Children targeted from ice cream vans in booming illegal trade.

ORGANISED criminal gangs are making millions of pounds in a racket which is threatening the future of small shops in the region and tempting children to light up.

An investigation by The Northern Echo has revealed that vast quantities of cigarettes are being brought illegally into the region, to be sold on deprived housing estates, and in pubs and clubs.

Customs officers say some are even targeted at children from ice cream vans acquired by the gangs, which use violence to protect their business.

Illegal cigarettes can sell for as little as £2 a pack, half the price as in UK shops, and the racket has already forced some small stores to close. One chain in County Durham estimates its annual loss in cigarette revenue to be £2.25m.

Areas where the black market is believed to be thriving include south and east Durham, Darlington, Teesside and Tyne and Wear.

Customs officers and industry investigators say that organised international gangs account for up to 80 per cent of cigarettes brought in illegally.

The rest are bought by individuals on the Continent and then sold on the black market back in Britain.

Up to 20 per cent of the cigarettes sold illegally are fake, made cheaply in Far East sweatshops.

There are health concerns because the fake cigarettes do not conform to the British standards.

According to British American Tobacco (BAT), which owns Rothmans in Darlington, a single 40ft container, enough to fit on a lorry, can carry 8.5 million cigarettes and net smugglers £1.5m profit each trip.

Customs officers believe one in four or five cigarettes smoked in the region are illegal. The Tobacco Alliance, which represents thousands of small shopkeepers, estimates North-East shops are losing on average more than £50,000 a year each, the highest figure in the country.

Businessman Barrie Taylor said his chain of stores throughout County Durham loses £2.25m a year.

Mr Taylor, of Spennymoor, said: "People have this idea of old-time smugglers rowing their boat across the Channel but it is not like that. The market is out of control and it is a tremendous problem."

John Abbott, North-East spokesperson for the Tobacco Alliance, who runs a shop in Darlington, said: "I can tell when there are not many illegal cigarettes around because we sell more cigarettes.

"It does hit retailers. The profit margin on cigarettes is five per cent so we need a lot of sales to keep the volume up. We have had members close down, particularly in more deprived areas where people are trying to save money."

Bob Fenton, a former Metropolitan police officer and now security liaison officer for the Tobacco Manufacturers' Association, said: "More and more of the smuggled cigarettes and tobacco come in by freight: the villains are bringing tobacco in in bulk."

BAT's press relations manager, Dave Betteridge, said: "It is a significant problem and a way for organised crime to make a lot of money.

"It costs us genuine sales and it costs us our reputation because people try what they think are our genuine cigarettes and they taste awful.

"These people set up a sweatshop, buy some old machinery to manufacture cigarettes and computer technology can produce some fantastic boxes.

"To the average punter, one box of Rothmans looks like very much like the next one - until they taste the cigarettes."