The problem of legal and illegal cross-Channel imports is that the duty imbalance between the UK and the Continent gives a clear advantage to French breweries and to the retailers who specialise in this market. The biggest volumes are handled by businesses set up to exploit the duty differentials, and are predominantly huge supermarkets (mostly French) and the well-publicised wholesalers who openly supply smugglers for their own personal gain.

  The current powers for Customs within the open borders of the European Union are largely limited to catching the smugglers re-selling the goods they import, because the re-selling is the crime and not the importation which could possibly be for their own consumption. The rewards for selling illegally imported alcohol in the UK have attracted the criminal element into alcohol distribution. As I understand it, we have licensing laws in this country to ensure that alcohol is distributed by responsible individuals. However, the government is causing and, by its actions, actively encouraging, the criminal element to take this over. This is dangerous, frightening to the businesses which are being "forced" to buy from the criminals, and undesirable from the point of view of the responsible attitude we all wish to have towards alcohol.

  Currently 1.5 million pints of beer are imported either legally or illegally from Calais every day. This equates to 550 million pints of beer a year. To give some idea of the scale of this, it exceeds the combined production of 30 out of the 33 independent family brewery companies in this country, such as Fuller's, Young's, Hall & Woodhouse, Gales, Thwaites, Shepherd Neame etc. This is a massive scale of activity and far exceeds the original forecasts.

  Unfortunately, the figure is growing and not receding, and is really hurting brewers, off-licences, bars, restaurants, pubs and other retailers across the country and most of these retail businesses are small family-run businesses such as tenanted pubs. This results in the export of many thousands of jobs and wealth-creation opportunities to France. All of this imported beer should be brewed in British breweries (most major foreign lagers are brewed under licence in this country) and distributed and retailed through British run businesses.

  As I am sure you are aware, in recent years there have been closures of many breweries owned by the larger brewers but, in addition, family companies have been forced out of brewing such as Morrell's (Oxford), Morlands (Abingdon), Greenalls (Warrington), Gibbs Mew (Salisbury), Maclays (Scotland), Mitchells (Lancaster), Eldridge Pope (Dorset), Vaux (Sunderland), Wards (Sheffield), Burtonwood (Cheshire). This has been accompanied by the closure of thousands of pubs across the country and, while cross-Channel border trading is not the only cause of this, it is a very major contributor. The rate of closures shows no sign of abating and will only do so if action is taken without delay to preserve our industry.

  The solution to both the Customs smuggling problem and the effect on small honest retail businesses and the brewers across the country is simple. The duty differentials between the UK and the continent must be reduced. It would not be necessary to entirely eliminate the differential, but it must be reduced to the point where the profits are not worth the risk and the effort.

  The loss of revenue to the government would be more than made up in the second year by the taxes paid by the increased wealth generation caused by increased employment, and taxes on higher profits. This is the result of work done on the Treasury's own economic model, and the findings have been presented to the government in the past although we would be happy to arrange a presentation for your Committee if this would be of interest. The outcome would be greater fairness to all, less unemployment, less benefits paid out by the government to the unemployed, almost no smuggling, the abolition of the criminal element from the alcohol distribution chain and a very popular move.

  Whether or not we join the Euro, we are part of the European Union and will almost certainly stay in the EU. In the past we have as a country called for the reduction of trade barriers between member states, and yet we have effectively erected a barrier that discriminates against UK retailers and manufacturers. While I understand that we may as a nation wish to retain our sovereignty, independence and our individuality in Europe, the preservation of differentials that only harm UK interests cannot be worth fighting for.

8 September 1999