CHILDREN are buying smuggled cigarettes at cheap prices from organised criminal gangs operating in the North-East.

Shopkeepers losing millions of pounds from falling tobacco sales say that the crooks do not care who they sell to.

Retailers went on the offensive yesterday to highlight the growing problem of smuggling in the region.

Members of the Tobacco Alliance and Crimestoppers met at a newsagents in Durham City to mark a day of awareness.

Figures released by the alliance showed the area's 3,600 independent retailers are losing £150m a year in tobacco sales.

Evasion of tax duty on the smuggled goods amounts to a £118m loss to the Treasury.

On average, businesses are estimated to be losing £42,692 a year on cigarette and hand-rolling tobacco sales, compared to £10,400 in 1994.

Nationally, the Government loses at least £2.5bn a year in tax revenue to the smugglers.

Barrie Taylor, North-East spokesman for the Tobacco Alliance, said the effects of the black market trade were far-reaching.

"Kids are buying cigarettes from these people because they don't care who they sell them to," he said.

"The smugglers don't think they are doing anything wrong, but I would say to them if their wife or girlfriend was working for me and I couldn't afford to keep them on, then they would be a victim.

"The trade is losing thousands of people, and each year 50 shops are closing down or going bankrupt."

Mr Taylor, who owns shops in Durham City and Spennymoor, called on the Government to reduce tax on tobacco, bringing British prices in line with cheaper prices in Europe.

Ken Parkin, police coordinator for Crimestoppers, said: "Smuggling is big business and one of the things we see is the effect on shops, which are shutting down.

"Criminals are employing unemployed and young people to go abroad and bring contraband back into this country, which they sell at vastly reduced prices.

"It's organised crime and there's a lot of money to be made. Common sense tells you that major criminals, such as drug dealers, will use that money to invest in other unlawful activities.