Northern Ireland Affairs Committee

Session 2002-2003

27th  November 2002

The Impact in Northern Ireland of Cross-border Road Fuel Price Differentials: Three Years On

Cross-border fuel duty differentials are sustaining terrorism

and organised crime in Northern Ireland

The Northern Ireland Affairs Committee today published its First Report on the Impact in Northern Ireland of Cross-border Road Fuel Price Differentials: Three Years On (HC 105-I).

Commenting on publication, Committee Chairman, Michael Mates, MP said:

"Road fuel price differentials are placing an increasing burden on the people of Northern Ireland .  Fuel smuggling and laundering are at unprecedented levels. 

The situation in Northern Ireland is  unlike anywhere else in the UK.    Northern Ireland has a land border with another European country and a difficult policing situation.   These factors combine to make this an attractive area for organised criminals and paramilitaries to operate in.  

One of the fuel laundering plants closed down by H M Customs and Excise earlier this year had the potential capacity to launder in excess of 150,00 litres of fuel per week.  This equates to duty evasion of approximately £4 million a year from one plant alone. 

Customs are doing all that they can to stem the flow of illegal fuel into Northern Ireland.    An increase in deliveries of legitimate fuel into Northern Ireland, year on year, for the first time since 1994 is one measure of their success but there is still much more to do. Customs are still facing major challenges,  in their attempts to eradicate fuel smuggling and laundering by increasingly sophisticated criminal operations.  

In order to assist Customs and the enforcement agencies in their fight against fuel duty evasion, we believe that the Government should implement a separate lower rate of duty in Northern Ireland  immediately.  This would almost entirely remove the financial incentive to smuggle fuel. We also consider that the introduction of a new more comprehensive licensing regime for premises selling fuel would give Customs the necessary powers to cut off the supply of illicit fuel to the market.

The 'unique and special' situation in Northern Ireland should be acknowledged by the Government in seeking solutions that protect and enhance the quality of life for the citizens of Northern Ireland.   Further, we believe that action to address these circumstances could benefit not only the communities and economy of Northern Ireland, but the Exchequer as well.  We are therefore calling on the Government to carry out a full cost-benefit analysis of the effects of the differential on Northern Ireland, as a prelude to setting a separate, lower, rate of fuel duty for Northern Ireland which would go some way towards mitigating the unique problems which have arisen."