Smuggling in hand-rolled tobacco is "out of control", say the MPs

The Commons Treasury sub-committee says Customs has made some progress in tackling the problem.

But with �3,750m a year lost in revenue every year, the MPs say there is a long way to go in tackling the fraudsters.

Ministers have decided to go ahead with tax stamps on bottles of spirits. The committee says the scale of the problem makes that measure worthwhile.

The drinks industry has disputed the level of spirits fraud and the MPs say there is too much uncertainty over Customs estimates that the problem costs �250m a year.

Despite those concerns, the MPs say the latest estimates are of a different magnitude from the costs of implementing the duty stamp measure.

'Out of control'

On tobacco, Customs and the industry agreed smuggling peaked in 2001 and is now declining.

The MPs acknowledge the progress but also say smugglers are increasingly switching attention to counterfeit cigarettes.

Committee chairman Michael Fallon said: "The fact that only three out of every 10 packets of hand-rolling tobacco consumed in the UK are duty paid is shocking and a matter of very serious concern."

He said the hand-rolled tobacco smuggling appeared to be "out of control" and urgent steps were needed.