Trade Bill

Debate between Lord Hannay of Chiswick and Lord Stevenson of Balmacara

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.

Trade Bill

Debate between Lord Hannay of Chiswick and Lord Stevenson of Balmacara

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 30th January 2019 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, in moving Amendment 33 I will introduce some of the discussion topics raised by the other amendments in this area. I look forward to the response from the noble Viscount, Lord Younger, who is standing in on this issue. The subject of the amendment is, as previously described by the noble Lord, Lord Hannay, a key—probably the most important—part of the Bill. I take his advice and am happy to try to man up and make sure that I establish the case in the sorts of terms he would like to see. We have also had contributions from the noble Lords, Lord Lilley and Lord Bilimoria, and the noble Baroness, Lady Kramer, which have set out some of the scene, so I do not think we need to go right down to the very basics of it. I would like to focus on some of the principles that are important in trying to assess this issue.

We are talking here about how Parliament and wider civil society get engaged with a process that we in this country have not really had much direct involvement with since 1972 because the function we are talking about—trade—has been a sole competence of the EU. Yes, there have been occasions when issues have come back but, as we heard in earlier discussions, they have not been very detailed and there has not been proper scrutiny. I think there is a general feeling that the procedures set out in the CRaG Act 2010 do not now satisfy those with an interest in this area.

I have eight principles that I think should inform our discussion. These are: how do the Government intend to ensure that formal consultation with external stakeholders, in advance of any negotiation mandate being drawn up, is exercised? How do the Government intend to ensure proper transparency of trade negotiations and negotiating mandates, and what role will Parliament play in that process? How do the Government intend to ensure maximum transparency in advance of those consultations? Obviously, they are constrained to some extent by issues that would be regarded as necessary to be taken under some level of secrecy if they involved security or other issues, but how will that transparency happen? In particular, how will the Government prepare proper impact assessments and make these available to inform the debate?

There is a general question about reviewing reporting on trade agreements after a specified time period, but also in relation to progress—we touched on this earlier, but it is part of a principle that we need to build in from the beginning. How do the Government intend to ensure that parliamentarians are able to access the negotiating texts? Without knowledge of the texts, very little scrutiny can take place. Some texts will be very sensitive, but nevertheless it is important that there is a mechanism under which they can be reviewed and discussed.

What will be the formal process or procedure for the ratification of trade agreements? The current arrangements under CRaG are not satisfactory. What will be the formal procedures for changes that need to be brought forward—not new trade agreements but how, particularly in light of the need for broader discussion and debate, we amend and change agreements found to be deficient, unfair or working badly in relation to any aspect of our economy or our part of the country?

Those are the issues the amendment seeks to open up. Again, it is gold-plated—I accept that—but it is important that we see the full range and depth of the issues raised and I hope to have a good debate around that. I beg to move.

[Lord Hannay of Chiswick]

I support Amendment 33, about which a great deal was said in the debate on the previous amendment, although some of the contributions more properly belonged to the discussion of this amendment. I have no hesitation whatever in suggesting that this is probably the single most important article in this legislation—except that it is not there, of course, at the moment, but it needs to be there.

Why is it so important? It is because until now the British Parliament has had no clear role in giving mandates or setting out the broad lines under which the Government should negotiate trade agreements, nor has it had any proper system for oversight of them. Possibly that did not matter in the far distant days before we joined the European Union, but it certainly matters now when free trade and other trade deals are, as the Government have said again and again, at the heart of their Brexit strategy. Britain’s ability to negotiate on its own on trade is at the heart of the Government’s pleading to back their deal.

This is really urgent now because the Government have made it urgent by refusing to take no deal off the table. If they took no deal off the table, as the Spelman amendment passed by the House of Commons did last night, we would have time to look at this. However, if no deal remains on the table—and the Prime Minister has said that it does—we have to realise that the Bill we are now discussing may be operational in 60 days’ time on 30 March this year. As currently drafted, the Bill says nothing about approving mandates before the Government can negotiate on trade with a particular country. That is a lacuna which cannot be left unfilled.

When he replies, I would like the noble Viscount the Minister to repeat what the noble Baroness the Minister said: that the Government will table amendments before Report and explain how they believe that Parliament’s authority should be established in the context of an independent trade policy. I agree that it may not be needed on 30 March and we would be mad to leave without a deal on 29 March. But the Government have decided to go on saying that we may and therefore we had better be prepared. I hope the noble Viscount will deal with that point as soon as he starts his response.

The substantive issue at stake relates to the provisions—or lack of them—for parliamentary mandating and oversight of all negotiations with third countries once we are able to conduct them on our own. They are important because without them, if the Bill remains as it is currently drafted, together with the provisions for the approval of international agreements, the only say that Parliament will have will be after the Government have conducted and concluded negotiations and then put before Parliament an up or down, yes or no agreement to what is in them. That is what we call in this House, when we are talking about statutory instruments, the nuclear option. It would be absurd if we went into the conduct of an independent trade policy with nothing for Parliament except the nuclear option. What does the nuclear option mean if it is ever deployed? It means that the Government would in good faith have negotiated with a third country—reached agreement with it, settled all the tariff details and the non-tariff barriers—and then the deal gets rejected. How much negotiating credibility would we have left after that? Zero.

BBC Charter Review

Debate between Lord Hannay of Chiswick and Lord Stevenson of Balmacara

Thursday 16th July 2015 Lords Chamber

[Lord Stevenson of Balmacara]

I hesitate to interrupt but I want to correct what has just been said. In front of me—thanks to the iPad and other new technologies—I have the statement from the BBC. It says:

“We believe that this Green Paper would appear to herald a much diminished, less popular BBC. That would be bad for Britain and would not be the BBC that the public has known and loved for over 90 years”.

I do not think that that squares well with what was said.

[Lord Hannay of Chiswick (CB)]

Does the Minister recognise that all around the House—and in the Statement itself—there is recognition that the World Service and the vernacular programmes are hugely important to this country and its soft power. However, what I am missing is any indication of how the Government are going to protect those services from being squeezed if there is a reduction in resources, or some change in the mandate, for the rest of the BBC. I would welcome the Minister’s response as to whether those outside these shores will also be consulted.