Thu 17th December 2020
Royal Assent (Lords Chamber)
Royal Assent (Hansard)
9 interactions (71 words)
Wed 16th December 2020
Taxation (Post-transition Period) Bill (Lords Chamber)
2nd reading (Hansard): House of Lords
3rd reading (Hansard): House of Lords
Committee negatived (Hansard): House of Lords
22 interactions (15,409 words)
Tue 15th December 2020
Taxation (Post-transition Period) Bill (Lords Chamber)
1st reading (Hansard): House of Lords
3 interactions (24 words)
Tue 15th December 2020
Taxation (Post-transition Period) Bill (Commons Chamber)
3rd reading: House of Commons
87 interactions (18,145 words)
Wed 9th December 2020
Taxation (Post-transition Period) Bill (Commons Chamber)
Committee: 1st sitting: House of Commons
23 interactions (3,598 words)
Wed 9th December 2020
Taxation (Post-transition Period) Bill (Commons Chamber)
2nd reading: House of Commons
67 interactions (17,857 words)
Tue 8th December 2020
Taxation (Post-transition Period) (Ways and Means) (Commons Chamber)
Ways and Means resolution: House of Commons
144 interactions (22,420 words)

Royal Assent

(Royal Assent (Hansard))
(Royal Assent (Hansard))
(Royal Assent (Hansard))
Thursday 17th December 2020

(2 months, 1 week ago)

Lords Chamber

Read Hansard Text Bill Main Page

The following Acts were given Royal Assent:

Taxation (Post-transition Period) Act,

United Kingdom Internal Market Act,

Trade (Disclosure of Information) Act.

Motion to Adjourn

Moved by

Lord Ashton of Hyde Portrait Lord Ashton of Hyde
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That the House do now adjourn.

Lord Ashton of Hyde Portrait Lord Ashton of Hyde (Con)
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My Lords, in moving that the House do now adjourn, I would like to wish all Members and staff who have remained to this late hour a very happy Christmas. I beg to move.

House adjourned at 4.01 pm.

Taxation (Post-transition Period) Bill

(2nd reading (Hansard): House of Lords)
(3rd reading (Hansard): House of Lords)
(Committee negatived (Hansard): House of Lords)
Wednesday 16th December 2020

(2 months, 1 week ago)

Lords Chamber

Read Hansard Text
HM Treasury

Second Reading (and remaining stages)

Moved by

Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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That the Bill be now read a second time.

Lord Agnew of Oulton Portrait The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con) [V]
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My Lords, the Bill was introduced in the other place on 8 December.

At the end of this year, the United Kingdom will leave the European Union’s legal jurisdiction and this country will recover its economic and political sovereignty. The measures in the Bill play an important part in those preparations. It sets out a new framework for the UK’s customs, VAT and excise systems following the end of the transition period, so that there are clear rules in place for goods moving in and out of Northern Ireland. It upholds our pledge to protect the UK’s internal market by ensuring that Northern Ireland goods have unfettered access to Great Britain.

I first turn to measures relating to the Northern Ireland protocol. This Government are committed to providing unfettered access for Northern Ireland businesses to the UK’s internal market. That means no tariffs or customs formalities for Northern Ireland goods arriving in Great Britain. Northern Ireland is and remains part of the UK’s customs territory. For goods deemed to be “at risk” of moving into the EU, the Bill introduces a framework for charges on goods arriving in Northern Ireland, both from Great Britain and from the rest of the world. The Bill will allow us to put in place decisions made by the joint committee on goods “not at risk” of entering the EU, ensuring that they do not have to pay the EU tariff. It also imposes a charge to UK customs duty on goods that enter Great Britain from Northern Ireland and are not qualifying Northern Ireland goods. The Bill also includes anti-avoidance rules on the use of unfettered access to ensure that it is not legitimate for goods to be routed to Great Britain via Northern Ireland in order to avoid the UK’s customs border.

For VAT, the Bill includes mechanisms to ensure that, in so far as is possible, VAT will be accounted for in the same way that it is today in Northern Ireland. Noble Lords will be aware that Northern Ireland is and will remain part of the UK and its VAT system. However, it will continue to align with the EU VAT rules in respect of goods but not services. This is to ensure that trade is not disrupted on the island of Ireland and allows us to meet our commitments under the Belfast/Good Friday agreement. HMRC will continue to be the tax authority for the whole of the UK. While the ECJ will continue to have a limited role where EU directives apply in Northern Ireland, the rules will continue to be policed by HMRC. Businesses will continue to have only one UK VAT registration number and to complete one VAT return each period for all supplies. In implementing the Northern Ireland protocol, the Government have sought to minimise changes to how the rules will operate in practice, as far as possible.

The Bill amends current legislation for excise duty to be charged when excise goods such as alcohol and tobacco are removed to Northern Ireland from Great Britain. This does not necessarily entail additional costs for Northern Ireland businesses and consumers. A credit of the duty already paid on the goods in Great Britain will be set against the duty arising in Northern Ireland, meaning that in almost all cases there will be no further duty to pay. In many cases, businesses move goods in duty suspension, meaning that there is no duty to pay in any case until the goods are released for consumption.

Some further taxation measures in the Bill need to be implemented before the end of the transition period. The Bill introduces a new system for collecting VAT on cross-border goods. This includes moving VAT collection on certain imported goods away from the border and involving operators of online marketplaces at the point of sale. UK consumers will now be able to see a VAT-inclusive price at the point of purchase, making pricing more transparent. In addition, measures in the Bill will remove the VAT relief on imported low-value items, meaning that VAT will be due on all consignments, irrespective of their value. This relief has been subject to long-standing abuse and removing it will build on government efforts to further level the playing field for UK businesses by protecting our high streets from VAT-free imports.

The Bill also includes provision for an increase in the rate of duty on aviation gasoline, which will apply across the UK. Otherwise known as avgas, the fuel is a form of leaded petrol, predominantly used in leisure flying. The Northern Ireland protocol requires that Northern Ireland continues to comply with the EU’s energy taxation directive following the end of the transition period. This directive sets a minimum level of duty in euros on leaded petrol used for propulsion. The Government have chosen to apply the change to the whole of the UK to ensure consistency between Great Britain and Northern Ireland. This avoids burdens on business and reduces compliance risks for HMRC. The change made by the Bill will increase the avgas rate by 0.5p to 38.2p per litre from 1 January next year.

To prevent insurance premium tax evasion, the Bill also includes a clause to ensure that HMRC has access to the same anti-evasion tools, regardless of whether an insurer is based in an EU member state. Overseas insurers are liable to pay insurance premium tax where they supply general insurance for UK-located risks. Occasionally, overseas insurers do not pay the insurance premium tax that they owe, so it is important that HMRC has access to tools to deter and tackle IPT evasion. The changes made by Clause 8 remove references to “member states” in current legislation, and allow notices to be issued in the case of a non-compliant insurer based in a member state, without mutual assistance arrangements in place. We do not expect that HMRC will issue liability notices frequently but the ability to issue notices acts as an important deterrent.

Finally, the Bill introduces new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period from 2013 to 2018. In order to recover state aid in line with a European Commission decision, the changes will enable additional CFC tax charges to be raised for the years 2013 to 2018. The Government are pushing for the decision to be annulled. In the event that it is, Schedule 4 requires the Treasury to make such regulations as are necessary to restore all affected taxpayers to their original position.

The Bill gives businesses throughout the UK certainty about the arrangements that will apply from 1 January next year. It plays a part in safeguarding the unity and integrity of this country and will help to protect our high-street retailers. I beg to move.

Lord Hain Portrait Lord Hain (Lab)
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My Lords, I thank the Minister and of course welcome the Bill. However, it reflects a chaotic last-minute scramble by the Government to retreat from their outrageous proposal to break international law in relation to the Northern Ireland protocol of the European Union withdrawal agreement, which was agreed by the Prime Minister and EU leaders in October last year. Among other things, the protocol requires that the UK introduce a framework for customs, VAT and excise after the end of the transition period on 31 December. The Bill before us now reflects the decisions of the joint UK/EU committee set up under that agreement on goods entering Northern Ireland “not at risk” of entering the EU, thereby ensuring they do not have to pay the EU tariff, as the noble Lord explained.

Crucially, the Government are therefore not introducing the so-called “notwithstanding” provisions into the Bill, which, along with those measures also now withdrawn from the UK internal market Bill, would have reneged on that withdrawal agreement.

I therefore welcome the statement made on 8 December by the co-chairs of the EU-UK committee. It is good news for businesses trading across the Irish Sea, as it is estimated that 98% of goods going from Great Britain to Northern Ireland will now be able to do so free from tariffs, irrespective of whether there is a UK-EU trade deal.

However, there remains concern about the imminence of the end of the transition period and the potential for disruption, especially to agri-food products; I would be grateful if the Minister could say something about that in his response. The reported three-month grace period for businesses may at least limit, to some extent, the disruption on 1 January. However, as pointed out by the Institute for Government, the joint committee will need to continue to work on ensuring that the arrangements under the protocol are acceptable to the people, and businesses, of Northern Ireland, who have been plagued by months of stressful and disruptive uncertainty. That is the Government’s fault.

No doubt this latest change of direction by the Government demonstrates a recognition of the realpolitik of the outcome of the American election. The Brexiteers’ confidence that a trade deal with the US would be an easy win has already been proven misplaced. President- elect Joe Biden made a very clear statement on 24 November that, if the UK wishes to discuss a trade deal with the US, the Irish border must remain open. In answer to a question from journalists about what he would say to Brexit negotiators, he stated:

“We do not want a guarded border”.

Biden also made his position clear in a New York Times interview at the beginning of December, stating:

“I am not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers and in education.”

In any case, such a deal with the US would have been more political than economically significant. Leaked government forecasts suggest that a trade deal with the US could benefit the UK’s economic output by about 0.2% in the long term—a miserly amount compared with almost half of our trade currently done with the EU, which is at risk unless there is a decent deal.

The advent of the new Administration in the US therefore serves only to underline the fallacies of the magical thinking of hard-line Brexiteers. In debates on this Bill in the other place, they have complained that, under the agreement reached between Michael Gove and Maroš Šefčovič—a vice-president of the European Commission—the EU will be allowed to have its officials permanently based in Northern Ireland to oversee checks on goods crossing the Irish Sea. They protest that this is an infringement of sovereignty, which, of course, they have always mistakenly confused with power. Perhaps we should close all foreign embassies on our soil, in case they also fail this ridiculous sovereignty test.

Is it simply too tempting for us to imagine that there is perhaps a glimmer of light that the Government have finally found the courage to face down the tyranny of their own rabid nationalist Back-Benchers? As the noble Baroness, Lady Cavendish, observed the other day in an article she wrote for the Financial Times, in 2016, in the weeks following the referendum result, it became obvious to those in No. 10, like her, that

“there would be a trade-off between sovereignty and market access.”

Yet, she observes, four years later,

“the UK is still trying to wish away the trade-offs, with no coherent vision for future prosperity.”

On the contrary, she says, Britain is

“engorged with Covid-led state intervention”

with

“few radical policies to help enterprise”.

The Government’s strategy for mitigating the disastrous economic devastation caused by Covid-19, which has reduced the capacity of the UK economy to withstand further shocks, is apparently one of compounding it with a possible disgraceful no deal or, at best, a scrawnily thin-deal Brexit. In July, the London School of Economics published a study showing that the business sectors that have escaped the worst fallout from Covid-19—such as manufacturing and services—are more likely to suffer from the effects of Brexit. Furthermore, the damaging economic impact of no deal is shown to be two to three times as great as that of Covid over the medium to long term. We now learn that Ministers have dreamed up Operation Kingfisher to support

“businesses that may be temporarily affected by changes of circumstances that are related to Brexit”.

Where is the economic strategy to generate the necessary revenues to fund all this state aid and the subsequent desperately needed recovery?

My noble friend Lord Adonis reports that a senior German politician confided in him that Chancellor Merkel thought it best, last week,

“not to speak to Johnson … ‘for fear of damaging British-German relations. It’s like how she managed Trump, by not speaking to him’.”

Last week, both Merkel and Macron refused to take the Prime Minister’s calls—perhaps the ultimate Brexit humiliation for any British Prime Minister for now.

The well-informed commentator Alex Andreou reported on Twitter the Brussels view of Boris Johnson’s behaviour:

“This has led people to split into two camps: There is one school of thought, that Johnson really is utterly clueless. His behaviour at the UVDL dinner last night (a car crash, apparently), has fed that impression. This makes people not want to do business with this government … The second school of thought, is that Johnson negotiated in bad faith throughout. That his aim was always No Deal and he simply strung 27 countries along, at the expense of a huge amount of work, effort and expense. This makes them not want to do business with this government … Note that the conclusion is precisely the same under either theory. That whether idiot or fraudster, Johnson is best kept at arms length. Polling in most EU27 shows that being tough with the UK yields a big favourability boost. So, I’m afraid, nobody is riding to our rescue”—

if we do not rescue ourselves, that is. Let us hope that it is not too late for the Government, having looked over the precipice, to step back from the brink of no deal on the wider relationship.

Given the poor state of relations that now exists between the EU and this Government, a thin deal is the most we can possibly hope for. However, as was spelled out by the Centre for European Reform think tank in August, this would at least avoid tariffs and provide the basis for building a deeper relationship in the future.

The agreement reached in the joint committee on the Northern Ireland protocol surely demonstrates the value of constructive compromise, collaboration and partnership in solving the many daunting issues currently facing our country over Brexit. Can this Government conceivably have the humility to admit that, in a shrinking post-Covid global economy, Britain can never prosper alone?

With more positive smoke signals about the negotiations as we debate this Bill, if the UK and the EU succeed in striking a deal, Boris Johnson will inevitably have a high-noon confrontation with the zealots who elected him Conservative leader, but the country will breathe a sigh of relief. I am afraid that, all along, that has been the problem in this sorry Brexit saga: putting dogma and factional fundamentalism ahead of the national interest.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, it is astonishing when the most important comment to make about a Bill is that the British Government have changed their mind and do not intend to use it to break international law and subvert agreements in existing treaties. I really do not understand what sort of hubris led the Government to attempt to take such a position in this Bill and the internal market Bill, but they have done real damage to Britain’s international reputation.

As for the Bill itself, it is troubling that, once again, the Government seek to diminish Parliament’s role by doing so much through negative SIs. The Northern Ireland protocol deals with a complex situation with many sensitive political ramifications—the supply chains alone are far from straightforward. A no-deal result to the UK-EU trade negotiations would make matters seriously worse. In those circumstances, Parliament should be fully engaged. Cutting Parliament out is not the way the Government should have moved within the Bill.

Much of the cross-border trade between Ireland and Northern Ireland involves small businesses. The Government’s answer to new problems for small businesses, which will be legion, seems to be trusted trader status. I sit on the EU Goods Sub-Committee. Small businesses have told us that the trusted trader scheme is simply not fit for purpose. It is complicated, expensive and disproportionate. It must be reformed, but so far the Government seem deeply resistant and certainly seem not to have addressed such issues in their trade negotiations. Therefore, no change is reflected in this Bill. It is an instrument that most will simply not be able to use.

The Bill also allows for new trade rules to be introduced gradually for supermarket supplies and medicines, and that makes sense. But it would have made more sense if it had been extended far more widely. I and my colleagues have called for a six-month adjustment period for all goods and small businesses that form our trade with the EU. Frankly, in the time of Covid intensifying—I suspect that when the Bill was conceived there was an expectation that it would be meandering away at this point—it is even more imperative to apply a much broader breathing space. I hope the Government will rethink that in these last few days.

Lastly, I will touch on VAT. HMRC has said that, in so far as possible, VAT will be accounted for by businesses and individuals as it is today as goods cross the Northern Ireland border. I attended a virtual webinar held just a few days ago on VAT, including the Northern Ireland border issues. I will admit that I could not follow large chunks of it, but it was easy to draw two conclusions. The first is that this is a real Bermuda triangle, with intense complexity embedded in it. Any business will be taking a real risk if it does not get expert advice to be able to cope, and that will be really challenging, especially for smaller and medium-sized businesses. The other conclusion one came to, which was a happy thought for those involved in the webinar, was that VAT experts had been given job security for life with the complexities that will arise.

We in this House have no say in the future of this Bill, but it is one that touches on serious issues that will shape the future of Northern Ireland and of our union. Despite that limitation, I hope that we will continue to follow these issues. We need to continue to hold the Government to account.

Baroness Altmann Portrait Baroness Altmann (Con)
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My Lords, I thank my noble friend for his explanation of the Bill and I certainly welcome it. I congratulate the Government on attempting to reinforce the powers to tackle tax evasion and on seeking to minimise the changes involved. I also welcome, as expressed so clearly by the noble Lord, Lord Hain, and the noble Baroness, Lady Kramer, the decision to pull back from the brink of breaking international law.

As noble Lords will know, I have long been concerned about the position of Northern Ireland. It is important that Northern Ireland goods have unfettered access to Great Britain. These frameworks for the changes have now been agreed with the EU-UK Joint Committee, as set out in the Northern Ireland protocol. That is good news, but safeguarding the unity and integrity of the internal market is important. However, can my noble friend say when we will get further details on how this will be implemented? Clearly, the view of the Joint Committee, as established by the Northern Ireland protocol, has now been accepted and I am delighted that the withdrawal agreement and the Northern Ireland protocol will be upheld.

Avoiding no deal is absolutely essential, as is repairing relationships with our European neighbours. May I ask my noble friend what the agreement in principle on the Northern Ireland protocol framework for future customs and tax arrangements means? When will the Joint Committee set out details and when will regulations be introduced, so that businesses will know what they need to do? We know that the agreement is that Northern Ireland exports to Great Britain will pay EU tariffs only if goods are at risk of moving into the EU. How will this be assessed and checked? How will the money be collected and how will it be policed? We are about to leave in a number of days’ time, and we do not seem to know the answers. As the noble Baroness, Lady Kramer, pointed out, the trusted trader scheme cannot be relied on. I also urge my noble friend to consider, if necessary—and perhaps we can see now that it is necessary—delaying further any temporary exemptions from initiation here.

I also congratulate the Government on ensuring that online marketplaces must charge VAT and on removing the low-value exemptions to help British businesses and reduce tax avoidance. I welcome, too, the measures to prevent evasion of insurance premium tax, with Clause 8 allowing HMRC to issue liability notices. This should help to ensure that EU insurers do not continue, as in some cases they have, to try to avoid the insurance premium tax.

I finish on an issue that has proved extremely contentious: the abolition of tax-free shopping for overseas visitors. Thousands of people come here to shop and this risks driving wealthy international shoppers elsewhere for their purchases and other expenditure, which would generate tax revenue in the UK through visits to hotels, restaurants and places of entertainment. I believe that France and Italy are already advertising for the business of these wealthy overseas tourists and shoppers. The Government’s estimates have been shown, even by the OBR, to be flawed. The suggestion is that this could save £500 million. However, the OBR suggested that this £500 million estimate in the spending review is significantly overstated and the figure may be £195 million at best, but this is highly uncertain because it does not assume particular behavioural change by those customers who would clearly be likely to go elsewhere. Indeed, the Centre for Economics and Business Research estimated that this change in VAT, opposed by the tourism, culture, hospitality and retail sectors, as well as by airports such as Heathrow, could lead to 138,000 job losses and a potential loss of revenue to the Treasury of £3.5 billion, rather than a net saving.

Hanbury has estimated that this will not just hit London and the south-east. In terms of the Government’s levelling-up agenda, it would appear that Manchester, Liverpool, Leeds and Edinburgh risk losing their current benefits of more than £200 million of tax-free sales last year. The removal of this VAT incentive is something for which I have struggled to find any support in any quarter. I therefore ask my noble friend to take back to his department the extreme concerns on this issue.

Overall, however, I welcome the Bill, hope we will be able to avoid any kind of no-deal outcome and look forward to a successful 2021.

Lord Bruce of Bennachie Portrait Lord Bruce of Bennachie (LD) [V]
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My Lords, the Bill is welcome for the practical measures it contains, but more for the notwithstanding clauses that have been omitted and were previously threatened. In a way, it is another tortuous step along the way to deliver the easy Brexit that the Government, or their Brexit-controlling cabal, promised. I well remember the Prime Minister during the election, in a draughty-looking warehouse in or near Birmingham, promise that there would be no new paperwork or charges between Great Britain and Northern Ireland. In fact, the “oven-ready deal” proved anything but. The only oven-ready thing about it is that it was stuffed.

Having agreed the deal that Theresa May negotiated, we then got the United Kingdom Internal Market Bill, with its law-breaking clauses now dropped. Why? It was because the EU-UK joint committee met and agreed a way forward. This was always the way it should have been resolved, without the threat of breaking international law or resorting to the latest ploy of gunboat diplomacy. I just wonder how hard the Government are working to alienate everybody that we need to have on side for trade, co-operation, security and all the other things that a respecting nation needs.

Arch-Brexiteers in the Commons tried to reinstate this approach yesterday. It appears that they are still deluded in the belief that sovereignty is an absolute. It can be only if the country puts itself in solitary confinement—an uncomfortable place for a trading nation with a historically massive balance of payments deficit. Facing reality, the Government have now agreed, as they always had to, that at-risk goods will be properly monitored, that Northern Ireland will conform to EU rules on, as a case of detail, aviation fuel duty, and that the rest of the UK will follow suit for “consistency”. Is this a taste of things to come? I suspect it is. Similarly, there is agreement on aspects of VAT, but can the Minister explain the implications for online sales under £15 in Northern Ireland? Do Northern Ireland residents have to pay VAT on online purchases when GB residents do not?

Can we now hope for the dawn of pragmatic common sense and an acceptance of reality? The Prime Minister advocated cakeism, and it appears that Michael Gove believes that it is being delivered, but for Northern Ireland. He seems to be supported by the Foreign Secretary. We have been told that Northern Ireland is in a wonderful position, effectively being in the UK and the single market. This is an enviable position that the majority of businesses in Great Britain wish to be part of, but they cannot be.

The rest of us—the 99.8% of the economy that does not depend on catching fish—want to know where the dust will settle. Even in fishing, the catchers and processors have conflicting interests. If we want to continue trading profitably with the EU, which takes nearly 50% of our exports, we have to accept that there will be EU rules and we will need to accept those rules if we want to secure access. That has always been the case for third countries. We will no longer have a say in shaping those rules but, as the EU states have pooled their sovereignty to make the rules, we can reject them only at a price. We have the right to choose, but there is a price to pay.

Ironically, we are choosing to trade under WTO rules. We have far less influence over these than when we were members of the EU. Indeed, the WTO is a pretty dysfunctional organisation in dealing with disputes among its members. The Government are urging businesses to prepare to end transition in 15 days’ time. Ministers claim that they are trying to provide certainty, but the opposite is the case: how can people prepare for the unknown against a background of promises that it would all be quick and easy? This Bill is necessary, but more legislation is required. We still do not know under which terms, if any, we will leave the EU, and businesses are expected to adapt to unknown rules and regulations, which the Government cannot explain, which are complicated and for which they will probably have to pay for expert advice.

I was astonished, the day after the Prime Minister claimed that there would be no new rules, regulations or paperwork, to go on to the government website and see that its advice was to contact HMRC to get a registration, to take advice on customs requirements and to consider whether you need to employ customs staff or a customs agent. The contradiction was there for all to see on the very day that the Prime Minister made his absurd claim, which everybody knew was unsustainable.

The Bill is necessary. Thankfully, it is limited compared to what it would have been, but it is symptomatic of the bungling incompetence that characterises the Government in delivering an ideological ambition that is deeply damaging to the interests of this country and has left the world looking on in astonishment at how the UK took leave of its senses.

Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Con) (Maiden Speech)
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My Lords, it is an honour and privilege to make my maiden speech in this important debate. I had rather hoped to be able to give my speech during the CHIS Bill’s passage through your Lordships’ House, as this is a subject on which I have some specialist knowledge, but my carefully laid plans were undone by contact with a gentleman who had tested positive for the dreaded virus so, in spite of a negative test, I was condemned to two weeks’ self-isolation. This was not much fun, although it left me with a refreshed appreciation for my family, who have to put up with me all the time. I found two weeks of my own company a most severe test. I am pleased to report that the gentleman in question has made a full recovery.

I arrived at your Lordships’ House at an odd time. I have watched, listened and attempted to learn, but the conditions are far from ideal for a new boy. Arriving during Covid is like trying to assemble a complex jigsaw puzzle, but without the picture on the box. At the outset, therefore, I give thanks to a number of people who have helped me paint the necessary picture. Noble Lords on all sides of the House have extended to me a very warm welcome. The doorkeepers and staff of the House carry out their responsibilities with such good cheer. I have to say how skilled the doorkeepers are at seeing through my cunning facial disguise every day. My noble friend Lady Seccombe has generously shared her many years of experience of your Lordships’ House, and last, but by no means least, I thank my two supporters at my introduction in October—my noble friends Lord Taylor of Holbeach and Lady Pidding.

I was particularly honoured that my two noble friends introduced me, as they are also predecessors of mine as chairmen of the National Conservative Convention, by which route I arrived at your Lordships’ House. For those of you who do not know, the national convention’s antecedents date back to 1867—to Disraeli’s time and that of the Second Reform Act. The National Union, as it then was, formed with the explicit intent of reaching out directly to the newly enfranchised voters created by that Act. Over the past 153 years, and no doubt to the regret of some of your Lordships opposite, it has been remarkably successful.

Joking aside, there is an important point to be made here, and more so in these troubling times, and that is that the foundations of our civil society and democracy require the active participation of many selfless volunteers from all walks of life and parts of our United Kingdom, and from every political persuasion. I am sure that your Lordships agree that, without them, many of the things that we take far too easily for granted would not happen and, whether we agree politically or not, we would be the poorer for that. So it has been a privilege and a pleasure to represent those from my side of the argument. I thank them and commit to continuing to represent them and all those who volunteer in your Lordships’ House.

My other life, the remunerated part, involved a lengthy career working in the stock markets of the world, which took me from Hong Kong to Tokyo, New York and back to London. I look forward to returning to the subject of financial markets and regulation in the new year, but I also look forward to contributing to the inevitable debates in this House on Hong Kong. I lived there for a decade and started life as an inspector in the Royal Hong Kong Police. That was a long time ago, and much has changed—not, I fear, for the better—but I have a great affinity for Hong Kong and its people and, having served in some of the more remote places in the New Territories, considerable experience of the pace and rhythms of life outside the glittering towers of Central and Kowloon. I owe these people a lot, this country owes them a lot, and I look forward to making the case that we must continue to demonstrate that.

In pursuing this career that has spanned much of the world, I have been lucky enough to gain a cultural understanding of a number of places, and that has shaped my views on our world and our place within it. As a consequence—and this is very relevant to the debate today—I am an optimist, bullish about our great nation’s future. It is perhaps a little hard to see the wood for the trees right now, but we should not forget the words of the second US President, John Adams:

“Every problem is an opportunity in disguise.”

We have the opportunity to demonstrate leadership in many different areas, and I hope to make the case that large parts of the world will respond favourably if we make the most of those opportunities. Having observed the proceedings in your Lordships’ House over the past month and, indeed, past half hour, I have reluctantly concluded that this may not be the majority attitude here, but I think that this Bill highlights the positive difference that your Lordships can and, I have no doubt, will continue to make.

We need this Bill: it ensures that we are legally prepared to leave the EU. It sets out a framework to prepare for all outcomes of the free trade agreement negotiations with the EU, and of the Joint Committee discussions on the implementation of the Northern Ireland protocol. It ensures the smooth continuation of business following the end of the transition period. The Government have made it very clear that they are committed to providing unfettered access for Northern Irish business to the rest of the UK’s single market, protecting progress made under the Belfast/Good Friday agreement. It is clear to me that this Bill will form a vital part of our preparations as we prepare to become a fully sovereign trading nation, and I have no hesitation in supporting it.

I thank noble Lords for indulging me with this speech and I look forward to taking my responsibilities seriously and contributing to the debate here on those subjects that I have outlined, and perhaps others where I have experience, perspective and knowledge.

Baroness Pidding Portrait Baroness Pidding (Con)
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My Lords, it gives me immense pleasure to follow the excellent maiden speech of my noble friend Lord Sharpe of Epsom. Our friendship goes back some 15 years, when we worked side by side as volunteers in the Conservative Party. As my noble friend mentioned, both my noble friend Lord Taylor of Holbeach and I have had the privilege of being chairman of the National Conservative Convention, the position that my noble friend Lord Sharpe currently holds. And what a superb chairman he is, leading from the front, motivating, encouraging and cajoling, but never asking fellow volunteers to do something that he would not do himself.

There are few parts of this country that my noble friend Lord Sharpe and I have not campaigned in together, and I am certain that his passion for democracy and volunteering will continue for years to come. I know, as I have witnessed first-hand, how much my noble friend likes nothing more than a good debate on the doorstep. Now that he is here in your Lordships’ House, he has found a new forum for debate. This outlet will probably be a great relief to his family.

Talking of family, it would be remiss of me not to mention my noble friend’s wife Fiona, son Charlie and daughter Kate, who, over the years, have given their unstinting support to his voluntary work and, on occasion, have got involved too. As is so often the case in working for any voluntary organisation, it has meant his absences on many an evening or weekend.

As noble Lords will have heard from his speech, in my noble friend we have a great addition to our House. We have heard only a snapshot of the experience that he will bring. Not only does my noble friend have a notable background in the world of finance and the unique experience of being an inspector in the Royal Hong Kong Police, but there is so much more. He is well travelled and is even a published historian. In the coming months, when we are able to move beyond this dreaded virus, more noble Lords will, like me, find my noble friend to be the most genial company, and I know that he will prove to be a real asset to these red Benches.

Turning to the business before us today, the Taxation (Post-transition Period) Bill is a crucial step on the road that the United Kingdom must take us as we prepare for the end of the transition period at the end of this year. I know, and hear today, that there are noble Lords who see this as a cause for melancholy, whereas others, like myself and my noble friend Lord Sharpe are optimistic for the opportunities that Brexit will bring to the whole of the United Kingdom, Northern Ireland included.

Throughout the negotiations, Northern Ireland has been the focus of much debate. This has caused anxiety from many in the United Kingdom who hold the union dear. However, the most affected are the British citizens who live in Northern Ireland or those whose livelihoods rely on trade and the movement of goods between Northern Ireland and the rest of the United Kingdom’s internal market. This has inadvertently harmed businesses, which are rightly concerned about the legal and practical state of regulations and tiresome taxes governing their trade with the European Union and the rest of the United Kingdom. Reassuring words of politicians have had little impact in soothing this concern. This Bill, however, represents action, ensuring that Northern Ireland will not be left behind or forgotten. It provides legal certainty for the customs, VAT and excise systems in Northern Ireland after the end of the transition period. This legislation will also help deliver the commitment made by this Government to deliver unfettered access for Northern Ireland businesses to the rest of the UK internal market and protect progress made under the Belfast agreement.

As the United Kingdom leaves the European Union, we must do our best to provide the assurances and support needed for businesses to prosper across the country. This is particularly true of SMEs, which are the backbone of the United Kingdom’s economy and which millions of citizens rely on for work. I am glad to see that this Bill has this at its core.

The Bill is no silver bullet but, along with other Bills currently making their way through Parliament, it will create a clear pathway for the whole of the United Kingdom to pass through this transition period, weather any possible storms and emerge stronger and ready for the opportunities awaiting us. Like my noble friend Lord Sharpe of Epsom, I give this Bill my full support.

Lord Faulkner of Worcester Portrait The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
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The noble Baroness, Lady Jones of Moulsecoomb has withdrawn, so I call the noble Baroness, Lady Ritchie of Downpatrick.

Baroness Ritchie of Downpatrick Portrait Baroness Ritchie of Downpatrick (Non-Afl) [V]
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My Lords, it is a pleasure to follow the noble Baroness, Lady Pidding, and to welcome the noble Lord, Lord Sharpe of Epsom, who has just made his maiden speech. I look forward to working with him as he stated that he looked forward to working with all noble Lords around the House.

I thank the Minister for his explanation of the Bill, whose purpose is to implement various aspects of the Northern Ireland protocol relating to customs duties, VAT and excise. While welcoming the provisions of the Bill, I note that it would have been a different position if there had not been a resolution on the operation and implementation of the Northern Ireland protocol in the UK/EU Joint Committee negotiations last week. The protocol will not contain provisions to disapply provisions within the protocol; that agreement has been achieved in the Joint Committee on export declarations for goods moving from Northern Ireland to GB and the application of state aid under the protocol. Notwithstanding that, I have some questions for the Minister.

First, can the Minister provide assurances that this Bill is consistent with the Northern Ireland protocol in all aspects? It is important to remember why the Northern Ireland protocol is in place—it is to prevent a hard border on the island of Ireland between Northern Ireland and the Republic of Ireland. It is also meant to act in accordance with the principles of the Belfast/Good Friday agreement to build on the peace with political, economic and social stability and to continue to foster reconciliation on the island. It is vital, therefore, as it contains those necessary ingredients to enable that to happen.

I hope that there is a zero tariff trade deal and that that is achieved as quickly as quickly as possible. I implore both the UK and EU to arrive at a deal; I did not want to leave the EU but realise the need for a proper and adequate trade deal so that business can be conducted which will not undermine or hinder trade opportunities and provide goods to customers at affordable prices. Lest we be in any doubt, no deal will not be beneficial for the UK, Northern Ireland or the Republic of Ireland or in fact the wider European Union. I note that the Government, through the debate on the United Kingdom Internal Market Bill, have followed on from the agreement in the Northern Ireland protocol to ensure that qualifying Northern Ireland goods have unfettered access to the UK internal market. This is welcome because it provides assurances to businesses and consumers alike.

The protocol applies the EU’s regulations on traded goods, customs and VAT on goods to movements into and out of Northern Ireland. As I have already said, this is to ensure that there is no hard border across the island, to protect the integrity of the EU single market and the customs union, and to respect Northern Ireland’s position within the UK’s customs territory and the UK internal market.

The protocol sets out in depth the parts of the EU’s acquis on goods that are to be given effect to and provides that the protocol will have the characteristics of EU law in terms of precedence and direct effect. This ensures that the legal rules on traded goods, VAT on goods, and customs processes not only are the same in Northern Ireland as the Republic of Ireland but will be enforced in similar ways. Of course, the decision on the continued application of the protocol arrangements on traded goods in Northern Ireland will be for the Northern Ireland Assembly to take on a cross-community basis every four years. I have a query about that, because that is not the true application of that particular facility in the agreement itself.

This legislation, which is to be given its Second Reading today, will give effect to the necessary implementing arrangements on VAT and customs. I understand that associated delegated legislation will need to be put in place quite quickly. Therefore, could the Minister indicate the schedule, framework and content for that delegated legislation?

This legislation also has several consequences, and I have certain questions in that respect. Since it prescribes through provision for taxation and VAT measures, how will the Bill and the Government deal with anti-avoidance? How will that work in the agri-food sector in particular? On the one hand, the Trade and Agriculture Commission, which is to be put on a permanent basis for at least three years through the Trade Bill, will underpin food standards. How will the Government ensure that inferior food products do not come into Northern Ireland to take advantage of the protocol?

How will the legislation prevent organised crime? What work will be carried out with the Police Service of Northern Ireland, other police constabularies, the Gardaí in the Republic of Ireland, and Interpol to underpin those standards and prevent avoidance measures? What will be the role of the National Crime Agency? With HMRC, what are the established practices for identifying and targeting those involved in avoidance measures to ensure that it does not happen?

When will the infrastructure at the ports of Derry, Larne, Belfast and Warrenpoint be in a state of readiness and operation? Where will the officials be based? Where will the EU officials operate from? Will they work alongside officials from HMRC? Has the recruitment of customs agents taken place? When will they take up post at the ports?

Will the Minister ensure that more details are set out on how duties and tariffs might be rebated through regulations under the Bill? For the avoidance of doubt, could he confirm that fish landings at Northern Ireland ports will no longer be subject to tariffs under the Northern Ireland protocol?

I realise that there were several questions there that the Minister might be able to answer today. If he is not able to do so, I would appreciate answers in writing and a copy being placed in the Library of your Lordships’ House.

While welcome, this taxation Bill comes at the end of a long process that many of us felt deeply unhappy about. I hope that there will be full implementation of the Northern Ireland protocol and that the people of Northern Ireland and the island of Ireland, where I live and have worked for many years, will be able to benefit and that there will be an end to this long, very sorry saga.

Baroness Suttie Portrait Baroness Suttie (LD) [V]
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It is always a pleasure to follow the noble Baroness, Lady Ritchie of Downpatrick. I agree with so much that she said. I also congratulate the noble Lord, Lord Sharpe of Epsom, on his extremely thoughtful maiden speech.

I suppose one thing we can say with a degree of certainty about the Bill is that it could have been worse. In that sense, it is to be welcomed. If the Government had not changed their position on Part 5 of the UK Internal Market Bill last week, we could have faced an extremely unwelcome piece of legislation. As it is, we find ourselves with just two weeks to go before the end of the transition period, debating a long and complex Bill without clarity on either the context or much of the content.

On the context to this Bill, we still do not know whether there will be a deal. We should recall that no deal would have a particularly brutal effect on the Northern Ireland economy. With only two weeks to go until the end of the transition period, we know that parliamentary scrutiny of the content of any deal that is now agreed will be very limited, and so much of the content of the Bill before us today will be delegated to future regulations. It does not give us a feeling of confidence that there will be much transparency in this process.

As others have remarked, it is an irony that so much of the Brexit debate was about taking back control and moving away from a system of imposed regulations that we were unable to amend. Yet, at the 11th hour, it is at least welcome that attempts are being made to make the Northern Ireland protocol work in practice. However, there remain a great many unanswered questions.

The Minister will know that, last week, the Northern Ireland trade groups warned that, in spite of the £200 million trader support service, businesses would not be ready to deal with the new border processes, computer systems and bureaucracy in time for 1 January. Can the Minister say what additional measures will be put in place to protect Northern Ireland households from significant price rises and potential shortages or delays to the many highly complex supply lines? As other noble Lords have said, the Minister will also know that there is particular concern in the agri-food sector in Northern Ireland about products of a lower standard coming into Northern Ireland and taking advantage of the protocol. Can the Minister say when we will see detail on exactly how measures to avoid this will work in practice?

It also remains unclear how non-qualifying goods will be determined and how they will be distinguished as they move from Northern Ireland to Great Britain. Can the Minister say what the operating model will be for this process? What mechanisms will be put in place to distinguish between Northern Ireland goods and goods from the rest of the EU, including the Republic of Ireland? The Minister will know that there is particular concern in the food and drink sector that cheaper or non-authentic versions of quality products may be able to reach the UK market in this way.

There is now so little time left to resolve so many problems before 31 December. We are ultimately in this situation because, from the outset, the Government promised a series of incompatible things—a trilemma, as my friend Stephen Farry MP has called it. The Government consistently said that the whole of the UK must leave the customs union and the single market, that special status for Northern Ireland was ruled out, and, correctly, that there should remain no border on the island of Ireland. It was the Government who insisted on these red lines, but it is now the people and businesses of Northern Ireland who risk paying the price.

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Con) [V]
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My Lords, I give a very warm welcome to my noble friend Lord Sharpe of Epsom and congratulate him on his first-class maiden speech. How lucky we are to benefit from his broad experience in so many different fields. He is very welcome indeed. I also congratulate my noble friend the Minister on bringing forward the Bill, albeit at this late stage, but without the “notwithstanding” clauses.

I want to press my noble friend the Minister on certain issues that are not on, or not immediately apparent and clear on, the face of the Bill. As he will be aware, we on the EU Environment Sub-Committee were very fortunate this morning to take evidence from those concerned with the agri-food sector and goods moving into Northern Ireland from continental Europe from 1 January. Is he minded to acquiesce to their request for a period of grace for a minimum of two months, but ideally of between two and six months, which others referred to as a period of adjustment, given the months of uncertainty and continuing lack of clarity, even with the publication and debate of the Bill today? Can the Government clarify the status of the UK global tariff regime? It was published in May, but we heard from a witness today that there is still a lack of customs data, trade statistics and tariff availability for imports.

Also, as others have mentioned, the trusted trader scheme will play a vital role, particularly in Northern Ireland, in preparing the flow of goods and unfettered access to which the Government are committed, which I applaud. With a budget of £2 million to fund the scheme, can my noble friend confirm that all 800 staff have been hired and trained and are ready to give the advice that will be required? Customs clearance will be required for all goods entering Northern Ireland from England, Scotland and Wales. What is the state of preparedness within HMRC regarding the additional 220,000 forms? Have all the necessary customs agents been appointed and trained, and are they in place and ready to go?

Regarding the abolition of tax-free shopping for overseas visitors, what is the up-to-date assessment of the loss of this trade for major stores not just in London but across the United Kingdom—in Birmingham, Manchester, Cardiff, Belfast and Edinburgh? What will the damage be? Does my noble friend share my concern that this will be removed from the UK market and that all the trade from which we have benefited over so many years will go to Paris, Amsterdam and Frankfurt, our near neighbours?

I end with specific requests flowing from the Bill. The first, as I set out at the beginning, is for a period of grace of between two and six months, to ensure that those asking to abide by the rules, which are not yet clear, will have the time to make the rules familiar with them, so that they can apply them from perhaps 1 April or 1 June. Also, can my noble friend confirm the status of the UK global tariff regime for imports? On the question of equivalence on phytosanitary measures, can he look at whether it should be veterinary surgeons alone who issue these environmental health certificates that will be required, or whether others might be more suitable, given the current shortage of vets, to enable these certificates to be issued in time?

Finally, can my noble friend give us a programme of when the implementing instruments will be in place so that we have a position at least to familiarise ourselves with them? I welcome the Bill and wish it a fair passage through Parliament.

Lord Faulkner of Worcester Portrait The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
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My Lords, the noble Lord, Lord Desai, and the noble Baroness, Lady Wheatcroft, have withdrawn, so I call the noble Baroness, Lady Bennett of Manor Castle.

Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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My Lords, I was going to say that it was a great pleasure to follow the noble Baroness, Lady Wheatcroft; as former newspaper editors we could both have reflected on how there was once a silly season where we were not dealing with such serious issues this close to Christmas—but I have said it anyway. I also welcome the noble Lord, Lord Sharpe of Epsom, to this House. I declare my position as co-chair of the All-Party Group on Hong Kong. There may be many things on which we do not agree, but I hope that we can agree on ensuring the rights of those Hong Kongers who wish to come to the UK, and on standing up for Britain’s position as a signatory to the joint declaration on Hong Kong.

I wish to start my reflection on the Bill with a couple of numbers. There are 112 pages, 29 pages of Explanatory Notes, and, depending on how you count it, four or five working days until Christmas. I feel I am repeating myself but it must be said, reflecting the words of the noble Baroness, Lady Kramer, who is not currently in her place: after a horrendous year, small-business people might have been thinking of winding down and finally getting a bit of a break, but they will have to plough through all that paperwork and seek expert advice at this point in the year. I usually try not to repeat what others have said in your Lordships’ House, but I must join many others in celebrating the Government’s U-turn on the “notwithstanding” provisions of this Bill. That a UK Government could be planning to break an agreement that they signed only 12 months ago will long resonate on the world stage. Every time we hear from the Government Benches, as we do so often about amendments to Bills, “This does not have to be on the face of the Bill” and “You can trust us, we’ve said this is our policy”, we can reflect on where we are today.

We must also reflect on the Brexit ultras having to face up to reality. The “easiest negotiations in history” is a phrase that we must remember being said. Drawing a couple of parallels, I reflect on Erasmus Wilson, the Oxford professor who said in 1878:

“When the Paris exhibition closes, electric light will close with it and no more will be heard of it”,

and the president of the Michigan savings bank saying to Henry Ford:

“The horse is here to stay but the automobile is only a novelty, a fad”.

We are in that territory, for this legislation lays bare the emptiness of “taking back control”. Your Lordships’ House is passing this Bill in one day, while the other place passes the new Trade (Disclosure of Information) Bill which, as of last night, no one had even had the opportunity to read. We will do our best to scrutinise so many things, but as we have been seeing, particularly in the Grand Committee, statutory instruments are being looked at that modify previously passed Brexit statutory instruments. I fear we will see the same cycle again early in the New Year.

I join the noble Baroness, Lady Altmann, in welcoming the modest measures in this Bill against tax dodging. I hope that this is the sign of much more to come from the Government Benches. It tackles a very small part of the issue; there are very large factors to be tackled here. I am happy to see the increase in aviation and gasoline tax, but it is nowhere near enough, particularly after the disastrous ruling in the Supreme Court today on Heathrow expansion. Flying is the most carbon-intensive form of travel, but it is undertaxed and inadequately dealt with in the Paris agreement.

In reflecting on that, I also note that today sees the tragic but terribly important coroner’s conclusion that air pollution was a cause of Ella Kissi-Debrah’s death at the age of nine. It is the first time that such a finding has been made in the UK. I ask the House to take a moment to pay tribute to her mother, Rosamund, for her long fight to get this medical reality recognised.

I shall finish with a question for the Minister. I do not know whether, at this late hour, he can ride to the rescue of Boris Johnson in offering an explanation of how the people of the UK will benefit from Brexit: those people who, right now, are making a weary trudge to the food bank to get food for Christmas; the self-employed who have been left for so many months without any money at all through the gaping holes in the Government’s Covid rescue packages; and the weary teachers struggling to provide education and security for their pupils amid the chaos. How will they gain from Brexit, whether it is no deal or the scantily patched-together thin deal that is now our best hope? We know that the surfers of disaster capitalism, the hedge fund traders and the purveyors of fancy financial instruments will benefit from the chaos—they always do. A few people will profit and the rest of us will pay.

Lord Bhatia Portrait Lord Bhatia (Non-Afl) [V]
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My Lords, this Bill will implement customs, VAT and excise obligations arising under the Northern Ireland protocol. The terms of the withdrawal agreement and the Ireland/Northern Ireland protocol create a unique status for Northern Ireland. It remains part of the UK’s customs territory but will continue to apply the EU’s customs code, VAT rules and single market rules for goods after the transition period, which ends on 31 December 2020. The Government are legislating in the United Kingdom Internal Market Bill to ensure that qualifying Northern Ireland goods have unfettered access to the UK internal market.

Article 8 of the protocol deals with EU VAT and excise provisions relating to goods that will continue to apply in Northern Ireland. However, HMRC will continue to be responsible for the operation and collection of the revenues that will not be passed on to the EU as VAT exemptions and reduced rates applying to Northern Ireland.

Clause 3 of the Bill amends the Value Added Tax Act 1994 to implement the obligation under the protocol. HMRC and the Treasury have explained that these provisions will ensure that the movement of goods between Great Britain and the Isle of Man and Northern Ireland will be treated as imports and exports. However, co-ordinating mechanisms will ensure that, as far as possible, VAT will be accounted for by businesses and individuals as it is today.

The Government have said that they will follow the UKIM Bill to make it clear that no tariffs will be payable on goods moving from Great Britain to Northern Ireland unless those goods are re-destined for the EU market or there is a genuine and substantial risk of them ending up there. The Government should not forget that the UK has signed an international agreement on Northern Ireland, which is part of the UK. Any breach of this agreement would damage the UK’s reputation internationally. It would also lead to the break-up of the United Kingdom.

Lord Fox Portrait Lord Fox (LD)
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My Lords, over the course of this parliamentary term, we have seen the introduction of many things. Although the Government have not invented content-free legislation, they have certainly furthered that process through the liberal use of secondary legislation following primary legislation which is unable or unwilling to set things out in exact detail, and we are faced with that again today.

On a slightly more frivolous note, this Bill introduces, or highlights, the way in which a word like “notwithstanding” can suddenly be vested with some sense of terror, like a shark arriving on a beach. We are glad that the “notwithstanding” clauses were not, in the Government’s view, necessary in this Bill, so there is a little piece of brightness there.

The sunny optimism of the noble Lord, Lord Sharpe of Epsom, was very welcome. We welcome him to this House and look forward to his wisdom, and perhaps his anecdotage—I am sure that there is plenty lurking there somewhere. I would call into question his maxim that every problem is an opportunity in disguise. As a former chief executive of the Liberal Democrats, I am quite able to give evidence of why that is not true.

I thank the Minister for his very clear explanation of the nature of the Bill. When I looked at it, I set out with the notion that it is the plumbing, which it is. It is easy to dismiss the plumbing, but then you think about what the world was like before we had plumbing and what it is like when we do not have plumbing and you realise that it is important. That is why the Bill is important and why we welcome it. Given the nature of our role in this House, I will seek clarification on some of the issues rather than make what could be called a traditional Second Reading speech.

The Bill sets out a new framework for customs, VAT and excise duty for goods moving in and out of Northern Ireland. The Minister was very clear, and said twice in two different ways, that Northern Ireland is, and remains, part of the UK customs territory, but on the second occasion he followed it with a big “however”. That “however” is that EU rules for goods but not services will apply in Northern Ireland. Therefore, it remains part of the UK customs territory but it also remains part of the EU customs territory, and there is a dichotomy in that process. That adds complication such that a £200 million scheme is required to help people with it. Like others, I ask the Government to update us on whether that scheme is ready to run.

The complexity lends itself to the six-month adjustment period that my noble friend Lady Kramer introduced. For the benefit of the noble Baroness, Lady Bennett, and others, I should explain that my noble friend is a member of the Economic Affairs Select Committee, and there is a protocol that allows those who have important Select Committee meetings not to sit through the extent of the debate.

The big question set out by the noble Baroness, Lady Altmann, my noble friend Lady Suttie and others concerned non-qualifying goods. We understand that there will be such goods but we do not know what they are and what the criteria are for creating them. We are not sure of the process for communicating what they are and we have no idea about the timing. This is not an abstract debate; it is about real people, with products, trying to understand what they need to do. Like them, I see adverts on my television every night telling me to get ready. Can the Minister tell us what they are getting ready for? What goods will be non-qualifying, and when will people know? That is really important and, again, it begs the question about delaying implementation so that people really can get ready, because that is what they want to do.

The Minister mentioned the role of duty suspension. It is an interesting role and one that I had not talked to the Minister about before. It would be interesting to know whether any of the rules around duty suspension are changing and whether the Government considered changing some of them, perhaps to add or remove friction from the system.

The Minister also talked about the removal of VAT relief on low-value items, and that is a welcome area. I would be interested to know whether the Minister can tell us what the expected increase in tax take is for that, and indeed what extra enforcement will be required to get that tax through the door. It strikes me that there could be an awful lot of different transactions that, in the end, add up to not much take. But I accept the Minister’s point that levelling up the playing field for our high streets across the country is really important. This is a very small measure but I would not overestimate its effect. A lot of things are happening to our city-centre and town-centre shops, and this is just one small element of them. My noble friend Lady Suttie and the noble Baroness, Lady Ritchie, talked about measures to manages shortages and potential price rises, and perhaps the Minister could set out what those would be.

My noble friend Lady Kramer and the noble Baroness, Lady Altmann, raised the issue of the trusted trader scheme. A lot of hope has been vested in this scheme but, without shooting too cheap a shot, our evidence of tracing schemes thus far has been relatively disappointing, to say the least. How can we be sure that this system will stand up to expectations? The accepted wisdom of many is that it is a small scheme that will not facilitate the sort of trade we are looking for.

Finally, a number of your Lordships raised the issue of removing tax-free shopping for foreign visitors. Here, without debating the issue, one needs to know what the facts are. Can the Government publish the cost-benefit analysis that I am sure they must have carried out before publishing such an important change in the rules? Can they explain how the difference in tax raised, which would have had to extend to EU visitors, is weighed against the economic effects on tourism and trade from foreign visitors? That number is very important and when we see it, I am sure we will be better able to understand why the Government have made this decision. Without those numbers, one might imagine that they just put a damp finger in the air and tried to work out which way the wind was blowing.

This is important plumbing, but it is inexplicable why we have had to wait this long so that businesses can get ready. I understand that we had to get through the internal market Bill, but that ran very late. Businesses need to be ready and for that, they need to know what they have to do. The Bill is essentially content free. The real detail comes with the regulation and the secondary legislation. When will we see that? When will businesses know what they have to do so that they can continue to trade? It is up to us and the Government to make sure that they know what they have to do.

Lord Tunnicliffe Portrait Lord Tunnicliffe (Lab) [V]
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My Lords, I am grateful to the Minister for introducing this Bill and to all noble Lords who have taken part in this debate. Before I turn to my broader contribution, I welcome the noble Lord, Lord Sharpe of Epsom, to your Lordships’ House and congratulate him on his maiden speech. He gave an interesting insight into his career, and I share with him the belief that a varied career in different areas adds a roundness. I also congratulate him on his refreshing optimism. I say that because, as far as I can tell, apart from that expressed by the noble Baroness, Lady Pidding, his was the only optimism in the House today. Concern over the Bill varied from “chaotic” in my noble friend Lord Hain’s case to more careful concerns, but even those whose concerns were least had issues with the lack of detail.

The noble Baroness, Lady Kramer, was the first to bring up the issue of international reputation, and I thought the comment of the noble Lord, Lord Bruce, that we were alienating everybody was very insightful. The final step in alienation was the announcement of our gunboat proposals. Surely, somehow, we have to learn that if we are to live with our neighbours, it makes quite a lot of sense to be polite when we talk to them. There was also an almost universal welcome for what is not in the Bill, particularly the “notwithstanding” clauses.

When reviewing proceedings from the other place, I was struck by how few of the speakers focused on the detail and how many saw it as an opportunity to air other concerns and grievances, particularly in relation to the Court of Justice of the European Union. Our debate has been just as wide-ranging, which is perhaps inevitable given the recent twists and turns in the trade negotiations.

The Bill has been presented as an essential piece of the jigsaw to ensure readiness for the end of the transition period—an event that will take place just over two weeks from now. As the shadow Chancellor made clear, we support the timely passage of the Bill, as it is important to minimise any disruption. This does not mean, however, that we endorse the Government’s approach to the negotiations on our future relationship with the EU. Given the importance of this legislation, it is disappointing that it was published so late in the transition period and received such little consideration in the Commons. It seems it was held back specifically to give the Government the option of breaching an international agreement, which reflects just how poorly this entire process has been managed.

Thankfully, a deal was done on implementation of the Northern Ireland protocol, but not before the Government had ordered their MPs to put controversial clauses back into the United Kingdom Internal Market Bill. As my colleague, Pat McFadden, said in the other place:

“It is one thing to play ping-pong with the House of Lords, but quite another to play ping-pong with yourself.”—[Official Report, Commons, 9/12/20; col. 925.]

The decision finally to drop the offending provisions from both Bills is a relief on many levels, particularly for those among us who care about the UK’s standing in the world. Far from providing the certainty that businesses and consumers need, this is yet another framework Bill that leaves much of the detail for later. We will have to wait for the Treasury to bring forward the full details of customs and excise duties, for example. Colleagues of mine in the Commons fought valiantly to get precise dates from Ministers but none were forthcoming. Can the Minister offer anything new on timings and sequences for the forthcoming regulations? If they will not be in force on 1 January, does that mean that some duties will be applied retrospectively? What forbearance might companies expect, given these extremely tight timelines?

Another area where we have had little detail is that of customs agents and intermediaries. Several weeks ago I asked the noble Lord about progress towards recruiting 50,000 new customs staff, a commitment which is frequently mentioned by Ministers when they discuss Brexit preparedness. The Minister helpfully clarified that these are industry recruits rather than civil servants, and, like colleagues across government, he was unable to provide figures. Indeed, he referred to the oft-cited 50,000 figure as

“a bit of a finger in the air, to be honest”.—[Official Report, 19/11/20; col. 1602.]

Now that a little more time has passed, is he able to confirm today which way the wind is blowing on that matter?

In the Commons, the Exchequer Secretary pointed to the free-to-use Trader Support Service as evidence of the Government’s support for business. Some 18,000 firms were said to have signed up for this tool. Can the Minister confirm what proportion of businesses which regularly move goods to Northern Ireland this represents?

As a result of the recent Joint Committee outcome, we now have a trusted trader scheme, providing a grace period for supermarkets. While this represents a significant step forward, again, it has come incredibly late in the day. The Northern Ireland Retail Consortium has long expressed concern about business readiness for these changes, while the Food and Drink Federation has voiced what many are thinking: that the process has been a shambles. Even with this agreement, the absence of an overarching trade deal would increase costs for businesses and communities in Northern Ireland. Returning to my point about the early clauses of the Bill, we cannot be sure what these costs will be until the Treasury publishes further information. Can the Minister confirm that, when fleshing out the detail, the department will remain mindful of Northern Ireland’s economic position vis-à-vis the rest of the UK?

We had all, parliamentarians and the public, hoped to have clarity on trade agreements long before now. Indeed, we expected to be dealing with the implementation legislation this afternoon. I had certainly not anticipated the possibility of taking my turkey out of the oven while the Government are still cooking their so-called oven-ready deal. Even at this late stage, and with festive good cheer in mind, let us hope the Prime Minister will finally deliver on his pledge to the British people, enabling us to focus on other issues as we move into 2021.

Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con) [V]
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My Lords, thank you for your thoughtful contributions to this debate. I shall try to address the issues raised but first, I shall briefly review the achievements of this Bill.

At its heart, the legislation seeks to ensure that businesses across the United Kingdom can continue to trade unhindered after the end of the transition period. The Government are determined to uphold the commitments to the people of Northern Ireland under the Northern Ireland protocol and to protect the progress made under the Belfast/Good Friday agreement. The Bill will help support these commitments by providing legal certainty for the customs, VAT and excise systems in Northern Ireland after the end of the transition period. It enables us to put in place decisions made by the Joint Committee on goods not at risk of entering the EU.

I start with the noble Lord, Lord Hain, who asked about the “notwithstanding” provisions. The UK Government set out on 17 September that Parliament would be asked to support the use of provisions in Clauses 44, 45 and 47 of the United Kingdom Internal Market Bill and any similar subsequent provisions in a Finance Bill only in circumstances where the fundamental purposes of the Northern Ireland protocol would be undermined. These clauses were introduced as reasonable steps to create a safety net so that the Government would always be able to deliver on their commitments to the people of Northern Ireland in the event that a negotiated outcome could not be reached in the Joint Committee. However, following intensive and very constructive work over the past few weeks by the UK and the EU, we now have an agreement in principle on all the issues in relation to the protocol on Ireland and Northern Ireland. As we have mutually agreed solutions, the Government have not included these elements in the Bill.

The noble Lord, Lord Hain, and others asked about agri-products. The Government have outlined in their Command Paper that there are no plans for any new bespoke customs infrastructure in Northern Ireland or at ports in GB to implement the protocol. We have always acknowledged that there would need to be some additional controls on agri-food movements between GB and Northern Ireland to reflect the island of Ireland’s existing status as a single epidemiological unit, but we have also been clear that these new processes could never be allowed to put food supplies to Northern Ireland at risk. That is why the deal we have reached with the EU and the support we have put in place do what is necessary to protect and preserve GB-NI agri-food trade from 1 January.

The noble Lord, Lord Hain, also asked about a US trade deal. It was always going to be a complex thing to implement, which is probably why the EU has not achieved it yet, but we will of course continue to pursue it with vigour.

The noble Baroness, Lady Kramer, asked about the complexity of the Northern Ireland VAT rules. In implementing the Northern Ireland protocol, the Government have sought to minimise changes to how the rules will operate in practice as far as possible. There will be very few practical changes for the vast majority of traders in Northern Ireland, and this is clear from the HMRC guidance on VAT under the protocol which was first published on 26 October. Businesses will continue to use their current VAT number, HMRC will continue to administer the VAT system for the whole of the UK, and businesses will continue to complete their single VAT return and account for VAT in the same way as they do today, including where they sell goods between GB and NI.

On authorised traders, the Government have consistently underlined the importance of specific solutions for authorised traders, such as supermarkets, which have stable supply chains, comprehensive oversight of warehousing and distribution operations and move prepackaged products for retail sale solely into Northern Ireland. In particular, it is essential to take account of the time it will take for those operations to adapt to the SPS requirements of the protocol, including the required certifications and authorisations. This has been a priority throughout discussions with the EU, and the arrangements that have been agreed provide a sensible, phased solution. This means that authorised traders, such as supermarkets and their trusted suppliers, will benefit from a grace period through to 1 April 2021 from official certification for products of animal origin, composite products, food and feed of nonanimal origin and plants and plant products. The UK Government and the Northern Ireland Department of Agriculture, Environment and Rural Affairs will engage in a rapid exercise to ensure those traders are identified prior to 31 December, so they can benefit from the grace period. The Government will not discriminate against small suppliers or between companies in implementing these practical measures.

My noble friend Lady Altmann asked about tax-free VAT for visitors—indeed, a number of other noble Lords asked the same question. The Government have been clear that they recognise the contribution that the VAT retail export scheme, or VAT RES, has made to international tourism and retail in the UK. However, there was not a choice to maintain VAT RES as it is today. The choice was between extending the scheme to EU residents or removing it completely, as WTO rules specify that goods bound for different destinations must be treated in the same way. Fewer than one in 10 non-EU visitors to the UK use VAT RES, and it is not a policy for discussion in this debate. The rules on VAT RES are not contained in the Bill.

The noble Lord, Lord Bruce, asked about small-value online sales in Northern Ireland. The Northern Ireland protocol means that Northern Ireland will continue to align with the EU VAT rules in respect of goods but not services. However, Northern Ireland is and will remain part of the UK’s VAT system. Changes to accounting for VAT on goods supplied to Northern Ireland are in most cases identical to the changes for supplies in Great Britain. Businesses selling goods to a GB or NI customer will see little if any difference in accounting for their VAT. Low-value consignment relief, the important VAT relief for goods valued at £15 or less, will be removed in both GB and Northern Ireland.

The noble Baroness, Lady Ritchie, asked for assurance that there is consistency between the Bill and the Northern Ireland protocol. The powers in the Bill allow us to implement the Northern Ireland protocol in a way that is consistent with our obligations. She also asked about fish landings. There will be no new SPS requirements for UK-flagged vessels with their port of registration in Northern Ireland when landing fishery products into Northern Ireland or into EU ports. This will be the case regardless of the location from which such products are caught.

On enforcement and anti-avoidance between NI and GB, HMRC will enforce these provisions through risk-based checks and random spot checks. HMRC will also conduct behind-the-border intelligence-led investigations, focusing in particular on high-risk traders and high-risk commodities. It will have the power to prosecute anyone who tries falsely to claim unfettered access for their goods. Wrongly claiming goods status is a form of tax evasion which HMRC will treat as seriously as any other.

The noble Baroness also asked about the EU presence in Northern Ireland. We have reached an agreement with the EU on practical working arrangements which will enable EU officials to exercise their rights under Article 12 of the protocol. These arrangements recognise our position that there should be no permanent EU mini-embassy in Northern Ireland, nor any concept or perception of joint controls. All processes required under the protocol would be carried out by UK authorities. We will ensure that these principles are fully upheld as the arrangements are put into practice from the end of the transition period.

The noble Baroness asks about the certainty that HMRC will have systems ready for 1 January. HMRC has committed to having systems in place to deliver the protocol and facilitate the flow of trade between Great Britain and Northern Ireland. That will include ensuring that electronic declarations for both fiscal and regulatory purposes can be received and processed, while high-risk internal delivery is on track to deliver a functioning model by the end of the transition period.

The software system for the Customs Declaration Service is live and can accept all import and export declaration types. Its minimal viable product has been successfully delivered, all critical core functionality is embedded and it is fully compliant with the union customs code legislation. The CDS has been scaled to be able to process Northern Irish protocol declarations, including GB traders, to move across. The vast majority of additional delivery for the Northern Ireland protocol for CDS is in a live-testing environment. Feedback from our delivery partners has been positive on functionality, although they continue to flag that end-user readiness for the end of December remains extremely challenging. That is why the Government have established the trader support service. It is worth adding as a little further reassurance that the CDS system has been in existence for some time; it is not in any way a brand new system. The changes that are being added are to deal with the dual tariff system under the Northern Irish protocol.

The noble Baroness, Lady Suttie, asked about non-qualifying goods. The Government are delivering unfettered access in two phases. In the short term, our priority is continuity for trade groups. Therefore, the current definition for Northern Ireland qualifying goods is expansive and includes any goods in free circulation in Northern Ireland. In the long term, our priority is to focus the benefits of unfettered access on Northern Irish businesses. Therefore, we will lay a new definition of Northern Ireland qualifying goods that includes only goods moved by businesses established in Northern Ireland. In the long term, additional protections will be in place for Northern Irish agricultural goods.

In the agri-sector, the rules ensure that our Northern Ireland qualifying goods can have unfettered access into GB; all other goods will have to undergo standard UK import processes, regardless of what route they take. The Secretary of State for Agriculture, Food and Rural Affairs is working with the Northern Ireland Executive to design additional protections for Northern Ireland’s farmers and other agricultural businesses. These will be designed with the consent of the sector and involvement of the Northern Ireland Executive.

The noble Baroness, Lady McIntosh, asked about the issue of temporary equivalence on phytosanitary measures. There will be no equivalence of SPS standards after the transition period between the EU and the UK, including for GB goods entering Northern Ireland. All agri-food goods will require an export health certificate, which must be verified by a veterinary practitioner before goods arrive at the border control post for full SPS border checks.

The noble Baroness was also concerned about the abolition of free VAT. I think that I have addressed it, but I can add some additional information. We consulted on the change and specifically asked for evidence on the impacts of withdrawing the scheme. This evidence was assessed alongside the fiscal and economic impacts and balanced against the policy objectives in the area. HMRC has also published a tax information impact note. The OBR, the fiscal watchdog that reports to Parliament, has now published its independent and up-to-date assessment for fiscal effects, which confirms the Government’s conclusion that withdrawal of VAT relief will raise a significant amount of revenue for the Exchequer, with a limited behavioural response and negligible impact on visitor numbers.

The noble Baroness, Lady McIntosh, also asked about the UK global tariff. The Government have today taken the necessary steps to bring into legal effect the UK global tariff, having just earlier this afternoon laid the relevant statutory instrument before Parliament as part of a wider legislative package. The UK global tariff will replace the EU’s common external tariff as the UK’s most favoured nation tariff from 1 January 2021. It is simpler to use, greener and cuts red tape and other unnecessary barriers to trade. It is also tailored to the needs of the UK economy, backing British business to compete on the world stage.

The noble Lord, Lord Fox, also asked about the removal of VAT relief. Just to build on my earlier comments, the OBR has forecast that these changes will raise over £300 million a year over the next five years—that is £1.6 billion over the scorecard period. Approximately two-thirds will come from improving collection and tackling non-compliance through the new VAT treatment of cross-border goods. The final third of the revenue comes from the removal of low-value consignment relief, which will end widespread abuse of this relief.

The noble Lord also asked about the rules on duty suspension. We have kept the rules in relation to the movement of excise goods and duty suspension between GB and NI as close as they are now, to reduce the burden on excise businesses and maintain the important controls that we have in place to prevent excise fraud.

A number of noble Lords asked about the role of the trader support service, or TSS, in Northern Ireland. I can provide some level of reassurance that we now have nearly 20,000 traders registered with it; that splits almost half and half between NI-based and GB-based businesses. We always calculated that there would be around 12,000 NI businesses that would need these services, so we are now at a very high proportion of those. They are receiving weekly bulletins from the TSS on readiness. The TSS call centre is rapidly standing up: it commits to have around 700 people—one noble Lord thought it was 800, but it will not be quite as many as that—and all offers have been made, and the numbers are arriving on a weekly basis. The current number working this week is something in the order of 250, with more arriving rapidly; I shall ask officials to correct me if I am wrong on that number. They will also be able to assist with advice on the complexities arising from the joint committee agreements that we have recently made, but we are encouraged by the progress being made.

The noble Lord, Lord Tunnicliffe, asked a number of questions. On the timings and sequencing of forthcoming regulations, the EU-UK joint statement made last week sets out that an agreement has been reached in principle regarding the implementation of the Northern Ireland protocol. As part of that statement, this agreement is in principle, and the resulting draft texts will be subject to respective internal procedures in the EU and the UK. Once this is complete, a joint committee will be convened formally to adopt them. Further details, including regulations, will be set out in due course, before the end of the transition period.

The excise statutory instruments covering Northern Ireland will be laid in Parliament as soon as possible following Royal Assent. Those statutory instruments will come into force from 11 pm on 31 December and apply from that point onwards. Any new excise change that arises as a result of the excise clauses in this Bill will apply from that point onwards.

The noble Lord asked about forbearance. On customs, we recognise that mistakes happen, even when a business has taken care to meet its obligations, particularly in a new environment. HMRC will be taking a supportive approach and will not charge a penalty if a business has taken reasonable care to get its tax right. Where honest mistakes happen, HMRC will be stepping in to help customers put things right, but taking tougher action on deliberate, fraudulent behaviour. Financial penalties will generally be reserved for those who are able to comply but deliberately choose not to. HMRC will also take a supportive approach on excise. We will not charge a penalty if a business has taken reasonable care to get its excise tax right. Again, where honest mistakes happen, HMRC will step in to help customers put it right, while taking tougher action on deliberate fraud.

The noble Lord, Lord Tunnicliffe, asked about progress on the recruitment of customs agents. Building on my earlier comments, when thinking about readiness it is helpful to think about the capacity to make declarations, instead of the actual number of staff involved. A number of customs intermediaries have invested in improving their computer systems over the past year. We have made financial assistance of some £80 million available to them; we are still allocating grants at the moment. The sector is varied and made up of a number of business models, including specific customs brokers, freight forwarders and fast-parcel operators, all of which will require different numbers of staff to complete declarations and provide their services.

I am conscious of time. The noble Lord, Lord Tunnicliffe, asked about the proportion of businesses regularly moving goods between Northern Ireland and GB. He correctly pointed out that over 18,000 firms have registered. The TSS outreach is ongoing; the call centre I referred to a few moments ago is outbound in conversation with traders daily. He also asked about fleshing out the detail of the Joint Committee. The agreement we have reached in principle means that we can establish arrangements which protect internal UK trade from tariffs, regardless of whether we have a wider free trade agreement or not. Further details on implementation will be set out in due course.

I finish by welcoming my noble friend Lord Sharpe to the House and thank him and the noble Baroness, Lady Pidding, for their picture of optimism. I know that is a minority view in this House, but I share it; I believe that we have huge opportunities to take. The noble Baroness, Lady Bennett, asked for concrete examples: one is the reform of rules on procurement, on which we published the formal consultation yesterday. This allows us to completely replumb—to use the terminology of the noble Lord, Lord Fox—the way this country carries out public sector procurement, which is worth some £290 billion a year. It will enable us to ensure that SMEs and areas not normally given preference in the UK can have a much fairer crack of the whip.

I have sought to answer noble Lords’ questions to the best of my ability. As is regularly the case, many of the expert interventions illustrate the significant value of the ongoing scrutiny of this House. If I have missed a point of substance in my closing remarks, noble Lords should contact me and I will respond in the normal way.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Sitting suspended.

Taxation (Post-transition Period) Bill

(1st reading (Hansard): House of Lords)
Tuesday 15th December 2020

(2 months, 2 weeks ago)

Lords Chamber

Read Hansard Text

First Reading

The Bill was brought from the Commons, endorsed as a money Bill, and read a first time.

House adjourned at 8 pm.

Taxation (Post-transition Period) Bill

(3rd reading: House of Commons)
Tuesday 15th December 2020

(2 months, 2 weeks ago)

Commons Chamber

Read Hansard Text Bill Main Page
HM Treasury

Consideration of Bill, not amended in the Public Bill Committee

[Relevant documents: First Report of the Northern Ireland Affairs Committee, Unfettered Access: Customs Arrangements in Northern Ireland after Brexit, HC 161, and the Government response, HC 783; Oral evidence taken before the Northern Ireland Affairs Committee on 16 and 23 September and 2 December 2020, on Brexit and the Northern Ireland Protocol, HC 767.]

New Clause 1

Act to have effect notwithstanding any international or domestic law

(1) The provisions of this Act have effect notwithstanding any relevant international or domestic law with which they may be incompatible or inconsistent.

(2) In this section “relevant international or domestic law” includes—

(a) any provision of the Northern Ireland Protocol;

(b) any other provision of the EU withdrawal agreement;

(c) any other EU law or international law;

(d) any provision of the European Communities Act 1972;

(e) any provision of the European Union (Withdrawal) Act 2018;

(f) any retained EU law or relevant separation agreement law; and

(g) any other legislation, convention or rule of international or domestic law whatsoever, including any order, judgment or decision of the European Court or of any other court or tribunal.—(Sir William Cash.)

Brought up, and read the First time.

William Cash Portrait Sir William Cash (Stone) (Con)
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I beg to move, That the clause be read a Second time.

Rosie Winterton Portrait Madam Deputy Speaker (Dame Rosie Winterton)
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With this it will be convenient to discuss the following:

New clause 2—Provisions of Act to have effect notwithstanding inconsistency or incompatibility with international or other domestic law—

(1) The provisions of this Act have effect notwithstanding any relevant international or domestic law with which they may be incompatible or inconsistent.

(2) Accordingly (among other things)—

(a) regulations under this Act are not to be regarded as unlawful on the grounds of any incompatibility or inconsistency with relevant international or domestic law (and section 6(1) of the Human Rights Act 1998 does not apply in relation to the making of regulations under this Act);

(b) all rights, powers, liabilities, obligations, restrictions, remedies and procedures which are, in accordance with section 7A of the European Union (Withdrawal) Act 2018, to be recognised and available in domestic law, and enforced, allowed and followed accordingly, cease to be recognised and available in domestic law, or enforced, allowed and followed, so far and for as long as they are incompatible or inconsistent with any provision of this Act;

(c) section 7C of that Act ceases to have effect so far and for as long as it would require any question as to the validity, meaning or effect of any relevant separation agreement law to be decided in a way which is incompatible or inconsistent with a provision of this Act; and

(d) any other provision or rule of domestic law that is relevant international or domestic law ceases to have effect so far and for as long as it is incompatible or inconsistent with a provision of this Act.

(3) Regulations under this Act are to be treated for the purposes of the Human Rights Act 1998 as if they were within the definition of “primary legislation” in section 21(1) of that Act.

(4) No court or tribunal may entertain any proceedings for questioning the validity or lawfulness of regulations under this Act other than proceedings on a relevant claim or application.

(5) The period mentioned in each of the following provisions (standard time limits for seeking judicial review), or any corresponding successor provision, may not be extended under any circumstances in relation to a relevant claim or application—

(a) rule 54.5(1)(b) of the Civil Procedure Rules in relation to England and Wales;

(b) section 27A(1)(a) of the Court of Session Act 1988 in relation to Scotland; and

(c) rule 4(1) of Order 53 of the Rules of the Court of Judicature (Northern Ireland) 1980 (S.R. (N.I.) 1980 No. 346) in relation to Northern Ireland.

(6) The jurisdiction and powers of a court or tribunal in relation to a relevant claim or application are subject to subsections (1) and (2).

(7) In section 7A of the European Union (Withdrawal) Act 2018, in subsection (5)—

(a) omit the “and” at the end of paragraph (e); and

(b) at the end of the subsection insert “, and

(g) the provisions of the Taxation (Post-transition Period) Act 2020 (provisions to which this section is subject).”

(8) In this section—

“relevant claim or application” means—

(a) a claim for judicial review in relation to England and Wales,

(b) an application to the supervisory jurisdiction of the Court of Session in relation to Scotland, or

(c) an application for judicial review in relation to Northern Ireland, where the claim or application is for the purpose of questioning the validity or lawfulness of regulations under this Act;

“relevant international or domestic law” includes—

(a) any provision of the Northern Ireland Protocol;

(b) any other provision of the EU withdrawal agreement;

(c) any other EU law or international law;

(d) any provision of the European Communities Act 1972;

(e) any provision of the European Union (Withdrawal) Act 2018;

(f) any retained EU law or relevant separation agreement law; and

(g) any other legislation, convention or rule of international or domestic law whatsoever, including any order, judgment or decision of the European Court or of any other court or tribunal, but does not include the Convention rights within the meaning of the Human Rights Act 1998 (see section 1(1) of that Act);

“relevant separation agreement law” has the meaning given by section 7C(3) of the European Union (Withdrawal) Act 2018.

New clause 3—Treasury use of powers—

(1) The Treasury must, within four working days of the day on which this Act is passed, publish a report setting out the timeframe within which it will use the powers to make regulations conferred by—

(a) section 40A(2) of TCTA 2018;

(b) section 40B(1) and (2) of TCTA 2018;

(c) section 30A(4) of TCTA 2018;

(d) section 30B(1) and (3) of TCTA 2018;

(e) section 30C(5) of TCTA 2018; and

(f) section 5(2) of this Act.

(2) The Treasury must publish an annual report setting out how it has made use of the powers referred to in subsection (1).

(3) Each report under subsection (2) must include an assessment of—

(a) what considerations the Treasury made when deciding to use its powers, and

(b) the impact of the regulations on individuals and businesses throughout the UK, and specifically in Northern Ireland.

Amendment 1, in clause 1, page 2, line 43, at end insert—

“(4A) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (3)(b) within four working days of this section coming into force.”

Amendment 2, in clause 2, page 4, line 24, at end insert—

“(5) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (4)(a) within four working days of this section coming into force.”

William Cash Portrait Sir William Cash
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The clauses before us are directly related to what was originally in the United Kingdom Internal Market Bill, and they were there for a very good reason. They were there because it is absolutely essential that we maintain our sovereignty, and the decisions must be taken by Parliament, and should not be taken by the House of Lords, whose Members are unelected. We are the House of Commons, and that part of the House of Commons which is elected has a Government who were elected in December 2019, almost exactly one year ago. In that general election, it was made quite clear that the decision before the British people was effectively to be decided in line with what was decided in the referendum. There are therefore two things joining together, in conjunction with one another: the referendum in 2016, followed by a whole series of enactments of Parliament. That includes the decision on the notification of withdrawal, which was accepted by the Labour party and was voted through in the House of Commons by 499 to around 120. It is not as if anybody could say that the supremacy of Parliament was not made manifest in the light of the referendum.

There was then a series of other enactments, and we eventually ended up with a confirmation of Acts of Parliament, including the European Union (Withdrawal Agreement) Act 2020, which was passed after the general election. Section 38 of that Act made it abundantly clear that we had the right to insist—as a matter of constitutional principle and through the enactment of an Act of Parliament—that the United Kingdom was sovereign, and, furthermore, that we would be allowed to override the withdrawal agreement. That was contained in section 38(2)(b), which specifically refers to section 7A and in turn therefore directly relates, through the use of the word “notwithstanding”, to the overriding direct effect. That is a very important point—a point that is conveniently overlooked by some people, who continually assert that somehow or other the Government have been out of order, breaking international law or breaking constitutional principles. But they never come forward with any arguments; as I said in a recent speech in the House regarding the attitude of the House of Lords, they were basically strong on assertion and empty in argument.

John Redwood Portrait John Redwood (Wokingham) (Con)
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Does my hon. Friend agree that those of us who could only vote for the withdrawal legislation because it contained clause 38 understood fully that it was a conditional agreement to the withdrawal agreement, because the EU always said that nothing is agreed until everything is agreed, and we wished to see the full package before deciding whether to allow it to be untrammelled?

William Cash Portrait Sir William Cash
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Yes, indeed. I sometimes find that Lewis Carroll has some very useful ways of putting things. There was the famous exchange between Alice and Humpty Dumpty, in which Humpty Dumpty says: “Words mean what you choose them to mean. The question is who is to be master, that is all.” Words can be used in all kinds of different ways to try to justify propositions that are unsustainable.

I say with respect, but none the less very firmly, that in this particular case it is absolutely clear that when the decision has been taken by the British people—the voters—in the referendum and has then been endorsed by an Act of Parliament and a whole series of other Acts of Parliament, including section 38, it really is not down to the unelected House of Lords to resist it on the scale that they have, and to claim that they can override the House of Commons. We have just had a whole series of agreements and disagreements going backwards and forwards on the UKIM Bill alone.

As Lord Bingham made absolutely and abundantly clear in chapter 12 of his magisterial book “The Rule of Law”, it is for Parliament to make law and pass Acts of Parliament; it is not for the judges to intervene, to seek to make law and to impugn the sovereignty of Parliament. Anyone who wants to get the full flavour of it should read chapter 12 of “The Rule of Law”, because it is the most explicit and clear statement that one could possibly imagine.

Kevin Hollinrake Portrait Kevin Hollinrake (Thirsk and Malton) (Con)
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If section 38 of the European Union (Withdrawal Agreement) Act 2020 has such overarching reach, why are new clauses 1 and 2 necessary in this Bill?

William Cash Portrait Sir William Cash
- Hansard - - - Excerpts

Because what section 38 does is reaffirm the capacity of Parliament to be able to make such provisions in other enactments should it be necessary to do so. Because of the complexity of the United Kingdom Internal Market Bill and the issues it raises—for example, as I have said in a previous speech this afternoon, with respect to the Northern Ireland protocol itself—there remain a number of matters that are still subject not only to the negotiation over in Brussels going on right now, but to the operation of the internal market of this country. I support that Bill, but I still believe it was a mistake to withdraw the “notwithstanding” clauses, because I think we are going to find that we will need them and we may yet need to reintroduce them on a future occasion. However, it will be section 38, which is explicit with regard to the withdrawal agreement, that will give us the authority and the statutory basis for doing that, and the same applies to the provisions I am referring to here. With regard to this Bill, we had expected that the “notwithstanding” clauses would be included in it and they were not, so I have taken the opportunity—in, one might say, my usual manner—to ensure that we have an opportunity to debate this issue today.

I now turn to the reasons why I am so clear in what I have said about state sovereignty in the context of international law. The United Kingdom as a state retains its sovereign right, and it was always capable of doing this, to withdraw from the EU. The EU is an international organisation; it is not a sovereign state. On the basis of state sovereignty, it would actually be contrary to the legal position under international law that the UK would require EU consent or agreement to leave the EU, but we do have article 50 and we did implement that in the European Union (Notification of Withdrawal) Act 2017.

State sovereignty is paramount to international law. As has been said:

“If States were not sovereign, no international law would be possible”.

It is quite an interesting idea. International law would be impossible if states were not sovereign, because they combine together to create the circumstances in which it applies. Each state has internal supremacy over how governmental functions are run and is shielded from external interference without consent. The UK as a sovereign state has a right to withdraw from an international organisation, and this right is recognised by the EU treaties themselves. This is evident from the words of article 50:

“Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.”

It could not be clearer from what I have said and from what everybody knows, as they have been through this passage or on this journey, that we have been through enactment after enactment. Nobody could possibly say that we have not done it lawfully. It has been done completely in the sight of the world, and I am astonished that anyone would even consider that we had not done it in the proper manner—we have done so, lawfully and in accordance not only with our constitutional law but with international law. In short, the UK’s right to withdraw from the EU is approved and agreed by international law, and only limited by UK constitutional law and thus by our own discretion, which we have exercised.

Following the Brexit referendum, the United Kingdom exercised its sovereign right to leave the EU and, as far as I am concerned, I believe this cannot be disputed. It is quite clear that we have done what was required under our own constitutional requirements and also, in my judgment, with regard to the question of international law itself. That was confirmed, for example, by the German federal constitutional court in the Maastricht treaty constitutionality case—I am now speaking about the Germans’ view of this, but it is interesting to observe—in which it said:

“Because the German citizen entitled to vote exercises his right to participate in conferring democratic legitimacy on the institutions and bodies entrusted with the exercise of sovereign authority principally through the election of the German Bundestag,”—

this is the same point I was making about our voters being represented by our Members of Parliament who passed the enactments in question—

“that parliament must also decide what is to be done about Germany’s membership of the European Union, its continuance and development”.

In other words, the principle is a common one between us and the German constitutional court.

That is of great importance in our understanding the context in which we must have the right to legislate ourselves in accordance with what our voters expect of us. We are entitled to do that in relation to the UKIM Bill or the Taxation (Post-transition Period) Bill, and we are entitled also to have a “notwithstanding” clause if we so decide. It is not for unelected persons—whether they are distinguished or otherwise, and whether they are numerous in the House of Lords or otherwise—to interfere with that.

The UK Parliament, being the supreme body in the British constitution, has the right to enact legislation inconsistent with the withdrawal agreement—I have already dealt with section 38—thereby explicitly reversing the direct effect option under article 4 of the withdrawal agreement. That is crucial, because article 4 says that, but for the fact that we are entitled to do that, it would have direct effect. That position has been set out on the UKIM Bill, which was published in September, and it was specifically stated that we would ensure that we had a “notwithstanding” clause. That has been unwisely removed, but we may come back to that on a future occasion.

The next question is, what is the position regarding the EU’s own attitude towards international law? I am afraid to say that it is guilty of recurring double standards. Article 3(5) of the treaty on European Union states:

“In its relations with the wider world, the Union shall…contribute to peace, security…and the protection of human rights…as well as to the strict observance and the development of international law, including respect for the principles of the United Nations Charter.”

But in the Kadi case, it was held that EU law is an autonomous legal order, meaning that in order for an international agreement to form part of EU law, it must not call into question the constitutional structure and values on which the EU is founded.

In the second Kadi case, the European Court of Justice, confirming its previous findings in the first case, ruled that the EU Courts

“must…ensure the review, in principle the full review, of the lawfulness of all Union acts in the light of the fundamental rights forming an integral part of the European Union legal order, including review of such measures as are designed to give effect to resolutions adopted by the Security Council under Chapter VII of the Charter of the United Nations.”

It is worth pointing out that the Security Council resolutions in question were adopted under chapter VII, which meant that those resolutions were adopted for the purposes of maintaining international peace and security and had to be carried out by members of the United Nations directly. Article 103 of the charter states:

“In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail.”

It is clear that our capacity as a sovereign nation is endorsed by the United Nations charter as well.

What is the position regarding the necessity of these “notwithstanding” clauses in principle? I have already explained the general power to override treaties,  particularly by reference to the European Union (Withdrawal Agreement) Act 2020. In the Miller case, a majority in the Supreme Court said that Parliament, in the exercise of its sovereignty, is free to legislate in any way it sees fit, including contrary to the UK’s international obligations, thus

“the sovereign power of the Queen in Parliament extends to breaking treaties”.

That was confirmed in a series of other cases, such as in Salomon, in EN (Serbia) and in the Attorney-General of Ontario v. Attorney-General of Canada. The Supreme Court has unambiguously stated that this power is a corollary of parliamentary sovereignty. I have already referred to what Lord Bingham said in chapter 12 of “The Rule of Law”, so I do not need to repeat that.

Kevin Hollinrake Portrait Kevin Hollinrake
- Hansard - - - Excerpts

My hon. Friend said a few moments ago that Parliament has a general power to override treaties. How would that work in the case of the free trade agreements that we have negotiated with other nations? Can we simply override those treaties at will if we do not like the findings of an investor-state dispute service?

William Cash Portrait Sir William Cash
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Interestingly, I made some reference to the principles that are under discussion in the current negotiations. Of course, we do not know the outcome of those negotiations as we speak—as I said in the previous debate, I wish them well—but it has to be made clear that, certainly as far as I and those of my friends who agree with me are concerned, one of the most crucial questions is that of state aid, because that issue is right at the heart of the discussions and negotiations this week. I asked the Secretary of State for Business, Energy and Industrial Strategy to assure the House that nothing in any treaty text or subsequent Act of Parliament will prevent the UK from having its own sovereign state aid rules, including on energy, so that we are not subjugated to EU state aid rules, nor to the European Court, given that the EU intends, as it has stated over the past week or two—in very bad faith, in my opinion—to impose and enforce its rules against us. Ultimately, of course, that would be done by a majority vote in the Council of Ministers, behind closed doors, without our even being at the table after 31 December. The fact is that we have to assert our sovereignty in the negotiations so that any treaty that emerges from them—if one does—must comply with the assertion of the sovereignty of this House, this country and this Parliament, and must at the same time apply whether in respect of direct or indirect effect.

John Redwood Portrait John Redwood
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Is it not also the case that the agreement with the European Union is muddled and contradictory? The EU has always said that it understands that the UK is going to be sovereign, so if this House simply asserts our sovereignty, as it can do, that is, in a way, our fair interpretation of the agreement.

William Cash Portrait Sir William Cash
- Hansard - - - Excerpts

Yes, absolutely. Sovereignty is also a question of fact. I do not want to get into the intricacies of 15th century history, but there was a chap called Henry VII who made it abundantly clear that as far as he was concerned he won the battle of Bosworth and that was it. I do not think we need to pursue that one too much, because sovereignty is quite a simple thing when it comes down to it: it is called political will and legal arguments of the kind I am addressing.

Kevin Hollinrake Portrait Kevin Hollinrake
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I am interested in my hon. Friend’s point about sovereignty over free trade agreements. In 2009, an American firm called Cargill was awarded around $90 million because Mexico had broken a free trade agreement with the United States by, in effect, banning soft drinks that were made with high-fructose corn syrup, putting Mexican producers at an advantage. Mexico acted unilaterally, with sovereignty; is my hon. Friend saying that Mexico was allowed to do that? That is not what the dispute-settlement service determined.

William Cash Portrait Sir William Cash
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I cannot speak for that dispute-settlement service and nor can I speak for the Joint Committee that is currently considering some of these matters. We do not really know exactly what is being decided in that Joint Committee, which is why I was concerned earlier to point out that I have asked the Chancellor of the Duchy of Lancaster to appear before my European Scrutiny Committee, of which I have the honour to be Chairman and on which I have served for 35 years, so I have a little experience of how it operates. Under our Standing Orders, it is our task—our duty—irrespective of party politics, to examine matters of legal and political importance and report to the House, and we are doing that. Of course, we need evidence, and we need to have people to appear before us and give evidence, and sad to say, despite the fact that I have written four letters to the Chancellor of the Duchy of Lancaster, he has declined to appear in front of the Committee, although he seems to be happy to see the House of Lords equivalent Committee and also the Committee chaired by the right hon. Member for Leeds Central (Hilary Benn).

Be that as it may, I have made the point, and sadly I cannot force the Chancellor of the Duchy of Lancaster to appear. It would, however, be extremely useful if he did, because then he would able to explain just exactly what he has agreed in the Joint Committee, of which we have only a smidgen of information. It would be a two-way advantage if he did it, and all I can say is that the position is as I have described it, and I am sorry about that. No doubt we will find out in due course.

Jim Shannon Portrait Jim Shannon (Strangford) (DUP)
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I just want to clarify one matter. Perhaps the hon. Gentleman can do that. When it comes to sovereignty and the free trade agreements that he and others have referred to, can he give me an educated guess on where Northern Ireland stands with sovereignty? Do we have the same freedom and the same rule of law across the United Kingdom of Great Britain and Northern Ireland, or will Northern Ireland be treated differently?

William Cash Portrait Sir William Cash
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Provided the treaty itself, and therefore the Act of Parliament that follows from it, maintain the principles I set out in my question to the Secretary of State for Business, Energy and Industrial Strategy yesterday, there is no question as to whether we will be entitled to exercise our sovereignty and to displace European Court jurisdiction and the EU laws, for example—there are many others—on state aid. We will be entitled to do so, but it is a matter of constitutional law and also, as I have explained, international law.

I am afraid that there has been a great deal of assertion that we are so-called potentially in breach of international law, but international law recognises the fact that a country can exercise its sovereign rights to defend its economic interests from a national point of view. In fact, Helmut Schmidt did precisely that in, I think, 1998 over the question of the deutschmark and the dollar. There are many examples, and we have not got time to go into them all today.

I will turn to some of the precedents just to illustrate the fact that it is not such a novel idea somehow or other to use a “notwithstanding” clause or formula, and that applies to all parties, whether that is the Labour party, the coalition, where the Liberal Democrats joined in and voted with us on these matters, or the Conservative party. For example, the Income and Corporation Taxes Act 1988 provides that the parts that diverge from treaty obligations—the language of the section was completely unambiguous—were “notwithstanding anything contrary” to those arrangements set out in the Act. The section was enacted to retaliate against the introduction of unitary tax systems adopted by certain states in the US, most notably in California. I think my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) may know about that.

What I am saying is that such provisions are not exactly unusual. Indeed, in the Finance Act 2013, which was under the coalition, the Liberal Democrats went along with allowing Parliament to effectively write a blank cheque to interfere with international treaties—approximately 130 of them, in fact. That provision is still in force. No one questioned the Chancellor’s right to introduce any such legislation or, indeed, the lawfulness of the work of Her Majesty’s Revenue and Customs, which still relies on it in combating questions relating to such arrangements.

Then there are other precedents. I shall stick to Finance Acts at this juncture as that is what we are dealing with in the context of this particular Bill, which is, of course, a finance Bill. Section 52 of the Finance (No. 2) Act 1945 overrode aspects of the Ireland-UK tax treaty of 1926. I hope I may be allowed a slight smile here, as I look across the Irish sea and consider the position with regard to the Irish Government in relation to the “notwithstanding” clauses, because we actually did this in 1926. The Act was used as an example in a case involving Collco in which the court said that if the statute is unambiguous, its provisions must be followed even if they are contrary to international law. It could not be clearer. The Finance Act 1955 again overrode the Ireland-UK tax treaty. In the Inland Revenue Commissioners v. Collco Dealings, Viscount Simonds said, “The company has no rights under any agreement. Its rights arise from the Act of Parliament, which confirmed the agreement and give it the force of law.”

Section 59 of the Finance Act 2008 excluded UK residents from benefiting from provisions in respect of profits from the trade etc. Then there is the coalition arrangement under the Taxation (International and Other Provisions) Act 2010 where, again, the position was made entirely clear in accordance with the precedents.

Indeed, it is not just the UK, or even a party in the UK, that has been doing this over a period of time in its economic and national interests. An example from 2020 is the European Central Bank’s bond-buying scheme. In May 2020, the German constitutional court sought to override EU law and the Court of Justice, suggesting that the ECB’s public sector purchase programme was unconstitutional. Then there are the bail-outs. Every one of the bail-outs from 2010 to 2015 could justifiably be described as in breach of article 125 of the Treaty on the Functioning of the European Union. I will not read out the details, but I shall give some examples: the first Greek bail-out in 2010; the Irish bail-out in 2010; the Portuguese bail-out, the second Greek bail-out; the Spanish bail-out; the Cypriot bail-out; and the third Greek bail-out in 2015. There are so many examples—whether in the UK, or in relation to other member states, or, indeed, in relation to the EU itself—that have demonstrated that, when it comes to the question of sovereignty and the ability to override treaties, this is done quite often as a matter of course. I am not saying that it is done generally. I am not saying that it happens every week or every day. What I am saying, however, is that it happens and that it happens for good reasons which are directly related to the arguments on sovereignty which I gave at the beginning, and it is not for the unelected House of Lords to tell us. That is why, in this Bill, they would not have been able to do so because of the issue of financial privilege.

I am bringing forward these amendments. I shall decide as we proceed whether I will press them to a vote. I will leave it at that for the moment, because I am more than fascinated to hear the usual Europhile utterings of the right hon. Member for Wolverhampton South East (Mr McFadden) who is about to speak.

Pat McFadden Portrait Mr Pat McFadden (Wolverhampton South East) (Lab)
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It is a pleasure, as always, to follow the hon. Member for Stone (Sir William Cash). I rise to speak to new clause 3 in the name of the Leader of the Opposition, and, with it, amendments 1 and 2, which are also in his name and the names of my right hon. and hon. Friends. These amendments are pro-business and pro-compliance. They are motivated by trying to get as much information to the businesses affected by the changes in this Bill in as short a timescale as possible.

The Bill that we are discussing sets out a number of taxation changes, many of them as a result of the Northern Ireland protocol. These measures will have an impact on businesses throughout the United Kingdom, but in particular, businesses in Northern Ireland and those who trade with them. In a recent evidence session for the Northern Ireland Affairs Committee, HMRC was asked how many new declarations there would be under the kind of system set out in the Bill. The official giving evidence said, to be fair, that it was a new system, so they could not be sure, but that there could be about 11 million new declarations a year. That is a sizeable additional amount of information that businesses have to publish.

The amendments we are putting forward this afternoon try to help those businesses to cope with the changes set out in the Bill. I should stress that nothing in these amendments alters the terms of the changes set out in the clauses or the purpose of the Bill. The Government have signed up to the protocol and we want to see them abide by the agreement they have made. There may be those in the Conservative party—in fact, there almost certainly are—who do not like the obligations that the protocol entails, but we believe that the Government should stick by the commitments they have made. The changes in the Bill are largely, though not entirely, a consequence of that agreement.

However, many of the clauses in the Bill are enabling in their nature. They confer on the Treasury powers that are to be filled in at a later date. For example, clause 1 says that the Treasury may by regulations provide a definition of goods being imported into Northern Ireland that

“are at risk of subsequently being moved into the European Union.”

It goes on to talk about which duties shall apply in the case of these so-called at-risk goods. Very similar language is used in clauses 2 and 5 and a number of the schedules—that the “Treasury may by regulations” provide.

To be fair to the Minister and to the authors of the Bill, there is nothing unusual about a Bill taking enabling powers that are then to be set out in further detail in regulations that come after the Bill has passed its parliamentary proceedings, but what is unusual is the context and the timescale involved. The end of the transition period is in just 16 days and, in the middle of those 16 days comes the Christmas holidays, so the Government are asking businesses to absorb, prepare for and comply with a new series of taxation regulations that those businesses have not yet seen, and to do so over a two-week period coinciding with the biggest holiday of the year. And they are doing that at the end of a year in which the very same businesses have already faced unprecedented turbulence in the wake of a global pandemic.

The businesses concerned do not want to fall foul of regulations. They want to comply. They want to be able to get this right. Businesses in Northern Ireland and the trade bodies that represent them have put in enormous efforts over the past few years to try to prepare for this moment. Of course, they could have spent all that time and effort doing what they were set up to do, which is to provide goods and services to their customers, but the process of Brexit and the specific circumstances of Northern Ireland, which are now enshrined in the Brexit withdrawal deal, have meant that a great deal of effort has had to go into trying to understand the trading and taxation rules that will kick in after the end of this year. So here we are with this Bill, with just over two weeks to go. With the best will in the world, how do the Government expect them to do this on this kind of timescale?

The purpose behind the amendments is very simple: it is, even at this late stage, to encourage the Government to get a move on. When I moved a similar amendment in Committee last week, the Minister said that guidance had been published in October, but that is not what we are talking about here. We are talking about the details of the regulations enabled by this Bill, which was published only last week.

The Minister cannot seriously be telling the House that everything covered by the Bill was dealt with in October, and there is nothing more to add. If that was the case, it would prompt the question as to why it was published only last week. The answer, of course, is that the Government wanted to use it to hold the threat of the kind of provisions that the hon. Member for Stone has just been talking about over the trade negotiations—a damaging and self-defeating tactic.

Many of the regulations stem from the Taxation (Cross-border Trade) Act 2018. New clause 3 sets out which sections of that Act are referred to in the Bill and changed by it. It asks the Government to publish the new regulations in short order and, in future, to report on their effects. Even if the Government accepted the new clause and agreed with that, however, it would still be difficult for businesses to understand it all before the new year. Is the Minister confident that HMRC has the capacity to process all the applications for authorisation that are now likely to come in from Northern Ireland-based businesses that want to comply with the new rules from 1 January?

What is attitude of the Treasury and HMRC to the enforcement of the changes in the early months of next year? For example, will businesses be penalised for not paying the relevant duties or filling out all the necessary declarations, if that happens next month while they are still trying to absorb fully the detail of the regulations? Have the Government factored in the difference between the desire to comply and the basic capacity to comply? I stress that that would not be a case of tax evasion or some clever scheme thought up by advisers to get round the rules. It would be the result of being presented with legislation just a few days before it came into force.

This not just drafting understood changes to an already understood system, as happens in Finance Bills—for example, if a Budget announces an extra penny or two on a pint of beer. These are new systems that deal with new concepts as a result of our departure from the EU and our commitments under the Northern Ireland protocol. The timescale is not the fault of businesses; the responsibility for that lies with Ministers. Amendments 1 and 2 are in the same vein as new clause 3 but focus more directly on the new system of duties and rebates set out in clauses 1 and 2, which are probably the newest measures in the Bill with which businesses will have to comply.

For the sake of completeness, I will briefly set out the Opposition’s attitude to new clause 1. The hon. Member for Stone has returned with our old friend, “notwithstanding”. Rarely can so much have been loaded on to one word. Behind it lies a concept that should give us all pause for thought. The hon. Member for Thirsk and Malton (Kevin Hollinrake) got to the heart of it when he asked whether it could be applied to every treaty or every international trade agreement. If it could—we are in the midst of trying to agree one by the end of the year—we have to ask what it will do in the mind of the party on the other side of the table, not only in our discussions with the EU, but presumably in discussions with other potential partners, such as India or the United States, or anyone else with whom we would seek to make a free trade agreement.

“Notwithstanding” cannot be a get-out-of-jail card for the country to escape its obligations. We would never get away with that in everyday life. Let us imagine telling a police officer, “Notwithstanding the law on theft, I thought I’d just take the goods out of the shop without paying for them.” I do not think we would get very far if we did that. We cannot set aside our obligations through a clever-sounding word. An agreement is an agreement. A deal is a deal. That is the whole point. If the hon. Member for Stone presses his amendment, I have to tell him, in the friendliest tones, that we will certainly oppose it.

John Redwood Portrait John Redwood (Wokingham) (Con)
- Hansard - - - Excerpts

I have declared my business interests in the Register of Members’ Financial Interests.

I rise to support what may be an amendment that we are going to vote on or may be a probing amendment from my hon. Friend the Member for Stone (Sir William Cash), because I think there has been a deliberate misunderstanding by the EU and its friends over what Brexit is about and what we need to do in order to achieve a proper Brexit. A proper Brexit is taking back control; it is recreating the sovereignty of the people of the United Kingdom through their Parliament.

My hon. Friend has a distinguished career in this place trying to rebuild that sovereignty and watching, year after year, more and more of our powers taken away by successive treaties, by successive directives and regulations, many of them automatic ones over which the UK had little or no influence, and by court judgments which, again, we had precious little ability to shape. He is right that, as we come to legislate for our new arrangements as a sovereign country from 1 January next year, we need to make quite sure that we have back under the control of people and Parliament all those powers that we need to regulate, to govern and to take wise decisions on behalf of the United Kingdom.

I am very worried about some elements of the withdrawal agreement. I was told, as we were all told, that nothing was agreed until everything was agreed, and that that meant the future relationship as well as the withdrawal agreement. The EU decided for its own convenience to sequence things and say, “You have to sign the withdrawal agreement first and then the future relationship agreement will follow.” A bit of flesh was put on the bones of the future relationship in the so-called political declaration, which one would have thought there was a lot of moral pressure to go along with even if it was not as strictly legally binding as they hoped the withdrawal agreement would be.

I now think there has been a lot of bad faith, because, according to both sides, the central feature of the future relationship was always going to be a free trade agreement, and where is the free trade agreement? We now discover that the EU wishes to take all sorts of other powers away from us as the price for the free trade agreement, which we have already overpaid for in the withdrawal agreement and which one would have thought, in good faith, the EU would now grant. It is very much in its interests—even more than it is in our interests—given the huge imbalance in trade, and above all in the trade that would attract tariffs if we had no free trade agreement: the trade in food.

That is really what we are talking about: are there going to be tariffs on food or not? We, the United Kingdom, run a colossal £20 billion trade deficit with the EU on food. We have to impose pretty high tariffs on food from the rest of the world—that makes absolutely no sense where we could not grow any of it ourselves; it may have some benefit for some of our farmers some of the time—but we are not allowed to put any similar tariffs on EU-sourced produce where we could produce it ourselves.

The EU system is to try to use tariffs to buttress domestic production, but it has not worked for the United Kingdom; it has worked the other way. The tariffs have been taken off in order to benefit the Dutch, Spanish, French or Irish suppliers of our market with food at zero tariffs. The EU already has rather more interest in tariff withdrawal than we do, because we could have a range of tariffs that would probably achieve the aims both of cutting food prices by having a lower average tariff and of having a bit more protection on the things that we really could make and grow for ourselves here, which we are not allowed to protect against continental products at the moment.

I therefore think that the Bill could be improved by reminding the EU that we will not be pushed around and we will not suffer too much bad faith from those original negotiations or from the withdrawal agreement itself. I think it was a very imperfect agreement. It is pretty ambiguous in places; it is imprecise in places. I have never felt that anything the Government have done, or thought of doing, was in any way illegal. Lawyers could make a perfectly good case under the withdrawal agreement treaty terms themselves, and anyway, we have the protection of my hon. Friend’s section 38, which made it very clear that this Parliament’s acceptance of the withdrawal agreement was conditional. Why else would anyone have put section 38 in the withdrawal agreement Act unless they were making a point?

William Cash Portrait Sir William Cash
- Hansard - - - Excerpts

Does my right hon. Friend appreciate that it was the Prime Minister who, after an eight-hour meeting I had in No. 10 that day—17 October 2019—insisted that section 38 was necessary and appropriate?

If we go back to the previous Administration, just imagine where we would be when we consider the Chequers arrangements, and then imagine what it would have been like if we had not decided to vote against that dreadful withdrawal agreement in its original shape. There were provisions that needed to be rectified, and section 38 provides the mechanism that enables us to do that.

John Redwood Portrait John Redwood
- Hansard - - - Excerpts

Indeed. I think my hon. Friend has confirmed that under the previous Prime Minister, when those of us who could not vote for her agreement said that we needed a sovereignty escape clause, we were told that that would not be permissible because it would not be effective implementation of the agreement; which was then reassuring to us, not liking the withdrawal agreement very much and realising that it was a provisional agreement and would be completed only were there to be a satisfactory outcome to the total range of talks. It was a totally artificial constraint that the EU invented that it had to be sequenced, when up until that point everybody had always rightly said that nothing was agreed until everything was agreed.

I would like to hear from the Minister a little more explanation on the detail of the Bill. As I understand it, the Northern Ireland protocol would apply only to goods that are passing from Great Britain to Northern Ireland and then on to the Republic of Ireland, or the reverse—goods coming from the Republic to Northern Ireland and then passing on to Great Britain. Am I right in thinking that that is a very small proportion of the total trade? In what ways will the Government ensure that it is properly defined, so that we do not catch up most goods in those more elaborate procedures? The bulk of the trade will be GB to Northern Ireland and back, or Republic of Ireland to Northern Ireland and back, and it should not in any way be caught up in any of these proposals. I am not sure that we do have a de minimis way of dealing with the so-called things at risk.

It is not clear how the system will work for items at risk where we agree that they are at risk—and I hope it is a UK decision about what is a risk, not some other kind of decision with EU inspectors. It would be helpful to me and the wider community interested in this debate to know how a business would proceed if it had such a good at risk, to whom it would answer, and what decisions would be made about such a good in Excise, because it sounds a rather complicated and difficult arrangement, both for the business concerned and for those who are trying to enforce.

I am trying to tease out from the Minister, in pursuit of the interests of my hon. Friend the Member for Stone and myself on sovereignty, whether we are really in control if the trade has started off from GB and is going to Northern Ireland. What kind of external intervention can the EU or the Republic of Ireland engineer—how is that fair, and how will it be determined? I think that is what we are most worried about in this piece of legislation, and we would be more reassured if there were the override that my hon. Friend proposes. I should be grateful for some explanation.

Alison Thewliss Portrait Alison Thewliss (Glasgow Central) (SNP)
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I come to this debate with many of the same concerns as I had last week. I shall not repeat them because I think everybody is quite clear on what they were. We come to this debate with the clock ticking louder and louder, and with uncertainty ahead.

I must agree with the right hon. Member for Wokingham (John Redwood) when he says that this is a complex, complicated and difficult arrangement. Yes it is, and it is absolutely baffling why we are still not certain what will happen, with such a close deadline looming. It is impossible for businesses to know what to plan for and how they will manage this, because so much is still uncertain. The Institute for Government’s Jess Sargeant went through some of the outstanding issues in the Northern Ireland protocol still to be agreed, and these are not small things but quite significant things in many cases. There is still great uncertainty about the grace period that was talked about last week, what will happen at the end of it, and what the Government are going to do between then and now, whenever this finishes. What work will they be doing in the meantime? It does feel, quite often, that this Government put things off and leave things, and then say, “Oh gosh, suddenly I have to do that at the last minute.” They do that quite regularly.

We still do not understand the real definition of “at risk” goods or indeed how they are going to be monitored. Jess Sargeant also pointed out issues around the rules on VAT and second-hand goods. That might sound like a small thing, but actually it is quite a big thing because it involves second-hand cars, many of which are exported to Northern Ireland from the UK. If people want to buy cars, they will need to know what the rules are around VAT. That is quite significant in terms of the costs that could be involved.

I understand that the arrangements for parcel movements are still not yet finalised. This is a time of year when many parcels are moving around the place. If someone were to send off a parcel just now and did not know when it was going to arrive with its recipient, either in Northern Ireland or the Republic of Ireland, they would not know what the arrangements were for any additional customs payments or anything else that might be due when it arrived. This is something that we really ought to know before any further parcels are dispatched, but that is not what will happen. People will continue to dispatch parcels, and the uncertainty about what happens at the other end is entirely on the Government.

I understand that many of the provisions will be monitored by reciprocal access databases. Does the Minister have any further detail on how that will happen? It is understood that it will be monitored by EU officials hot-desking, but where and how, and what will that access look like?

There is still uncertainty about EU product standards on industrial goods and how that applies in Northern Ireland. There are also still issues around movement of goods cargos from GB to Ireland via Northern Ireland, because not everything stops when it reaches Northern Ireland—some things are always going to be transiting through one way or the other. Last week I gave the example of cattle hides from Ireland going for processing in Scotland. We would not want those to be hanging about for any longer then they had to.

I would always question whether the Government are fully prepared for this. What gives me further cause to do so is an email I received from the Cabinet Office at nine minutes past 3 this afternoon which talks about a port infrastructure fund for which the Government have put out applications. The Government have received 53 applications, to a value of £450 million, for this port infrastructure fund. That includes rail, air and seaports right around the United Kingdom and Northern Ireland. The Treasury allocated £200 million to it. Why spend half of what is asked for by the ports who said what they needed for their port infrastructure, which is only happening because of Brexit? Because of what the Government have done, the money has been spread more thinly and people are getting 66% of what they asked for, while 12 ports have got absolutely nothing at all.

I do not know what these investments are, to whom they are going and by when, because that has not come before the House—it is a decision the Cabinet Office has taken. It is deeply worrying that some ports that have asked for money for their infrastructure have got nothing and some have not got all they need. The ports infrastructure is absolutely critical to this Bill in terms of the smooth operation of our ports in 16 days’ time. It is beyond belief that the Government have not made this money available more quickly and that some of it is yet to be there. I ask the Minister to check the purse strings back at the Treasury to see if perhaps more money could be found, because it is important that ports have what they need in order to make this work.

With reference to the new clauses tabled by hon. Members on the Government Benches, or rather “Opposition to the Government” Benches, I am very concerned that they are trying to bring back the new clauses that the Government have taken out. These hokey-cokey clauses have been in and out, and the Government might as well shake it all about and put them back in again. It is damaging to our international reputation to have these clauses in the first place. They should not have been there in the first place, whether as a negotiating mechanism or anything else. They would breach international law, and the Government should have no business in breaching international law, particularly when that undermines their reputation in the negotiations.

I welcome the new clauses tabled by the Labour Front Bench in their recognition of the powers and what they are there for. Last week, I made the case that at many points in the Bill the Government are taking power for themselves and for the Treasury where they do not know what the power will be used for, and they cannot see what it will be used for, when it will be used or why it will be used. Anything that helps to hold the Government to account on the new powers that they are appropriating for themselves is welcome. I will support the new clauses if the official Opposition are minded to put them to a vote.

Through all of this, the Government have seized powers for themselves—it is not about taking back control to this place, but about taking control back from civil servants in Brussels to civil servants in Whitehall. We would all be well advised to look more carefully at the powers and how the Government intend to use them.

Andrew Jones Portrait Andrew Jones (Harrogate and Knaresborough) (Con)
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We have heard from my hon. Friend the Member for Stone (Sir William Cash) about the importance of the “notwithstanding” clauses and about how unelected people should not seek to overturn democratic decisions. I agree strongly that we have seen attempts to overturn democratic decisions over the past four years, and they have been a stain on the democratic history of our country. We had a vote by the British people that had to be followed through on.

I disagree with my hon. Friend about the clauses, however. Putting them back in will not be viewed as an enormously helpful measure by those negotiating a deal, especially while our Prime Minister is out trying to get a deal that we can accept. Bringing the clauses back in will not be particularly helpful for that.

The Labour party has put forward some suggestions about providing clarity for business. That is a reasonable point because, clearly, we need to provide clarity for business. I come back from a business background, and knowing the environment that one is in helps to facilitate investment decisions. However, I have to say, the Treasury knows that. I spent some time working in the Treasury, and it gets that. It does not need to be told that. It will execute the Bill in as timely a way as it can, providing all the clarity that it can. That does not need to be legislated for.

We have had delays, because people have sought to overturn—ultimately, to negate—a democratic decision. I voted to remain in the referendum, but I immediately understood that it was a vote of the British people, and that the British people are bigger than individual politicians. Only recently have some people been able to work that one out.

The measures in the Bill are about the continuity of trade across all four parts of the UK. That is something that we should all be acutely aware of, because it is bigger than any other trade deal that could possibly be discussed anywhere.

The point in the Bill about creating a more level playing field between the online and the high street worlds of retail is, again, something that I think we should all be able to support easily. Everybody, I am sure, has had representations from retailers in their constituencies about how challenging the past few years have been. Obviously the clock cannot be turned back in any way—this is about embracing the future—but we must make sure that as retailers evolve the offer of our high streets, they are able to do so with a more level playing field. That is the objective we should be seeking in our policy.

I want to see such measures enacted as soon as possible, frankly. We are in uncertain times, and I want us to get to the position in which we can offer business as much clarity as possible, as soon as possible. I will therefore be supporting not the new clauses, but the Bill as it stands.

Wendy Chamberlain Portrait Wendy Chamberlain (North East Fife) (LD)
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It is a shame that the Bill has been rushed through the House so rapidly. Members have had a short amount of time in which to get to grips with a rather technical and lengthy piece of legislation. The small number of amendments tabled today speaks to the incredibly tight time limits that have been put in place. Given the impact of the legislation on businesses operating across Northern Ireland and Great Britain, that concerns me, and it should concern us all.

For me, the Bill speaks to the heart of the many contradictions of Brexit—between what was promised in 2016 and what is being delivered today. We were told that Parliament will take back control, but this Executive, peopled by the same individuals who made those promises, have arguably more contempt for the legislature than any before them. That is summed up by an incredibly depressing piece of legislation, presented a couple of weeks ago, to repeal the Fixed-term Parliaments Act 2011, which attempts to engineer the first ever return of powers from the legislature to the Executive in our history.

However, the contradictions do not end there. A case in point is clause 6 of this Bill on the uprating of fuel duty for aviation gasoline, which, for me, is a microcosm of the whole Brexit process. The whole point of Brexit was to get our sovereignty back—was it not?—so that we could finally write our own laws rather than follow bureaucratic regulations from Brussels, the sort of stiflingly dull directives with boring names such as EU energy tax directive (Council Directive 2003/96/EC). We might have thought that directive was exactly the sort of red tape we would finally cut through in Brexit Britain, and yet the Bill proves that the reality is far removed from the rhetoric, because EU energy tax directive (Council Directive 2003/96/EC), which ensures that across the EU a minimum level of tax is applied on a whole type of aircraft fuel, is in this Bill being applied across the whole of the UK.

The explanatory notes rather patriotically inform us that,

“the UK is not bound to comply with the Directive in respect of Great Britain (GB) from 1 January 2021,”

but none the less Great Britain is complying with it anyway. Does that not say a lot about Brexit and the current trade negotiations, where effectively the Government have been toying with the idea of taking maximum tariff pain now in order to allow regulatory divergence that, in all likelihood, is not going to take place?

Turning now to the amendments, I agree with amendments 1 and 2 and new clause 3, tabled in the name of the Leader of the Opposition. Economic assessments have been conspicuously lacking over the past few months, covid notwithstanding: not only a lack of assessments of the impact of any potential deal with the EU, but the refusal of the Secretary of State for International Trade to tell us whether any of the trade deals she has struck will actually leave us any better off than our current trading relationships. The other conspicuous absentee when it comes to the economic impact of all this is the Chancellor. I find it very surprising that he has said very little about the threat of no deal, during a time when the UK finds itself in the midst of its worst economic crisis.

It is entirely right that we carry out proper economic assessments of all that, not least for Northern Ireland. I remember during the election campaign last year the Prime Minister was caught on camera telling Northern Ireland businesses that,

“Northern Ireland has got a great deal. You keep free movement, you keep access to the single market”.

In the words of the Foreign Secretary, Northern Ireland has “a cracking deal” because it has access to the EU market. Meanwhile, as we teeter on the edge of no deal, we are told by the Culture Secretary that things “will be choppy”, but that “we can survive”. I am sure those words will be a comfort to many of my constituents.

Finally, I turn to new clause 1 and new clause 2. During the debate on the United Kingdom Internal Market Bill earlier, I spoke about what a disaster the notwithstanding clauses in that legislation were for the future of the UK and elsewhere. I will not repeat myself, because exactly the same applies here; all I ask is for the Minister to give a guarantee that, if there is no deal with the EU, international lawbreaking clauses will not be introduced in this or any future business. We cannot afford to let a no-deal scenario be a proxy for further actions that are hugely damaging to our international reputation. For that to be the UK’s first action once it left the EU would be a truly regrettable matter indeed.

Kevin Hollinrake Portrait Kevin Hollinrake (Thirsk and Malton) (Con)
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It is a pleasure to be called to speak in this debate. I will speak particularly to new clause 1 and new clause 2 because, as my hon. Friend the Member for Stone (Sir William Cash) said, this is a matter of sovereignty. I am very keen to explore where sovereignty ends and international law starts, and that is right at the heart of those new clauses, I guess.

We have made reference several times in these debates to section 38 of the European Union (Withdrawal) Act 2020, where it says that,

“the Parliament of the United Kingdom is sovereign.”

If that is the case, and I accept that it is the case in areas of our jurisdiction, is there a need to reiterate it in every piece of legislation, or is it simply a fact that Parliament is sovereign?

My hon. Friend has rightly stated quite clearly that the UK Parliament has a general power to override treaties, but I am very keen to understand how that works in the sphere of international treaties, particularly in terms of trade agreements. As I quoted in my intervention earlier, there was a case between Mexico and the US, settled in 2009, where a US company, Cargill, took the Mexican Government to court on the basis that they had breached the general agreement on tariffs and trade regulations of 1994. The Mexican Government had applied some punitive tariffs on soft drinks coming from the US, produced by Cargill and other companies, which effectively blocked access to the Mexican market.

William Cash Portrait Sir William Cash
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Let me respond briefly. This provision is really going to apply only where there is an impugnment —an infringement—of sovereignty itself. In this case, the entirety of our leaving the EU, as is well understood by the EU and provided for by article 50, and which we have done lawfully, demonstrates that when the EU and the remainers start prattling on about the idea that somehow or other we should do it on their terms, which is the basis on which the whole thing was constructed when the negotiations began, however many years ago it was—I cannot quite remember, as it seems so long ago—we see that the bottom line is that they have acted in bad faith. That is the problem. If it were not for that —we had reasonable negotiations—we probably would not be having to discuss these matters now. Most recently, we have seen that over the state aid rules, with their saying, “We’re going to punish you if you don’t do what we want.”

Kevin Hollinrake Portrait Kevin Hollinrake
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I am grateful for my hon. Friend’s intervention. I have great sympathy with his points. The difficulty is that when we are in an international agreement, there is a judgment as to whether they are “acting in bad faith” or “prattling on”, and they are subjective judgments he makes. All international trade agreements need an independent body to decide who is breaching the agreement. If Parliament is simply sovereign and is able to say, “In our judgment, you are breaking the agreement”, all trade agreements would fall apart. We saw that in the case of the Mexican Government and the breaching of the terms of GATT, where that judgment was made unilaterally. The independent body, which was the arbitration council of the North American free trade agreement, settled the dispute. That is an international body; it is not subject to one national jurisdiction or the other. There has to be someone who adjudicates; we cannot simply have national sovereignty making a judgment on these points. That is why we have these investor-state dispute settlement bodies.

John Redwood Portrait John Redwood
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All too often in international trade agreements it does come down to power and sovereignty. President Trump has regularly used national security as a good reason to impose tariffs and override World Trade Organisation rules. The EU, for years, ignored state aid rules to promote Airbus. I can perfectly understand what it was trying to do. It took a long time to catch up with it and in practice the damage, from the WTO point of view, was done.

Kevin Hollinrake Portrait Kevin Hollinrake
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Therein lies the difficulty, does it not? As soon as a nation, however powerful, is allowed to make a subjective judgment, it leads to international chaos. We can have international agreements that people sign and adhere to, with independent resolution. My point is that as soon as we have done that, we have handed over the settlement of the issues and disputes to another body, and we are, in effect sharing some of our sovereignty. We do not have total sovereignty at that point. We have sovereignty to sign the agreement and to exit the agreement, but I cannot see how using sovereignty to override an agreement works. I think it would result in chaos.

William Cash Portrait Sir William Cash
- Hansard - - - Excerpts

This is about when the issue of the override is to do with sovereignty itself—that is the point. That is why this matter is essential. That is why international law actually recognises it, in article 46. My hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) accepted that, as, indirectly, did Lord Judge, on this Bill. So, for practical purposes, I have quite a lot of support, even from those who originally opposed my proposals.

Kevin Hollinrake Portrait Kevin Hollinrake
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The trouble with new clause 1 is that it says the provisions have effect

“notwithstanding any relevant international or domestic law”.

Subsection 2(g) states that that means “any other legislation”. This Parliament’s decision would affect any other legislation, and so this is an overarching amendment. The key thing is that we would all agree that international agreements and free trade are important, and we need to make sure they are fair on all parties subject to those agreements. We must not forget that this is a two-way street. We want the other signatories to these trade agreements—be it Canada, Japan, the EU or whatever—to adhere to these agreements as well. It is not just about the UK heading into these agreements. We partly do that through the agreement itself, of course, but also through the soft power that the UK holds and the respect that people have for the United Kingdom.

There are some special circumstances regarding the withdrawal agreement, because there were two sides to the coin. Yes, there were the commitments that we made under the withdrawal agreement and the Northern Ireland protocol, but there was also the EU’s commitment to use its best endeavours to deliver an ambitious free trade agreement. As Members on both sides of this Chamber have said, there is no doubt that some of the things that the EU has done over the past few months have indicated that it was not using its best endeavours and that it was acting in bad faith, particularly on things such as requiring exit summary declarations for products manufactured in Northern Ireland and then shipped to the rest of the UK. That is simply unacceptable. As the right hon. Member for Leeds Central (Hilary Benn) said, what on earth would the EU do with these things if we exported them from Northern Ireland to the rest of the UK? Describing all goods that went from Great Britain to Northern Ireland as “at risk” would also be simply unacceptable. I was very pleased that those key issues were resolved last week. It largely went by without notice or recognition from many Opposition Members and some parts of the media. New clauses 1 and 2 are interesting. I will not be supporting them, but I will be supporting the Bill.

Stephen Flynn Portrait Stephen Flynn (Aberdeen South) (SNP)
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It is a pleasure to see you in the Chair again, Mr Deputy Speaker.

When I put my name down to speak in this debate, I guess I did so more out of intrigue than expectation, given the shenanigans and the boorach of last week. We all saw what unfolded over the Ways and Means resolutions, the Bill coming 24 hours later and then off to Committee of the whole House, where nothing changed whatever. A week later, here we are on Report, with, as far as I can see, a very clear likelihood that the Government’s Bill will move forward without a single change, despite the best valiant efforts of the hon. Member for Stone (Sir William Cash) and his desire again to get the Government to break international law.

In that regard, I must pause and reflect; I find it utterly fascinating that, despite getting what they appear to want, Members of this Parliament who have—from what I have heard—seemingly spent their entire lives working towards the political cause of leaving the European Union still seem thoroughly unhappy. I take a little bit of joy in knowing that they are so bitterly disappointed that even their friends in the Government still refuse to do just what they want. Now, I cannot be the only one who has looked at Twitter, and it appears that there may well be a breakthrough in terms of an EU trade deal. I do not know whether the Minister is sighted on the developments on this occasion, because I do not think he was last week, but I do not think that I am overreaching or overstepping in any way, shape or form to suggest that, although that may be the case, the hon. Member for Stone may still be unhappy.

William Cash Portrait Sir William Cash
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Will the hon. Gentleman give way?

Stephen Flynn Portrait Stephen Flynn
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Of course I will let him intervene.

William Cash Portrait Sir William Cash
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I am so glad. I can only say that, actually, sovereignty is not just a theoretical concept; it is a practical necessity. It is on the basis of that that we are able to enter into arrangements internationally that are justified by our own terms of reference. The problem with the EU is that it wants to impose its terms of reference, and it never wanted us even to be able to compete with it as a third country after we had left. But it could not deny that it was lawful, so it resorted to all these other obstructions.

Stephen Flynn Portrait Stephen Flynn
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I admire the hon. Gentleman’s repetition, but ultimately, when it comes to sovereignty, there is only one sovereignty that I am interested in: the sovereign will of the people of Scotland. When we look at the European Union in terms of sovereignty and the will of the people of Scotland, our views have been completely ignored. The people in my constituency voted overwhelmingly to remain. Aberdeen city as a whole is projected to be the hardest hit city in the entire UK as a result of Brexit, irrespective of whether we get a deal or not. Although I do not want to encourage the hon. Gentleman any further, I simply cannot understand the premise of his argument—that he is willing to break international law and is talking about sovereignty, while simultaneously rejecting the sovereign will of the people of Scotland.

William Cash Portrait Sir William Cash
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Will the hon. Gentleman take one last intervention?

Stephen Flynn Portrait Stephen Flynn
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No, the hon. Gentleman has had plenty of opportunities to intervene and, indeed, speak today, and I think I will be doing everyone a favour if I just continue. I see that the Minister is laughing as well.

On the purpose of the Bill, I would like to reflect on the comments of the shadow Minister, the right hon. Member for Wolverhampton South East (Mr McFadden), because what he said was incredibly important. I apologise if I am misquoting him but I think he talked about the Bill hovering as a threat. That is an important point to reflect on, particularly as we look at what was being undertaken last week and the entire process that we have gone through.

I want to conclude, because I am aware that I am close to havering, and in Scotland, when someone starts doing that, they should probably sit down. As we look forward to what the Bill will do for online sales and the level playing field that it will create on VAT sales, which is important—I see the hon. Member for Thirsk and Malton (Kevin Hollinrake) nodding his head, and it is worth repeating that we agree on this point—we know that that level playing field should go further, because Northern Ireland will, in effect, have a beneficial agreement compared with anywhere else in the United Kingdom, be that Wales, England or Scotland. The level playing field that the Government are putting in place for online sales should also apply to Scotland to help our ability to access EU markets, and I would encourage the Minister to reflect on that point.

Matt Western Portrait Matt Western (Warwick and Leamington) (Lab)
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I rise to speak to new clause 3 and amendments 1 and 2. Three years ago, we were given the advice that this deal was going to be the “easiest in human history”. As we have just heard in the past hour or so, it is not quite as easy as some expected, and here we are with just 16 days to go. I appreciate that the Government are trying to manage expectations by talking about no deal, but in the last 30 minutes or so there has been lots of speculation online about whether a deal may have actually been struck.

Yesterday, I was listening to someone from an independent freight haulage company based in Nuneaton in north Warwickshire, and they were saying how frustrated they were by the lack of clarity coming from the Government. They were talking about the 300% to 400% increase in paperwork that they were expecting, the mixed messages from the Government, the fact that they had had to invest in new software and the fact that the lorry parks were not ready. I guess this is why the amendments and new clause 3 that my honourable colleagues have tabled, which I support, are so important. Being so close to the end of the transition period, we urgently need clarity for our businesses.

We on the Labour Benches just want to get a deal done, contrary to what is being said by some in the Chamber, because at the end of the day this is all about ensuring that our businesses have a prosperous future—have a future, indeed—and that we protect people’s jobs and livelihoods. That is why no deal would be absolutely desperate for so much of our economy, particularly in the wake of the pandemic. Like my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), I really do not understand why it has taken so long for this Bill to be published. It seems that the Government were holding it back as one of their cards—maybe again threatening to break international law and damaging our reputation—but businesses cannot plan on that basis. They cannot work on a last-minute approach. That might work in negotiations in the political sphere, but it has been damaging for business. Rather than having messages such as a “check, change, go”, they have been demanding the substantive advice from the Government which, sadly, businesses across my constituency have not been receiving.

I spoke earlier to one of those businesses—a retailer and importer—and it said, “This is utter chaos. We desperately need clarity and urgency, so that we can start planning, but at the moment we cannot get hold of the goods that we’re going to be able to sell in the first quarter of next year.” I understand what the right hon. Member for Wokingham (John Redwood) said about UK sovereignty, but the quid pro quo is about access to markets and obligations. I liken it to how businesses have to work. If they want to be in the app market and use the Apple platform, they have to pay to be part of that. If they want to be on the Sony PlayStation platform, they have to pay to access that. It is the same with the European market.

John Redwood Portrait John Redwood
- Hansard - - - Excerpts

Does the hon. Gentleman not understand that, from 1 January, the EU and the UK are both full members of the World Trade Organisation, which does not allow its members to charge to trade, controls what tariffs can be levied and says to each of its members that they have to offer most favoured nation status to any other member of the WTO? That is how we do our trade with the whole of the rest of the world, which is bigger than our trade with the EU. Why can we not do that for everything?

Matt Western Portrait Matt Western
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Our biggest and nearest customer is the EU. It is a critical customer and supplier to so many businesses in the UK, particularly in our manufacturing sector.

Let me briefly turn to the Northern Ireland protocol. We were told that there would be no checks, but as of last week, we have seen the need to implement new checks and controls for goods moving from Great Britain to Northern Ireland and, to a lesser extent, from Northern Ireland to Great Britain. The Government have said rather vaguely that a significant majority of internal UK trade will be tariff-free. I would be interested to know what assessment the Government have made of the precise percentage of GB-Northern Ireland trade that will be and the volume and value that will be subject to tariffs.

That is why these amendments are important. They are aimed at injecting urgency, with just 16 days until the transition period ends. Businesses want clarity and certainty, and they need it urgently. The intention of new clause 3 and amendments 1 and 2 is simply to demand that the Government make clear when they will propose the secondary legislation flowing from the Bill, to help those businesses. The Food and Drink Federation has said that the guidance is being published too late, and 43% of its members that supply Northern Ireland have said that they will not be able to do so in the first three months of next year. Our amendments are very similar to those proposed and, sadly, voted down in Committee. They are vital to assist our businesses and are business-friendly, as the Opposition are.

I cite the disruption that we are in danger of allowing. We have seen what happened with Honda—one of the most efficient companies on the planet. That should be the canary in the mine. If Honda is not able to get parts from its supply chain here to the UK, what hope is there for small and medium-sized businesses across the UK? Whether they are a clothes retailer or a car manufacturer, they just want clarity and certainty. They want an uninterrupted supply of goods into the first quarter of next year. Given the damage already done by the pandemic, we cannot afford further economic disruption. The Government need to move swiftly. That is why new clause 3 and amendments 1 and 2 are so important, and that is why I am supporting them.

Jesse Norman Portrait The Financial Secretary to the Treasury (Jesse Norman)
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I am grateful to everyone who has contributed to the debate. I will address the proposed amendments and then come to the specific points that have been raised.

New clauses 1 and 2, tabled by my hon. Friend the Member for Stone (Sir William Cash), would, if adopted, mean that the provisions in the Bill would apply notwithstanding any domestic or international law. The House will be aware that on 17 September, the Government set out that Parliament would be asked to support the use of so-called “notwithstanding” provisions in clauses 44, 45 and 47 of the United Kingdom Internal Market Bill and any similar subsequent provisions in a Finance Bill, but only in circumstances where the fundamental purposes of the Northern Ireland protocol would be undermined. Only in those circumstances would Parliament be asked to support the use of so-called “notwithstanding” provisions, as described.

William Cash Portrait Sir William Cash
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We do not really know exactly how the Northern Ireland protocol is going to be interpreted, nor do we actually know its full content, and the Chancellor of the Duchy of Lancaster is declining to appear before my Committee to explain it.

Jesse Norman Portrait Jesse Norman
- Hansard - - - Excerpts

What we do know is that the agreement was reached by the Chancellor of the Duchy of Lancaster acting for the Government on a duly legitimately and democratically elected basis in the exercise of our national sovereignty, and that should, I think, be enough for my hon. Friend.

These clauses were previously introduced as reasonable steps to create a safety net so that the Government would always be able to discharge their commitments to the people of Northern Ireland in the event that a negotiated outcome could not be reached in the Joint Committee. Following intensive and constructive work over the past weeks by the UK and the EU, the Government have now reached an agreement in principle on all issues in relation to the protocol on Ireland and Northern Ireland. This is an agreement that discharges the Government’s commitment to the people of Northern Ireland to ensure that there are no tariffs on goods remaining within the UK customs territory.

As part of the agreement, the Government committed to removing the notwithstanding provisions in the United Kingdom Internal Market Bill and not to introduce them or any similar provisions in this Bill. As was noted by the Chancellor of the Duchy of Lancaster in his statement to the House last week, in view of the agreement these provisions are no longer required. On that basis, I hope the House can agree that new clauses 1 and 2 are unnecessary.

New clause 3 and amendments 1 and 2 tabled by the Opposition would, if adopted, require the Treasury to publish guidance setting out its proposed approach to any reliefs, repayments and remissions for which the Bill allows provision to be made. The provisions contained within the Bill ensure that the Government have the flexibility they need to establish the framework for such reliefs, repayments and remissions. Details of any policies along these lines would be announced in due course, and HMRC will publish detailed guidance providing certainty to traders and businesses, as is its normal procedure. For this reason, putting such additional provisions in the Bill is unnecessary, and therefore I urge the House to resist these amendments.

New clause 3 would, if adopted, require the publication of various reports setting out the timeframes in which the customs duty charges contained in clauses 1 and 2 would be implemented as well as the factors taken into account when using these powers. The provisions contained in clauses 1 and 2 allow the Government to establish customs charging provisions to support the practical application of article 5.1 and 5.3 of the protocol and to deal with the movement of goods from Northern Ireland to Great Britain. This is important legislation, which will ensure that the Government are able to implement the Northern Ireland protocol as required in UK law ahead of the end of the transition period. The regulations that set out the detail of the charging regimes will be laid after the Bill receives Royal Assent.

This Bill thus provides the framework, and the detail will be provided alongside the relevant regulations. When bringing forward regulations the Government will also provide explanatory material in the usual way.

If I may, I will now turn to some of the questions raised by Members who spoke in the debate. The right hon. Member for Wolverhampton South East (Mr McFadden) encouraged the Government to get a move on; as he will know, the Government have been proceeding extremely rapidly and energetically in this area ever since the issues first arose. He also asked about guidance, and of course he is right that in the normal course of these things guidance will follow the publication of the Bill, but he also ought to be aware that the guidance that will be published follows the Northern Ireland protocol and the Command Paper and that in relation to other matters, which is what I was referring to, the House has seen customs guidance on 7 August, the trader support service launched on 20 September, guidance on VAT and excise on 26 October, and a whole host of other information designed to support traders and others involved in these changes.

The right hon. Gentleman asked what new systems are being put in place, as did my right hon. Friend the Member for Wokingham (John Redwood), so let me respond on that. My right hon. Friend will be aware that, in terms of the agreement for at-risk and not-at-risk goods, there is a requirement for there to be genuine and substantial use for the goods to be classified as at-risk. HMRC expects there to be up to 11 million declarations in relation to trade between Great Britain and Northern Ireland, and the Customs Declaration Service, which has been put in place, has a minimum viable product up and running as we speak.

The hon. Member for Glasgow Central (Alison Thewliss) referred to hokey-cokey clauses, but of course the clauses have never been included. They were themselves a response to a perfectly plain concern, which every Member of the House should feel, that, as matters stood, even a bag of salad would be considered an at-risk good, a consequence of the previous understanding that was patently absurd and which has been removed by this change.

The hon. Member for Warwick and Leamington (Matt Western) talked about a last-minute approach, but I would remind him that when this point, or this attempted point, was made by the shadow Chief Secretary, the hon. Member for Houghton and Sunderland South (Bridget Phillipson), I asked her if she could recall a single occasion when the EU had ever failed to negotiate except at the very last minute of a negotiation, and she was unable to point to such a case. That is, I think, the principal reason why we are in the position that we are in.

With those remarks, I would urge the House to resist these amendments.

William Cash Portrait Sir William Cash
- Hansard - - - Excerpts

We have had an interesting debate and, as far as I am concerned, the Government had originally proposed putting these clauses in the Bill itself. I personally think that they will find, in due course, a necessity to have something that is on exactly the same lines, and the same applies to the UKIM Bill. However, in the circumstances, because I want this Bill to go through, I beg to ask leave to withdraw my new clause. I just simply say: sovereignty is indivisible.

Clause, by leave, withdrawn.

New Clause 3

Treasury use of powers

“(1) The Treasury must, within four working days of the day on which this Act is passed, publish a report setting out the timeframe within which it will use the powers to make regulations conferred by—

(a) section 40A(2) of TCTA 2018;

(b) section 40B(1) and (2) of TCTA 2018;

(c) section 30A(4) of TCTA 2018;

(d) section 30B(1) and (3) of TCTA 2018;

(e) section 30C(5) of TCTA 2018; and

(f) section 5(2) of this Act.

(2) The Treasury must publish an annual report setting out how it has made use of the powers referred to in subsection (1).

(3) Each report under subsection (2) must include an assessment of—

(a) what considerations the Treasury made when deciding to use its powers, and

(b) the impact of the regulations on individuals and businesses throughout the UK, and specifically in Northern Ireland.”—(Mr McFadden.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

The list of Members currently certified as eligible for a proxy vote, and of the Members nominated as their proxy, is published at the end of today’s debates.

Third reading.

Jesse Norman Portrait Jesse Norman
- Hansard - - - Excerpts

I beg to move, That the Bill be now read the Third time.

We have had some good debates in the course of the Bill. I thank right hon. and hon. Members for their contributions, but there are two in particular whom I would like to thank. First, the right hon. Member for Wolverhampton South East (Mr McFadden) has truly been the workhorse of the shadow Front Bench throughout the Bill. For a shadow Economic Secretary, as he is supposedly designated—he should of course be much higher—he has done a wonderful job, and I salute him for it. Secondly, I thank my hon. Friend the Member for Stone (Sir William Cash), who is sadly no longer in his place. I think he should be referred to as the ancient mariner of Brexit. As you may recall, Mr Deputy Speaker, Coleridge says:

“It is an ancient Mariner,

And he stoppeth one of three.

‘By thy long grey beard and glittering eye,

Now wherefore stopp’st thou me?”

Although my hon. Friend does not, tragically, present us with a long grey beard, he has something of a glittering eye where matters of Brexit are concerned. We can only salute the energy and indefatigability with which he has attacked the topic over many years, while perhaps devoutly hoping that this may be the moment at which, at the end of this year, a hiatus or pause may be reached.

In just over two weeks’ time, the transition period will end. The UK and its tax system must be ready to support the smooth continuation of business across this country. In that regard, the Bill is a cornerstone of those preparations. In addition, it will play an important part in helping to implement the Northern Ireland protocol and to safeguard the Belfast/Good Friday agreement. It introduces a framework for charges on goods arriving in Northern Ireland and enables the Government to put in place decisions made by the Joint Committee for goods deemed to be at risk of moving into the EU. It also includes mechanisms to ensure that, in so far as is possible, VAT will be accounted for in the same way as it is today in Northern Ireland.

Let me once again assure the House that HMRC will remain the tax authority for the whole of the UK, and let me remind hon. and right hon. Members that businesses will continue to submit only one UK VAT return to account for VAT on all supplies of goods and services. The Bill also amends current legislation for excise duty to be charged when excise goods are removed to Northern Ireland from Great Britain, as required by the protocol. However, that does not mean additional costs for Northern Ireland businesses and consumers, because the Government will be introducing a mechanism to offset any excise duty already paid on those goods in Great Britain.

The Bill introduces a small increase in the rate of duty on aviation gasoline, which will apply across the UK to ensure consistency between Great Britain and Northern Ireland. Finally, the Bill includes a small number of other taxation measures, including measures to ensure the Government retain their ability to prevent insurance premium tax evasion.

John Redwood Portrait John Redwood
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I think the Minister needs to be a little more forthcoming. What is the EU’s enforcement mechanism if it thinks UK authorities have not fulfilled the remit? What percentage of trade are we expecting to be caught up in this double jurisdiction?

Jesse Norman Portrait Jesse Norman
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As I have already said to my right hon. Friend, without venturing a percentage, the test for at-risk goods is those where there is a “genuine and substantial risk”, and therefore those are expected to be a smaller proportion of goods, but trade of course is a flexible and ever-changing thing, so whatever numbers there are may change over time.

My right hon. Friend also asked a question about the EU. I am not going to speculate on what the EU does, but I can assure him that there will be no EU customs, embassy or the like and no joint control over customs in Northern Ireland. HMRC will remain the tax authority for Northern Ireland, as it is for the whole of the UK.

The Bill also includes new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period 2013 to 2018. Lastly, to help level the playing field for UK businesses, the Bill also moves VAT collection on certain imported goods away from the border and removes VAT relief on low-value consignments to clamp down on VAT abuse and to protect our high streets.

The Bill gives businesses throughout the UK certainty about the arrangements that will apply from 1 January of next year. Above all, it helps the Government to safeguard what we all prize and desire, or should all prize and desire: the unity and integrity of the United Kingdom. I commend the Bill to the House.

Pat McFadden Portrait Mr McFadden
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I do not propose to detain the House for very long. I thank the Minister for the typically courteous way in which he has led these short debates on the Bill. He has outlined the changes that the Bill makes through its various clauses on customs, VAT, insurance liability and so on, and I do not propose to repeat all that.

From our point of view, and as I have made clear all along, we do not oppose the passage of this Bill, because we understand that these changes have to be put in place. The Government reached agreement on the Northern Ireland protocol. We want them to stick to and abide by their agreements as we want the EU to stick to and abide by its agreements, too. Many of the changes in the Bill stem from those agreements. I also reiterate my party’s strong support for the Good Friday agreement and for policies and practices that uphold the spirit and letter of the agreement into the future.

We have set out our views on the timing of the Bill and the difficulties that the changes it outlines pose for businesses trying to comply with them. The Minister has said it is always last minute with the EU and that it was always going to be like this. I am not sure I fully agree with that. We are asking a lot of businesses with just a couple of weeks of the year left, in the midst of the pandemic and as we are about to enter the Christmas holiday period. I hope that the Minister and the Exchequer Secretary to the Treasury, the hon. Member for Saffron Walden (Kemi Badenoch), who joined him last week, are correct when they say that everything will be in place by 1 January, but I cannot help but reflect at this time of year that perhaps in the minds of many it did not always need to be like this. Perhaps the Prime Minister’s Christmas wish—all he wanted for—was that the German car manufacturers would come riding over the hill and influence the negotiations. I hope that Santa visits all good boys and girls over the Christmas period, but I do not think that that particular Christmas wish of the Prime Minister and many of his colleagues is going to come true. This week, just as last week, one gets the impression that the action is elsewhere. I do not know whether an agreement will be reached in the next couple of days. There has been some rumour and social media chatter that we are heading in that direction over the past hour or so. Time will tell and wisdom would counsel us to wait to see what happens before making any predictions.

These measures in the Bill are largely a result of the commitments that the Government have made. I hope they are not too burdensome on businesses because at the end of all this—both the Brexit process and the covid period, which we hope to see come to an end through the use of the vaccine—we will have to gather around a process of business getting back to what it does: trading, serving its customers, providing goods and services and helping economic growth to come back to the country. There may be competing visions as to how best that should happen in the future, and what a blessed debate that would be in our politics, rather than some of the issues that have coloured it over recent years. I thank you, Mr Deputy Speaker, and all the Members who have contributed to debates on this Bill.

Alison Thewliss Portrait Alison Thewliss
- Hansard - - - Excerpts

I also wish to thank the Minister and the Opposition Front-Bench spokesperson, the right hon. Member for Wolverhampton South East (Mr McFadden), for the way in which this debate has been conducted, as well as the hon. Member for Stone (Sir William Cash) for his contributions, which were typically detailed. There is one point of detail that I was quite surprised that he missed. I have been saving this up the end, just in the hope that he might have picked up on it. He has waxed lyrical about sovereignty, as he does in every single debate I think he has ever spoken in, but I am quite surprised that he allowed to fly the EU setting the level of taxation on aviation gasoline. The reason that I am quite surprised about that, in the most ludicrous of ludicrous Brexit-based patriotic ironies, is that avgas is the fuel used not just in private and leisure aircraft, as the Minister set out, but in Spitfires, Hurricanes and other similar planes. There is some mad irony in the UK Government handing over to the EU the power to set the taxation on those vintage planes that bear so much patriotism among so many people.

I suppose that it is typical of the Government’s approach to all of this that there is so much detail in the Bill that we cannot possibly see—

Jesse Norman Portrait Jesse Norman
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Will the hon. Lady give way?

Jesse Norman Portrait Jesse Norman
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Will the hon. Lady tell us how much extra cost filling a Spitfire with fuel will incur according to this extra avgas taxation?

Alison Thewliss Portrait Alison Thewliss
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I think the Minister knows well that it is the principle of the EU continuing to set the fuel duty rate, rather than the cost of it. Conservative Members know well about all these principles—they are principles of patriotism that they hold dear. The Minister has allowed this to slide in and he has done very well not to alert their suspicions on it.

Jesse Norman Portrait Jesse Norman
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I think we can all have a patriotism that is rich and bold enough to incur an extra £10 on a 450-litre tank of avgas.

Alison Thewliss Portrait Alison Thewliss
- Hansard - - - Excerpts

I thank the Minister for that detail. If he can tell me the further details on the questions that I have not yet had answered from the previous day’s debate, that would be welcome. I can go through the things that he has not yet answered and have him answer all those, if he has that particular detail to hand. I thank him for that and look forward to letters appearing in my letterbox with the detail at some stage.

Other letters that have not yet appeared are those from Baroness Davidson and the former Secretary of State for Scotland, who both threatened to resign if Northern Ireland got any special treatment in these negotiations, yet that is exactly what we have as a result of this legislation. As the Chancellor of the Duchy of Lancaster said, it gets the “best of both worlds” in this deal—it gets to be in the EU and part of this Union—and yet Scotland is not getting any of that. Scotland is getting thoroughly ripped off as a result of the deal.

The Minister talked about strengthening the Union, but the Union is slipping away from the Government’s grasp. By every action that they take in this legislation, Scotland sees further and further how we are being undermined and left behind by this Government. They do not give much of a toss about Scotland—they are pushing their own Brexit agenda, and the rest of us can put up with it.

The Minister mentioned the additional paperwork that is coming. Northern Ireland in particular is being wound up in a giant Christmas ball of red tape as a result of the legislation. He talked about 11 million extra declarations and paperwork. That is more than 265 additional bits of form-filling that will happen after Brexit. The Government used to talk about getting rid of all the red tape, but in fact they are increasing it. They used to talk about taking powers back from the bureaucrats in Brussels, whereas in fact they are giving them back to bureaucrats in Whitehall, out of sight of this House.

We still do not know whether the transition period is ending, and with 16 days to go we still do not know what we are going to transition to. This Government have made an absolute mess of the four and a half years that they have had. We have absolutely no confidence in the direction that they are going and, with 16 polls in Scotland now showing support for independence consistently over the past months, we can see exactly where Scotland is going. It should be going there as soon as possible.

John Redwood Portrait John Redwood
- Hansard - - - Excerpts

I have declared my business interests in the Register of Members’ Financial Interests.

The Bill is a great missed opportunity. It should have been the Bill in which we started to cut and reorganise the taxes, celebrating our new freedoms as we leave the European Union. There is so much good we could do by remodelling and reducing the incidence of VAT, for example, or by having excise duties and tariffs that make sense for British business and for British importers, because we need to balance the two. Instead, it is a rather technical Bill.

I think it is a pity that this House has not been given a detailed account of what the Chancellor of the Duchy of Lancaster has agreed so far, and a detailed account of what still remains to be agreed, because I believe that there were outstanding issues. On behalf of Northern Ireland within the United Kingdom, we need to know the extent of this possible dual jurisdiction and how it actually works.

The Minister has kindly assured me on more than one occasion that the VAT regime in Northern Ireland will be the UK VAT regime and will be enforced by normal UK enforcement. That is very good, but cannot be the whole story, because we know that there is this overlapping jurisdiction for certain types of goods. We are still not privy to how big an issue that is. I presume it is a small proportion of trade, but we have not been given any indication of that, and we have not been told—perhaps the Joint Committee has not yet agreed it, or does not want to share it with us yet—exactly how that might work. It is a pity that we do not have more of that detail.

I am also concerned that we should not get drawn into the state aid issue, which is clearly part of the wider discussion between our Ministers and negotiators, and those in the European Union. We know that the European Union takes a very wide definition of state aids. State aids definitely include all taxation, which is the subject of this piece of legislation, and grants, subsidies, the competition framework and general industrial policy. It is very wide ranging, and there is no way we can say we have Brexit if the EU will have powers over our state aid policies, because that would be tentacles stretching into this Bill and the powers of the Treasury, Customs and Excise, and the Business Department and its competition and industrial policies, as well as into energy and practically every other major area one can imagine. I therefore hope my right hon. Friends and the UK negotiators are firm on that in their discussions.

We must have control of taxation and state aids as a fundamental part of our Brexit departure. We would have taken more confidence from the Government if they had used this Bill to show just how much better a UK-based taxation policy could be. We need a taxation policy that promotes more fishing and farming at home, promotes more industry and manufacturing at home, and promotes that green revolution they want by stripping the VAT off the green products that the EU has imposed on them—a policy that allows small businesses to flourish and does not overburden them with compliance and red tape. That is what we wanted from Brexit, and the sooner Ministers bring it forward, the better.

Wendy Chamberlain Portrait Wendy Chamberlain (North East Fife) (LD)
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I echo the thanks of the Minister and the Labour and SNP Front-Bench spokespeople, the right hon. Member for Wolverhampton South East (Mr McFadden) and the hon. Member for Glasgow Central (Alison Thewliss), as well the hon. Member for Stone (Sir William Cash) and, indeed, my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), who covered the earlier stages of the Bill on behalf of my party.

I became an MP a year ago and Whip for my party in September. Despite the covid challenges, the Leader of the House was giving Members two weeks’ notice of business up until two weeks ago. This Bill was tabled less than two weeks ago. Now, we find ourselves in a situation where the business for tomorrow was announced today, and where Bills are being given very little time for legislative scrutiny before they are considered by the House. This does not feel like a sovereign Parliament to me.

Despite covid, the Government have had a lot of time to bring forward the necessary legislation ahead of the transition period, whether there is a deal or not. If they felt that the challenge of covid this year was too great, they could have averted the current covid-Brexit collision by extending the transition period. I would ask when the Government realised that the measures in this Bill and, indeed, this week’s Trade (Disclosure of Information) Bill were needed. I worry what potential measures the Government may have failed to legislate for, and the extent to which we are prepared for the end of the transition period, deal or no deal.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Taxation (Post-transition Period) Bill

(Committee: 1st sitting: House of Commons)
Wednesday 9th December 2020

(2 months, 2 weeks ago)

Commons Chamber

Read Hansard Text Bill Main Page
HM Treasury

Considered in Committee

[Dame Rosie Winterton in the Chair]

Rosie Winterton Portrait The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)
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Before I ask the Clerk to read the title of the Bill, I should explain that in these exceptional circumstances, although the Chair of the Committee would normally sit in the Clerk’s chair during Committee, I will remain in the Speaker’s Chair in order to comply with social distancing requirements, although I will be carrying out the role not of Deputy Speaker but of Chairman of the Committee. Chairs of the Committee should be addressed as such, rather than as Deputy Speakers.

I must also modify the call list slightly in the light of the selection and grouping of amendments by the Chairman of Ways and Means. I will call the right hon. Member for Wolverhampton South East (Mr McFadden) to open the debate by moving amendment 2; we will then follow the rest of the call list as published, starting with the hon. Member for Stone (Sir William Cash). I will call the Minister at the end to respond to the debate.

Clause 1

Duty on goods removed to Northern Ireland

Pat McFadden Portrait Mr Pat McFadden (Wolverhampton South East) (Lab)
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I beg to move amendment 2, page 2, line 43, at end insert—

“(4A) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (3)(b) within four working days of this section coming into force.”

Rosie Winterton Portrait The First Deputy Chairman
- Hansard - - - Excerpts

With this it will be convenient to discuss the following:

Clause stand part.

Amendment 3, in clause 2, page 4, line 24, at end insert—

“(5) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (4)(a) within four working days of this section coming into force.”

Clause 2 stand part.

Clauses 3 to 4 stand part.

Amendment 1, in clause 5, page 7, line 44, leave out subsection (3).

This amendment is connected with NC1, which would make all substantive regulations under the Bill subject to the affirmative procedure.

Clause 5 stand part.

Clauses 6 to 12 stand part.

New clause 1—Regulations—

“Notwithstanding any other enactment, a statutory instrument containing regulations made under this Act, other than regulations made under section 11, may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.”

This new clause would make regulations made under the Bill (other than the commencement regulations in clause 11) subject to House of Commons affirmative procedure.

New clause 2—Treasury use of powers—

“(1) The Treasury must, within four working days of the day on which this Act is passed, publish a report setting out the timeframe within which it will use the powers to make regulations conferred by—

(a) section 40A(2) of TCTA 2018;

(b) section 40B(1) and (2) of TCTA 2018;

(c) section 30A(4) of TCTA 2018;

(d) section 30B(1) and (3) of TCTA 2018;

(e) section 30C(5) of TCTA 2018, and

(f) section 5(2) of this Act.

(2) The Treasury must publish an annual report setting out how it has made use of the powers referred to in subsection (1).

(3) Each report under subsection (2) must include an assessment of—

(a) what considerations the Treasury made when deciding to use its powers, and

(b) the impact of the regulations on individuals and businesses throughout the UK, and specifically in Northern Ireland.”

That schedule 1 be the First schedule to the Bill.

That schedule 2 be the Second schedule to the Bill.

That schedule 3 be the Third schedule to the Bill.

That schedule 4 be the Fourth schedule to the Bill.

Pat McFadden Portrait Mr McFadden
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As well as speaking to amendment 2, I will speak to amendment 3, which makes the same points, and say a word about new clause 2. All three have been tabled in the name of the Leader of the Opposition and those of my right hon. and hon. Friends.

Clause 1 sets out the new customs regime that will apply to goods moving between Great Britain and Northern Ireland—specifically those that are deemed to be at risk of entering the EU single market. The Northern Ireland protocol that the Government have signed up to requires such a regime as a result of their decision to leave the single market and the customs union. It will mean a system of paying customs duties for those who move such goods.

As yet, none of us knows whether a deal will be agreed, although we know that an important dinner is taking place in Brussels tonight. However, we welcome the announcement of a trusted trader scheme today, although it comes very late in the day. That scheme will remove some of the possible tariffs on goods that move from Great Britain to Northern Ireland in the event of a no-deal Brexit, but for other goods we are clear that we do not want to see additional costs for businesses and communities in Northern Ireland.

The House should note that Northern Ireland consumers have, on average, about half the discretionary income of consumers in the rest of the United Kingdom; the long and the short of it is that they simply cannot afford such additional trade tariffs on goods. There therefore needs to be a system for at-risk goods that do not leave Northern Ireland, in line with the agreement that Northern Ireland remains part of the UK’s customs territory and that customs duties should not apply to goods that travel between Great Britain and Northern Ireland if Northern Ireland is their end destination.

The protocol and the arrangements agreed yesterday by the Chancellor of the Duchy of Lancaster and his counterpart create new requirements for businesses to be set out in regulations. Clause 1 is specific about that, for example in new section 40B of the Taxation (Cross-border Trade) Act 2018, which states that the Treasury

“may by regulations provide”

for which goods the new duties will apply to, and make

“provision about reliefs, repayment and remission…checks, controls or administrative processes”

and other matters.

My broad point is that that is obviously a description of new arrangements that are not in place right now; that is why they are being introduced in the Bill. As I said on Second Reading, it would be better for the Government to acknowledge that this is a new regime with new requirements, instead of the pretence that everything will carry on exactly as it is.

As I also said on Second Reading, we only have three weeks to go. Businesses in Northern Ireland and those that do a lot of trade with Northern Ireland will be asking, “What does this mean for me? What processes do I have to go through? What do I have to pay? If the goods remain in Northern Ireland, will I be entitled to a rebate if I have paid? How will I claim that rebate? How will this system work?” Those are all legitimate questions about the new regime being introduced by the Bill and the regulations enabled by it. Amendment 2 asks the Treasury to reach conclusions and to publish answers on these matters in the coming days. Frankly, it is already too late to expect businesses to absorb more than 100 pages of legislation within a few weeks. But even if it is too late, we cannot afford more delay, which is why our amendment calls for the publication of guidance on this within a few days of the Bill coming into force.

I should stress that nothing in this amendment alters the regime that the Government are trying to bring in. Everything in the amendment is fully in line with the Northern Ireland protocol and with the commitments that the Government have made as part of that. We want to provide clarity for businesses as soon as possible, rather than leaving open-ended the time for these regulations to be published.

In response to my question at the end of the Second Reading debate, the Exchequer Secretary to the Treasury said with confidence that she was sure this could all be done by 1 January. I hope she is right and that any scepticism that all these arrangements will be completed in the three weeks between now and 1 January is unfounded. Let us hope that she is right. The amendment asks for the Government to outline precisely how these duties and tariffs, if they are necessary, will be rebated. Businesses will be asking that question and, quite reasonably, they will want an answer.

Will businesses be required to pay up front and then be reimbursed by HMRC, as envisaged in the Northern Ireland protocol? Is that what the Government have in mind? If so, the Minister should know that there are fears that such a rebate system could be hugely complex. Indeed, some fear that it is not fully built, but we are told that it will all be ready for 1 January. These are vital questions. As it stands, the Bill does not fully answer them, nor does it set out a timeframe in which they will be answered, which is why we have tabled amendments 2 and 3 to the Bill.

Finally, new clause 2 is an attempt to give both Parliament and the public some timetable—some road map—for the blizzard of regulations that are enabled by the Bill and to secure a report on their impact in the future. As I said, this is a new regime. The Bill legislates for something that we have not had to do before in the United Kingdom, and we should at least have the courtesy of reporting on how it is operating in the future. New clause 2 asks for both a timetable of the regulations and a report on how the new regime has operated. These are completely reasonable amendments. I hope that, in a spirit of generosity, the Government will find it within themselves to accept them, and I look forward to hearing the Financial Secretary to the Treasury wind up the debate.

Rosie Winterton Portrait The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)
- Hansard - - - Excerpts

Sir William Cash is not here, so we go to Alison Thewliss.

Alison Thewliss Portrait Alison Thewliss (Glasgow Central) (SNP)
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I am very sorry to hear that the hon. Member for Stone (Sir William Cash) is not here, because I am sure that there is so much more that he could have added to this debate that he has not already said.

Rosie Winterton Portrait The First Deputy Chairman
- Hansard - - - Excerpts

He may have withdrawn but I have not been told, so that may explain it.

Alison Thewliss Portrait Alison Thewliss
- Hansard - - - Excerpts

That is absolutely fine. I wish to speak to the amendments in my name and the names of my hon. Friends.

As I outlined on Second Reading, I have real concerns about the scrutiny aspects of the Bill. It is a thick and substantial Bill that gives substantial powers to the UK Government to move things through this House under the negative procedure, which gives very little opportunity for us or anybody else to scrutinise their proposals. We wish to see the proposals come under the affirmative procedure wherever possible, to allow extra scrutiny of the Government.

As I said, I am very concerned about the letter that the Minister sent to Members. It talks about a huge range of duties that the Government are creating but that, at this moment, they do not intend to use. I question why they are creating such duties if they do not intend to use them. At some stage perhaps they will use them, so we need a mechanism to scrutinise them. It is unfortunate, but perhaps not surprising, that the Government see taking back control as bringing it back from bureaucrats in Brussels to give it to bureaucrats in Whitehall, bypassing this place altogether. It should have been an opportunity for this place to get more powers to scrutinise such duties, but no; it all goes to Her Majesty’s Revenue and Customs or to the Treasury, and very little comes here or indeed to the Committees of this House. There should have been an opportunity to look at the new taxation structures that we are bringing in here and that we have responsibility for in this House, but the Committees of this House will not get the opportunity to scrutinise these measures either. I know that some have suggested that an additional Committee would allow that scrutiny to be made.

I very much support what the right hon. Member for Wolverhampton South East (Mr McFadden) said and the questions he asked. We are dealing with complex supply chains when we talk about the movement of food, chemicals and manufactured goods. In my constituency and in the constituencies of some of my colleagues, for example, we have manufacturers of leather, who move raw hides from Ireland to the west of Scotland. They need to know how they will be able to move these goods through different territories, as they really should not be left hanging about for any length of time; they need to be moved quickly to where they are processed. We do not know whether they would fall under what the Government have termed “at risk goods”. It is not surprising that businesses are tearing their hair out with this shambles of a Government, because they do not know whether they will be able to continue with their business come the turn of the year.

There is also the cost and the red tape, whether it is the 265 million customs forms that will need to be filled out compared with the 54 million now, or whether it is the issue of rebates and the processing of fees and money. This is the end of the transition period, but we do not know what we are transitioning to. We certainly know what we had and what we will not have any more: free and unfettered access to a huge market in Europe. We do know that we are losing that, but we do not yet know what the Government’s plans are.

Despite the Government’s attempts to reassure us, concerns remain. Aodhán Connolly of the Northern Ireland Retail Consortium, while acknowledging the progress that has been made, said of the delays:

“We are just 22 days out and retailers are still unsure about the exact processes needed to move food to Northern Ireland. Therefore, the Government needs to assure them how this will be done without additional bureaucracy.”

There are real concerns about the cost and the choice of food that people of Northern Ireland will have if we do not get this right.

The point that I made earlier about customs charges and duties was reflected in an item on RTÉ at about 2.30 this afternoon. It said that customers in Ireland will be faced with VAT and customs duty from 1 January if buying goods from the UK worth over €22. That is significantly lower than the levels that were spoken about earlier. It was said that the Irish Revenue has no way of knowing whether consumers will continue to buy from the UK when additional charges apply. I ask the Minister to consider this and to do some studies on whether these additional charges will have an impact on people in this country who make good-quality goods and export them to Ireland. A total of 70% goes to Ireland, and we need to have some certainty from the Government about the long-term impact.

The scrutiny mechanisms that we suggest give us ample opportunity to do that at every stage of this process, not just today while we are considering this Bill, and then putting it in a box and leaving it, but on an ongoing basis. This Government definitely need to be held to account.

The First Deputy Chairman of Ways and Means (Dame Rosie Winterton): I believe that the Members who were numbers five to 11 on the call list spoke in the earlier debate and have withdrawn from this one, which means that we go straight to Andrew Griffith.

Andrew Griffith Portrait Andrew Griffith (Arundel and South Downs) (Con)
- Hansard - - - Excerpts

It is a pleasure to speak under your chairmanship, Dame Rosie.

I welcome this set of pragmatic measures. The Bill is a building block on the way to regaining our national self-determination in this very important area. I will oppose the amendment, although not on the principle— greater scrutiny and giving business greater certainty are things that I hope that those on both sides of the House can support. However, we should recognise that we are in a fast-moving environment. The Treasury team have been working incredibly intensively in the context of the pandemic and I think it is unfair to impose on them a specific timeframe when I know they will—perhaps the Minister will address this point—use their very best endeavours to give the very greatest amount of certainty as quickly as possible.

I follow the hon. Member for Glasgow Central (Alison Thewliss), who I have to say takes something of an 18th-century approach to customs, borders, forms and tariffs. The reality is that, as my right hon. Friend the Member for Wokingham (John Redwood) said earlier, we are in an age of online forms and digital electronic surveillance. Any good that passes across any internal or external border is tracked through a multiplicity of different technologies. I made the observation to the hon. Lady that of course when one introduces any customs border—this is one reason why Government Members are so keen to keep our United Kingdom together—there is an added level of complexity, but we should not overstate the complexity or understate the ability of business to innovate and deal with that.

Alison Thewliss Portrait Alison Thewliss
- Hansard - - - Excerpts

I thank the hon. Gentleman for allowing an intervention. Is he aware that we were told in the Treasury Committee that the UK could have adopted the French customs system, which was up and running before ours? Ours is not ready, as the Business, Energy and Industrial Strategy Committee heard yesterday. Technological solutions exist, but they do not exist in the UK, and we do not have them up and running to get this moving by the turn of the year.

Andrew Griffith Portrait Andrew Griffith
- Hansard - - - Excerpts

I beg to differ with the hon. Lady. There will be different systems for different territories, but on the business side of things there is already sophisticated tracking of stock, sales and data, which can be used to feed into accounting systems.

What I really want to do is to celebrate—I hope that those on both sides of the House can do that—the absolute game-changer that is contained within clause 7 to crack down on the leakage of the important tax revenues that fund our valued public services, and, most importantly, to create a level playing field for the nation’s small and online retailers. That has needed to be addressed for far too long. I welcome the Minister to his place and what clause 7 will do for the enterprising small businesses of our nation.

Jesse Norman Portrait The Financial Secretary to the Treasury (Jesse Norman)
- Hansard - - - Excerpts

Dame Rosie, what a delight it is to see you in the Chair, metaphorically if not actually.

It is a measure of the wide gulf between the House’s professed intentions and its actual activities that we are about to wind up within a very few minutes, and nothing like to time, the scrutiny of the Bill in Committee. I thank those who have spoken. Let me do service on my part by keeping my remarks brief, although I will say that nothing could have surprised me more than that my hon. Friend the Member for Stone (Sir William Cash) will not be taking the opportunity to make a trivial two-hour speech.

The right hon. Member for Wolverhampton South East (Mr McFadden) said that somehow the Government were pretending there was no change. Of course, he then went on to say that nothing has changed. We are not pretending anything. We acknowledge that there is change and that is specifically why we have used the language we have of making the changes as easy and as frictionless as possible for all parties concerned.

The right hon. Gentleman raises concerns and questions about Northern Ireland. I remind him that the Trader Support Service, which was launched on 28 September, has 18,000 subscribers already. He asks us to publish guidance. I can tell him that guidance has been published already, on 26 October.

The hon. Member for Glasgow Central (Alison Thewliss) saw Brexit—rather helpfully—as an opportunity to return powers to Parliament. How right she was. That is why I am a supporter of the United Kingdom of Great Britain and Northern Ireland, and of the Parliament that stands at its centre. My hon. Friend the Member for Arundel and South Downs (Andrew Griffith) rightly said that it should be for the Bill to make matters as easy as possible. I agree with that. He pointed to the absolute game-changer in clause 7. I agree with that too.

Rosie Winterton Portrait The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)
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I believe the right hon. Member for Wolverhampton South East may wish to withdraw his amendment.

Pat McFadden Portrait Mr McFadden
- Hansard - - - Excerpts

I point out to the Minister that he said guidance was published in October; he cannot be referring to the guidance referred to in clauses 1 and 2, which talks about the regulations under the Bill. However, on the basis of the whole debate, we will not press the amendment to a vote tonight, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

Amendment proposed: 1, in clause 5, page 7, line 44, leave out subsection (3).—(Alison Thewliss.)

This amendment is connected with NC1, which would make all substantive regulations under the Bill subject to the affirmative procedure.

Question put, That the amendment be made.

The list of Members currently certified as eligible for a proxy vote, and of the Members nominated as their proxy, is published at the end of today’s debates.

Clause 5 ordered to stand part of the Bill.

Clauses 6 to 12 ordered to stand part of the Bill.

Schedules 1 to 4 agreed to.

The Deputy Speaker resumed the Chair.

Bill reported, without amendment.

Bill to be considered tomorrow (Order, this day).

Taxation (Post-transition Period) Bill

(2nd reading: House of Commons)
Wednesday 9th December 2020

(2 months, 2 weeks ago)

Commons Chamber

Read Hansard Text Bill Main Page
HM Treasury

[Relevant documents: First Report of the Northern Ireland Affairs Committee, Unfettered Access: Customs Arrangements in Northern Ireland after Brexit, HC 161, and the Government response, HC 783; Oral evidence taken before the Northern Ireland Affairs Committee on 16 and 23 September and 2 December 2020, on Brexit and the Northern Ireland Protocol, HC 767.]

Second Reading

Jesse Norman Portrait The Financial Secretary to the Treasury (Jesse Norman)
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I beg to move, That the Bill be now read a Second time.

It is a delight to speak under your chairmanship, Madam Deputy Speaker.

In three weeks’ time, the transition period will end and this country will take its place as a fully sovereign trading nation once more. It is a very important moment in our nation’s history, one that will undoubtedly provide us with great opportunity in the years ahead, but the Government are acutely aware that at this time they also have a great responsibility to provide certainty to people and businesses and to preserve this nation’s unity, and the fundamental purpose of this Bill is to achieve those goals. It seeks to ensure that businesses in every part of the UK can continue to trade smoothly after the end of the transition period, but its particular focus is on businesses based in Northern Ireland or those that work with Northern Ireland companies.

The Government have always been clear that we must deliver on our pledge to provide unfettered access for Northern Ireland’s businesses to the rest of the UK internal market, and we have been equally unstinting in our determination to uphold our commitments to the people of Northern Ireland under the Northern Ireland protocol and to protect the progress made under the Belfast Good Friday agreement. This Bill will help us support those commitments by providing legal certainty for the customs, VAT and excise systems in Northern Ireland after the end of the transition period.

If I may, I will start with the customs elements of the Bill. The House will know that the UK is a single customs territory, with article 4 of the Northern Ireland protocol giving a clear legal commitment to this. However, the protocol also requires a new and unique set of arrangements to be put in place for goods moving from Great Britain to Northern Ireland. Under these arrangements, the only circumstance in which there should be charges on goods moving between Great Britain and Northern Ireland is if those goods are destined for the EU single market or there is a clear and substantial risk that they may be.

John Redwood Portrait John Redwood (Wokingham) (Con)
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I am grateful to the Minister for giving way in this Second Reading debate before we get to Committee. Will he confirm that under the proposals in this last legislation the European Court of Justice will be the ultimate arbiter of excise and VAT arrangements within Northern Ireland, and that the European Union will be placing staff in our country to supervise this?

Jesse Norman Portrait Jesse Norman
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VAT in Northern Ireland will be subject to the EU principal VAT directive, and for that purpose the ECJ will be the judicial body. I cannot comment as to whether or not there will be anything more than staff, except to say that excise processes in Northern Ireland will be carried out by Her Majesty’s Revenue and Customs.

Alistair Carmichael Portrait Mr Alistair Carmichael (Orkney and Shetland) (LD)
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The Minister was asked by his right hon. Friend the Member for Wokingham (John Redwood) whether the ECJ would be the ultimate arbiter, and the Minister replied that it would be the judicial authority. Is that the same thing?

Jesse Norman Portrait Jesse Norman
- Hansard - - - Excerpts

Yes, I was simply paraphrasing the point that my right hon. Friend made.

Under the terms of the protocol, we need to treat goods at risk of such onward movement into the EU differently from those groups that are not at risk. On the specific details of what will be defined as at risk or not at risk, the House will be aware of the EU-UK joint agreement made this week setting out that an agreement has been reached in principle regarding the implementation of the Northern Ireland protocol. In accordance with that statement, the draft texts will now be subject to further consideration in both the EU and the UK. Once that is complete, a joint committee will be convened to adopt them formally. Further details will be set out in due course, and before the end of the year.

William Cash Portrait Sir William Cash (Stone) (Con)
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In reply to my right hon. Friend the Member for Wokingham (John Redwood) and the right hon. Member for Orkney and Shetland (Mr Carmichael), the question of jurisdiction was raised, and perhaps it is best to use the right expression, rather than paraphrasing. The fact remains that EU officials will be there for the purposes of enforcing the jurisdiction of the European legal arrangements, which will be enforced subject to the European Court. In those circumstances, will the Minister now accept that actually there is an infringement of sovereignty in that respect? As the “notwithstanding” clauses are being taken out, there is therefore a further complication, and if I may say so respectfully, that is slightly in contradiction of his allegation that we would now take over as a sovereign, fully independent power.

Jesse Norman Portrait Jesse Norman
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I thank my hon. Friend for the question. He is right that it is expected that there will be EU officials. The checks will be levied and done by HMRC inspectors, and the system that we are putting in place gives effect to the Northern Ireland protocol, which, as he will recognise, already recognises the balance that is being struck in Northern Ireland between its status under the Union customs code and its status within the UK customs system.

If I may proceed, the Bill will allow the Government to put in place decisions made by the Joint Committee on goods that are not at risk of entering the EU, ensuring that they do not have to pay the EU tariff. However, if I may underline the point, this Bill does not itself seek to specify the classes or categories of goods or movements that are at risk or not at risk. Instead, that will be set out by regulations that the Bill permits us to make once legal texts have been formally adopted. The “at risk” or “not at risk” definitions will also determine whether the UK or EU tariff applies when goods arrive in Northern Ireland from rest-of-the-world countries, again in line with the Northern Ireland protocol.

In relation to the so-called “notwithstanding” clauses, as part of yesterday’s EU-UK joint statement, the Government have agreed not to introduce these provisions into this Bill, and we have also committed to remove the three “notwithstanding” clauses from the United Kingdom Internal Market Bill.

William Cash Portrait Sir William Cash
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Will my right hon. Friend give way?

Jesse Norman Portrait Jesse Norman
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I suspect we are going to go around this many times, but I am happy to give way again.

William Cash Portrait Sir William Cash
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Could I simply say to my right hon. Friend that this does raise a question? I am not going to go into it in an intervention on him, but I will in my speech. I believe that those provisions may well be needed, because we do not know the outcome of the negotiations yet. I will leave it at that for the moment. We do not know, but we have been told that the clauses are going to come out. The question of whether they should have been put in is a separate question, which I dealt with yesterday.

Jesse Norman Portrait Jesse Norman
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I am not quite sure where that was heading, but we have the Bill in front of us and the Government have made it clear that the so-called “notwithstanding” clauses will not be introduced.

The legislation follows from commitments made in the Government’s Command Paper on the implementation of the protocol, which was published in May. The Bill will ensure that EU goods moving into Northern Ireland remain free from customs duties or processes. Although we recognise and are addressing the challenges relating to the movement of goods from Great Britain to Northern Ireland, we should not lose sight of the benefits to Northern Ireland of having continuing access to the EU market.

In addition, this legislation will ensure that the UK customs regime applies to goods moved from Northern Ireland to Great Britain if they do not qualify for unfettered access. The Bill will also introduce anti-avoidance rules to prevent goods from being rerouted through Northern Ireland to avoid UK customs duties or associated obligations, and its measures will ensure that customs enforcement and penalties, along with review and appeal processes, are in place in relation to duty and that they continue to work alongside EU legislation in Northern Ireland and can be applied, where required, to movements of goods between Northern Ireland and Great Britain.

Stephen Farry Portrait Stephen Farry (North Down) (Alliance)
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I welcome the thrust of the Bill. We have heard a lot about the anti-avoidance approach in recent months, but we have never seen any detail as to how it will work. This is a critical issue, particularly for the agrifood sector, to make sure that inferior product is not coming into Northern Ireland and taking advantage of the protocol, and there is the risk of organised crime in Ireland as well. When will we see detail on exactly how it will look?

Jesse Norman Portrait Jesse Norman
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As the hon. Gentleman will know, goods that are, as it were, normally circulating in Northern Ireland will be open to go into Great Britain from the beginning. There will be some goods that, over time, will be designated as non-qualifying goods for these purposes, and HMRC has well established practices for identifying, discussing and targeting those, as may be necessary, and will be applying them to prevent avoidance and to keep the market honest.

As I have said, the Bill will ensure that the UK customs regime applies to goods moving from Northern Ireland to Great Britain if they do not qualify for unfettered access. These anti-avoidance rules will prevent goods from being rerouted through Northern Ireland to avoid UK customs duties or associated obligations, and its measures will ensure that customs enforcement and penalties, along with review and appeal processes, continue to work alongside EU legislation in Northern Ireland and can be applied, where required, to movements of goods between Northern Ireland and Great Britain.

The Bill also amends and modifies certain provisions in relation to VAT and excise for Northern Ireland.

Toby Perkins Portrait Mr Toby Perkins (Chesterfield) (Lab)
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In many of these debates over the past four years, the Government have referred to “frictionless trade” between the mainland and Northern Ireland. The Government now say that they want VAT accounting treatment for goods moving between Great Britain and Northern Ireland to remain “as close as possible” to the current approach. Will the Minister confirm whether we have now accepted that frictionless trade is not possible? Can he tell us a little more about what “as close as possible” actually means for businesses in Northern Ireland that are looking forward to 1 January with some trepidation?

Jesse Norman Portrait Jesse Norman
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I thank the hon. Gentleman for his question and, yes, the legal basis on which VAT is charged will change. I will spare him the details of the difference between import VAT and acquisition VAT, but it will change. The experience of those who pay VAT will be very similar, if not identical, to the system we have in place at the moment. HMRC and the Government have identified flexibilities, which allow that to be put in place. Of course, there will continue to be the normal processes of enforcement that one would expect to see from HMRC in order to make sure that VAT is properly paid in the usual way.

John Redwood Portrait John Redwood
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These are urgent and important issues. We heard earlier from the Chancellor of the Duchy of Lancaster that there are various delays to the full implementation of trade arrangements into and out of Northern Ireland as a result of his negotiations. Will they be incorporated into this legislation, and do they provide a brake on the immediate introduction of these complex double-taxation arrangements?

Jesse Norman Portrait Jesse Norman
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I have no doubt that the Chancellor of the Duchy of Lancaster will be updating the House over time as the different provisions he has negotiated come into force but, from our point of view, the position remains as stated, that is to say that VAT will become chargeable by a slightly different legal means, but in substantially the same way in Northern Ireland as it is at the moment. The mechanisms we have put in place are designed to ensure that, as far as possible, VAT will be accounted for in the same way as it is today.

Existing rules in relation to movements of goods between Northern Ireland in the EU, including the rules relating to acquisitions and distance selling, will continue to apply. Goods entering Great Britain from Northern Ireland will be subject to VAT as though they were imports under the relevant UK legislation. Similarly, goods entering Northern Ireland from Great Britain will also be subject to VAT as though they were imports and relevant EU or UK legislation will apply, but let me add that the Government are adopting an approach that minimises any changes for goods moving between Northern Ireland and Great Britain.

Stephen Flynn Portrait Stephen Flynn (Aberdeen South) (SNP)
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On a point of order, Mr Deputy Speaker, can you clarify whether Members in the Chamber should be socially distancing by staying on the seats that have ticks on them?

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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Yes, that is what the ticks are there for. I hope that all Members will abide by them so that we can have safe social distancing. Thank you very much.

Jesse Norman Portrait Jesse Norman
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In addition, the Bill amends current legislation for excise duty to be charged when certain goods, such as alcohol and tobacco, are moved from Great Britain to Northern Ireland. The changes are necessary to ensure that there is a fully functioning VAT and excise regime in place in relation to Northern Ireland at the end of the transition period.

In line with the protocol, Northern Ireland will maintain alignment with existing EU excise rules. That means a change to excise duty is required when goods are moved to Northern Ireland from Great Britain, but the Government are adopting an approach using flexibilities and EU rules that minimises changes for excise goods moving between Great Britain and Northern Ireland.

A small number of other taxation measures also need to be in place before the end of the transition period. The Bill introduces a new system for collecting VAT on cross-border goods. That includes moving VAT collection on certain imported goods away from the border and involving operators of online marketplaces in the collection of VAT at the point of sale.

In addition, measures in the Bill will remove the VAT relief on imported low-value items so that VAT will be due on all consignments, irrespective of their value. The relief has been the subject of long-standing abuse and removing it will build on Government efforts to level the playing field for UK businesses still further by protecting high streets from VAT-free imports. Together, the changes will improve the effectiveness of VAT collection on imported goods, tackle non-compliance and protect the flow of goods at the border.

Kevin Hollinrake Portrait Kevin Hollinrake (Thirsk and Malton) (Con)
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I very much support the measures that the Minister is talking about. Why is the measure just for low-value goods? There will be other goods where a similar loophole applies, such as watches or jewellery that have a value above £135. Is this not an opportunity to close that loophole as well?

Jesse Norman Portrait Jesse Norman
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I thank my hon. Friend for his question, and I will take that under review. We have put in place a set of measures designed to tidy up the position that particularly arises in relation to the Northern Ireland protocol, as he will be aware, and the end of the transition period, and that has meant a change to low-value consignment relief and the changes I have described. I am grateful to him for his contribution and suggestion.

The Bill also includes provision for an increase in the rate of duty on aviation gasoline, which will apply across the UK. Otherwise known as avgas, the fuel is a form of leaded petrol predominantly used in leisure flying. The change made by clause 6 of the Bill will increase the avgas rate by half of a penny to 38.2p a litre from 1 January next year. By way of explanation, the Northern Ireland protocol requires that Northern Ireland continues to comply with the EU’s energy taxation directive following the end of the transition period. It sets a minimum level of duty in euros on unleaded petrol used for propulsion. After some careful consideration, the Government have chosen to apply the change to the whole of the UK to ensure consistency between Great Britain and Northern Ireland, avoid burdens on business and reduce compliance risks for HMRC.

The Bill also includes a clause to ensure HMRC has access to the same or similar tools to prevent insurance premium tax evasion as it does at present, regardless of whether an insurer is based in an EU member state. Overseas insurers are liable to pay insurance premium tax when they supply general insurance for UK-located risks. Occasionally, overseas insurers do not pay the insurance premium tax they owe, so it is important that HMRC has access to tools that deter and tackle that form of evasion. Up to now, it has been using EU provisions to prevent evasion by insurers based in EU member states.

Separately, HMRC can issue liability notices in cases involving insurers based in any country outside the EU with which the UK does not have a mutual assistance agreement. Given that the EU provisions expire at the end of the transition period, this clause will enable HMRC to issue liability notices in evasion cases involving insurers based in any country with which the UK does not have a mutual assistance agreement, including EU member states.

Finally, the Bill introduces new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period from 1 January 2013 to 31 December 2018. This is a technical provision that will deal efficiently with the legacy state aid decision relating to the period before the UK left the European Union.

This Bill will give people and businesses throughout the UK certainty about the arrangements that will apply from 1 January next year. It will play a part in further safeguarding the unity and integrity of this country, both in the months ahead and long into the future. I commend the Bill to the House.

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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Before I call Anneliese Dodds, let me say that the wind-ups will begin at 5 o’clock at the latest, and that 13 Members wish to speak and are all here. We therefore know that there will definitely be 13 Members speaking, so colleagues should really be thinking about speeches lasting for six minutes. Even if I do not put the clock on, it would be really useful if everybody shows at least some discipline on that, so that everybody can get a fair crack of the whip.

Anneliese Dodds Portrait Anneliese Dodds (Oxford East) (Lab/Co-op)
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It is a year to the day since the Chancellor boasted that there was no need to plan for no deal because

“we will have a deal.”

Yet today, as we debate this Bill, we stand on the brink of a no-deal Brexit that would destroy jobs and livelihoods right across the United Kingdom. We have only 22 days to go until the end of the transition period, with still no deal in sight.

When we debated yesterday the Ways and Means resolutions associated with this Bill, a number of Government Members claimed that agreements between nations are often only finalised at the last minute—that there is nothing out of the ordinary about this Government’s approach. That is because for run-of-the-mill agreements there is a fall-back option, a status quo. But failing to reach a deal now does not mean a return to the status quo—that we stay as we are. It means extensive economic damage to the tune of an additional 2% loss of GDP, on top of the 4% loss of GDP that the Office for Budget Responsibility has calculated would be the impact of a very thin deal: the type of thin-as-gruel deal that the Conservatives look set to deliver.

Toby Perkins Portrait Mr Perkins
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My hon. Friend is absolutely right, but even the statistics that she refers to regarding the overall impact on the economy mask the absolutely catastrophic impact that no deal would have on individual businesses and individual industries. I had the pleasure of visiting the Toyota factory in Derby. No deal means that the entire purpose of that factory being based in Derby is under serious threat. Alongside those statistics about the overall impact, it is really important that we recognise that the situation is much worse than that for individual businesses and industries.

Anneliese Dodds Portrait Anneliese Dodds
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My hon. Friend is absolutely right. There is potentially a very, very severe impact from no deal, but, as I will go on to explain, there is already a concrete and very acute impact on our economy. I am particularly concerned about the situation for many businesses based in Northern Ireland.

This damage will be long lasting, likely to outlive even the impact of the current covid crisis. Our country cannot afford this. We have already experienced the steepest economic downturn in the G7 due to the covid crisis, and are predicted by the OECD to experience the slowest recovery in the G7. Just the prospect of a potential no-deal outcome is already leading to chaos in the midst of a pandemic. Stockpiling by companies, caused by the threat of no deal, is exacerbating supply blockages at our ports.

Kevin Hollinrake Portrait Kevin Hollinrake
- Hansard - - - Excerpts

The economic damage that the hon. Member is talking about should a deal not be agreed would also be inflicted on the European Union, particularly certain parts of the European Union, such as the Republic of Ireland. She criticised the UK Government for the way that they have negotiated. Does she have no words of criticism for the EU negotiators in this two-way negotiation?

Anneliese Dodds Portrait Anneliese Dodds
- Hansard - - - Excerpts

Of course we need application and a determination to conclude a deal on both sides; that surely is obvious. But the fact remains, as I will go on to describe, that it was the UK Government that, rather than tabling this Bill many weeks ago, which they could have done, decided to effectively retain provisions that threaten to break international law. That is on the Government’s head, and it is something that the Government must surely be responsible for.

The irresponsible approach that we have seen recently speaks to a wider pattern over the last 12 months of recklessness with public finances, broken promises to the British people and short-term thinking that is doing long-term damage to our country. The Prime Minister promised the British people that he would get Brexit done. He said he had an “oven-ready” agreement. Whatever he has got cooking ahead of his dinner with von der Leyen tonight, my message to him is to get on and deliver what was promised.

William Cash Portrait Sir William Cash
- Hansard - - - Excerpts

I would just like to point out to the hon. Lady that Labour Governments, not to mention Conservative Governments or the coalition Government after 2010—there is a host of examples by a number of Governments—have passed treaty overrides, on exactly the same principles relating to Finance Bills, in the past. If she wants to construe that as breaking international law, she can, but the reality is that it is consistent with article 46 of the Vienna convention.

Anneliese Dodds Portrait Anneliese Dodds
- Hansard - - - Excerpts

I am pleased that the hon. Gentleman mentions that situation, because it has been referred to by those who favoured the Government’s approach previously. However, I gently state to him that if he is referring in particular to provisions against tax avoidance—the example of a general anti-avoidance rule—then, sadly, I believe he is mistaken. In that case, that commitment and the ability to apply such rules was actually a fundamental principle agreed to by this country as part of a multilateral agreement that it concluded with the OECD, so I fear that that example is not as telling as he may wish it to be.

With just three weeks to go until the end of the transition period, the Government published late yesterday afternoon the 116-page Bill that we are discussing now, setting out detailed new rules for tax and customs duties. Members of this House have been given less than 24 hours to scrutinise a major piece of post-Brexit legislation that will impact businesses and individuals across the country, especially in Northern Ireland. Many of the clauses in the Bill, particularly those covering customs and excise duties, require the Treasury to make regulations that will set out the actual detail of its proposals at a later date, so even with the publication of the Bill, businesses and individuals still do not have the information they need to prepare for the end of the transition period.

Earlier today, the Chancellor of the Duchy of Lancaster said there would be “further clarity” forthcoming on these matters, but again without saying when. In fact, the Minister talked a few moments ago about those details coming in due course. His letter to Members spoke about the fact that there would be information on this later; “in the coming days” was the formulation at that time. How can he really expect businesses to plan on that basis—on the never-never up to 1 January?

This last-minute approach was not necessary. It is no use pointing to the complexity of the ongoing negotiations. We know that this Bill could have been published a long time ago because the Government have been floating a Finance Bill for months, so why yet another last- minute scramble? My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) set it out very clearly: because the Conservatives had a not-so-cunning plan to use this Bill as negotiations reached a critical point by threatening to override the withdrawal agreement. At a time when we are seeking to negotiate new trading relationships across the international community, and when the Government are trying to project an image of global Britain to the world, this tactic certainly sent a clear message, albeit not the message the Government intended.

It is welcome that the Government finally saw sense yesterday, although we have already seen damage being done. Both in relation to the provisions in the Bill and more generally, the time is running out to ready our country for the challenges ahead. The Public Accounts Committee was clear last week that:

“Government is not doing enough to ensure businesses and citizens will be ready for the end of the transition period”.

It expressed concern at reports from industry bodies that the Government had not provided the key information needed for businesses to prepare. Indeed, the Committee indicated that more than a third of small and medium-sized enterprises still believed that the transition period would be extended.

The Cabinet Office has admitted that it is well behind in recruiting the customs agents desperately needed for 1 January, despite more than £80 million having been spent so far. Yet again, earlier today, the Chancellor of the Duchy of Lancaster refused to specify exactly how many additional customs agents had been recruited. Overall, £4.4 billion has been spent by the Government on preparations for Brexit and the end of the transition period, yet we are still not ready.

Jesse Norman Portrait Jesse Norman
- Hansard - - - Excerpts

I am terribly grateful to the hon. Lady for giving way. She has criticised the Government for spending £80 million in support of traders and a facilitated approach to the border. Could she tell us whether she thinks that number is too large or too small?

Anneliese Dodds Portrait Anneliese Dodds
- Hansard - - - Excerpts

With enormous respect to the Minister, the problem with his Government’s approach is the fact that they do not indicate what they have got with that spending. As I said, £4.4 billion has been spent on preparedness for Brexit and for the end of the transition period, and the £80 million that he refers to, but there is no indication from the Government of how many additional customs officers we have received as a result of that spending. I hoped that he was intervening on me to provide an indication of the additional workforce that has been recruited. It is a matter of regret that he was unable to do so.

Alison Thewliss Portrait Alison Thewliss (Glasgow Central) (SNP)
- Hansard - - - Excerpts

The hon. Lady is quite rightly querying how money has been spent. I do not know whether she has had letters from the Government asking MPs, as small businesses, to get ready for Brexit. I got two of them, including one that referred to me as an MSP, so perhaps the Government are not spending their money particularly wisely or accurately.

Anneliese Dodds Portrait Anneliese Dodds
- Hansard - - - Excerpts

I am grateful to the hon. Member for that very relevant point. I am sure that it is not only Opposition Members but Government Members who have had many businesses contacting them, often in despair, about the communications and advertisements asking them to get ready when there is so little indication of what they have to get ready for.

Yesterday morning, the Business, Energy and Industrial Strategy Committee heard from the Food and Drink Federation, which said that the guidance being published now was already too late. Some 43% of its members who supply Northern Ireland have said that they will not do so in the first three months of next year. That is desperately worrying. TheCityUK said that in the worst-case scenario, 40% of the UK’s EU-related financial activity could be lost. Every day between now and the end of the year counts to get a deal, and failing that, to plan for the no-deal outcome that the Prime Minister himself conceded would represent a failure of statecraft.

With that in mind, Labour supports this Bill passing. Labour is a responsible Opposition, and we are determined to see the minimum disruption possible, but we cannot support such continued lack of clarity on critical issues. When businesses need clarity as a matter of urgency, it is not good enough to state that further guidance will be forthcoming. At the very least, they need a timetable for the provision of that greater certainty. They need to know what rules of origin will apply from 1 January. The continued lack of clarity could create unprecedented new costs. They need to know when appropriate tariff codes will be published. They need to know whether the Government will be providing easements, and they need to know these things in concrete terms, not through the winks and nudges that have substituted for clarity so far.

Businesses need to know whether there will be a pause in penalties arising out of this legislation and, if so, what would be done to counterbalance that and prevent wilful avoidance. They need to know whether the measures in the Bill countermand the existing guidance provided to Northern Irish businesses, some of which was updated just on 7 December. They need to know, as revealed in The Irish Times, whether and when the information on the trusted trader scheme for Northern Irish business—details of which have allegedly been coming out of internal communications —is going to be fully published, so that businesses can follow that scheme.

I want to end my contribution by asking the Minister to place himself in the shoes of a small manufacturing company. We have many excellent such companies across the United Kingdom—in Northern Ireland and in Great Britain. Companies will already have faced enormous challenges during this period because of covid. Potentially, they have staff off because they have to self-isolate. Potentially, there is continuing uncertainty about the future of furlough because of this Government’s unwillingness to provide that certainty. Potentially, they were counting on the job retention bonus, but they are not going to receive it. They are now trying to plan which members of staff they will need to have in the company at work to get ready for 1 January. The stress and strain are immense.

The Minister and his Government must do all they can to overcome those uncertainties and help businesses to plan. That is the least they can do for businesses and the people who work for them, who have had such a hard year.

William Cash Portrait Sir William Cash (Stone) (Con)
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I simply would like to put on record it on Second Reading the fact that, as I made clear in a point of order earlier, consideration on Report will take place next week and a lot will happen between now and then. The UKIM Bill at the moment has the “notwithstanding” provisions in it; they have not yet been taken out. We do not yet know what will transpire this evening or at any point between now and the Report stage of this Bill next week. Therefore, I have given instructions for the tabling of amendments to reinsert the “notwithstanding” provisions for the purposes of this Bill, which would have appeared but for the fact that the decision had already been made yesterday, before a statement was made to the House of Commons. That was dealt with today in principle, although not the question of what actually is going to be done. Therefore, for practical purposes, all I need say on Second Reading is that there are relevant provisions within the scope of this Bill, in clause 9, which is entitled “Recovery of unlawful state aid”.

Earlier this afternoon, I chaired, as I always do on Wednesdays, the European Scrutiny Committee. We have a 10 or 15-page paper on this question. The report, which will be signed off today and then published, covers reform of state aid rules and potential implications for the UK and includes a full description of what the state aid rules would mean; what the evaluation is at the moment by the European Commission; what it intends to do with respect to state aid in relation to enforcement proceedings; matters of sovereignty regarding the United Kingdom; the timetable for amendments to the EU state aid rule book; and the continued relevance of EU state aid law to the UK.

I am reading out some headline points, which also include infringement proceedings for state aid granted before 31 December; state aid law under the protocol on Ireland and Northern Ireland; state aid commitments—this is of course highly relevant to what the Minister said at the beginning, and I strongly advise him to read the report carefully—and state aid commitments in the EU-UK trade agreement, which the Prime Minister is going to be discussing today, and we do not know the outcome of that; the impact of EU subsidy controls on the competitors to UK businesses; and article 10 of the protocol on Ireland and Northern Ireland, which my right hon. Friend the Member for Wokingham (John Redwood) referred to. Indeed, I did too this afternoon, when my right hon. Friend the Chancellor of the Duchy of Lancaster made his statement and I pointed out that not only do I agree 100% with what the Prime Minister said at Prime Minister’s questions on all those relevant matters, wishing him well for this evening, but that what the Chancellor of the Duchy of Lancaster announced yesterday, in principle, and then reaffirmed today must not be allowed to undermine the unfettered sovereignty of the United Kingdom Parliament. That sovereignty is based on the referendum, the votes, the Acts of Parliament that everybody in this House on the Government Benches and the House of Lords agreed to, and, for that matter, section 38 of the European Union (Withdrawal Agreement) Act 2020, which was passed by a majority of 120 in this House—not a word of dissent from the House of Lords and not a word of dissent from any Member of this House.

In conclusion, I intend to table these amendments to examine the question when we get to the Report stage next week.

Alistair Carmichael Portrait Mr Carmichael
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Will the hon. Gentleman give way?

William Cash Portrait Sir William Cash
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It is always a pleasure to give way to the right hon. Gentleman, with whom I have been jousting on these questions for the best part of 20 years.

Alistair Carmichael Portrait Mr Carmichael
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I hate to think it is the best part, but certainly it has been almost 20 years. The hon. Gentleman gives an interesting list of topics that his Committee has considered. The actual, practical application of these matters will be very different if the ratio decidendi in the Factortame case continues to have application in Northern Ireland post 31 December. Is that a matter he has considered, and what impact does he think it has on these things?

William Cash Portrait Sir William Cash
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As somebody who has taken a great interest in Irish matters since I came into this House, I can only say the answer to that is yes. However, I also know that there is an enormous amount of malicious rubbish talked about the implications for the hard border. We are not going to impose a hard border. If anybody does, it will be the EU. If the EU gets its way on these matters, believe me, we are going to end up with difficulties that will have been created by the EU, not by us. I remember Martin Selmayr saying that the price the United Kingdom would have to pay would be the loss of Northern Ireland. I mean, it is as bad as that. I therefore say that I do take a great interest in it, because I want the Union to survive and to prosper. I believe it can, but it will not be able to if we end up with provisions that undermine the sovereignty of the United Kingdom Parliament.

On the specific question of state aid, that is a matter within the scope of the Bill. I therefore expect our amendment to be able to be called. Precisely what I do about it at that time will depend on the outcome of the negotiations, but I am not going to buy a pig in a poke and accept the idea that it is all over and done with because somebody who happens to be a Government Minister made a statement yesterday from Brussels and then came to the House to put forward his case today. We have not seen the details, so I want to reserve my position until I know exactly what the outcome of the negotiations is. I would warrant that the 70% of the British people would agree with me.

Alison Thewliss Portrait Alison Thewliss (Glasgow Central) (SNP)
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The way this Bill has been brought to the House today, less than 24 hours since it was published yesterday, really shows the disrespect the Government have for Parliament and for all of us here today. It is unacceptable that the UK Government are coming so late in the day with these proposals and are blatantly using them as a form of leverage in their negotiations.

The proposals before us today will impact on the daily lives of residents in Northern Ireland and of businesses more widely. I have concerns, not least from what the hon. Member for Stone (Sir William Cash) has just said, that the clauses being taken out could easily be put back in again—if not by him, then by the Government themselves. We have no certainty over that because of the way they have conducted these negotiations.

As MPs, we do not have adequate time to scrutinise what is in front of us this afternoon. Businesses and stakeholders have also been excluded from the process and they are, of course, those who will feel the impact the most. It is typical of the slapdash, chaotic way the UK Government do things, but I would like very much to put on record my dismay and regret at this shambles. I would also like to say that, while I have huge sympathy for those who have worked on the drafting on the Bill, it would not be the first Bill that has come back with errors and drafting issues because it has been prepared in haste. We have also seen that with some of the financial services statutory instruments that have gone through. I am very concerned that this has been done so hastily that we will not find out what the errors are until the UK Government come back to fix them later.

The Northern Ireland provisions have huge complexity and give significant powers to the Treasury to define in regulations the goods that are “at risk” of being moved into the EU. The Minister confirmed yesterday that we do not know exactly what those at-risk goods are, which causes huge uncertainty for those moving goods in and out of Northern Ireland. As the hon. Member for Oxford East (Anneliese Dodds) said, that has a chilling effect on businesses that want to transact their business as normal, but just do not know what it is that they are being expected to prepare for.

The letter that we received earlier from the Financial Secretary to the Treasury confirms that changes to the regulations will be made under the negative procedure, so this House will have no ability to further scrutinise them. The same is true of Stormont and it is crucial that we hear Stormont’s views on these regulations and the effect of them.

“Take back control,” this Government said. Well, it seems that most of the control is either going to the Treasury or to officers in HMRC. All these regulations are being put forward in such a way as to remove scrutiny and to remove control. Throughout the letter that we received earlier from the Financial Secretary to the Treasury, references were made to the use of the negative procedure and, curiously, to powers that there are no plans for the Government to use. It may not be the plan now to use them, but even the best laid plans gang aft agley, as happens so often and so wildly with this Government. How will the scrutiny work should the Government decide to make these changes? Lots of powers are being hived off, as we can well see. The amendment tabled in my name and the names of my colleagues attempts to redress some of the democratic deficit in the way that the Government are conducting themselves.

The affirmative procedure, as with many procedures in this place, is not perfect by any means, but at the very least this would make the UK Government come to this House to explain the reasons for their actions and to be scrutinised on their thinking, rather than just making changes that will make a real difference to the lives and livelihoods of people across these islands and more widely. Changes should not just go through on the nod.

The withdrawal agreement has the consent mechanism for Stormont, which will kick in only at the end of 2024. The UK Government must explain how their engagement will operate on all the mechanisms between then and now. This matter is horribly complicated and my sympathies are with all those who have to operate under these very difficult circumstances. So much of the uncertainty is also swathed in huge amounts of red tape. The red tape that the Brexiteers claimed they were going to remove will now be wrapped around Northern Ireland.

I received very little by way of reassurance from the Chancellor of the Duchy of Lancaster in his statement and his responses to Members earlier today. Too much is uncertain, and a lot of it is mince. The derogation in chilled meat, sausages, mince and unfrozen prepared meals is one such aspect. [Laughter.] Keep up, keep up! RTÉ’s Tony Connelly notes that when the as-yet-to-be-determined derogation period expires, supermarkets in Northern Ireland will need to source products locally or from the Republic of Ireland. That may well be good for those producers and good luck to them, but a clear competitive disadvantage is being placed on food exporters in Scotland, Wales and England and that cannot be justified by the Government.

The trusted trader scheme itself is subject to review three and a half years after the Northern Ireland protocol begins, but what mechanisms exist to hold it to account in the meantime to ensure that it is effective and that it does not have a distorting effect, which we suspect that it may do? What is in place now to ensure that there is not a further panic in a couple of months’ time due to a lack of qualified staff to carry out checks for export health certificates? Given the propensity of this Government to hand in their homework late if the dog has not already eaten it, what concrete assurances can they give?

I turn now to enforcement. The Prime Minister could not answer the question earlier from the Leader of the Opposition on the existence, or otherwise, of 50,000 customs agents, and the Minister today could not answer the same question from the hon. Member for Oxford East. I want to know a bit more about these customs agents. Where are they? How many of them are there? Will they be prioritised for the big ports in the UK, or will the Government run the risk of leaving the door open to smuggling and tax-dodging via the short straits? As the hon. Member for North Down (Stephen Farry) mentioned earlier, there is a risk of criminality as well as just of error.

What assessment have the Government made of the competitiveness of our export businesses with reference to schedule 3 of the Bill? If customs charges now apply, surely it will make it more difficult for people to export as well as to import? This is a general concern that has been raised by my hon. Friend the Member for Aberdeen North (Kirsty Blackman) on multiple occasions. It presents an extra hassle for small businesses as well as an extra unanticipated expense for consumers. I give the House a small example. I ordered a necklace some time ago from the United States and when it arrived a huge customs charge was slapped on it. Had I known about it before I had ordered it, I might not have ordered it, given the scale of the charge. Consumers do not know what they will end up with if they order something online. When we see something online, we see what the price of it is and what the postage is, but we do not see that customs charge, which is really not transparent. The earrings that I am wearing today are from a small business based in Slovenia, which was able to send them with no additional charges because we were a member of the European Union. Some 70% of Irish online purchases come from the UK. I want to know from the Minister what the impact of the changes will be on our own businesses that wish to export to the Irish Republic.

Andrew Griffith Portrait Andrew Griffith (Arundel and South Downs) (Con)
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The hon. Lady makes an almost persuasive case about the difficulty of fragmenting a customs union that has been in place for only 40 years or so. How much more difficult would it be to fragment the United Kingdom, a customs union that has been in place for centuries?

Alison Thewliss Portrait Alison Thewliss
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The hon. Gentleman makes a good attempt there, but the issue is really the UK Government and their incompetence in dealing with all these issues, which could well have been anticipated, as well as in taking us out of the large trading bloc on our doorstep from which we have benefited for 40 years and from which our businesses have been able to export their goods. We in Scotland have been able to export our food and drink very easily, very simply and without any barriers. These are barriers that the UK Government wish to put in place—and if they wish to put them in place with an independent Scotland, that is their choice, not ours.

Katherine Fletcher Portrait Katherine Fletcher (South Ribble) (Con)
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Will the hon. Lady give way?

Alison Thewliss Portrait Alison Thewliss
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I have almost finished, so I want to make a little progress, but I will try to bring the hon. Lady in later.

I am curious about what assessment the Government have made of the chilling effect of these changes. It is also very interesting that the customs duties will benefit the Irish Exchequer and be to the detriment of our people who wish to export. I note that paragraph 12 of schedule 1 will amend the Isle of Man Act 1979, and that part 6 of new schedule 9ZB to the Value Added Tax Act 1994, which is inserted by schedule 2, also relates to the Isle of Man, so I would be grateful if the Government told us what communication they have had with the Manx authorities on the proposals. Obviously those proposals have come out overnight, so I do not know what discussions have been had, but it would be very interesting to find out.

Scotland has not been offered the deal that Northern Ireland has been offered. The Financial Secretary to the Treasury spoke about the benefits of the EU single market that people in Northern Ireland will enjoy. Lucky them. Scotland is the only part of this supposed Union of equals not to get any of what we asked for, and we will see our own industries disadvantaged. To add insult to our very evident injury, Baroness Davidson and the then Scottish Secretary, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), threatened to resign if Northern Ireland was given different treatment. Just a couple of years ago, they said:

“Having fought just four years ago to keep our country together, the integrity of our United Kingdom remains the single most important issue for us in these negotiations.

Any deal that delivers a differentiated settlement for Northern Ireland beyond the differences that already exist on an all Ireland basis (eg agriculture), or can be brought under the provisions of the Belfast Agreement, would undermine the integrity of our UK internal market and this United Kingdom…We could not support any deal that…leads to Northern Ireland having a different relationship with the EU than the rest of the UK, beyond what currently exists.”

Well, that is exactly what we have. It is exactly what the Bill is and what it does, yet those two Members are still about. The Scottish Conservatives really do have more faces than the town clock.

To move on to the Chancellor of the Duchy of Lancaster, he has an absolute brass neck to describe the situation in Northern Ireland as the “best of both worlds”. He said on ITV that Northern Ireland would have

“access to the European single market, because there is no infrastructure on the island of Ireland, and at the same time unfettered access to the rest of the UK market.”

“The best of both worlds”—in Scotland, we have heard that before. The Better Together campaign told us that the only risk of losing our place in the EU was if Scotland voted for independence. Where are we now?

The United Kingdom Internal Market Bill farce undermines yet further the integrity of this crumbling Union, and today’s Bill takes another sledgehammer to the support structures that this Government believe are stronger than they are. The people of Scotland—those who voted no as well as those who voted yes, and those who were unable to vote six years ago—have been watching what has been going on. They do not want a UK Government who drag Scotland out of the EU—they voted very clearly, by 62%, to remain—they do not want a UK Government who threaten to break international law and spoil our standing in the world, and they do not want a UK Government to force Scotland into an insular and poorer future. People want their chance to have their say. The 15 polls in a row that now back independence show clearly to me and everybody else that the people of Scotland believe that things have changed. As Winnie Ewing said:

“Stop the world, Scotland wants to get on.”

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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Members should be aiming to speak for not much longer than four minutes, if we are to get everybody in. I call Sir John Redwood.

John Redwood Portrait John Redwood (Wokingham) (Con)
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I have declared my business interests in the Register of Members’ Financial Interests.

The origins of this legislation lie in the negotiations under the previous Prime Minister that introduced the whole idea of a Northern Ireland protocol. I regretted those negotiations very much. I opposed them at the time and did not vote for the deals that my right hon. Friend the Member for Maidenhead (Mrs May) came forward with, because I thought they were designed by the EU as a lever to try to delay, dilute or damage Brexit.

When the current Government asked me to support their version of the withdrawal agreement, I still had considerable reservations about the Northern Ireland protocol. I put those to Ministers, who reassured me and said, “This is only an outline operation in the withdrawal agreement as currently drafted. None of the detail has been done. We will negotiate very strongly. We will get rid of the offensive features that you don’t like.” They said that they shared some of my concerns and that they would come back with something much better. I am always trusting of colleagues, so I said that that was very good to know but that I did not have the same confidence in the EU.

I thought it was unlikely that the EU would want to facilitate that in the way that I and the Government would like. so with some friends, I backed my hon. Friend the Member for Stone (Sir William Cash) in saying that the way through this was to put clause 38 into the European Union (Withdrawal Agreement) Bill. Under that clause, were the EU to act in bad faith and not come up with a workable solution for Northern Ireland and the other problems, we would have asserted UK sovereignty in our version of the treaty, and so in good law we could use clause 38 to legislate in Britain for what we intend to do, overriding the agreement.

It was quite clear from the drafting of that Bill that we wanted that override, and I would not have dreamt of voting for the thing without the override. The Government were saying that they did not think we would need to use it, but we could use if we had to, which is why I was pleased to support them earlier this week in a very modest override. It is entirely legal; it is the assertion of British sovereignty. We need to keep that in reserve, because without seeing all the detail from the Chancellor of the Duchy of Lancaster, I am not satisfied yet that we have a working operation for the Northern Ireland border and the matters that we are discussing today—more precisely, who controls the taxation.

What I do not like about these proposals is that it is extremely difficult for individuals and businesses to have to respond to two legal jurisdictions on tax in the same place, yet we seem to have both an EU VAT system and a UK VAT system. I hope that the UK VAT system will deviate rather more from the EU one and be friendlier, lower and apply to different things, but the more that that happens, the more difficult it will be if we are trying to enforce two different VAT systems in one part of the United Kingdom.

I am also concerned about the enforcement mechanisms. We are led to believe that it will be handled by HMRC, but we are also told that the ultimate authority on the EU part of VAT and excise will be the European Court, and therefore there are likely to be inspectors and invigilators—electronic or in person—interfering in the process within what should be sovereign United Kingdom territory. I hope the Government will think again and push back again.

We need more of the detail that the Chancellor of the Duchy of Lancaster has so far withheld from the House. It may be that he does not yet know it all or that his agreement is high level, in principle, but there are details that we need to know—indeed, details that it would be better to know before we legislate today. For example, the Chancellor of the Duchy of Lancaster says that delay periods for adjustment will be necessary for supermarkets and some meat products and so forth. Does that not require some kind of recognition in this legislation? Does it not mean that these jurisdictions do not kick in during the period of grace that we are told will be available?

We need to have more detail from the Government on what exactly happens at the border. I have always explained to the House and others who are not very interested that VAT and excise take place electronically across the borders at the moment, so we are talking largely about an electronic border. We need to know how this electronic border will be programmed to deal with the competing jurisdictions and competing incidences of taxation, and how the product codes and shipment codes will correctly identify the products by category that will be suborned by the EU jurisdiction as well as, properly, by the UK jurisdiction, which ideally would be handling the whole thing.

We do not have nearly enough time to discuss the fundamentally big issues of principle that the Bill brings before us and we have had precious little time to go into the detail. It is all very sad that this rush job is being done like this, but I hope before the Government finish the debate today they will have done a better job of explaining to someone like me why we need to have this dual jurisdiction; how the EU control is going to be limited; how it is going to operate; how, in the early days, the “transitional arrangements”, which we are told about, are going to apply; and why they are not reflected in the current text of this rather unfortunate piece of legislation.

Toby Perkins Portrait Mr Toby Perkins (Chesterfield) (Lab)
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It is a great pleasure to follow the right hon. Member for Wokingham (John Redwood). Unusually, I found myself agreeing with much of what he said about the time we have to debate this Bill. The points made by my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) in the previous debate were absolutely on the mark.

As someone who voted in the referendum to remain but who represents a seat that voted leave, I have to say that when I hear speeches such as the right hon. Gentleman’s, and many others that we are going to hear, I fear that much of what I have long feared about the whole Brexit process is coming to pass, which is that Brexit will be an orphan child and when we have left the EU and come to our final arrangement, it will be impossible to find anyone, perhaps with the exception of the Prime Minister, who says, “This is the Brexit I was campaigning for.”

Brexit operated in so many different people’s minds as a different entity. Even now, with a Brexit-backing Prime Minister, an overwhelming Tory majority, any Tories who showed a whiff of regard for our future relationship with Europe banished from the party and all rebellion quashed, the fundamental contradictions of Brexit remain unresolved. I have no way of knowing whether there will be a deal, but I can be certain that when that deal is signed many who argued earnestly that we should leave the EU will claim, “This was not the Brexit I was campaigning for.”

Let me turn to the measures in the Bill. I confess that during the referendum our campaign to back remain in Chesterfield hardly touched on the position of Northern Ireland. We did speak a bit about the Union in the context of Scotland, but Northern Ireland was barely mentioned, yet much of the Bill relates to the provisions relating to Northern Ireland that have become central to the issues that remain. The Labour party is, as I am, resolutely behind the Union and entirely committed to the Belfast agreement, and we recognise the many contradictions that persist.

I have to say to colleagues from the Democratic Unionist party and others that they should not think that these Northern Ireland issues concern very many of my constituents in Chesterfield. I know from many conversations that took place during the general elections on doorsteps in Chesterfield in 2019, when I was trying to raise the issues associated with Northern Ireland, that if the cost of getting a Brexit deal that enables our country to trade freely and regain control of immigration happened to be a united Ireland, many of my Brexit-voting constituents would accept that in a heartbeat. The people of Northern Ireland, whom, we should remember, in totality voted to remain, have been badly let down by many of the people they elected to represent them, either by those who sold their support to prop up the disastrous May Government and were then shocked to be sold down the river by the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), or by those who, through their absence from this place, allowed the Brexit view to be heard as the dominant opinion of Northern Ireland.

The businesses of Northern Ireland are now starting to understand what that failure means for them. Right now it means that just weeks away from a change that will impact them more than any other on these islands, the promise that they will be able to enjoy frictionless trade has been exposed as wrong. It is irresponsible that when the Government themselves acknowledge that the administrative impacts on businesses affected by these changes will be significant, those businesses have so little time to plan, and no serious economic or fiscal impact assessments are contained within.

The last-minute nature of the Bill once again exposes the fact that the businesses of Great Britain, and particularly Northern Ireland, are left vulnerable by this incompetent Government’s pursuit of a promise that they cannot keep and should never have made. Although I wish the Prime Minister well tonight, the whole country needs him to remove the spectre of no deal from the nightmares we face as we look towards 2021. Once again, the Government are leaving businesses in the dark, jobs at risk and industries on the brink.

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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The next two speeches will be timed at four minutes, and then everyone else will have three minutes.

Katherine Fletcher Portrait Katherine Fletcher (South Ribble) (Con)
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I am going to break with tradition in this debate and actually talk about the Bill. A Bill that is described, in large sections, as primarily technical, administrative and procedural will not always excite the juices in Parliament, among the public or in the press but, although dry in sections, this Bill contains important measures, and I rise to support them.

Let me ground my comments in the experience of many people in the UK today. As someone who ran her own business prior to the election, I know that it is often the technical, administrative and procedural that can really shift the dial—for example, on the number of sales an individual can make or on market price points for a certain type of product—never mind the administrative and procedural processes that take too much valuable time from often hard-pressed smaller traders. Clarity is essential, welcome and timely. Once passed, the Bill will ensure that whatever happens in the ongoing trade negotiations with the EU, in an important subset of regulations there is clarity and fairness for businesses in the UK.

Measures in the Bill will change and improve our tax system and have been brought forward in separate legislation in advance of the proposed Finance Bill. They will ensure that the UK is prepared, whatever the outcome of the Prime Minister’s trip to Brussels later today. We are, and will continue to be, a proud sovereign trading nation. We are ensuring, and will continue to ensure, a smooth transition and continuity for trading businesses.

What do I mean? Let me be specific and turn to schedule 3, on amendments to the Value Added Tax Act 1994—essential bedtime reading for all, I am certain. In my previous business, I sold volumes of lower-value goods in online marketplaces and online channels to customers in the UK, the EU and many other locations overseas. For too long prior to the election I saw lower-value goods advertised by overseas sellers—my competitors— that were imported from abroad and undercut UK manufacturers and suppliers.

Currently, overseas sellers can avoid VAT, not charging it at the point of sale and not handing the revenue back to our Exchequer. That means that our country is losing twice: our fabulous businesses are losing sales to cheaper products from overseas sellers who do not have to charge VAT, which is unacceptable, while our Exchequer is also losing the revenue that such measures raise, which I remind the House funds the provision of the public services, such as the NHS and schools, that we rightly value so highly on the Government Benches. The Bill will remove that overseas-seller anomaly.

Specifically, the measures will mean that low-value consignment relief—LVCR—is removed from all non-UK sellers. All imported goods worth under £135, including under those worth under £15, will be subject to VAT at UK rates. Although currently legal, the existing situation amounts to tax avoidance by overseas sellers and has created distortions in UK marketplaces. It is this Conservative Government who are clamping down on it. To level the playing field, online marketplaces must now account for their VAT. This Government support our fabulous businessmen and women who trade from shops or—like me—online and will continue to do so.

Earlier, the hon. Member for Glasgow Central (Alison Thewliss) mentioned extra exporting barriers. As someone who has sat and put the labels on to goods going to EU, Ireland and international destinations, I know that for lower-value goods, any individual consignment worth under £270 gets a CN23 sticker with all the declarations on it, and then off it pops and there are no additional barriers between the EU and the US. No change that we will make today will put in place extra paperwork: what was done for the EU was always what happened anyway—it automatically comes off the printer. I am sure there are great British jewellers who can sell us wonderful earrings—

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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Sorry Katherine —that is four minutes.

Andrew Jones Portrait Andrew Jones (Harrogate and Knaresborough) (Con)
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Yesterday in the debate on the Ways and Means resolutions, I said that I would be supporting the Bill because our country needs it. It needs it for the core purposes of the Bill, which are the smooth continuity of business after the transition period, being ready, and creating a more level playing field for UK businesses.

I recognise that leaving the EU is a field full of tough issues, but the most problematic element is the nature of our land border with it. Seeking to deliver Brexit while protecting the Good Friday agreement was the major stumbling block in our endless debates and struggles last year, so I am pleased to see progress made on that issue. We had a statement on it earlier; I will not go over trodden ground.

There are businesses in Harrogate and Knaresborough that do significant trade selling to and buying from Northern Ireland. The Bill will be welcome news for them. More people in Harrogate and Knaresborough are affected by internet shopping, either buying from or selling via online platforms. Even if people do not buy online, they are affected by the struggles on the high street. It is a tough time for retailers and, of course, high streets provide countless thousands of jobs. They are economic hubs. Our high streets and town centres also have a social function beyond an economic one. They provide a community focal point.

Before coming here, I worked in retail and for brands that sell through retail. When I talk to retailers, they say that they just want a level playing field. They are talking widely when they use that phrase, but they are talking about taxation, particularly business rates and VAT. The Bill helps to create more of a level playing field with a new model for the treatment of VAT on goods arriving in the UK from overseas. The collection moves to the overseas seller or the online marketplace where that transaction occurs. As a result, it will be easier to collect VAT and harder to avoid it. The last thing that a business having a tough time needs is for competitors to have a 20% price advantage. High street businesses and online players based here pay VAT, so if overseas businesses are allowed to make VAT-free sales, they are unfairly undercut.

I do not think the measure is controversial; it is entirely reasonable. Indeed, as I mentioned yesterday, there are moves across the world in this policy direction. I commented on the other measures in the Bill yesterday, so I will not detain the House with repetition.

The past year has obviously been one of the toughest on record in peacetime. The economic impact will be felt for many years. We also have the consequences of Brexit. The need for the continuity of business operation is profound. Our whole United Kingdom must focus on growth as we seek to protect livelihoods as we have sought to protect lives. The Bill is part of the measures being taken to secure our business future, and that is why I will support it.

Miriam Cates Portrait Miriam Cates (Penistone and Stocksbridge) (Con)
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The existence and contents of the Bill encapsulate the opportunities and complexities that we, the United Kingdom of Great Britain and Northern Ireland, face as we reach the end of the transition period. As we regain control of our money, borders and laws, we have the opportunity to innovate and, in relation to taxation, to remould our regulations around the values and requirements of our modern UK economy.

For example, the Bill introduces some administrative and procedural VAT changes that not only are legally necessary, but allow us to tackle non-compliance and to support our high streets to compete with online sales. That is important in the current economic climate where, for nearly nine months, our high streets have faced unprecedented restrictions and sales have plummeted, while online retailers have traded unhindered and made record profits. I therefore support the measures in the Bill that stipulate that VAT is due from online sales by companies that import goods into the UK. That will ensure a more level playing field for our bricks-and-mortar retailers.

Another opportunity presented by our departure from the EU and the end of the transition period is our potential ability to crack down on tax evasion. The Bill also makes technical provisions on that issue. As well as realising the administrative opportunities that we can embrace as we leave the EU, the Bill reflects some of the complexities that have inevitably arisen as we, an historic Union of four distinct nations, seek to disentangle ourselves from 40 years of economic and increasingly political union with our European neighbours.

During the referendum campaign in 2016, I was not actively involved in politics and I was not a member of a political party, but I agonised over my vote. I was torn between the moral conviction that our UK Parliament should be sovereign and the practical acknowledgement that any divorce after 40 years of union will be complicated and messy—of course, both are true. Following 17 million votes to leave the EU, it is right and democratic to leave, but is also a complex and challenging process that has tested our determination and resolve for three and a half years. That is why the Bill must also make provision for all the circumstances that we may face following the outcome of ongoing trade negotiations. We cannot gloss over or underestimate these complexities or pretend that they should not exist. The history of the relationship between each of our four nations is unique, and it is based on cultural and relational settlements as much as law and statute. Whatever the outcome of the trade negotiations, we must ensure that we have a VAT and customs framework in place to allow trade across the UK to continue as seamlessly as possible. That is what this Bill will achieve, and it is why I support it as a sensible, responsible and necessary piece of legislation.

Alistair Carmichael Portrait Mr Alistair Carmichael (Orkney and Shetland) (LD)
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Somehow or other, I always thought that taking back control would look rather different for this place than this: to have just 24 hours to consider 112 pages of highly technical and detailed taxation legislation is an affront and insult to this House, and an abuse of the process by which we are supposed to govern ourselves. Those on the Treasury Bench who have brought forward this legislation in this way should hang their heads in shame. But, as the hon. Member for Oxford East (Anneliese Dodds) indicated in her contribution, it is, unfortunately, necessary. It is remarkable that amongst these 112 pages there are so many enabling provisions; so we know that in fact the detail is still to come and there will require to be secondary legislation to implement the detail of what our businesses will actually need.

The kindest comment I can make about the Bill at this stage, given the time available to me, is that it is just a foretaste of things to come. Essentially, most of what we have here pertains to the relationship with Northern Ireland, and even at this stage the Government are still tying themselves in knots because they promised three things of which they could only ever at best deliver two. They said we could come out of the customs union or we would have no border north and south or have no border east or west. In fact, if we were going to come out of the customs union, eventually we had to have a border north or south, or east or west; we could not have all three. I listened to the right hon. Member for Wokingham (John Redwood) talking about electronic borders, but the clue is in the title: it is a border. Once sovereignty trumps economics, that inevitably leads to having borders—something that should be heard in all parts of this House.

I was struck by the hon. Member for Glasgow Central (Alison Thewliss) quoting Robert Burns, saying:

“The best laid schemes o’ Mice an’ Men

Gang aft agley,”

I was disappointed and a little surprised that she did not then deliver the next line of that stanza:

“The best laid schemes o’ Mice an’ Men

Gang aft agley,

An’ lea’e us nought but grief an’ pain,

For promis’d joy!”

If ever I heard the perfect way of describing Brexit, that has got to be it:

“An’ lea’e us nought but grief an’ pain,

For promis’d joy!”

The House will remember, of course, that Robert Burns was an exciseman, so he would know quite a lot about customs and the matters in this Bill; Lord alone knows what he would make of it if he were alive today.

Jerome Mayhew Portrait Jerome Mayhew (Broadland) (Con)
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This time yesterday we, frankly, would all have celebrated seeing what is in this Bill; today, I want to celebrate what is not in it. It is great that we do not have to consider the inclusion of additional measures to take account of the failure of the Joint Committee to come to an agreement on the proper interpretation of the Northern Irish protocol; I am delighted to learn that we have now come to the pragmatic and proportionate way found by the Joint Committee for the interpretation and enforcement of its provisions. Just a few days ago the European Union asserted that all goods travelling from GB to Northern Ireland were to be considered as being “at risk” of onward transport to the EU, a patently absurd and obstructionist position, so I heartily welcome this last-minute change of heart.

TD Simon Coveney, the Fine Gael Minister for Foreign Affairs, has said that

“Practical cooperation and flexibility has been agreed to make it as manageable as possible for people and businesses.”

Amen to that, and may the same spirit suffuse the continuing negotiations elsewhere in Europe.

Clauses 2, 3 and 4 put in place the practical requirements to allow for the charging of customs duties and VAT away from the geographical border with the Republic of Ireland while continuing to protect the ability of Northern Irish products to travel without restrictions to the rest of the United Kingdom. This respects the Government’s commitment that goods from Northern Ireland will continue to have unfettered access to the rest of the United Kingdom.

Clause 7 proposes that VAT collection for goods sold in the UK by overseas sellers will move away from the border either directly to the overseas seller or, importantly, where the sale has been facilitated by an online marketplace, to that marketplace. This is a very important step that marks, I hope, the beginning of a much wider reassessment of the role of online marketplaces and the responsibility that they should properly have for the goods of international origin that they sell. All goods sold on our high streets pay the appropriate level of VAT, yet high street shops are being unfairly undercut by online international competitors that have avoided VAT. This clause allows the first step to be taken in recognising that the online marketplace has come of age, and with that coming of age it needs to accept the responsibilities of its powerful market-making position.

I hope that the link between the facilitation of sale and wider responsibilities will be a theme that the Government expand on in the coming months. As I mentioned in the debate yesterday, the same argument can be applied to areas of environmental legislation, such as the extended producer responsibility, as well as the collection of electronic waste for recycling.

I welcome Her Majesty’s Government’s approach. It is no longer credible for the hugely powerful and commercially dominant online marketplaces to wash their hands of what actually passes through their platforms.

Stephen Flynn Portrait Stephen Flynn (Aberdeen South) (SNP)
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It is a pleasure to follow the hon. Member for Broadland (Jerome Mayhew), particularly given the fact that he highlighted that just yesterday, we were all wondering what was going to be in this Bill.

What a complete and utter boorach the last 24 hours have been. The right hon. Member for Orkney and Shetland (Mr Carmichael) rightly highlighted the shambolic scenes that we have all seen. I heard yesterday from those on the Government Benches that the reason for this is that we are currently in a fast-paced environment. This has been going on for four and a half years, with three Prime Ministers and two general elections. How many resignations? How many U-turns? And the Government leave it until three weeks before the end of the transition before they bring forward something, and they do so with less than 24 hours’ notice of what it will actually entail. What a complete and utter embarrassment. Government Members are the ones who tell us that this is the place where power should lie, yet they are the ones who treat it with more contempt than anyone else. If I was not so disappointed, I would laugh at their sheer hypocrisy.

To turn to the Bill—I am very mindful of time—the hon. Member for South Ribble (Katherine Fletcher) was right to highlight one of the good elements of the Bill, in relation to online VAT. We should all support that, particularly at this moment in time, given the challenges that we are all seeing on our high street. We need to see a level playing field, and if we can bring that level playing field about, we should be willing to do it. I hope, however, that the Government will continue to go further and revisit the issue of the digital services tax, where they have the powers to make further inroads into levelling that playing field.

You will be unsurprised to learn, Mr Deputy Speaker, with just 60 seconds to go, that my agreement with the Government ends there, for four simple reasons that I will cover quickly. The first one is this: England voted to leave and England will leave. Wales voted to leave and Wales will leave. Northern Ireland voted to remain and Northern Ireland is going to get the best of both worlds; it is going to get access to the EU market while simultaneously remaining in the United Kingdom. And what of Scotland? What do we get? Scotland was told that we should stay in the United Kingdom in order to lead the United Kingdom—lead, don’t leave. We wanted the same access as Northern Ireland. We put forward numerous proposals, yet time after time, this UK Government completely ignored our views and desires in that respect. That all adds up, and it adds up in the minds of the very people this UK Government are going to have to rely upon the next time we go to the polls on our independence.

Kevin Hollinrake Portrait Kevin Hollinrake (Thirsk and Malton) (Con)
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At least I and the hon. Member for Aberdeen South (Stephen Flynn) agree on a level playing field for business, and I want to concentrate my comments on that area. There is no question, for the best deal for consumers on prices and service, but that we need a fair and level playing field for businesses. That makes the market more competitive, which drives down prices and drives up service. It is absolutely where this Government should focus, and I am pleased to see that they are doing so in this legislation.

I am a big fan of VAT’s part in the collection of taxation. It is much more difficult to avoid than other taxes and much easier to collect. It is not a regressive tax, and I think we should try to focus on indirect taxes as we reform taxes in the future and simplify the tax system. As this closes a loophole, there is actually another area where we lose such a fair and level playing field, and that is the threshold for VAT registration. Some businesses are slightly below that and gain an advantage over others that are slightly above it. That is perhaps a conversation we should have another day.

On part 1 of schedule 3 to the Bill, I very much welcome the changed emphasis on online marketplaces in the collection of VAT duty. I understand from reports that when the changes were made in 2016, we collected about £500 million, although I am not sure what period that accounted for. I would be interested to hear from the Exchequer Secretary how much she thinks these changes will actually bring in for the Exchequer. I am pleased to see that we are closing another loophole in this way, after things like the digital services tax and the diverted profits tax. I do not think any Government in history have done more to clamp down on tax avoidance than this Government, quite rightly.

I would like to ask a couple of questions about these provisions. As I asked in my intervention, why is the figure £135? I realise this is to do with the changes in Northern Ireland to do with our leaving the European Union and the provisions in EU law for this, but why is it £135? Many products sold on the internet are also sold by UK domestic sellers who have to charge VAT, but above £135 overseas sellers may not have to, so this is another loophole that needs closing. I am not sure why, for example, someone could buy a watch from abroad that might be £500 or £1,000 and the same loophole would apply.

Similarly, this applies only to goods, not services. Many services are now sold online from abroad, such as legal services, accountancy services, IT developer services—for example, people can recruit developers from abroad through platforms such as Elance—and UK providers would have to charge VAT, but overseas providers potentially would not, so I wonder whether we can look at that. However, in the round, I am very supportive of these changes. I welcome them, and I certainly will be voting for them, if it comes to that, later today.

Stephen Farry Portrait Stephen Farry (North Down) (Alliance)
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I am pleased to be a Northern Ireland voice in this very important debate. Obviously, this is a different type of speech from the one I was envisaging making earlier this week, and I do welcome that progress—not least that we are, I hope, moving beyond part 5 of the United Kingdom Internal Market Bill and the potential notwithstanding clause in this legislation, although of course we do remain vigilant in that regard.

I would welcome confirmation from the Minister, not least given that we have had very little time to scrutinise the detail, that the current version of this Bill is entirely consistent with the Northern Ireland protocol. It is worth recalling why we have to do that and why there is such a protocol. It arises from the decision of the UK not to have a fresh customs union with the EU post Brexit. That prompts the question of where the line is going to be drawn on the map between the UK’s customs union and the EU. The protocol essentially sees a situation whereby Northern Ireland remains part of the single market for goods, but remains part of the UK’s customs territory. Crucially, however, the EU customs code is to be applied down the Irish sea; hence the nature of this Bill.

Just to correct something that was said earlier, the withdrawal agreement and the protocol, which were signed up to by this Prime Minister, had the starting point that all goods moving into Northern Ireland were potentially at risk. That was what was said in the protocol, and I do welcome the progress that has been made in trying to find a way through this and that that is not going to be the case in practice.

Some people may say that it was only the EU that was threatening a border in Ireland. Of course, the EU does have the right to protect the integrity of its single market and customs union, but I think we are being too complacent about the UK’s own obligations in that regard. If, in the event of no deal, the back gate was left open, so to speak, there would be a requirement under WTO rules for the UK to adopt the exact same posture that it has on the island of Ireland with the rest of the world. I am not sure that is a line that it would want to go down, particularly given the whole range of threats that are out there.

There are a range of issues still to be addressed regarding the wider context of the Bill—in particular, the achievement of a zero-tariff, zero-quota deal. Even with that, rules of origin will still be an issue. But if there is no free trade agreement, we are back to the issue of goods at risk. Although we have the prospect of the authorised economic operator model—we await more details of that—it is not going to cover everyone. For example, it is not going to cover small retailers and it may not cover the online issue. There is also the question of what happens if that measure is not renewed in a few years’ time, as well as the issue around necessary resources.

Looking the other way, I have already raised in my intervention on the Minister the issue of qualifying goods and how we can tackle avoidance.

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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I call Shaun Bailey; please resume your seat no later than 5 pm.

Shaun Bailey Portrait Shaun Bailey (West Bromwich West) (Con)
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It is a pleasure to contribute to this debate. It has certainly been a wide-ranging and interesting one, on both sides of the House.

Trade is among the most efficient ways to ensure that peace can be maintained between the communities in Northern Ireland as a whole, and to maintain the prosperity of Northern Ireland and the rest of the United Kingdom. I believe that this Bill secures that. In creating the legal framework for customs, VAT and excise charges, the Bill will make a real and positive impact on trade in both Northern Ireland and the rest of the United Kingdom, including in my communities in Wednesbury, Oldbury and Tipton. It will have a sizeable effect, given that 10% of England’s exports are to other parts of the United Kingdom, and particularly to Northern Ireland, with Northern Ireland external purchases from Great Britain coming in at around £14 billion. In specifying that customs charges will apply to certain goods only if they are at risk of moving into the EU, the Bill provides greater certainty and will ensure that our businesses can have the brighter future that they are looking for. Equally, the Bill will ensure that businesses across the United Kingdom can benefit from a continual flow of goods between the United Kingdom and Northern Ireland, and that Northern Ireland exports and imports do not have to suffer from barriers to trade.

It is quite right that our red line in this Bill has been the ability to set our own customs laws and excise duties. We are going to see the benefit of that in January, with the streamlining of some 6,000 tariff lines and the removal of tariffs on some £30 billion of imports entering supply chains, particularly within manufacturing, which is a key industry for areas like mine in the Black Country. We are going to do that while ensuring that there is no hard border on the island of Ireland, that we maintain the peace that has been built there over generations, and that we maintain the integrity of the communities within Northern Ireland.

Let me turn to the technicalities of the Bill. My hon. Friends the Members for South Ribble (Katherine Fletcher) and for Harrogate and Knaresborough (Andrew Jones) touched on the tax element, particularly VAT. As we have heard, schedule 3 finally ensures that our high street retailers can have the level playing field that they desperately need. As I touched on in my contribution yesterday, this has been a horrendous year for our high street retailers, with all the uncertainty and difficulties that they have come through, so ensuring that they are on a level playing field with online retailers and are able to obtain those benefits—and, equally, ensuring that the tax revenue that we have lost out on so far can be put into our vital public services, which have stepped up to protect us and our constituents during this time—is absolutely crucial. I welcome that part of the Bill.

I am extremely conscious of time, so I will round off my comments. Ministers have been given quite a degree of discretion under the words in the Bill, both in some of the definitions, and in some of the abilities that they will have. My right hon. Friend the Member for Wokingham (John Redwood) touched yesterday on the point that Ministers have to realise the potential of what they can do through this Bill. I implore my hon. Friends on the Treasury Bench to realise the potential in some of the abilities and powers that they have in this Bill, and to ensure that they get this right as we move forward—because we will move forward into 2021, and we have to ensure that, as we implement these measures, we do the best by all traders and all businesses operating within our United Kingdom.

Pat McFadden Portrait Mr Pat McFadden (Wolverhampton South East) (Lab)
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I thank everybody who has contributed to this short debate. To pick out a few, the hon. Member for Stone (Sir William Cash) told us that he was reserving his judgment on some of these measures, particularly the Government’s decision not to proceed with the “notwithstanding” clauses. The hon. Member for Glasgow Central (Alison Thewliss) talked about hidden customs charges and described parts of the Government’s approach as “absolute mince”. The right hon. Member for Wokingham (John Redwood) spoke about the dual taxation regime, which we will return to in the Committee stage shortly to follow. My hon. Friend the Member for Chesterfield (Mr Perkins) spoke about the phenomenon of people saying that it is never a proper Brexit, no matter what kind of Brexit it is. The hon. Member for North Down (Stephen Farry) gave us a very welcome Northern Ireland voice on these issues.

What this Bill does, first and foremost, is to put in place a framework for the monitoring, taxation and movement of goods that was not there in the past. However much the Government try to duck that issue—to pretend that everything is going to carry on as normal—the new regime is there for everybody to see in the clauses of the Bill and the regulations to follow. Business to and from Northern Ireland will be conducted on a more monitored, differently taxed and significantly more bureaucratic basis than before. There is simply no escaping that and no hiding from it, and it would be better if the Government acknowledged this as what they have agreed. My first question to the Minister is: do the Government really expect to implement everything in this Bill and to secure compliance from businesses both in Northern Ireland and in the rest of the UK on all these measures by 1 January? Is that the Government’s realistic goal?

The Bill, of course, could have been very different. It could have contained clauses setting aside parts of the Northern Ireland protocol. The Government did look ready to double down on the course of action that they had embarked on in the UK Internal Market Bill, but thanks to yesterday’s statement by the Chancellor of the Duchy of Lancaster and his counterpart, Mr Šefčovič, the Government have announced that they will not proceed with such clauses. We can now look forward to the Government moving amendments in the other place to delete that which they insisted was necessary in this House on Monday evening. It is one thing to play ping-pong with the House of Lords, but quite another to play ping-pong with yourself. Once again, the Government’s MPs who valiantly defended the line on Monday now have a very different line to advance before Thursday. This is not the first time this has happened, and I should guess it will not be the last. If I was a Government Back Bencher, I would be becoming a little bit more wary of following the line from No. 10 on a number of issues.

In all the twists and turns that got us here, Ministers might think that they have acted tough, but threatening to legislate to set aside parts of an international agreement that the Government signed only a year ago has only done damage to the country’s reputation. The Government have not communicated toughness; all they have communicated is that they cannot be trusted. As we embark on a process of trying to negotiate new free trade deals around the world, what a signal to send and what a starting point: do a deal with the Government who threatened to ditch parts of the last one that we signed. That was not clever negotiating tactics and it was not toughness—it was reckless, and, I am afraid, it was revealing about the character of the Government.

The Bill sets out the new customs regime for so-called at-risk goods moving to and from Northern Ireland and the rest of the UK. Although it empowers Ministers to levy the necessary duties, there is still much that, as clause 1 says, will have to be clarified in new regulations from the Treasury. We only have 22 days to go. When will we see these new regulations? When will businesses in Northern Ireland, or those anywhere else in the country that send goods to Northern Ireland, know exactly what the new regime will be? Does the Minister really think that this is a proper way to do this, more than four years after the referendum and just three weeks before the end of the transition period?

Similar phrasing is used in clause 2 in relation to goods moving from Northern Ireland to the rest of the UK, and the same point applies: when will businesses know what is happening? On the VAT regime in clause 3, will the Minister set out how the EU’s VAT regime, as it applies to Northern Ireland, will interplay with the UK’s VAT regime—the question raised by the right hon. Member for Wokingham (John Redwood)? Similarly, on excise duties, how will the measures in clause 4, which apply to everything from spirits and beer to tobacco products, differ from current arrangements? Are the insurance premium tax changes thought necessary in the event of no mutual assistance provisions between the UK and the EU? If they are, are such provisions likely to be part of any deal which, if agreed, would then mean that the clause was not needed?

These measures are likely to pass the House quite quickly tonight, but the real action at the moment is of course not here, but elsewhere. As we debate this Bill, we still do not know whether there will be a free trade agreement reached. After four years, the public, companies and their staff do not know what they will be facing in January, and the root of that decision remains what it has always been: this choice between sovereignty and market access.

The story of the past four years has been the Government moving more and more towards the sovereignty side of that choice. They may say that is the remorseless logic of Brexit, but no one should doubt the significance, because what it means is that, for the first time in history, we have a Government and a process where questions of investment, of people’s prosperity and of their living standards have been progressively relegated to a more and more distant second place. We will see the results of that choice over the coming months. Perhaps after tonight’s dinner in Brussels, we might even be a bit clearer about the results in the days to come, but in the end what has been described as a negotiation is, in fact, a choice. The Government have made their choice, and we will see the effect in the months to come.

Kemi Badenoch Portrait The Exchequer Secretary to the Treasury (Kemi Badenoch)
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It is a privilege to close this debate on behalf of the Government, and I thank Members from all parts of the House for their thoughtful and varied contributions.

At the end of this month, the transition period will end. As my right hon. Friend the Financial Secretary pointed out at the beginning of today’s debate, we have a great responsibility to be ready for this event. The measures contained in the Taxation (Post-transition Period) Bill will play an important part in the preparations.

Let me take this opportunity to thank Opposition Members for their constructive and collegiate approach throughout the passage of this Bill, despite their evident reservations, and in that same spirit I will address some of the points raised in today’s debate.

The Bill is an essential part of our preparations for the end of the transition period. It takes forward important changes to our tax system to support the smooth continuation of business across the UK. It contains six measures. Three relate to the implementation of the Northern Ireland protocol and three implement wider changes to the tax system, which are needed before 1 January. Most importantly, it will ensure that we meet our commitments to Northern Ireland, including on unfettered access and those commitments as set out in the Northern Ireland protocol. Taken together, the measures form an important part of our preparations as we resume our place as a fully sovereign trading nation.

Now that we have further clarity on the outcome of the Joint Committee negotiations, it is vital that the provisions are in place before the end of the transition period to provide that certainty. The Bill’s passage is necessarily rapid, but it will allow for these important changes to be implemented on time. The right hon. Member for Wolverhampton South East (Mr McFadden) asked if we believed it can be done, and my answer is yes, of course. The UK Government will take forward a pragmatic approach that draws upon available flexibilities to implement the protocol without causing undue disruption to lives and livelihoods.

The Government are committed to supporting business. At the centre of the package is the free-to-use trader support service, which will support business when moving goods into Northern Ireland, educating traders on what the protocol means for them and completing customs safety and security declarations on their behalf. That is working. Since the launch of the registration portal in September, more than 18,000 businesses have signed up for support from the trader support service.

Turning to Members’ comments, the hon. Member for North Down (Stephen Farry) requested confirmation that the UK meets its obligations. The powers in the Bill allow us to implement the Northern Ireland protocol in a way that is consistent with our obligations, and I appreciate his broader supportive statements. My hon. Friends the Members for South Ribble (Katherine Fletcher) and for Harrogate and Knaresborough (Andrew Jones), among others, rightly referred to our closing of the VAT loophole in clause 7 and schedule 3. Low-value consignment relief is subject to widespread abuse and contributes to trade distortion. It disadvantages UK high street businesses that are required to charge VAT where overseas businesses are not, either for legitimate reasons or through abuse, and removing the relief will bring overseas sellers on to an equal footing with UK businesses.

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) asked why the clause applied just to low-value goods and whether there was an opportunity for it to apply to high-value goods as well. The reason is that the £135 threshold aligns with the threshold for customs duty liability. Imports of goods greater than £135 in value are subject to enhanced customs requirements, which would negate the benefit of moving VAT away from the border. Therefore, imports of goods greater than that amount will remain subject to the current model for goods arriving from non-EU countries, where VAT is collected at the point of importation.

My hon. Friend also asked what revenue we expected from this change. The Office for Budget Responsibility has forecast that these changes will raise over £300 million a year over the next five years, and £1.6 billion over the scorecard period. Approximately two thirds of that will come from improving collection and tackling non-compliance through the new VAT treatment of cross-border goods, and the final third of the revenue will come from the removal of low-value consignment relief, which will end widespread abuse of this relief.

My right hon. Friend the Member for Wokingham (John Redwood) asked whether the ECJ would be the ultimate arbiter for VAT and excise. The ECJ will continue to have a role where EU directives apply in Northern Ireland—for example, where there are disputes on how the EU rules should be interpreted. However, the rules will continue to be policed by HMRC, which will continue to be the tax authority for the whole of the UK. He also mentioned Northern Ireland being subject to two regulatory systems. Northern Ireland is and will remain part of the UK and its VAT system. It is correct that the Northern Ireland protocol means that NI will continue to align with the EU VAT rules in respect of goods, but not services. That is to ensure that trade is not disrupted on the island of Ireland, and to allow us to meet our commitments under the Belfast/Good Friday agreement. But, as I said, HMRC will continue to be the tax authority for the whole of the UK. Businesses will continue to have a single UK VAT number, issued by HMRC, and they will submit only one UK VAT return to account for VAT on all supplies of goods and services.

My hon. Friend the Member for Stone (Sir William Cash) asked about the current negotiations. Just to remind him and reiterate to the House, the UK Government set out on 17 September that Parliament would be asked to support the use of provisions such as clause 45 of the United Kingdom Internal Market Bill and any similar subsequent provisions in a Finance Bill. These clauses were introduced as reasonable steps to create a safety net, so that the Government would always be able to deliver on their commitments to the people of Northern Ireland in the event that a negotiated outcome could not be reached in the Joint Committee. However, as we all now know, following intensive and constructive work over the past weeks by the UK and EU, we now have an agreement in principle on all issues in relation to the protocol on Ireland and Northern Ireland. As we have mutually agreed solutions, the UK can now withdraw clauses 44, 45 and 47 of the UKIM Bill and not introduce any similar provisions in this taxation Bill.

Pat McFadden Portrait Mr McFadden
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On that point about the “notwithstanding” clauses, can the Minister guarantee, given that neither the United Kingdom Internal Market Bill nor this Bill has finished its passage in the House, that the Government will not reintroduce them at any further stage?

Kemi Badenoch Portrait Kemi Badenoch
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As I have just said, I am not in a position to be talking about what is happening in the future. We have been negotiating in good faith and we have an agreement in principle. I do not believe that those clauses will be coming back, but as the right hon. Gentleman knows very well, the negotiations are still ongoing and we need to wait and see what the outcomes of those negotiations are. It would be quite wrong for me or him to pre-empt anything else that will be taking place, and we must not bind the hands of our negotiators. It is absolutely right that we all speak with one voice in this House.

The hon. Member for Glasgow Central (Alison Thewliss) mentioned GB and NI parcels and asked how consumers would know whether there was a customs charge. The movement of parcels into Northern Ireland is another important part of how the protocol will work in practice for people in Northern Ireland. That is why the UK Government will take forward a pragmatic approach, just as we have elsewhere, that draws on available flexibilities to implement the protocol without causing undue disruption. In terms of schedule 3, she gave the example of the earrings from Slovenia that she had ordered. It is worth stressing that schedule 3 deals with imports to the UK and not exports. It will ensure that UK customers see the amount of VAT that needs to be paid at the point of sale on goods below £135. For goods between Northern Ireland and GB, VAT is already charged on supplies sold by a GB business to an NI customer. When the Northern Ireland protocol comes into effect, Northern Ireland businesses or consumers purchasing goods from VAT-registered businesses will see no significant difference in costs from a VAT perspective.

 

Let me conclude by saying that tonight, this House has the opportunity to give businesses in Northern Ireland and throughout the rest of the UK certainty about the arrangements that will apply from 1 January next year, to strengthen the precious bonds of union that tie this country together, and to prepare this country for an even brighter future as an independent sovereign trading nation. For all those reasons, I urge all Members to support the Bill.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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I will now suspend the sitting for a brief period in order for both Dispatch Boxes to be sanitised.

Sitting suspended.

Taxation (Post-transition Period) (Ways and Means)

(Ways and Means resolution: House of Commons)
Tuesday 8th December 2020

(2 months, 3 weeks ago)

Commons Chamber

Read Hansard Text Bill Main Page
HM Treasury

Northern Ireland (Ways and Means)

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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I inform the House that I have selected the amendment in the name of the Leader of the Opposition to the first motion.

Jesse Norman Portrait The Financial Secretary to the Treasury (Jesse Norman)
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I beg to move,

That provision (including provision imposing and regulating new duties of customs) may be made in connection with goods in Northern Ireland and their movement into and out of Northern Ireland (whether the movement begins or ends in Great Britain or elsewhere).

It is a delight to see you in the Chair, Mr Deputy Speaker.

In less than a month’s time, the UK will reach the end of the transition period and resume its place as a fully sovereign trading nation. As colleagues across the House will be aware, our negotiations with our counterparts in the EU continue. The Government remain cautiously optimistic about the conclusion of those talks. However, there is no doubt that we have a responsibility to the people of the United Kingdom to be ready for every outcome. The measures contained in the Taxation (Post-transition Period) Bill, which will be introduced and published following this debate, will play an important part in those preparations. The Bill will help to give confidence and certainty to the owners of businesses small and large throughout the United Kingdom after the end of the transition period.

William Cash Portrait Sir William Cash (Stone) (Con)
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Will my right hon. Friend explain exactly how this matter we are dealing with now will be affected by the statement made by the Chancellor of the Duchy of Lancaster about an hour ago, which also deals with the question of goods to be considered not at risk, and with questions relating to customs and tariffs, and the decision that appears to have been taken that the Government have agreed in the Joint Committee with Mr Šefčovič on a number of matters of which at the moment we only have an outline? I know the Chancellor will make a statement tomorrow, but perhaps my right hon. Friend could assist us in this matter, because it quite clearly has relevance to what he is saying now.

Jesse Norman Portrait Jesse Norman
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I am very grateful to my hon. Friend for raising the question, and I will touch on it in my remarks in my opening speech, but I should say to him that I am not better sighted on the breaking news than he is. He will have ample opportunity to address this matter tomorrow with the Chancellor of the Duchy of Lancaster when he comes to the House. As my hon. Friend will be aware, this matter was a product of a joint negotiation with the Commission, and the UK Government do not control the timing of that, and therefore the Chancellor will come at the earliest opportunity to the House to discuss the matter with colleagues from all political parties.

Today’s debate is on the important but technical ways and means motions that we need to pass before the Bill is debated tomorrow. If I may, I will talk a little about the Bill’s key elements in greater depth in order to foreshadow what we are going to see over the next day or so. The Bill will take forward important changes to our tax system to support the smooth continuation of business across the UK. In particular, it will ensure that we meet our commitments to the people and businesses of Northern Ireland in relation to the implementation of the Northern Ireland protocol. It will help to uphold our pledge to protect the UK’s internal market by ensuring that Northern Ireland goods have unfettered access to Great Britain. To that end, the Bill will set out a new framework for the UK’s customs, VAT and excise systems following the end of the transition period, so that there are clear rules in place for goods movements.

If I may, I will start with the areas of the Bill that relate to customs. The motion before us relates to legislation that will be required for customs duties and processes to support the practical implementation of the Northern Ireland protocol. I want to underline to right hon. and hon. Members that the legislation follows directly from the commitments made in the Government’s Command Paper on the implementation of the protocol, which was published in May of this year. The House will recall that the Northern Ireland protocol guaranteed no checks or controls at the Northern Ireland-Ireland land border and maintained the UK as a single customs territory.

The legislation will achieve its aims through a series of targeted changes to the Taxation (Cross-border Trade) Act 2018, focusing on five specific areas. First, the changes will ensure that EU goods imported to Northern Ireland from the European Union—for example, goods moved across the Ireland-Northern Ireland border—are not subject to customs duties or processes.

Secondly, the changes will introduce a framework for charges on goods arriving in Northern Ireland, both from Great Britain and from the rest of the world, that are considered at risk of moving into the EU, subject to conditions agreed under article 5 of the Northern Ireland protocol.

Thirdly, these alterations to the TCTA will establish the framework for the UK Government to offer waiver and reimbursements for tariffs that are still incurred when that is needed.

Fourthly, the customs aspect of the legislation will ensure that the UK’s customs regime applies to goods moved from Northern Ireland to Great Britain if they do not qualify for unfettered access. Anti-avoidance rules will prevent goods from being re-routed through Northern Ireland in order to enter Great Britain without undergoing UK import processes.

Finally, the rules will ensure that customs enforcements, penalty, review and appeal provisions in relation to duty can continue to work alongside EU legislation in Northern Ireland and can apply where required in relation to movements of goods between Northern Ireland and Great Britain.

I will, if I may, respond to my hon. Friend the Member for Stone (Sir William Cash), who raised the point earlier. He was right to point to the EU-UK joint statement that has just been made. This sets out the agreement in principle regarding the implementation of the Northern Ireland protocol. The Government are therefore not introducing the so-called notwithstanding provisions to the taxation Bill. In the light of that, the Opposition’s proposed amendment to the first motion is unnecessary.

This Bill will also allow us to amend and modify certain provisions in relation to VAT and excise, including mechanisms to ensure that, in so far as is possible, VAT will be accounted for in exactly the same way as it is today. In addition, the Bill will make provision for amending current legislation for excise duty to be charged when excise goods, such as alcohol, tobacco and certain fuels, are removed to Northern Ireland from Great Britain.

William Cash Portrait Sir William Cash
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As my right hon. Friend knows extremely well, all these matters relating to the Northern Ireland protocol and the withdrawal agreement have direct relevance to the question of sovereignty. A statement was made by the Paymaster General yesterday relating to the question of negotiations, but the matters that have just been raised by the Chancellor of the Duchy of Lancaster in his statement to the press and to the public, but not to this House so far, have not been dealt with properly, because that statement has not yet been made to the House of Commons, although it has been published in general.

The point that I wish to make is simple and I would be grateful if my right hon. Friend addressed it. In withdrawing the “notwithstanding” provisions—clauses 45, 46 and 47 of the internal market Bill—which have a direct relevance to the question of sovereignty, does he have any comment to make and could he please help the House to understand, if these provisions are being withdrawn from the internal market Bill and will not be introduced in the taxation Bill, for which he does have responsibility, what are the implications for sovereignty with respect to what has been announced? I understand that the Chancellor of the Duchy of Lancaster will make further comment tomorrow.

Jesse Norman Portrait Jesse Norman
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I thank my hon. Friend for having another go at this issue. Let me address the questions that he raises. I do not accept the point that he tries to make about whether this is, in some sense, an inappropriate procedure. As I have indicated, this is a product of a joint negotiation. The UK did not control the timing. It is as agreed with the other party to the debate and the discussion.

The Chancellor of the Duchy of Lancaster will be coming to this House at the earliest opportunity once he returns from Brussels, in order to make a statement to discuss this and to receive scrutiny from my hon. Friend and from other Members of the House. That seems to me entirely appropriate. I cannot, of course, comment on matters relating to the United Kingdom Internal Market Bill, but what I will say is that, in withdrawing these “notwithstanding” provisions, we do not regard that UK sovereignty is being in any way impeded or undermined—on the contrary. Therefore, I think his concern can be and should be allayed, but I leave it to the Chancellor of the Duchy of Lancaster to address those points tomorrow.

Alan Brown Portrait Alan Brown (Kilmarnock and Loudoun) (SNP)
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The Business, Energy and Industrial Strategy Committee heard evidence this morning that the IT systems and processing procedures to allow the Northern Ireland protocol to be implemented on 1 January are not in place. Will the Minister update the House on what the Government are doing to rectify that situation to meet the technical provisions that he is bringing forward?

Jesse Norman Portrait Jesse Norman
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I think the hon. Gentleman knows that the work that we are doing in terms of legislation very much has as its counterpart a great effort to put in place all the procedures that may be required. Significant work has been done. He will be aware that there is a trader support service that works directly with people who will be importing into Northern Ireland to make it as close to a one-stop-shop arrangement as possible. What we are discussing today is the framework for the law under which those movements will operate.

John Redwood Portrait John Redwood (Wokingham) (Con)
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The Minister has not yet reassured me about the sovereignty issue. Is it not the case that when any good in commercial quantity comes into the UK across any border—Northern Ireland or one of our marine borders—there are usually VAT and excise adjustments to be made and those take place by computer, not actually at the port of entry? Why do we need special arrangements here?

Jesse Norman Portrait Jesse Norman
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My right hon. Friend will be aware that under the terms of the Northern Ireland protocol, we have agreed arrangements for Northern Ireland with the European Union. The goal of the legislation is to make sure that, as far as possible, it is a completely seamless and straightforward process for those who are trading and that it is unfettered in regards to trade from Northern Ireland into Great Britain. That seems to me to be a very important technical fact.

Sammy Wilson Portrait Sammy Wilson (East Antrim) (DUP)
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On the VAT issue, which comes to the sovereignty issue once again, under article 8 of the Northern Ireland protocol, Northern Ireland traders will be subject to not just UK VAT rules, but EU VAT rules. Do the provisions that the Minister is now putting forward exempt Northern Ireland traders from being subject to dual VAT rules, given the costs that that would present and the huge administrative issues which would arise from it?

Jesse Norman Portrait Jesse Norman
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We do not expect the vast majority of any trade into Northern Ireland to be subject to any dual VAT arrangements. The whole purpose of these rules is to put in place the simplest and most straightforward arrangements that can be put in place and that replicate in so far as possible the current experience that people will have when they trade with the EU.

Sammy Wilson Portrait Sammy Wilson
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Will the Minister give way?

Jesse Norman Portrait Jesse Norman
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I will give way once more, and then I will make some progress.

Sammy Wilson Portrait Sammy Wilson
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The Minister has said that he would not expect that Northern Ireland traders will be subject to VAT rules of another jurisdiction, but article 8 of the protocol makes it clear that they will be subject to a dual VAT regime. Do these provisions remove that requirement from all traders in Northern Ireland, or are we giving away some of our sovereignty by accepting that some parts of the United Kingdom and some sectors in that part of the United Kingdom will be subject to VAT rules from another jurisdiction?

Jesse Norman Portrait Jesse Norman
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I am afraid that inadvertently the right hon. Gentleman has misrepresented my position, or misdescribed my position. I am saying that we are following the Northern Ireland protocol and, therefore, following any provisions that he refers to, but what we are doing is putting in place mechanisms that make them as easy and as facilitated as possible, so that the experience of someone trading in Northern Ireland should be as close as possible to that which they would have today.

The Bill will allow us to amend or modify certain provisions in relation to VAT and excise, including mechanisms to ensure that, in so far as possible, VAT will be accounted for in the same way as it is today, as I have said. In addition, it will make provision for amending current legislation for excise duty. Most of these changes are necessary to ensure that there is comprehensive VAT and excise legislation in place in relation to Northern Ireland at the end of the transition period.

In addition to those steps, there is also a small number of other taxation measures that need to be in place before the end of the transition period. They include provision for an increase in the rate of duty on aviation gasoline, which will apply across the UK. Otherwise known as avgas, the fuel is a form of leaded petrol predominantly used in private aviation.

Alan Brown Portrait Alan Brown
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I notice the Minister said private aviation. Is the Treasury going to look at hydrocarbon fuel duty overall? Kerosene is zero duty rated, which is ridiculous, when motorists pay duty. We need a system in which the duty is applied to kerosene used by airlines, but given the fragile state of the flight industry, we should perhaps do that in a cost-neutral way to it and the Treasury, by incentivising the use of sustainable fuels. Is that something that the Treasury would look at?

Jesse Norman Portrait Jesse Norman
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I admire the hon. Gentleman’s ingenuity in bringing this matter into a debate that has no direct relevance to that issue at all. I, like him, would like to see as green and sustainable a world as we can arrange. This is a measure that does not relate to kerosene; it relates to avgas, and it has to do with the need to harmonise—or rather, to manage—the relationship between Northern Ireland and the UK, and that is what we are seeking to do. The requirement for an increase is set out in the Northern Ireland protocol—again, it relates only to Northern Ireland—but we are expanding it to the whole of the UK to ensure consistency, to avoid burdens on business, and to reduce compliance risks for Her Majesty’s Revenue and Customs. It is extremely small in its magnitude.

The Bill will also make provision for the introduction of a new system for collecting VAT on goods entering the UK. This includes moving the VAT collection on certain imported goods away from the border, and removing the VAT relief on low-value consignments. Together, these provisions will help to level the playing field for UK businesses, and they will protect the UK high street from VAT-free imports. The Bill will also take forward measures to ensure that the Government retain their ability to prevent insurance-premium tax avoidance after the end of the transition period. This will provide Her Majesty’s Revenue and Customs with access to the same tools to prevent insurance- premium tax evasion—sorry, I should have said “evasion” rather than “avoidance” earlier—regardless of whether or not an insurer is based in an EU member state.

Finally, the Bill will make provision for new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period from 2013 to 2018. This technical provision will deal effectively and efficiently with the legacy state aid decision relating to the period before the UK left the European Union.

Patrick Grady Portrait Patrick Grady (Glasgow North) (SNP)
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I wonder why, if the Bill is so technical and dry, and does not have much relevance to the statements that the Chancellor of the Duchy of Lancaster is making outside the House, we cannot see a copy. Why do we have to listen to the Minister tell us all about it, but none of his hon. Friends or my colleagues on this side of the House can prepare properly to respond?

Jesse Norman Portrait Jesse Norman
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I thank the hon. Gentleman. What I am actually doing is giving him a preview of a Bill that will be published in the normal way, after the resolutions debate has concluded. This is a debate on the resolutions required to lay the Bill, and we will do so as soon as the debate has concluded and the measures have been voted on. At that point, he will have a chance to see the Bill and its details.

William Cash Portrait Sir William Cash
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In view of the statement that has been made by the Chancellor of the Duchy of Lancaster—a press statement has been put out; we do not have enough notice of that at the moment—will my right hon. Friend explain whether the Bill, which we will receive in a few moments, or whenever the ways and means resolution has been completed, will contain those notwithstanding provisions? On the basis, as I understand it, that it will not, as the Minister responsible for the Bill which is being brought in, I think, would he not know that the notwithstanding provisions had been removed? Presumably, they are not contained in the Bill—or are they?

Jesse Norman Portrait Jesse Norman
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I salute my hon. Friend’s astonishing indefatigability, but I am afraid his memory plays him false. I have already said that the notwithstanding provisions will not feature in this Bill. I said that earlier in my speech, but I am sorry that that was not as clear as it should have been, because that is the state of affairs.

This Bill will help the UK to cement its position as an independent trading nation at the end of the transition period. It will give businesses throughout the UK certainty about the arrangements that will apply from 1 January next year, and it will play a part in safeguarding the unity and integrity of this country, both in the months ahead and long into the future. I therefore commend these resolutions to the House.

Bridget Phillipson Portrait Bridget Phillipson (Houghton and Sunderland South) (Lab)
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I beg to move amendment (a), at end add

“; but any such provision must not place the United Kingdom in breach of its obligations under the Agreement on the withdrawal of t