Monday 20th November 2017
(6 years, 5 months ago)
Commons ChamberTaxation (Cross-border Trade) Act 2018 View all Taxation (Cross-border Trade) Act 2018 Debates Read Hansard Text
21:07 - The House divided: - Ayes: 76 / Noes: 311 - Question accordingly negatived.
The Financial Secretary to the Treasury (Mel Stride)
I beg to move,
That—
(a) provision may be made imposing and regulating a duty of customs chargeable by reference to the importation of goods into the United Kingdom,
(b) provision may be made conferring power to impose and regulate a duty of customs chargeable by reference to the export of goods from the United Kingdom,
(c) other provision may be made in relation to any duty of customs in connection with the withdrawal of the United Kingdom from the European Union, and
(d) provision may be made dealing with subordinate matters incidental to any provision within any of paragraphs (a) to (c).
Since the British people took the decision to leave the European Union in June last year, the Government have taken a number of significant steps to put that decision into action, including triggering article 50, taking forward the European Union (Withdrawal) Bill and, of course, undertaking the extensive consultation and planning that inform our negotiation objectives. The motions before us today represent another essential step in that process. We are here to debate legislation that will allow a new customs regime to be in place by the time the UK leaves the EU and its customs union and, in doing so, allow the UK to respond to the outcome of the negotiations. I do not need to tell the House how important that is.
The Taxation (Cross-border Trade) Bill will pave the way for new domestic legislation that will enable the UK to establish a stand-alone customs regime. It will allow the UK to charge customs duty on goods, including those imported from the EU. It will allow the Government to set out how and in what form customs declarations should be made. It will also give the UK the freedom to vary rates of import duty as necessary, in particular in the case of trade remedies investigations and for developing countries.
Mike Gapes (Ilford South) (Lab/Co-op)
The Minister talks about the decisions that the Government have already made. Before they decided to trigger article 50 and begin the process, did they give any consideration to the complications that would be caused in the relationship between Northern Ireland and the Republic of Ireland, which were explained to the Foreign Affairs Committee when we were in Dublin last week?
Mel Stride
In exercising article 50, the Government’s consideration was the decision taken by the British people in June last year to leave the European Union. On the hon. Gentleman’s specific point about the Northern Ireland-Ireland border, we are of the same mind as the European Union and the Irish Republic that there should be no return to the hard borders of the past. We are committed to as frictionless a solution as possible for the border between Northern Ireland and the Irish Republic.
Tom Brake (Carshalton and Wallington) (LD)
The Minister will be aware that the Irish Prime Minister has called on the UK Government to give a written guarantee that there will be no controls on the border. Is the Minister able to give that guarantee?
Mel Stride
We have made it clear on numerous occasions that we have no intention of reverting to the hard borders of the past, and that we will ensure that we fully take into account the unique political and cultural circumstances of Northern Ireland and the Irish Republic.
In addition, the Bill will modify elements of our VAT and excise legislation to ensure that it functions effectively upon our EU exit. In doing so, the Bill will give the UK the power to implement new arrangements that will ensure that trade is as frictionless as possible.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Has the Minister heard the judgment of the UK Chamber of Shipping, which talks of an “absolute catastrophe” unless issues relating to transport through the ports are resolved? Are the Government taking that seriously?
Mel Stride
The hon. Lady raises an extremely important point, particularly in relation to roll-on/roll-off ports. I have been to Dover to meet the port’s chief executive and other staff, and Her Majesty’s Revenue and Customs is closely engaged through various roundtable exercises with all the UK’s ports. We recognise the paramount importance of ensuring that we have fluid trade flows through those ports. The hon. Lady will know that the White Paper set out clearly the sorts of approaches that we will be taking, if necessary, to ensure that those flows are rapid and effective, and that trade is kept moving.
Stella Creasy (Walthamstow) (Lab/Co-op)
Following our time together in Committee considering the Bill that became the Finance (No.2) Act 2017, the Minister will know my concern that small businesses in Britain will be saddled with the 13th VAT directive. He has set out that the Government’s intention is that a new directive will come into place before we leave the European Union, so will he clarify whether he expects British businesses to have to deal with all the vagaries of the 13th VAT directive?
Mel Stride
As the hon. Lady knows, at the point at which we leave the European Union, we will gain further control over VAT, although that depends on the precise nature of the deal that is negotiated. It might be that we move from acquisition VAT to import VAT depending on where that negotiation lands, which remains to be seen. The general principle is that the Government are entirely committed to ensuring that burdens on businesses are kept to an absolute minimum and that trade flows are maintained.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
The Minister will be aware that there were many responses by manufacturing organisations to the White Paper on the Trade Bill. The British Ceramic Confederation, which is based in my constituency, is genuinely concerned about the market and trade remedies that will exist post-exit, particularly for dumped goods such as tiles and tableware, which could undermine the indigenous manufacturing base. Will he clarify what those remedies might look like once we leave the EU? The time between the closure of the consultation on the White Paper and the publication of the Trade Bill was very short, so we cannot really be sure whether those representations were considered.
Mel Stride
The bulk of the measures to which the hon. Gentleman refers will be in the Taxation (Cross-border Trade) Bill, including trade remedy measures on dumping, excessive subsidy and safeguarding. He will know that we take those issues extremely seriously. In the event that there is evidence of dumping or the other things to which I have referred, there will be a trade remedies authority, the details of which have already been disclosed to the House in the Trade Bill. That body and the Secretary of State for International Trade will be able to work together to ensure that, when there are problems due to activities such as dumping, we will be able to take appropriate action in the normal manner.
John Howell (Henley) (Con)
Will the Minister comment on the extent to which the Bill will allow the VAT and customs system to continue, whatever the outcome of the negotiations? Has enough flexibility been built in to the measure regardless of the outcome?
Mel Stride
My hon. Friend raises an important point that goes to the heart of the Bill. This is a framework Bill, so it will allow us to make sure that we can deliver wherever the negotiations land. It does not presuppose any particular outcome from the negotiations; its purpose is to enable the outcome of the negotiations to be put into effect.
Anna Soubry (Broxtowe) (Con)
I have made it very clear to people in Broxtowe that I believe in our continuing membership of the customs union and the single market. Can the Minister help me with this? Will the measure be able to cope with all eventualities, including our staying de facto as a member of the customs union through a period of transition? Could we—if everything goes the way I would like—even stay a member of the customs union under this Bill, if that were the will of the Government and the House?
Mel Stride
The Bill deals with our leaving the European Union, which means, as a simple matter of law, that we will be leaving the customs union. However, it does indeed allow for a transition period in which there could be a very close customs association with the European Union.
Mel Stride
The Bill will be presented this evening. When the hon. Gentleman reads it tomorrow, he will be more enlightened as to how it can facilitate a period of transition.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The Minister referred to the Bill’s ability to deliver in all possible circumstances. Is he aware of the report by the Home Affairs Committee and of discussions with HMRC about concerns over its capacity to deal with various customs arrangements? The report says that the Home Office is providing only an extra 300 staff by 2019, yet HMRC says that it needs 5,000 additional staff to cope with a changed customs regime. What assessment has he made of how many new staff are required and what they will cost?
Mel Stride
We will be guided by HMRC on the number of staff required, and we are working closely with it on this issue. As the hon. Gentleman will know, Jon Thompson, the head of HMRC, has suggested that between 3,000 and 5,000 staff will be needed in a day one contingency scenario, if that is where we end up, and he and HMRC are in discussions with us about both the timing of the pressing of the buttons on these issues and the costs involved. The hon. Gentleman can rest assured that HMRC will be provided with whatever resources it requires to ensure that we are ready on day one.
Mr Leslie
Will the Minister assure us that the Bill, which, of course we do not have but which he is saying we will be able to see—although not until we have debated this paving resolution—will contain arrangements for sanitary and phytosanitary regulatory checks at Dover and the channel tunnel entrance and exit? They are not there at present and if we were going to institute customs checks, we would similarly have to institute those regulatory checks. Has Her Majesty’s Revenue and Customs allowed for that in the budget as well?
Mel Stride
The hon. Gentleman makes it sound as though the fact that we do not have the Bill available right now is in some way inappropriate or not right, but he will know that this Bill is a finance Bill—a taxation Bill—and it is coming in under Ways and Means. I will introduce the Bill at the end of this debate, having the opportunity to walk the Floor accordingly and to be admired by many Members on both sides of the House when I do so. He will also be aware that HMRC is involved in our ongoing negotiations on the issues he has raised, and these things will come out of those discussions in the normal manner.
James Duddridge (Rochford and Southend East) (Con)
Does the Minister agree that there is some faux misunderstanding of the situation going on here? There is a body of evidence of what life will be like outside the EU: our trade with the rest of the world. This is not a new thing we are doing; it is something we are replicating within the EU that exists in our trade with the rest of the world, which dwarfs what we do within the EU.
Mel Stride
My hon. Friend raises an important point: our nation is quite capable of ensuring that wherever the negotiation lands, we will be able to have the resources, talents and wherewithal to go out and make a success of Brexit, getting out and engaging in our future trading arrangements. The important thing is that this Bill does not presuppose any particular outcome, but facilitates whatever outcome we finally arrive at.
Dr Andrew Murrison (South West Wiltshire) (Con)
Does the Minister agree that it is wrong to say that phytosanitary checks do not happen—or could not happen—at the moment? We experienced such checks clearly in 2001, at the time of the bovine spongiform encephalopathy outbreak. These things are very real and they happen from time to time. It is right that member states should be able to protect public health and animal health, and they are perfectly capable of doing so within the European Union.
Mel Stride
My hon. Friend has put the point very clearly and effectively, and nothing in this Bill acts counter to our ability to act in the way he has suggested.
Damian Collins (Folkestone and Hythe) (Con)
As the Minister will know, more than 80% of the UK’s freight movement goes through the channel tunnel and the port of Dover. Anything that slows, let alone delays, that processing will cause massive backlogs, and the physical infrastructure is not yet in place to do this. Alongside the Bill he is presenting this evening, does he believe that we need to make sure the resources are there so that whatever is necessary is in place on day one to make sure the physical infrastructure can support cross-channel trade?
Mel Stride
My hon. Friend raises a crucial point for ro-ro—roll on, roll off—ports, and these are just the kinds of issue that I discussed with the personnel and the chief executive at Dover when I visited. I have regular discussions with HMRC on these matters, and it in turn has regular roundtable events and a particularly close association with the port of Dover. He is absolutely right to say that we must ensure that trade is fluid and moves quickly across that border. He will have noted the suggestions set out in the White Paper of the pre-lodging of customs declarations away from the port—from Calais, in this instance—and making sure we have the right inventory software in the port so we can match up those goods coming in against those declarations to make sure we keep the flow going.
Several hon. Members rose—
Mel Stride
If I may, I will finish the point. As to my hon. Friend’s specific question about whether I believe we are ready, let me say that I believe we will be ready. I believe that the customs declaration system—the IT system that is coming into place—will be ready by January 2019, that we will start seeing businesses and traders migrating to that system around August next year, and that we will be in the position we want to be in come day one.
Mel Stride
As the right hon. Gentleman will know, the figure is very low. I think it is a matter of a couple of minutes—if the whole system stopped for more than a couple of minutes we would start to see major problems, which is why we are placing such an extremely high priority on making sure that our ro-ro ports continue to move as effectively as they should.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I thank the Minister for his full responses to the questions on ro-ro. I wish to ask similar questions about our biggest port by value: Heathrow airport. With respect to the IT systems and other processes, will Heathrow be ready for this process?
Mel Stride
Yes, absolutely. In the case of Dover, most of the traffic is intra-EU trade, whereas a high proportion of the traffic going into Heathrow is more international than simply the EU, so there is already greater engagement with third-country trading. We are therefore confident that Heathrow will be ready.
Charlie Elphicke (Dover) (Ind)
My right hon. Friend is giving a typically powerful and effective exposition on this incredibly complex and detailed matter. Does he agree that it is really important for the channel ports that parking facilities and resilience are built in off the M20 so that whatever eventuality arrives with respect to needing to do checks—whether for animal health or customs purposes—we have the right kind of infrastructure and facilities in place on day one?
Mel Stride
I thank my hon. Friend for his intervention and, before I address his specific question, I also thank him for his insights and the fairly powerful lobbying he has quite rightly done on behalf of the Port of Dover and his constituents. On his specific question about infrastructure being ready, we certainly recognise that we need to have infrastructure there and that the port itself would generally not be able to handle a large number of stoppages at any one time. As I say, I have been down to the port to inspect the facilities there, so I certainly appreciate that. That is an issue that is receiving ongoing consideration.
Mrs Ellman
Will the Minister tell us what financial provision is going to be made if Operation Stack has to be put into practice on the M20 every week, if not more regularly, when there is a blockage at the port?
Mel Stride
Of course, Operation Stack arose not because of a general deficiency in the customs arrangements but because of the specifics of what occurred on the French side of the channel. If that situation occurred again, which I suppose it could do irrespective of the arrangements we have for customs, the Government would clearly make sure that we had sufficient resource to deal with that eventuality. As I have said, though, in terms of the customs arrangements themselves, the resourcing of the facilities and the arrangements that we need to put into place, we are confident that they will be there to keep the traffic moving on day one.
Damian Collins
As the Minister will know, this is in the interests of my constituents, as well as those of my hon. Friend the Member for Dover (Charlie Elphicke). Will he confirm, if not from the Dispatch Box then in writing afterwards, that the £250 million allocated by the Government in the autumn statement two years ago for the provision of an Operation Stack relief lorry park on the M20 is still in place? The Department for Transport has unfortunately had to withdraw its plans for that lorry park because of a judicial review, but it intends to go back into the planning process with new plans. My constituents would benefit from knowing that the funds allocated to that project are still there.
Mel Stride
I have taken a rather large number of interventions, so in the interests of making progress I shall do as my hon. Friend suggests and write to him on that specific point.
Working in tandem with the Trade Bill, which was introduced to Parliament earlier this month, this legislation will help to provide the continuity and smooth transition that everybody wishes to see.
Let me be clear to the House that, by virtue of leaving the EU, the UK will also leave its customs union—that is a legal fact. It is also a critical part of allowing the UK to forge a new relationship with new partners around the world. Leaving the EU customs union will allow the UK to negotiate its own trade agreements. Those trade agreements will be based solely around the UK’s national interests and needs. We will also want to ensure that we have an ambitious new customs arrangement with the EU that will allow us to keep trade between the UK and EU member states as free and as frictionless as possible. As the Prime Minister has made clear, although we are leaving the EU, we are not leaving Europe. Having mutually beneficial customs, VAT and excise arrangements is clearly in the interests of businesses on both sides—a resounding message that we have been hearing from the hundreds of businesses that we have consulted on this matter since the referendum.
Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. We welcome the recognition from our European partners that this is a point of absolute importance, by which I mean their commitment to the Good Friday agreement and their focus on flexible and creative solutions to avoid a hard border. We look forward to making progress on that issue.
To meet those core objectives—establishing an independent international trade policy, ensuring UK-EU trade that is as frictionless as possible and avoiding a hard border on the island of Ireland—the Government have set out two options for our future customs regime. One is a highly streamlined customs arrangement. That approach includes a number of measures to help minimise barriers to trade: negotiating continued access to some facilitations that our traders currently enjoy; introducing innovative new-technology-based solutions to reduce the risk of delays; and simplifying and streamlining the administrative demands on businesses. The other is a new customs partnership. It is an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world, removing a need for the formal customs border between the UK and the EU. Both of those options would take time to put in place. We are clear that “cliff-edge” changes are in no one’s interests. Businesses should have to adjust only once to a new customs relationship. It is for that reason that we are proposing an implementation period, during which businesses and Governments in both the UK and the European Union would have time to adapt. How long that period lasts and the form that it takes will be a matter for the negotiations, and it would of course cover issues beyond customs. However, as the Prime Minister has set out, the duration should be linked to the amount of time required to prepare for our future relationship with the EU. Current evidence points to the need for an implementation period of around two years.
Although the precise nature of the relationship that we will end up with on customs is a subject for the negotiations, there are sensible steps that we can take now to prepare for the future. This Bill is one of those steps, providing, as it does, a framework for a new customs regime. This will allow the Government to give effect to a range of outcomes from the negotiations, including an implementation period. Businesses have called for certainty and continuity, and this Bill will, as far as possible, allow us to replicate the effect of existing EU customs laws. It is only prudent that the Government should prepare for all eventualities, so this Bill will also allow the Government to operate effective customs, VAT and excise regimes even if a deal with the EU is not reached, although, as I have set out, a negotiated settlement is in the interest of all parties. That is exactly what the Government hope and expect to achieve.
Just as with the European Union (Withdrawal) Bill, this Bill is about laying the groundwork for our successful future outside the European Union. Trade is clearly going to be a key part of that. The UK has long been a great trading nation. Today, the UK’s trade with non-EU countries is equivalent to more than half of our exports by value, so getting our customs, VAT and excise arrangements right to support that—as well as continued trade with EU countries—is vital. We need to be able to pursue trade deals with partners across the world, while, at the same time, keeping our trade with the EU as frictionless as possible, and avoiding a hard border between Northern Ireland and Ireland. This Bill is a crucial stepping stone to the new arrangements that will allow us to meet those objectives.
Peter Dowd
My hon. Friend hits the nail on the head. That has been the line that this Government have taken. Power stops at Westminster and it does not go beyond. It is, quite frankly, a sham.
The Government cannot even bring themselves to include in this Ways and Means motion any reference whatever to parliamentary scrutiny; they do not like that. At every opportunity, even if the Government have contempt for this House, we will ensure that they will be forced to explain why they are so frightened of parliamentary scrutiny. At every corner, they will be required to explain in the cold light of day why they seem so reluctant to send Ministers to the Dispatch Box to explain the Government’s rationale.
Now, the Government, in their faux generosity, will claim that they have set aside eight days to debate the withdrawal Bill and other days to discuss Brexit. However, in the withdrawal Bill, they are institutionalising an accretion of powers to the Executive that is quite unheard of in the modern history of this country. [Interruption.] Ministers are huffing and puffing, but that is the reality: the accretion of power to Ministers is absolutely disgraceful.
We have to go back to the second world war to see powers of this magnitude and extent reserved to the Government, and those were dismantled as soon after the war as practical. At least our forebears had good reason in that situation, in so far as there was a national Government—a true coalition—united against one of the most odious regimes. The methods being used to sideline Parliament are quite shocking. History will treat this Government with the contempt they deserve for their feculent attempts to disenfranchise this House.
Mel Stride
I have patiently listened to what the hon. Gentleman has had to say. He has referred to the powers in the European Union (Withdrawal) Bill and to the operation, setting-up and independence or otherwise of the TRA. Neither of those items is actually included in this Bill, so what is it in this Bill that he wants to make a point about?
Peter Dowd
The right hon. Gentleman misses the point. This is part of the whole pattern and process by which this Government accrue and accrue powers. Government Members do not seem to grasp that concept, but the fact is that the Government continue to pull powers to themselves and do not devolve them to any of the other nations.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Answer the question.
Anneliese Dodds
I just have, if the hon. Gentleman doesn’t mind. The Government have stated that the motions are about that future relationship, and so we have to take them at their word, even if we might have been mistaken in doing that on other issues.
It has been suggested that, if the Government recover a sense of responsibility and sincerity and genuinely engage us in negotiations, albeit after wrongly ruling out a customs union with the EU, it could involve the adoption of deals similar to CETA or the Turkish deal. Now, CETA does not cover agriculture, so if we get a deal on industrial goods procurement and so forth, we might then need, concomitantly, still to have a deal on the protection of sensitive agricultural products, so we would need to have those powers still there. The Turkish bespoke deal, for its part, still necessitates anti-dumping and countervailing duties on both the Turkish and the EU sides.
To conclude, we have to be clear about what amendments (e) and (f) ask for. They do not, in and of themselves, guarantee that the Government will seek continued customs union membership, because they would apply across the piece of whatever arrangements the Government lead us to.
Mel Stride
We have had a full and good debate this evening on an extremely important matter. I do not think that anybody on either side of the House would suggest that these matters are not of the utmost importance. Perhaps I could run through some of the points raised.
My hon. Friend the Member for Yeovil (Mr Fysh) rightly raised with me, as he has done on many occasions, the importance of HMRC being appropriately resourced. He will know that to date we have provided more than £40 million to HMRC and that we will provide it with such funds and resources as it needs going forward. The hon. Member for Oxford East (Anneliese Dodds) bemoaned the fact that the Government would be able to change duties as a consequence of the Bill through secondary powers without parliamentary scrutiny. I urge her to wait until she sees the Bill and the opportunities in it for the Government to provide that scrutiny.
The hon. Member for Aberdeen North (Kirsty Blackman) said she was not clear what we wanted from these negotiations. We have in our White Paper made clear the direction of travel we foresee in these negotiations. She also raised a point about the customs declaration service computer system, suggesting that we had allowed just three months for testing—that being, I assume, the date between January 2019 and our exit from the European Union. In fact, the full system will be up and running in about August next year, and companies and traders will be migrating to it between August and January 2019.
The hon. Member for Edinburgh South (Ian Murray) says that he wants to stay in the customs union. That is a perfectly reasonable aspiration, but it overlooks the fact that we have voted to leave the European Union, and that we will therefore, of necessity, be leaving the customs union. We want to be able to go out and put together our own trade deals across the world.
My hon. Friend the Member for Gloucester (Richard Graham) said that the amendments closed off options. He is entirely right, but it is worse than that: they introduce options that are deeply unattractive. If we passed the amendments, we could find ourselves in a position whereby we unilaterally offered the same terms to European countries, but did not receive the same duty arrangements in return, which would be hugely to our disadvantage. Moreover, in the absence of a deal, if we offered those arrangements to European countries, we would find that, under the most favoured nation rules, we would have to offer the same duty arrangements to all the other countries with which we were trading, which would of course be an absurdity, and they would not necessarily have to reciprocate.
My right hon. Friend the Member for Broxtowe (Anna Soubry) talked of our jumping off a cliff into no deal. The Government have no intention of going anywhere near any cliffs or jumping off them. We are pushing for a good deal, we are negotiating hard, and I am confident that we will get a deal that is in our interests and also in those of the European Union.
The Bill is an enabling Bill that allows opportunities, whereas the amendment is disabling in the way I have described. I urge the House to reject both amendments, and I commend the motions to the House.
Question put, That the amendment be made.