Alcohol fraud strategy still lacking

The issue of alcohol fraud has gained momentum since being raised at a Westminster Hall debate by Paul Rowen MP in January 2010.

During the debate Mr Rowen exposed the fact that alcohol fraud is costing the Treasury an estimated £1 billion a year. On beer alone over £700m (around 7-12% of the total UK market) is lost in excise and VAT a year.

In recent meetings the Exchequer Secretary, Sarah McCarthy-Fry MP has stated that she would be considering some of the proposals raised during the debate such as establishing a wholesaler registration system. The Minister also agreed that the issue of alcohol fraud was one that required more active publicity and agreed to take forward a more targeted publicity campaign to highlight efforts to tackle the fraud.

Since the debate, the National Audit Office have said that they have become increasingly concerned about the effectiveness of HMRC’s Alcohol Fraud Strategy and noted the fraud’s links with serious organised crime. Due to the issue’s seriousness they have decided to carry out an investigation into the strategy, due to be published later this year. They were not aware of the costs and size of alcohol fraud before the debate.

Mr Rowen said: “It is good that the Government is taking the issue of alcohol fraud more seriously. Clearly however, far more still needs to be done and failings in the Government’s strategy are becoming apparent.

Given the state of public finances, the Government can ill afford such revenue losses and tackling illicit alcohol is an important part of confronting the wider impact on public health caused by the availability of cheap alcohol. More should also be done to protect legitimate traders that are being harmed by illicit alcohol chains.

There are many challenges ahead that the Government needs to tackle. Because of the World Cup there will be a significant rise in fraudulent activity as the market for alcohol will increase to coincide with the event. The Government should license the wholesale point of the alcohol supply chain and listen more to the practical recommendations of industry bodies such as the Federation of Wholesale Distributors which were raised during the debate.”