Monday 8th January 2018
(6 years, 10 months ago)
Commons ChamberTaxation (Cross-border Trade) Act 2018 View all Taxation (Cross-border Trade) Act 2018 Debates Read Hansard Text
22:16 - The House divided: - Ayes: 265 / Noes: 309 - Question accordingly negatived.
22:30 - The House divided: - Ayes: 309 / Noes: 265 - Question accordingly agreed to.
The Financial Secretary to the Treasury (Mel Stride)
I beg to move, That the Bill be now read a Second time.
The Government have been clear that in leaving the European Union the UK will also leave its customs union, allowing us to establish and enhance our trading relationships with old allies and new friends around the world. Further to that, the Government have previously set out that in leaving the EU customs union and exercising the powers in this Bill, we will be guided by what delivers the greatest economic advantage to the United Kingdom and by three strategic objectives.
Sir William Cash (Stone) (Con)
Before my right hon. Friend gets deep into his analysis, may I ask him about the expression “a customs union” in clause 31, which, according to the explanatory notes, clearly includes the EU itself? Will he be kind enough to tell me, either now or later in his speech, what the distinction is between the customs union and other kinds of customs union mentioned in clause 31?
Mel Stride
Clause 31 makes provision for this country to enter into a customs union with another territory. That territory could be the existing customs union of the European Union after we have left the European Union, or it could be another territory separate from it. As he will know, such a move would be subject to a treaty and would not be entered into until a draft statutory instrument had been laid before the House and approved under the affirmative procedure, and then subsequently approved by Her Majesty as an Order in Council.
Tom Brake (Carshalton and Wallington) (LD)
The right hon. Gentleman says that he wants to do what is of “the greatest economic advantage to the United Kingdom”. Has he assessed whether staying in the customs union would be precisely that?
Mel Stride
I say gently to the right hon. Gentleman that we are going down a rather well-worn path. The answer is quite simple: in June 2016, the British people took a decision—people may have ended up on different sides of the argument, but they took a clear decision—that we would exit the European Union. As a consequence of that, we will be leaving the customs union.
Mr Kenneth Clarke (Rushcliffe) (Con)
I was almost reassured by what my right hon. Friend said in response to my hon. Friend the Member for Stone (Sir William Cash). Would it not remain perfectly lawful under clause 31 for this country either to stay in the existing union, or to re-enter it quite quickly without any further change to the law, and while remaining party to all the EU agreements with about 70 other countries and participating in them as though we were still a member of the European Union? If that is strictly the effect of the Bill, may I tell my right hon. Friend that I would be considerably reassured?
Mel Stride
As my right hon. and learned Friend will know, article 50 was invoked—the decision was taken to invoke that particular article—with the consequences that we will exit the European Union on 29 March 2019, and therefore leave the European Union customs union. However, clause 31 does indeed facilitate our future ability to enter into customs union arrangements with other customs unions or territories, subject to the express will of Parliament, as I detailed with reference to the affirmative resolution that would have to be passed by the House.
Alex Cunningham (Stockton North) (Lab)
The Manufacturing Trade Remedies Alliance tells me that 7,000 manufacturing jobs, including 2,500 in the chemicals industry, will be at risk in my constituency if the UK does not establish effective trade remedies. If there is no customs union, how will the Government guarantee that manufacturing workers will not be negatively affected by unfairly priced or subsidised imports?
Mel Stride
The hon. Gentleman raises the extremely important matter of protecting our UK producers from dumped goods in this country, goods that have been subject to excessive subsidy, and indeed import surges that arise for other reasons. That is why this Bill and the Trade Bill, which will have its Second Reading tomorrow, make provision to set up a Trade Remedies Authority with the ability and powers to investigate appropriately the kinds of issues to which the hon. Gentleman alludes, and to ensure that we are able to take remedial action, in terms of additional duties and so on, to ensure that we properly address those particular threats as and when they occur.
Stephen Kinnock (Aberavon) (Lab)
The Financial Secretary of course knows how close we came to the collapse of the British steel industry, thanks to the dumping of Chinese steel, but even though schedules 4 and 5 of the Bill refer to incredibly onerous public interest and economic interest tests, there is absolutely no detail of how so many of the practical aspects will work. Why do the Government seem to be set on leaving our manufacturing sector completely exposed to the dumping of Chinese steel, for example?
Mel Stride
I am afraid that I have to disagree with the hon. Gentleman. The Bill takes a balanced approach to the issue of protecting our domestic producers including, very importantly, steel producers. By “balanced approach”, I mean that we should also take into account the interests of consumers of those imported goods and businesses that use them in their processes. If the hon. Gentleman looks closely at the measures—we will do that in Committee—he will see that they provide for compensation where dumping has occurred and for appropriate sanctions to be made.
The economic advantage to the UK is very important, and that means continued UK-EU trade that is as frictionless as possible. It also means avoiding a hard border on the island of Ireland and establishing an independent international trade policy. As we look forward to the next stage of our negotiations with the European Union, we see that the nature of our future customs relationship with the EU, and therefore the legislation that will allow the Government to give effect to any such relationship, become all the more significant.
Damian Collins (Folkestone and Hythe) (Con)
My hon. Friend mentions the need to avoid a hard border on the island of Ireland. I know that he will also agree that we need to avoid an effective hard border on the channel crossing points, particularly the channel tunnel and the port of Dover. That is our principal road freight route for goods back and forth across the continent of Europe. It is essential that we maintain frictionless trade.
Mel Stride
My hon. Friend is entirely right. That is why we have consulted ports so extensively, most importantly that of Dover, which I visited myself. I met the port authorities down there, and members of Her Majesty’s Revenue and Customs have been closely involved in consultations with the ports. Of course, the Bill allows the facilitations that we will require—both unilateral and bilateral—to ensure that the smooth flow of trade occurs at those vital ports. It is particularly essential that we do not have any delay to the processing of imports and exports that go through roll-on/roll-off ports.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
On the specific need to keep trade frictionless, HMRC, which is part of the Minister’s Department, said that we would need an additional 5,000 customs officials. The Home Office said that it was already recruiting 300 additional staff, although I understand that they will backfill places rather than taking on additional roles. How many new customs officers are currently in training to prepare for the new customs regime in March 2019?
Mel Stride
The important point is that we are in discussions with HMRC about its funding—[Interruption.] If I may, I will answer the hon. Gentleman’s question. We are discussing with HMRC the funding arrangements it will need in the 2018-19 financial year. As he suggested, Jon Thompson has said that between 3,000 and 5,000 staff will perhaps be required. Incidentally, they need not be new recruits; they may be people who are reallocated from other parts of HMRC as we change priorities, depending on how the negotiations pan out. I am very confident that an organisation of in excess of 50,000 people will be capable of recruiting sufficient individuals of the right calibre and with the right skills to ensure that the job is done.
John Redwood (Wokingham) (Con)
Will the Minister confirm that on our current frontiers with the rest of the EU, excise, VAT, general taxation and currency are all different on the other side of the channel or the other side of the border with the Republic of Ireland, and that that all works very smoothly and mainly electronically today? Why do people think there would be a bigger problem if we needed to add another line to the electronic register because there was a customs charge as well?
Mel Stride
My right hon. Friend makes a very important point. There is no doubt that we can foresee an end state in which a very frictionless process pertains on the borders between the EU27 and the United Kingdom as a separate customs territory. There are many examples around the world of technology in particular facilitating the free flow of goods across international boundaries.
Mike Gapes (Ilford South) (Lab/Co-op)
The Minister referred to the EU’s borders. It is not only that we have a border with the Republic of Ireland, as the British overseas territories have borders. Gibraltar has a border with Spain, and Anguilla has a border with Saint Martin and Sint Maarten. Will he explain what the Bill will mean for British overseas territories?
Mel Stride
As the hon. Gentleman will know, the overseas territories are not part of the existing European customs union. However, they clearly need to be factored into our discussions and negotiations. We are, of course, close to our overseas territories and, indeed, our Crown dependencies, and we will ensure that the arrangements that would suit those overseas territories, as well as the United Kingdom, are taken into account when determining where we land this deal and the approach that we take.
Sammy Wilson (East Antrim) (DUP)
Does the Minister recognise the advice given by HMRC’s permanent secretary that it believes that all of what is required is doable, and indeed that it is confident that we can have the movement of trade without significant disruption? Does he accept that if we want a frictionless border not just between Northern Ireland and southern Ireland, but between southern Ireland and its main market in the United Kingdom, it is not just a matter of this Bill and the resources being in place, because there needs to be much more co-operation than has been demonstrated so far by the Irish Government?
Mel Stride
I thank my hon. Friend for his intervention, but I do not want to be tempted too far into the negotiations that pertain to matters between the United Kingdom and the Republic of Ireland. However, I will pick up on the point that he and other right hon. and hon. Members have made about readiness. The customs declaration services system that will need to be in place to handle around 300 million import and export transactions and declarations is well on target. It will start to go into use by this autumn and we firmly believe that it will be up and running by next January—well in time for the 29 March deadline.
Catherine West (Hornsey and Wood Green) (Lab)
The Minister is being very generous in taking interventions. Will he tell the House the estimated impact on the beef and dairy sectors in Northern Ireland, following today’s article in the Financial Times that flags up the massive cost to the industry that a completely new customs union system would entail?
Mel Stride
Any issues around impacts on the flow of goods or trade necessarily require an assessment of where exactly the deal with the EU and—specifically in the case of the hon. Lady’s question—the Republic of Ireland lands. Until we know exactly where that lands, it is not possible to start opining on those impacts. I come back to my central point: we are negotiating hard, and it is in our interests, and of course those of the EU, to make sure that we have the lowest duties possible between our trading blocs, and that trade flows as freely and effectively as possible.
Stella Creasy (Walthamstow) (Lab/Co-op)
I have been asking the Minister for many months now about the impact of the 13th directive and the ability of other countries, once we are outside the EU, to vary their own VAT requirements. How can he be so confident that by next January he will be able to implement a system that looks at import and export tariffs, given that it will still be dependent on all 27 countries determining their VAT relationship with us? Does he have an agreement with them for that deadline?
Mel Stride
The 13th directive—as the hon. Lady will know, is principally used by countries and businesses outside the EU for the purposes of reclaiming VAT within the UK—will not necessarily be an issue, depending on where the negotiation between us and the EU lands. It is quite possible—indeed, the Bill facilitates this—that continued engagement with IT platforms will allow an easy and effective method of making the kind of reclaims to which the directive relates. She raises the question of whether we have to be ready by next January. If we have an implementation period, for example, we might have considerably longer to bring the process into effect.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
To clarify, is it the Government’s policy to try to remain a member of the EU VAT area? That issue matters massively to hundreds and thousands of businesses.
Mel Stride
The purpose of the Bill is to ensure that on day one we are ready for whatever eventuality we are faced with. For example, the Bill moves us away from acquisition VAT to import VAT, as would be the case—[Interruption.] The hon. Member for Nottingham East (Mr Leslie) thinks that that is some extraordinary revelation—almost a divine revelation—but it is actually in the Bill, as he will find if he reads it. To get technical, if he really wants to find out where this will end up, I think it inserts new section 15 into the Value Added Tax Act 1994. All these possibilities will be facilitated, but it will depend on where the negotiation lands.
Nicky Morgan (Loughborough) (Con)
I appreciate that the Minister did not even get on to the section of his speech about VAT before we started to ask him about it, but following on from the previous intervention, he will be aware that many small businesses in this country have not had to deal with import VAT, because they have been dealing with imports from the EU, and that finding upfront cash to pay for that would be a real problem for them. Will he assure the House that he is aware of that issue and the concerns of small businesses about cash flow, and that he hopes to return to this matter? As he knows, we have discussed this before, and as Chair of the Treasury Committee, I will be writing to HMRC to ensure that we understand its current thinking.
Mel Stride
My right hon. Friend, who has been a doughty campaigner for the interests of business, is absolutely right to raise this issue, with which the Government and the Treasury have sympathy. We do not want over 100,000 businesses to be disadvantaged in cash terms in the way she describes, so this is certainly something that we will be looking at closely going forward. The Bill itself does not prescribe any particular end point in this context. It will be for the Government, after the passage of the Bill, to decide exactly where we wish to end up.
Nigel Mills (Amber Valley) (Con)
My right hon. Friend said that the Treasury might be inclined to be generous to businesses that had their cashflow disadvantaged by this change. Would he perhaps be less generous to large businesses that wholly disadvantage their small UK suppliers by forcing them to accept 120-day payment terms, thus effectively putting many out of business? It would be rather generous to let such businesses off earlier VAT payments on their purchases from within the EU if they were not paying their UK suppliers to a decent timetable.
Mel Stride
The issues that my hon. Friend raises are probably slightly beyond the scope of the Bill, but they are none the less important. If he would care to write to me, I should be happy to consider them, and, indeed, to meet him if he so wishes.
Richard Graham (Gloucester) (Con)
My right hon. Friend is being very generous. It would help us all if he could confirm that this is really an enabling Bill, and that it therefore should not alarm either those who wish to see the continuity of existing trading arrangements, or those who want significant differences. It paves the way for either scenario, depending on the negotiations in Europe.
Mel Stride
As usual, my hon. Friend is eloquent and to the point. He makes an important point because, as he says, the Bill is intended to ensure that wherever the deal with the European Union lands, we will be in a position to be ready on day one to ensure that we keep trade flowing across our frontiers, to the benefit of our economy, our businesses and our consumers.
Sir William Cash
I mention this only because of the very articulate response that my right hon. Friend gave to my hon. Friend the Member for Gloucester (Richard Graham). The Bill refers to Orders in Council, which the Financial Secretary has mentioned, and also includes the words “despite any enactment”. Could that include the European Union (Withdrawal) Bill, when it has been enacted? Could it also include any other transitional arrangements under a further enactment? The words “despite any enactment” are very dramatic.
Mel Stride
I think it is clause 32 that sets out the basis on which the powers will be dealt with. The Bill is extremely clear that any treaty between ourselves, as a customs union, and another territory or customs union must be subject to a draft affirmative statutory instrument. Having been laid, such an instrument would not come into effect immediately, but only when Parliament—or, specifically, the House of Commons—had considered and passed it. At that point, and only at that point, would an Order in Council follow, which would effectively bring the will of the House into law.
John Howell (Henley) (Con)
My right hon. Friend is being very generous in giving way. An important element of what he is talking about is the business community. What consultation has taken place with businesses, and what feedback has there been?
Mel Stride
My hon. Friend raises an extremely important point. At the heart of the issues that we are discussing are British businesses of all sizes. Because we want to ensure that we have an environment that is as good as possible for those businesses, consultation has been at the heart of our approach. We produced a discussion paper last year, as well as a White Paper, to which we received responses. I know that my colleagues in Her Majesty’s Revenue and Customs have been actively engaged for many months in roundtable discussions with not just businesses, but representatives of ports and airports, and all the important actors in the process of importing and exporting into and out of the United Kingdom.
Perhaps I could now make a little progress—
Mr Clarke
I am extremely grateful to my right hon. Friend for giving way so generously, and for giving way to me twice. Let me also congratulate him on the eloquent clarity that he is bringing to this whole subject. He confirmed to my hon. Friend the Member for Gloucester (Richard Graham) that this is essentially a contingency Bill in case things change, and that it covers everything from carrying on roughly as we are now to having quite different arrangements. However, does it remain the Government’s preference that things should stay the same if the negotiations are successful? Paragraph 10 of the explanatory notes states that
“it is the government’s intention that the UK’s Customs regime will continue to operate in much the same way as it does today following exit from the EU.”
Can my right hon. Friend confirm that that remains the Government’s policy intention in the context of the forthcoming negotiations?
Mel Stride
My right hon. and learned Friend raises an important point. The Government are indeed saying that we recognise the importance of ensuring that we have a smooth and frictionless trading situation between ourselves and the European Union once we have left it. Although we will have left the European Union, the Bill will facilitate our ability to have similarities in the way in which we trade. It will then be up to us to decide how we deviate from our starting point. We see the current position, under the European Union code—the customs code and the legislation in the European acquis—as a starting point to which we need to be reasonably aligned, even though we might diverge from it in the years ahead as a result of the negotiations, if that would be to the benefit of our country.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
The Minister has clarified that it is the Government’s intention to continue with the existing customs arrangements, and that the Bill will allow for the possibility of a continued customs union. Can he also confirm that the content of any new customs arrangements or customs union will be decided only through secondary legislation, rather than through primary legislation? Would it not be better to have a proper vote on the Floor of the House on primary legislation on whether we should stay in a customs union?
Mel Stride
The right hon. Lady poses an ingenious question. The simple answer is that the form of the arrangements with the European Union after our exit is the subject of the negotiations. The Government have committed to holding a meaningful vote on the deal. The focus will be on whether the deal is appropriate, not on secondary legislation within this legislation. This Bill is designed to facilitate whatever the will of Parliament ends up being. That is the important point.
The Government have been clear from the outset of the negotiations that, as we implement the decision of the British people to leave the EU at the end of March 2019, we want a deep and special partnership with the European Union and that, as we move towards any future relationship, we should seek to minimise disruption and maximise the opportunities that the process of withdrawal represents. That is in the interests of businesses and individuals in the UK and the EU.
Since triggering article 50, the Government have worked intensively with our European partners to settle the issues in the first phase of the negotiations—namely, a fair deal on citizens’ rights allowing UK and EU citizens to get on with their lives in the country in which they live; a financial settlement that honours the commitments that the UK has undertaken as a member of the European Union, just as we said we would; and an agreement on the island of Ireland that preserves the territorial integrity of the United Kingdom and the stability that has been brought about by the Belfast agreement. We have made great strides in each of those three areas, and I am sure that Members on both sides of the House will welcome the European Council’s agreement last month that sufficient progress had been made on phase 1 and that we should move on to talks about our future partnership.
This development in the negotiations means that we can now look forward to discussing our future customs relationship with the EU. As I reminded the House earlier, the Government have been upfront in setting out their objectives for any such arrangement. The Prime Minister has been clear that, although we are leaving the EU, and therefore its customs union, we are not leaving Europe. So just as the UK will establish an independent international trade policy and look to forge trading relationships with new partners around the world, it is also critical that our future customs arrangements allow us to keep trade between the UK and the EU member states as free and frictionless as possible.
Wes Streeting (Ilford North) (Lab)
The Minister keeps on referring to the importance of free and frictionless trade with the European Union, but is it not time for the Government to be a bit clearer with the public that, through our membership of the customs union, we have preferential trade agreements with a further 65 countries right across the world? This is not just about protecting trade with the EU; we also need to protect those existing trading relationships. As far as any future trade deals are concerned, we must recognise that size matters, and that we are better and stronger as part of the European bloc.
Mel Stride
The hon. Gentleman raises an important point, and it is one that I largely agree with. It is important that we maintain the existing arrangements that we have been brought into by virtue of our membership of the European customs union, which is exactly why we are in discussions with those countries to ensure that we have appropriate arrangements in place once we leave the EU and its customs union. Over and above that, there will be opportunities to forge trading relationships with other countries around the world, which we are prohibited from doing at present because of our membership of the EU customs union.
Alison McGovern (Wirral South) (Lab)
My constituents are today dealing with the news of yet more job losses at Vauxhall in Ellesmere Port. We are a place that manufactures, and we want to keep manufacturing, so can the Minister tell me and my constituents exactly what these opportunities are?
Mel Stride
The opportunities will be very significant indeed—[Interruption.] If the hon. Lady will allow me, I will attempt to answer her question. Of course our trading relationship with Europe is extremely important, which is why we are having negotiations with our European partners. It is important to us and to them to ensure that we maintain those relationships to the highest degree. However, a growing percentage of our trade is now taking place outside the European Union—certainly more than was the case five or 10 years ago—and the expanding markets of the future are not necessarily going to be the countries that constitute the membership of the European Union. To answer the hon. Lady’s question directly, the opportunities lie out there in China, India, the United States and other countries around the world with which we will be able to forge a freer set of trade agreements than we have been able to contemplate during our membership of the European Union.
Ian Murray (Edinburgh South) (Lab)
The Minister continually uses the word “frictionless” and talks about keeping things as they are now. Indeed, the Bill will facilitate our keeping the customs union regulations as they are at the moment, so what principle are the Government using to take participation in the customs union off the table?
Mel Stride
This comes back to the fundamental point that on leaving the European Union we will be leaving the customs union. Then it will simply become a question of what kind of relationship we negotiate with the EU and its customs union. The Government’s position is clear on this. We want these arrangements to be as frictionless as possible. We want to facilitate trade rather than putting barriers in the way of what will be a European customs union of 27 nations after Brexit.
Wera Hobhouse (Bath) (LD)
The Minister seemed to say previously that it might not be a great thing for the UK to leave the customs union and the single market, but that we were doing it because that was the will of the people as expressed in the referendum result. Is that the only reason that we are doing this?
Mel Stride
I apologise to the hon. Lady if I said something that in any way misled her. I do not think that I actually said that. What I said was that, as a consequence of leaving the EU, we will of necessity be leaving the customs union. Now, in the negotiations, we need to strike the best possible deal for our country—a deal that is in our interests and those of the European Union and that maintains a close, frictionless, positive and mutually beneficial relationship between ourselves and a customs union of the remaining 27 members.
Kirsty Blackman (Aberdeen North) (SNP)
On the subject of the negotiations that the UK is having with countries with which it currently has free trade arrangements because it is part of the EU, and on the rules of origin issue, what discussions has the Minister had about cumulation and about whether the EU will accept UK-EU cumulation, or whether we will be required to have parts made only in the UK?
Mel Stride
As the hon. Lady will probably know, those are matters of ongoing discussion within the Department for International Trade, but this Bill and the Trade Bill, which will have its Second Reading tomorrow, are about ensuring that country-of-origin issues can be determined by ourselves under our own laws, rather than having to depend upon on those of the European Union.
John Redwood
Will the Minister confirm that the European Union made it clear to the United Kingdom that we cannot stay in the customs union and single market if we will not pay contributions or accept freedom of movement?
Mel Stride
It is entirely true that we cannot have our cake and eat it—[Interruption.] I am paraphrasing the EU, not the Government’s position. Our position has always been that we foresee a mutually advantageous trading relationship with the European Union’s customs union and, for the purposes of this afternoon’s debate, the important point is that this Bill provides and facilitates the ability to produce exactly that.
It is important to provide certainty and continuity to businesses, including the hundreds with which the Government have met and consulted since the referendum. Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. That commitment and progress on the issue were formally recognised at last month’s European Council, and it will continue to inform our approach in the future.
The Government set out in their future partnership paper last summer and in the White Paper for this Bill two options for our future customs arrangements—two options that most closely meet those objectives. One is a highly streamlined customs arrangement, which comprises a number of measures to help to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new, technology-based solutions. The other option is a new customs partnership: an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU. The Government look forward to discussing both those options with our European partners and with businesses in both the UK and the EU as the negotiations progress.
The Government have already taken a number of important steps to ensure readiness for EU exit, including most recently at the Budget when my right hon. Friend the Chancellor of the Exchequer announced £3 billion of funding for Departments and the devolved Administrations to support their preparations. HMRC is on course to deliver a functioning customs service on day one that enables trade to flow, HMRC to collect revenues and the UK to have a secure border. The Treasury has already effectively allocated over £40 million of additional funding to HMRC this year to prepare for Brexit and continues to work with HMRC to understand its ongoing Brexit requirements. The Taxation (Cross-border Trade) Bill represents a significant part of our preparations.
Mr Leslie
I am grateful to the Minister for giving way. I sense that he is coming to a conclusion, so I wanted to get this particular question in. The programme motion specifies when he and the Government want the Bill to come back for Report and Third Reading, but how many sittings does the Minister intend the Bill to have in Committee? Many hon. Members would have expected a Committee of the whole House, but that does not appear to be the case and the Committee stage will happen upstairs. Will he guarantee that significant time will be available in Committee for those lucky Members to scrutinise this legislation properly?
Mel Stride
I will make two points. First, as the hon. Gentleman will know, such matters are for the usual channels, and his party is an important part of the usual channels. Secondly, the Bill will of course receive the normal high level of scrutiny as it passes through the House—line by line, clause by clause. Amendments can be tabled, debated and divided on if necessary. The Bill will then come back to the House on Report and for Third Reading. If he has any particular representations to make about the number of sittings in Committee, he should perhaps speak to his Whips, who can then speak to our Whips, and I am sure that we will all end up in a happy place on the issue he has raised.
Stephen Doughty
The Minister is being generous, as he always is. Having been opposing Whips at various points on various financial matters, I know that he always does these things in good faith, but I share the concern of my hon. Friend the Member for Nottingham East (Mr Leslie). Both Front-Bench teams are currently tied up with the Finance Bill that is going through—an important piece of legislation that we quite rightly oppose many parts of. Given that, we will not be able to start the scrutiny of this Bill in Committee for quite some time, and the Bill is due to be out of Committee by 1 February. The Bill will not receive full scrutiny in the House of Lords because this is a money Bill, so will the Minister tell us how many Committee sittings there will be to scrutinise a large, substantial and important Bill?
Mel Stride
The hon. Gentleman is being typically tenacious, but he asks the same question as the hon. Member for Nottingham East and he will have the same answer. I will spare the House my eloquence by not going through, once again, the same answer that I just gave.
Vicky Ford (Chelmsford) (Con)
I thank the Minister for giving way and for drawing attention to the “Future customs arrangements” paper that came out in the summer and the two potential solutions: the highly streamlined option or the new customs partnership. Will he confirm that the Government are still open minded about both options and that this Government’s priority is to maximise stability and minimise uncertainty not only for British consumers buying products from the continent, but for continental suppliers trying to sell to us and vice versa?
Mel Stride
My hon. Friend is absolutely right that the Government’s position is that we are determined to explore both models actively. The new partnership model would be a creative and unique approach to a customs union with the European Union in which we would effectively have a common customs border and no customs border between ourselves and the other EU member states. Its very uniqueness and the creative thinking needed to reach any such agreement means that it would probably happen on a longer timeframe than some of the other approaches that we will be taking, but I can confirm that we want to continue to discuss both options with our European partners.
The Bill allows the UK to establish a new, standalone customs regime, ensuring that VAT and excise legislation operates as required upon EU exit. The Bill makes a number of provisions that are absolutely essential for any future customs regime to function effectively regardless of the outcome of the negotiations. Those provisions include allowing the UK to charge customs duty on goods, including those imported from the EU, allowing the Government to set out how and in what form customs declarations should be made, and giving the UK the freedom to vary the rates of import duty as necessary, particularly in the case of trade remedies investigations and for developing countries. Moreover, it will confer a number of necessary and appropriate powers to allow the UK to respond effectively to the outcome of the negotiations, and it will give the Government the ability to make subsequent changes to the customs, VAT and excise regimes, which may be required later but cannot be predicted as this stage.
As I have set out today, the Government recognise the importance of providing certainty and continuity to businesses, so this Bill will allow the Government to make good on their intention to replicate the effect of existing EU law wherever possible as the UK leaves the EU. I look forward to debating the provisions and the underlying issues as the Bill makes its way through this House. The Bill takes significant steps to ensure that the UK is ready for EU withdrawal by allowing our country to establish a standalone customs regime and by ensuring that our VAT and excise legislation operates as required upon exit day. As we begin discussions with the EU on our future partnership, the Bill ensures that we can do so with the utmost confidence, securing our ability to deliver a robust, efficient, effective customs regime whatever deal is struck with our European partners. As such, the Bill underpins our great country’s ability to pursue its own trade deals with partners from right across the world, and I commend it to the House.
Mr Leslie
That is why I suspect that the other place will look at the truncated scrutiny. I tried to get this out of the Minister earlier—not the Minister before us, but the Financial Secretary to the Treasury. It was not a Cabinet Minister who came to the Chamber to introduce the Bill, by the way, but I am told that a reshuffle might be going on, so perhaps the Chief Secretary or even the Chancellor are in negotiations. The junior Minister acquitted himself reasonably well at the outset—as well as he possibly could, given the line that was scripted for him to take—but I think that a Cabinet Minister should have presented a Bill of such scale and importance. It deserves proper scrutiny in this place, with the right number of Committee sittings, because otherwise the other place will have to do that job for us.
The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)
I am happy to confirm that the Bill will have eight Committee sittings in the House of Commons.
Mr Leslie
I can only hope—fingers crossed—that I am selected for the Committee. I know that my hon. Friends on the Front Bench will be keen to have me on it. I try my best to be as constructive as possible at all times, so I hold out great hope for that.
Part 1 of the Bill is very wide-ranging. My hon. Friends have made speeches about trade remedies in respect of anti-dumping and subsidy provisions. Perhaps the Minister will use his winding-up speech to cast a little more light on what the UK’s policy will be on competitive trade and, in particular, on subsidy issues. I know that Government Members have an interest in many aspects of trade with places such as China and other non-market economies. The question about subsidies is important, so I would like to hear a little more from the Government about what their policy stance will be. Will we cut and paste the existing EU approach or not?
A number of big decisions have to be made. When our constituents find out that we will have the power to raise or lower a particular duty, the widget manufacturers or whatever in our constituencies who might be prone to it, or whose competitors might be prone to it, will take great interest in contacting Members of Parliament to say, “Will you push the Government to raise this duty?” or, “Will you push Ministers to lower that duty?” This has the potential to fill our inboxes for decades to come.
Members of the European Parliament—we have sort of outsourced much of this policy to the EU for 40 years—have a number of scrutiny powers in respect of customs and excise and trade agreements that we will not have when those matters are brought to the House of Commons. I worry very much about trade agreements. Members of the European Parliament have the right to comment on them and even to suggest amendments to them. Of course, they then give final consent to trade agreements, but that is not part of the current Administration’s package under the customs and trade Bills.
The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)
I thank hon. Members for their contributions to today’s debate. It is a great pleasure and an honour as a trade Minister to close the debate on the Taxation (Cross-border Trade) Bill, on which my colleagues in the Treasury lead. However, the fact that a trade Minister is closing the debate is not only indicative of the unity of purpose across our Government to deliver critical legislation, but demonstrates how important our future trading relationship will be after we leave the European Union. As a country, we need to create the structures and legislation that will form the framework of our new, home-grown, global trading relationships, which will embrace the entire world.
Before turning to the specifics, I remind the House of the context of our discussion today. As the Prime Minister and the Chancellor of the Exchequer have made clear, when Britain leaves the European Union in March 2019, it will also leave the customs union and the single market. Many hon. Members, particularly Opposition Members, have claimed that during the referendum campaign, people were not told that we would leave the customs union and the single market. However, I was proud to stand as a remainer with Opposition Members, and I certainly said that we would leave the customs union and the single market if we left the European Union. The British public were well informed about what was happening with Brexit.
The key issue now is what kind of relationship we will have with the European Union from 29 March 2019. On customs, the Government have been clear that they will be guided by what delivers the greatest economic advantage to the UK. They have set out their objectives for any future relationship: an independent trade policy; trade with the EU that is as frictionless as possible; and avoiding a hard border on the island of Ireland.
The progression of the negotiations to the next phase means that we can now look forward to discussing our future customs arrangements with the EU. In that context, the Bill is especially vital to the UK’s preparations for EU withdrawal. Just as it allows the Government to establish a stand-alone customs regime and ensure that VAT and excise legislation operates as required on EU exit, it also gives the UK the ability to respond to a range of outcomes to the EU negotiations.
Several issues have been raised, particularly on VAT. The hon. Members for Nottingham East (Mr Leslie), for Aberavon (Stephen Kinnock) and for Newcastle upon Tyne North (Catherine McKinnell) mentioned an impact assessment on the effect of the VAT regime. I make two points on that. First, we cannot do an impact assessment of any meaningful depth until we know exactly what deal has been achieved with the EU. Until we reach that point, any impact assessment will be merely a random guess. Secondly, the Chancellor in his autumn statement made the incredibly important point that he will do everything he can to mitigate the effects of the changes to the VAT regime as we change it under the Bill.
The hon. Member for Redcar (Anna Turley), supported by my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), made an impassioned speech about free trade ports in her constituency. She asked a couple of important questions. The first was whether the Government were supportive of free trade zones. The simple answer is yes, but with a caveat that we need to understand them a great deal more. Her second question was whether the Government would advocate Teesport as a free trade port. She made a strong case for that—she speaks very well on behalf of her constituents. The Government will be very happy to engage with her and hear her case for that.
It is incredibly important that we understand how ports will work. My hon. Friends the Members for Morecambe and Lunesdale (David Morris), and for Folkestone and Hythe (Damian Collins) and the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) all appealed for the ability for ports to work efficiently. The Government well understand that roll-on roll-off ports working efficiently is one of the most important things we can achieve in the negotiations. We fully understand the problems that would arise if there were a hold-up in port.
The hon. Members for Aberdeen North (Kirsty Blackman), for Nottingham East and for Sedgefield (Phil Wilson) asked about the CDS. HMRC will start migrating traders to the CDS in August 2018 to allow a six-month period for transition to all users by 2019. To reduce the risk at the point of exit, HMRC will continue to operate the current CHIEF system in tandem.
I do not want to go on too long, but I will quickly make a point about trade remedies. The framework will provide UK industry with a safety net against injury caused by unfair trading practices and by unforeseen surges of imports. It will be a key part of ensuring an effective rules-based system for a fully functioning independent trade policy. It is important that the lesser duty rule provides for proportionate protections which remove injury to UK industry without unnecessary costs, and the economic interest test will provide a sensor check to ensure that measures are not imposed where they might have a disproportionate impact on the wider economy. The UK market is a relatively small but complex market, and the effect on competition and consumers of duties that are too high could be significant. Both the economic interest test and the lesser duty rule have been designed with that in mind.
In conclusion, the UK has set out our ideas for how future customs relationships with the EU can work. As our negotiations with the EU progress to the next phase, it is only right that the Government take whatever steps they can to ensure that they can effectively implement a new regime. On customs, VAT and excise, and indeed in relation to some aspects of our future trade policy, that is precisely what the Bill will do, by taking the sensible step of providing the Government with the ability to put in place responses to a range of possible outcomes from the negotiations. I hope that right hon. and hon. Members will support this crucial legislation, as the Government continue to put into action the decision of the British people to leave the European Union. I commend the Bill to the House.
Question put, That the amendment be made.