Brexit: Outstanding Commitments

Lord Hannay of Chiswick Excerpts

Wednesday 6th February 2019 Lords Chamber

[Lord Bates]

The noble Baroness is right. We need to remember that our net contribution, because of the way it is calculated, is made up not just of what the UK sends to the European Commission but of what the European Commission sends to the UK. Therefore, there are two parties to this; both are making contributions, and both need to honour their obligations. We believe that the financial settlement does just that.

[Lord Hannay of Chiswick (CB)]

My Lords, would the Minister not confirm that the £39 billion was entered into in good faith by the Prime Minister and the Government in December 2017, and simply represents what the two sides—the Commission and the British Government—believe is owing in respect of various commitments over many years? If that is so, the suggestion that we do not owe this money if we leave without a deal has no basis.

[Lord Bates]

In that sense, that is correct. The range of the figure in the financial settlement is between £35 billion and £39 billion. The OBR has put it at the top end of that range. When we went into that negotiation, one thing the European Commission wanted to do was discount the rebate, which is a significant element of our contributions and benefits the UK. That was included in the final calculations, so I believe it represents a good settlement, alongside the withdrawal agreement, and should command support on all sides of the House.

Trade Bill

Lord Hannay of Chiswick Excerpts

Committee: 4th sitting (Hansard): House of Lords
Monday 4th February 2019 Lords Chamber

[Lord Stevenson of Balmacara]

Although this group of amendments points in different directions, the amendments have a common starting point, and it is therefore not inappropriate that they should be debated together. Amendment 77 is in my name, joined by other noble Lords, and others have put their names to Amendments 78, 79 and 80, to which I shall also speak.

The history is important, because it raises a wider point than we have recently discussed, although we have from time to time touched on it: the fact that the Taxation (Cross-border Trade) Act and this Bill are really two sides of the same coin. They deal with aspects of trade which need to be in place in the unfortunate event that we crash out of the EU, but they are also pointers towards how we would carry out our trade policy and activity in the event of either crashing out or, as the Government would wish, having an extended period during which various other agreements would be added to the withdrawal agreement and political declaration.

The question that underlies the amendments is: are we in a good place to take forward those future discussions, given the two pieces of legislation that we are looking at? Because of how the Taxation (Cross-border Trade) Bill was defined as it went through the other place, it came in a form expertly handled by the Minister but which allowed us only a limited degree of comment and an occasional question, which he was of course well able to answer but which did not allow us to either amend or question in any serious way how the Bill was framed or where it pointed.

In addition, at a very late stage in the process in the Commons, the Government accepted a group of amendments tabled by the rather quaintly named European Research Group which, to many people, were tabled very late, rather surprising and subject to little debate—they certainly did not go through Committee. So the Taxation (Cross-border Trade) Bill, unscrutinised by your Lordships’ House, was not even scrutinised to any great extent in the Commons after the later amendments arrived which changed its nature.

At the time, we felt that there were issues that could have been raised in debate, but we were unable to do so. Of course, the presence of the Trade Bill before your Lordships’ House and its ability to amend previous legislation opens up the opportunity to make some changes, if the House feels that to be an appropriate way forward.

In crude terms, Amendments 77 to 80 would reverse the late amendments made by the European Research Group to the Taxation (Cross-border Trade) Bill in the other place. In so doing, obviously one looks at the impact that those amendments had and tries to frame our amendments in relation to both the Bill and wider policy arrangements. Briefly, it is fair to say that the conclusion that we on this side have come to is that those amendments do not strengthen our position in general terms and that it should be the duty of this House carefully to consider whether they should be removed, because that would return the Bill to a much better place in terms of where we may require powers set out in the Taxation (Cross-border Trade) Act to be utilised.

For example, Amendment 77 removes the restriction in Section 31 on creating a customs union with the European Union by requiring a separate Act of Parliament to be passed before the designated powers could be used. We think that that should be amended because the restriction under the previous amendment will make it difficult for the Government to negotiate a customs union—or even the customs union—should that be the way that they wish to move in forthcoming discussions.

As it stands, the collection of taxes and duties on behalf of the European Union would be banned unless there are reciprocal arrangements, but Amendment 78 would change that. I think the debate has moved on here, and it could be argued that Amendment 78 is probably the least important of the group. Nevertheless, it was a change perhaps made in haste and, at leisure, the Government may come to the view that it is not the best way to try to open a negotiation if the possibilities one is offering are already restricted by the Act.

Amendment 79 would make it legal for the Government to enter into arrangements that would see Northern Ireland forming a separate customs territory from the rest of the UK. Although I gather that this has support from the DUP, it still makes it a very different situation and context for any discussion about the backstop arrangements. Other noble Lords may expand on that issue. As it stands, the Bill seems again to cut off an opportunity for future discussion and debate—which is even more important than when the amendments were tabled.

Amendment 80 concerns a rather significant change to the way in which VAT is charged in a customs union. It is perhaps of some interest to your Lordships’ House that we have not, within the duopoly of legislation with which we are currently dealing—the Taxation (Cross-border Trade) Act and the Trade Bill—dealt with the question of why the VAT rules that operate within the EU have not also been subject to attention. It will be interesting to hear the Minister’s response.

Of course, VAT is dealt with under separate rules under a separate agreement among the countries in the EU; it is not part of the EU as such, nor part of any other arrangements which normally interpose with trade. To that extent, the Schedule 8 arrangements in the Taxation (Cross-border Trade) Act are distinct and different. It is therefore important that we should have some response from the Government about how this should be taken forward.

The amendment proposed by the European Research Group and inserted into the Act is not the only story that needs to be told on this, but we may not wish to go all the way down that route, although expertise is available should we wish to do so. The Government should be very clear about how they intend to take this forward. I beg to move.

[Lord Hannay of Chiswick (CB)]

My Lords, I support the amendment in the names of the noble Lords, Lord Stevenson and Lord Purvis, and the noble Lord, Lord Bowness, who asked me to mention that he is unable to be here but that he continues to support the amendments. The noble Lord, Lord Stevenson, introduced the amendments admirably and explained very clearly why those parts of the Taxation (Cross-border Trade) Act which we seek to change are either unnecessary or damaging. He is absolutely right to say that the least important is probably the European Research Group amendment passed at a very late stage in the Commons, which we had no chance to intervene on effectively when it came through this House because it was a money Bill.

However, one part of it makes collection of customs duties possible only if the European Union collects customs duties and gives them to us. The original idea was that we would collect duties on behalf of the European Union; this was an essential part of the—now lost in the mists of time and buried deep under the soil—Chequers plan. The European Research Group amendment, frankly, neutered the Chequers plan, but as the European Union was never going to accept it anyway and made it clear at Salzburg and later that it would not accept it, there seems no point leaving it on the statute book.

The last point made by the noble Lord, Lord Stevenson, relating to Amendment 80 about VAT is actually extremely important. Anyone who seriously believes that preventing the British Government maintaining a VAT union, if you would like to call it that—a system that enables trade across borders between us and the European Union without the need for extremely elaborate VAT calculations, inspections, payments and so on—and doing away with that which exists now and going back to where we were before that existed will not put a huge amount of friction on our trade simply does not understand the realities. The VAT aspect is just as important as the tariff aspect and is separate from it. Unfortunately, the European Research Group—in its usual extraordinarily constructive way—has managed to insert something here that would be really damaging to our interests if it is sustained when we go into negotiations with the European Union about future trade arrangements. The only sensible thing to do—I hope the Government will give careful thought to this—is to get rid of this now and take it out of the Taxation (Cross-border Trade) Act.

We cannot be certain now what the Government and the European Union will do when negotiating our future trade arrangements. The Government are quite right to say they cannot guarantee how that will go. But they can remove this great ball and chain around their ankle, put there by the European Research Group, which would be really damaging to us if it ever came to be a central part of our future trade relationship. To say that relationship will be frictionless if the VAT aspect is not dealt with is just a bad joke, frankly, if you have to have VAT inspections, payments and all that sort of thing on goods that are passing. After all, the VAT levels are different in every member state, and the current system enables us to live with that without slowing down or impeding trade; that would go. So I really hope the Government—if not tonight, at least before Report—could say that they will take out that amendment, which should never have been allowed in. This is the single most important amendment in this group of four.

[Lord Purvis of Tweed]

My Lords, I am very happy to have my name attached to these amendments. It shows the Government there is a degree of cross-party consensus that it is important that these aspects—which, as the noble Lord, Lord Stevenson said, did not get the level of scrutiny they deserved in the Commons—get scrutiny in Parliament. This is after the event, because in effect we are scrutinising legislation, but there is no harm in a bit of post-legislative scrutiny of the taxation Act. In an exchange the Minister and I had during the very brief proceedings in this House on the Taxation (Cross-border Trade) Bill, the Minister said there would be ample opportunities for scrutiny, such as during the upcoming Trade Bill, so we are taking him at his word and offering the Government a chance to give a full-throated defence of the ERG amendments passed in the Commons.

As the noble Lord, Lord Hannay, said, there are perhaps some unintended consequences of these amendments that we now need to properly scrutinise. It is an extraordinary position we find ourselves in where Members of the Government’s party moved amendments to the Government’s Bill that would in effect render the Government’s then policy on the facilitated customs arrangement largely inoperable. Now those same Members are meeting the same Government today to breathe new life into the very systems of a facilitated customs arrangement that they themselves rendered largely inoperable by their amendments. I was struggling for an analogy on the way to the Chamber this afternoon. I could not find one as ridiculous as the position we now find ourselves in. If it is the purpose of the so-called alternative arrangements working group that is now meeting to try to find solutions to the problems that they themselves created, I do not think that any alternative arrangements will come out of this working group.

The ERG amendments now sit most uncomfortably with the process under way, so it is right that we give them proper scrutiny. The Government say one of the amendments they accepted—that there would need to be a stand-alone statute for any customs arrangement agreed with the European Union—is not necessary for any other trade agreements. If I understand it correctly, the positon of the Government is that the free trade agreement with the European Union would undergo a CRaG process, which is an affirmative process to be approved because there is a treaty, but a secondary customs arrangement that would come with that would have to have a stand-alone statute. Why? What is the Government’s rationale for that? In the Commons, the Government simply said they thought it would be appropriate that there would be a stand-alone statute. I do not understand why, so I hope the Government might be able to tell us why that would be the case.

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[Lord Bates]

Yes, there is a reason why we have brought back the agreement—to resolve the situation.

As for whether the amendments have been considered in the other place, the other place voted for two of the original amendments and had the opportunity to vote on another two but decided not to do so, so the other place made its view clear on that point.

[Lord Hannay of Chiswick]

On this point about VAT, I hope the Minister will forgive me for saying that he and I are probably slightly out of our depth on the detail of how this will work. From what he just said and from the guidance that he read out at some stage, it sounds as though the Government and HMRC understand that potential friction will come into our trade with the EU if we do not ensure that something like the present arrangements continue. Back in the 1980s, when I was involved in the matter, we avoided a perfectly appalling idea by Lord Cockfield of having a clearing house in Brussels into which everyone would pay all this VAT. We have a frictionless system and it sounds as though the Government understand that that should be preserved. But I rather doubt that that is consistent with the Taxation (Cross-border Trade) Act, because of the amendment on VAT that was put in by the ERG.

The best thing that we could ask of the Minister this evening is to go back and consider very carefully whether the Government should either accept Amendment 80 or give some fairly lengthy explanation of what they will do and how that is—if it is—consistent with the Act now on the statute book. That would be best. Then, when we return to this on Report, we will all have probably learned quite a lot.

[Lord Bates]

I am very happy to give an undertaking to the noble Lord that I will reflect with colleagues, particularly my noble friend Lady Fairhead, on the comments made on these amendments, notwithstanding the points that I have put on the record about the Government’s position. We can return to these on Report and I will seek to give some further information in the gap in between Committee and Report. I hope, in the meantime, that the noble Lord will feel able to withdraw his amendment.

--- Later in debate ---

[Lord Purvis of Tweed]

My Lords, I am happy to contribute to the successful realisation of the noble Lord’s ambition to have an amendment on commencement.

I want to make two final comments because I know the Committee has been working hard in offering scrutiny to the Bill, but before I do so I wish to thank the Ministers, and indeed the whole team, who have tried to answer on what was on some occasions an impossible situation. Earlier the noble Lord, Lord Bates, aptly commented on how fast things have been moving, and I think the Ministers have had a degree of sympathy from the Committee. However, this is serious. As the noble Baroness, Lady Neville-Rolfe, said, businesses need urgency as they operate. They need urgency in their day-to-day practices but also when it comes to knowing what the Government’s position is.

In advance of the next stage, if there is one, it is helpful that all the usual channels are here. I do not think the Committee needs any reminding of the decision of this House, very clearly stated, that greater information is needed on both the Government’s policy and intentions on how it sees trade agreements being put in place, as well as the relationship with the devolved Administrations. If that is not forthcoming, the House has sent a clear signal that there will not be a Report stage. However, on the basis that there will be, the information that is needed on the current position on the intended trade agreements needs to be forthcoming. There also needs to be clarity on—if we are going to be crashing out on WTO rules—the position of operating on non-certified WTO rules.

The relationship with the devolved Administrations, while a little clearer, needs more fleshing out. This is not just about constitutional courtesies with the Scottish and Welsh Parliaments and Northern Ireland authorities. Trade agreements could disproportionately affect parts of the United Kingdom, which will affect livelihoods and public services in those areas. They need to be not just consulted, but involved. Contrary to the Government simply wanting continuity agreements for trading relationships, we also want to see the rolling over of the same amount of parliamentary scrutiny that the European Parliament would afford trade agreements, which this Parliament will be denied unless this Bill is amended.

Finally, we need to be looking forward to the future. The noble Lord, Lord Lansley, and others, have made very constructive contributions. If we are to have a customs arrangement—which, if it covers the majority of our trade with our biggest market, will be a customs union—then the clarity about how that will be conducted will be important. While we are at the end of the Committee stage, I hope that the Minister has received strong signals that there are still questions that need to be answered. Those answers need to be forthcoming before this House will consider the Report stage.

[Lord Hannay of Chiswick]

My Lords, I am not sure that the noble Lord, Lord Stevenson, did me a great favour by alleging that I had partial paternity of this amendment, but I will leave that to one side. It is a very simple amendment, setting in statute the view that has been expressed twice by this House, by massive majorities, and once in the House of Commons last week: that leaving the European Union on 29 March by default without an agreement should be excluded. That is what this amendment proposes to do. It does not prevent this Act, as it would be, coming into effect in the event of the meaningful process being successfully completed in the other place. Nor does it do so if the other place should, in the extraordinarily unlikely circumstances, actually decide that we should leave without a deal. However, it rules out leaving by default as a condition for the entry into force of the provisions in this Act. No more needs to be said, and I have a feeling that we may wish to debate that rather more decisively on Report.

[Lord Lansley]

My Lords, I am speaking on behalf of my noble friend Lady Altmann, who is unable to be here and asked me to extend her apologies. I think she would have shared the view of the noble Lord, Lord Hannay, that Amendment 98 would not prevent our exit without an agreement, which is the default situation under the statute law as it remains, but it would certainly enable one to put into the equation consideration of the damage and chaos that would result if one were to leave by default without an agreement and without the statute book and continuity agreements being in place. Both Houses would have to think hard about that. It is a contest between different visions of what kind of chaos might ensue. Unfortunately, that is essentially where we are.

My noble friends on the Front Bench have done a grand job, not least in keeping us on track, wherever possible, in understanding the importance of getting this legislation into the right structure rather than being distracted too often and too far into discussion of Brexit. I think we agreed at Second Reading that the Bill is occasioned by Brexit but is not really about it; nor, technically, is it about the future processes and structures of free trade agreements. Their approach has enabled us to have what I think will be some interesting, positive and constructive discussions on Report, arising out of this Committee, when we can really focus on one or two specifics. My noble friends will have been given an indication of what kinds of considerations will be important to the House in thinking about free trade agreements as they come along.

Brexit: Security

Lord Hannay of Chiswick Excerpts

Tuesday 29th January 2019 Lords Chamber

[Baroness Williams of Trafford]

I totally agree with the noble Baroness and, to that end, we had a useful debate on that subject last week. For her information, at his Home Affairs Select Committee appearance, Deputy Assistant Commissioner Richard Martin, who is the Brexit lead for the National Police Chiefs’ Council, confirmed regarding policing:

“If we crash out on 29 March, we will have the team up. We will have everything written. We will have the whole system and the network developed, and we will be there, sitting on the shoulders of forces across the country from a policing point of view to help them through what that looks like. We will be fully prepared”.

[Lord Hannay of Chiswick (CB)]

My Lords, will the Minister be so kind as to say what the extradition arrangements will be for each of the 27 member states on 30 March in the event of no deal? If she does not have those details at her fingertips, could she write to me and ensure that the letter gets here before 30 March?

[Baroness Williams of Trafford]

I will try to make sure it gets to the noble Lord by 29 March. I shall not go through every one of the 27 states, but in the event of no deal we would rely on the Council of Europe European Convention on Extradition of 1957. Just for noble Lords’ information, it is already used for other non-EU countries—for example, Norway.

Brexit: Foreign Language Teaching and Public Service Interpreting

Lord Hannay of Chiswick Excerpts

Wednesday 23rd January 2019 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, it is a splendid initiative of my noble friend Lady Coussins to have this on our Order Paper. It is a little bit sad that not one single person on the Back Benches of the three main party groups in this House is present for this debate. The immigration White Paper, which is the focus of this debate, seems just about the greenest White Paper I have ever seen. I draw some hope from that because I really hope it is not set in concrete, particularly not that figure clutched out of the air of £30,000, which we have already heard from my noble friend presents serious problems in the two sectors that she has identified. I hope the Minister will confirm that there is plenty of scope for further consultation and change.

On interpreters, the extremely welcome statement by the Government a couple of days ago that they were going to waive the charge on EU citizens who wish to have settled status simply underlines the fact that we in this country are going to have 3 million or more EU citizens for the foreseeable future and, although a lot of them speak such good English that they put some of us to shame, many of them do not. Some of them will find themselves within the courts system or dealing with other forms of law enforcement or inquiry. It really is essential, if we believe in the rule of law in this country, that they should be given the services of interpreters who are genuinely able to help them explain how they got into the position they got into. The point about interpreters being able to come here is very important, because it is wider than a purely European one.

On language teaching, it is a cause of some despair, I think, to those of us who have lived much of our lives abroad and who understand that it is not any good believing that just because English is the lingua franca of the world of the 21st century we can just ignore other people’s languages and do business around the world without bothering to understand their culture or their languages and it will be all right if we just speak a bit louder—it will not. The journey on which we are setting out, or which the Government would like to see us setting out on, outside the European Union is going to be pretty rough and it will be a lot rougher if we are not able to educate businessmen, the military, diplomats—anything you like—to speak other people’s languages. It is quite clear from the figures that my noble friend has given that if the rules suggested in the White Paper are put in place, there will be an even greater shortage of language teachers, since such a high proportion of them are from the European Union. That is another extremely serious matter and I look forward to hearing the Minister’s response.

Future Immigration

Lord Hannay of Chiswick Excerpts

Wednesday 19th December 2018 Lords Chamber

[Baroness Williams of Trafford]

My Lords, I repeat that £30,000 was a suggestion from the MAC. There will be a year-long period in which people can engage with the consultation. The figure is not set in stone. It is a salary that was suggested by the MAC.

[Lord Hannay of Chiswick (CB)]

My Lords, is the Minister able to explain how this can be described as taking back control, when the largest proportion of immigration to this country, from outside the EU, is rising inexorably and the proportion coming from the EU, on which controls are now to be put, is dropping? Is that taking back control? Perhaps she can also explain why the Home Secretary is so pessimistic about the Prime Minister’s deal going through. The only circumstances in which free movement will end on 29 March is if there is no deal. If there is a deal, it does not end until the end of December 2020.

On students, while it is welcome that the post- study period is being relaxed a little, does the Minister recognise that the figures given for the relaxation still leave us at a disadvantage to all our main international competitors, which give longer post-study periods of immigration?

Taxation (Cross-border Trade) Bill

Lord Hannay of Chiswick Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 4th September 2018 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, the powers of this House in respect of this Bill are, as many speakers have said, limited by convention as it is brought forward, rightly or wrongly, as a supply Bill, so there is no power to amend it. For practical purposes, our scrutiny is limited to this Second Reading debate, so it is important that the Minister, who is well known for giving serious and clear answers to questions, does precisely that to the important points that have been raised from all quarters of the House, particularly given the chaotic circumstances that marked the passage of the Bill in the Commons and that have led to many of the questions posed today. There is no lack of them.

I will first raise a point that has not been raised much in the debate hitherto—perhaps not at all. If I have understood the matter correctly, and the Minister will certainly correct me if I am wrong, under the Government’s preferred option for the outcome of the Brexit negotiations—namely, a deal struck this autumn which would include a withdrawal treaty containing a 21-month effectively standstill period—there will be no question of raising any supply under this Bill before January 2021 at the earliest. We should not forget that the 21-month period is likely to prove grossly inadequate—most people now think that it is—and will need to be extended in one way or another by some means or another.

During the transitional period of however long, be it 21 months or longer, the UK, as I understand it— the Government are in agreement with this—will remain within the EU’s customs union and be subject to the EU’s budgetary rules and procedures. So the scope for using the powers in this Bill will be nil. The only circumstances in which the Bill would be used earlier would be if there was no deal, which would give rise to the need for the powers in it. But the Government say that it is not their preferred option to have no deal and that they fervently wish to get a deal—and they had better get one, because the consequences of going over the cliff in March 2019 are dire indeed. So why not bring forward this Bill in the early months of 2019, and only if by then it is clear that the transitional period will not be available—a period during which we are debarred from using the powers in the Bill, if I have understood it correctly? Could the cause for this haste be explained largely by the Government’s doubts as to whether, in circumstances where there was no deal, there would be a majority in Parliament to pass the Bill at all? In any case, legislating now for a no-deal outcome sends the worst possible message to our EU partners about whether we really are negotiating in good faith.

That is made all the more problematic by the next set of questions that I will put, relating to the amendments to the Bill that the Government accepted in extremis in the Commons. The amendments were put forward by the rather oddly named European Research Group—odd because I cannot remember it ever having done a bit of research. They were put forward quite explicitly as amendments designed to wreck the Cabinet’s Chequers negotiating position. That was stated quite clearly in the full light of day. The Government clearly shared the view that they were wrecking amendments—otherwise, why on earth did they put on a three-line Whip to vote against the amendments? Then, suddenly, the clouds cleared, the sun shone and the Government decided that they were not wrecking amendments after all and were acceptable. As Dr Johnson said, impending execution concentrates the mind remarkably. Will the Minister give some account of the thought processes behind that volte-face?

Two of the amendments in particular require further detailed explanation. Several noble Lords have gone over them and I shall do so briefly again. The first relates to the collection of customs duties on imports, both on imported goods coming to the EU via the UK and on goods coming to the UK via an EU member state. Under the Government’s Chequers plan for a facilitated customs arrangement, we would hand over to the EU duties on goods merely transiting the UK, but we would not expect the EU to do likewise for goods arriving to us, for example, via Rotterdam. That latter requirement has now been spatchcocked into the Bill by the European Research Group amendments, and will therefore be on the statute book: that is what we are being asked to agree this afternoon. Has that amended proposal—the one that requires reciprocity—been put to the EU 27? That is a quite simple question: yes or no? If it has been put to them, have they rejected it, accepted it or just cleared their throat? Or are the British Government’s post horses still labouring between Aix and Ghent? Perhaps the noble Lord can say where we are on that.

I will ask him again: was it not, and is it not, a wrecking amendment with respect to Chequers? I think that it is. Or are the Government perhaps hoping to get agreement in Brussels on their original proposition, without reciprocity, and then return to Parliament to repeal the amendment that they were forced to accept in July? That would be a pretty gruesome situation.

Then there is the amendment relating to the systems for charging value added tax. This amendment, if I understand it correctly—again, the Minister will correct me if I am wrong—forbids the UK remaining in any EU system for charging VAT. But that will surely inevitably introduce a new element of friction, a new element of bureaucracy, into UK-EU trade. If so, it will cut right across the main objectives of the facilitated customs arrangement. Another wrecking amendment, perhaps? Perhaps the Minister can explain how that is to be managed.

Finally, how satisfied are the Government that the provisions of the proposed facilitated customs arrangement are, in reality, compatible with WTO rules? Have they consulted the WTO on the matter? Normally, exporters expect to know which rate of duty they will pay when dispatching their goods. That will not necessarily be the case under the proposed arrangement.

I apologise for raising some rather detailed questions, but these are important matters that need clarification before the Bill passes, as it necessarily will, on to the statute book. In any case, I fear that, in the absence of fully satisfying explanations, I shall be supporting either or both of the amendments that have been put before the House.

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[Lord Bates]

The noble Lord says that, but I am not suggesting what he has just accused me of suggesting for one minute. I am placing this in context. There has been substantial scrutiny and time for debate on the issues. The Trade Bill will follow; it has its Second Reading on 11 September, as referred to by the noble Lord, Lord Stevenson. We hope that an agreement with our European friends will take place this autumn, and there will then be a meaningful vote. Following that, there will be an agreement and implementation Bill. Following that, a piece of legislation on the future economic framework will have to come before your Lordships’ House. Placed in that context, this Bill represents the fact that at the moment our customs, trade and tariff policies are hardwired into the European Union, so there is a legislative necessity for us to have a standalone trade and customs arrangement, legislatively underpinned, so that we can prepare for any eventualities that the negotiations throw up. We have been clear throughout that it is in the best interests of this country and of the European Union that we conclude in an orderly way, with an agreement, and that we move to frictionless trade as far as possible.

The debate has focused essentially on the following issues; I will summarise them as a way of trying to work through and answer as many questions as I can in the time available.

[Lord Hannay of Chiswick]

Since the noble Lord is moving on from the point about timing, could he answer the question as to whether the powers in the Bill have any practical applicability in the context of an agreement with the European Union which provides for a 20-month transition period, during which we will not be able to exercise any of these powers because we will still be following the decisions of the customs union and the single market? I accept that, if there is no deal, these powers will have applicability. Am I correct in thinking that the only circumstance in which they will have applicability before 1 January 2021 is if there is no deal?

[Lord Bates]

That is correct. Obviously I defer to the noble Lord, who has immense experience in this area—I believe that he was one of the team of negotiators who negotiated our entry into the European Economic Community—and knows it substantially. In his question, he gave the reason why the Bill is necessary: because we are not guaranteed a deal. However, we are guaranteed that business will need to trade, because we are a trading nation. Therefore, we need to be prepared for every possible outcome or eventuality.

The headings under which this debate has taken place are: the economic impact of Brexit, raised by the noble Baroness, Lady Kramer, and the noble Lord, Lord Fox; trade remedies, which the noble Lords, Lord Kerr, Lord Stevenson and Lord Davies, referred to; the Northern Ireland border and the Bill’s relation to ports more generally, raised by the noble Lords, Lord Hain and Lord Adonis; the progress of the negotiations, mentioned by the noble Lord, Lord Tunnicliffe—and following this debate, my noble friend Lord Callanan will repeat a Statement to update the House on that; the impact on supply chains, mentioned by my noble friend Lady Altmann; and the impact on free trade, mentioned by my noble friend—I underscore the friend element—Lord Trenchard, although the noble Lord, Lord Stevenson, also placed his remarks in the context of the Trade Bill. I have tried to address the constitutional concerns raised by the noble Baroness, Lady Kramer, and the noble Lords, Lord Kerr and Lord Browne. There were also points on rules of origin, which the noble Lord, Lord Whitty, raised, as he did in the take-note debate last December. The noble Lords, Lord Purvis, Lord Whitty and Lord Hannay, referred to the application of duties and the methodology of the tariffs; the noble Baroness, Lady Kramer, raised the important issue of VAT and the way it will continue; and the noble Lord, Lord Hannay, referred to WTO status. I put that on the record just to give those who read these concluding remarks some sort of structure in terms of how I will try to work my way through the debate.

First, on the amendments to Clause 31 and the charge that they have restricted the Government’s options, we have been clear that as we leave the EU, we will also leave the EU customs union. Therefore, the Government have no objection to an enhanced level of scrutiny related to the use of Clause 31. The Chequers agreement does not envisage a customs union with the EU as part of a future economic partnership. Therefore, the amendment is consistent with the White Paper.

The noble Lord, Lord Tunnicliffe, asked whether HMRC has the necessary resources. There was a full response from the chief executive of HMRC, Jon Thompson, to Meg Hillier, chair of the Public Accounts Committee, which did a very detailed report on this subject earlier in the year. He responded as to where they were, including in terms of independent reports by the National Audit Office on the infrastructure project assessments that had taken place.

We have committed an extra £260 million to ensure the UK’s new tax and customs arrangements with the EU, including compliance and customer services staff to resolve the design of the new IT requirement. Also on that note, it was pointed out—a number of noble Lords referenced the fact—that there will potentially be a requirement for the number of customs declarations generated electronically to rise to some 250 million. There are currently 55 million. The capacity of the system that has been designed is for up to 300 million.

The noble Baroness, Lady Kramer, asked about the business impacts of the facilitated customs arrangement. There will be no new routine checks or controls for UK businesses trading with the EU under the FCA model. There will be a range of facilitations to help UK businesses which export to the rest of the world. For UK businesses importing from the rest of the world, they will benefit from the UK’s own tariffs. We estimate that up to 96% of UK goods trade will pay the right or no tariff on the UK border. I note the point made by the noble Lord, Lord Purvis of Tweed, and I will come to it later. The remaining 4% of UK goods trade is most likely to pay the UK’s tariff through the repayment mechanism, which we will make as simple as possible by introducing a range of facilitations.

The noble Lord, Lord Kerr, asked about the Trade Remedies Authority, on which there are provisions in the Bill, but which gets its structure and overarching powers from the Trade Bill to come. The Trade Bill establishes the TRA as a non-departmental public body. It will have an independent chairman. There will be recruitment processes for people to form a shadow Trade Remedies Authority ahead of its being ready for our exit from the European Union. The upcoming Trade Bill provides an opportunity to explore those issues further.

The noble Baroness, Lady Kramer, asked about the impact on supply. The Bill establishes a stand-alone customs regime in relation to taxation. For this reason, it was introduced in the other place on a ways and means resolution. Bills introduced through such resolutions are Bills of aids and supply which, in accordance with established practice, are not amended by this House. There is nothing in this Bill that could not have been in a Finance Bill.

A number of noble Lords, including the noble Lords, Lord Browne and Lord Kerr, referred to Clause 54, saying that, as amended, it prevents the Government implementing the facilitated customs arrangement. The Government have been clear in their White Paper that, under the FCA, the UK would seek to agree a mechanism for the remittance of relevant tariff revenue. The UK has proposed a tariff revenue formula taking account of goods destined for the UK entering via the EU and goods destined for the EU entering via the UK. Clause 54 is therefore consistent with the White Paper.

The noble Lord, Lord Hain, claimed that this contradicts the UK’s commitment to the backstop, and therefore a hard border would be inevitable. This point was also made by the noble Lord, Lord Adonis, who invited me to give a one-word response. I am still working on that, but, if I may, I will give him the lengthy answer first. Clause 55 seeks to avoid a fiscal customs border between Northern Ireland and Great Britain by preventing Northern Ireland forming part of a customs territory separate from GB. That was the backstop arrangement negotiated in December. Since then, both the European Commission and the UK have made their positions clear. The concept of a hard border between the Republic of Ireland and Northern Ireland is simply not acceptable to the Government.

This clause is therefore a straightforward statement of government policy. The Government have always been clear that there will be no hard border between Northern Ireland and the Republic of Ireland and have committed to protect the constitutional integrity of the UK in the joint report in December.

The noble Lord, Lord Hain, among others, asked what that means for the Northern Ireland protocol. Our proposal delivers all our commitments to Northern Ireland and Ireland. It means that goods and agri-food would flow freely across the border, with no need for any physical border, infrastructure or related checks or controls, so the backstop would not need to be used. We have said clearly that we are committed to agreeing a legally operative backstop in the withdrawal agreement, and we will continue to negotiate on this as we intensify negotiations over the coming weeks.

There has been some criticism in terms of how the White Paper has been received, but there have been a number of positive remarks. Chancellor Merkel has said that we have made progress and that it is a good thing that we have proposals on the table. The Taoiseach said:

“The Chequers statement is welcome. I believe it can input into the talks on the future relationship”.


Kristian Jensen, the Danish Finance Minister, said just a couple of weeks ago that Chequers is a,

“realistic proposal for good negotiations”.

He said that we need to go into a lot of detail but that it is a very “positive step forward”.

The Government understand that the impact and cash-flow implications of the different rates of VAT, whether it is import VAT or acquisition VAT, are a very important concern for VAT-registered businesses. It was announced in the Autumn Budget that the Government will look at options to mitigate any cash-flow impacts for businesses. The White Paper on the future economic partnership, published on 17 July, makes it clear that the Government’s aim is to,

“ensure that new declarations and border checks between the UK and the EU do not need to be introduced for VAT and Excise purposes”.

They therefore propose,

“the application of common cross-border processes and procedures”.

I was asked what happens in the event of a no-deal scenario. The Government are confident that the UK can agree a deep and special partnership with the EU. However, a responsible Government should prepare for all potential outcomes, including the unlikely scenario in which no mutually satisfactory agreement can be reached. The VAT for Businesses if there’s No Brexit Deal technical notice confirms that, if the UK leaves the EU without an agreement, the Government will,

“introduce postponed accounting for import VAT on goods brought into the UK”.

I believe that that will be welcomed by businesses and it was as a result of listening to business that we brought that proposal forward. The noble Lord, Lord Browne, asked about delivery timescales. The UK and the EU will work together on the phased introduction of a new facilitated customs arrangement. The precise timeline will be agreed through negotiations with the EU.

The noble Lord, Lord Fox, kindly referred to my north-east antecedents and interest in that wonderful part of the country, which I share with my noble friend Lord Callanan. He talked about the impact on the economy of the north-east of England. We are currently enjoying the fact that unemployment in the north-east is at record low levels—down to 4.3%. That is the lowest level for 40 years and it compares to 8.3% in the eurozone. Therefore, I think that the north-east has the ingenuity, talent, ability and propensity for hard work to be able to look after itself whatever the outcome, and that goes for the rest of the UK.

I turn to the important matter of Scotch whisky. The Scotch whisky industry is a truly great British success story, and the EU accounted for around a third of the valuable Scotch whisky exports in 2016. The Bill provides the ability to adopt the EMCS after our withdrawal from the EU in order to manage suspended UK internal excise duties. The Government want to minimise burdens on firms while still having the tools to tackle the illicit trade which undermines all legitimate producers and retailers.

I think that I have covered the point about unreasonable powers in the Bill, but I particularly want to cover the issue of the no-deal version that the Government presented last week as being “incompatible” with the Good Friday agreement, to quote the noble Lord, Lord Adonis. That is a very serious charge, and we obviously recognise that successive Governments have placed that at the heart of their policies. The UK Government remain steadfast in their commitment to the Good Friday agreement, in both letter and spirit, alongside maintaining the common travel area and associated rights and avoiding a customs border in the Irish Sea. This will meet all the commitments which have been made to the people of Northern Ireland.

There is still a lot of negotiating to be done, but there are some things that we cannot compromise on because they are at the heart of what people voted for—for example, an end to the vast annual contributions to the EU, an end to the jurisdiction of the ECJ and an end to free movement. Inevitably, there are some who are unhappy with our proposals—people who want to reverse the referendum decision—and some who, rather than compromise, would prefer the most distant relationship possible with the EU. However, the country did not vote for either of those things. It is time that we came together and agreed a pragmatic Brexit that most people can support and get on with, and which is good for us, good for business and good for our European friends. I believe that this Bill represents an important part of the preparations for that aspiration. I commend it to the House.

United Nations Relief and Works Agency

Lord Hannay of Chiswick Excerpts

Tuesday 4th September 2018 Lords Chamber

[Lord Bates]

There are a number of things we can do. Certainly there has been ministerial contact with the US. There have been official-level contacts with our EU partners. The European Commission’s ECHO fund is the second largest donor, and of course we contribute significantly through that. There is a meeting next week in Brussels, and I am sure this will be on the agenda. It is a constant area of engagement and concern that other people should do more.

[Lord Hannay of Chiswick (CB)]

Perhaps the Minister noticed that during the Recess, the Foreign Secretary made a speech in Washington in which he was reported to say that we agree with the United States on 95% of foreign policy issues. Will he say on which side of 95 or five this particular decision falls?

[Lord Bates]

Perhaps I can answer that with another illustration from the Recess, when Alistair Burt visited the Middle East, which he does frequently. He does an incredible job, and in the process of visiting Gaza, he announced that we would double the funding for economic development in Gaza and the West Bank. That underscores where our beliefs and principles lie.

Immigration: International Students

Lord Hannay of Chiswick Excerpts

Monday 26th March 2018 Lords Chamber

[Baroness Williams of Trafford]

I am very happy to agree with both the noble Lord and, of course, my noble friend. We absolutely acknowledge that international students enrich the economy and, indeed, this country. We have no plans at all to cap the numbers—in fact, we encourage them, hence we are expanding the pilot.

[Lord Hannay of Chiswick (CB)]

My Lords—

[Lord Green of Deddington (CB)]

My Lords—

Israel: DfID Secretary of State Meetings

Lord Hannay of Chiswick Excerpts

Tuesday 7th November 2017 Lords Chamber

[Lord Bates]

All I can say to my noble friend is that, in the list of 16 meetings that were published as part of the statement, no specific location was given that appeared to be in the Occupied Palestinian Territories. But it could well be—we need to check this out—that one of the charities that she visited, Save A Child’s Heart, could have been located there. The wider point that my noble friend makes about the importance of DfID’s work in the Occupied Palestinian Territories, working with UNRWA and others in that area, is very important. We are spending £68 million this year in that area and it is providing important humanitarian relief. I will relay his points about the importance of visiting and viewing those places to the Secretary of State.

[Lord Hannay of Chiswick (CB)]

My Lords, will the Minister clarify one point about his Secretary of State’s activities during her busman’s holiday? Will he say whether, having held all these meetings, including one with the Israeli Prime Minister, she recorded what passed and circulated the records to all the departments that have responsibility for relations with Israel? If he is unable to give a positive answer to that, could he take the issue way and ask her to rack her brain and write a few records?

[Lord Bates]

These were private meetings that took place.

Brexit: United Kingdom-Africa Trade and Development

Lord Hannay of Chiswick Excerpts

Tuesday 25th April 2017 Lords Chamber

[Lord Bates]

That is right. All those points were made by the Secretary of State when she launched the economic development strategy in Ethiopia in January. We have taken this matter forward seriously. No country has ever successfully defeated poverty without economic development and economic growth. We want to be at the forefront of ensuring not only that there is FDI but that those countries can have access to our markets on the most preferential terms.

[Lord Hannay of Chiswick (CB)]

My Lords, does the Minister recognise that the relationship with the African, Caribbean and Pacific countries which we have as a member of the EU covers a lot more than just trade and aid? It also covers guaranteeing the export receipts from primary materials and sugar. What plans do the Government have to look after those aspects when we have left the European Union?

[Lord Bates]

Those are all important points, as the noble Lord will know, which is why we want to make sure that arrangements relating to all matters covered by the EPAs continue not just until the point at which we leave but beyond. We want also to take the opportunity to discuss with our bilateral partners in Africa, the Caribbean and elsewhere how we can improve on the current arrangements so that they might work better for those in poor countries.