacconists and corner shops. I am conscious of how they are profoundly undermined by illegal tobacco and bootleg sales. Nevertheless, part of the pressure on them is a result of our shopping habits and the change in the way we lead our lives. It is not due just to tobacco duty or the level of smuggling.

The hon. Gentleman quoted a number of statistics that we published alongside the pre-Budget report just before Christmas on the level of the illegal market in the UK. The mid-point of the illicit market in 2004-05—he was not certain about this—was 14 per cent., which is down from 21 per cent. four years earlier when we launched our anti-tobacco smuggling strategy. If we had not taken action, it would probably have risen to 36 per cent.

Members are right to question the Government on whether the measures that we are taking are sufficient, whether they are having the necessary impact and how they are working—that applies particularly to the new ones. The hon. Gentleman called for legally enforceable sanctions and tough penalties in voluntary memorandums of understanding with UK tobacco manufacturers. I think that he served on last year’s Finance Bill. It might have slipped his mind, but at that stage we legislated for a framework that gave the Government the ability to raise penalties of up to £5 million on tobacco companies that do not follow the agreements and obligations when controlling their supply chains. I am glad to say that we have not had cause to use those yet, but we will not hesitate to invoke those penalties if necessary. I am sure that he accepts that they could be an important weapon in our armoury.

The hon. Gentleman is right also about counterfeits being a growing problem. According to the latest figures, in 2005-06, 51 per cent. of large-scale seizures made by HMRC were of counterfeits. I continue to believe, and to argue, that the UK’s memorandums of understanding are better than that struck between the EU and Philip Morris, because the latter does not cover counterfeit tobacco and cigarettes.

I shall turn briefly to the point made by the hon. Member for Ludlow. If he is a lifelong anti-smoking crusader, I congratulate him—this must be an important year for him. I am sure that he is pleased at the prospect of the smoking ban in July.