Customs Legislation and Amendments: Impact Analysis

Lord Purvis of Tweed Excerpts

Tuesday 8th October 2019 Lords Chamber

[Lord Bethell]

I completely endorse the noble Lord’s sentiment. It is very much the Government’s policy to strike a deal and I, like others in the Government, very much hope that will be successful. The Government’s efforts are very much focused on that objective.

Let me strike at the heart of the question. The noble Lord started by saying that this report articulates what will happen, but actually it articulates what may happen under very strict circumstances. I pay tribute to the officials who prepared such a detailed report for its transparency and integrity. The report in no way dodges or mitigates for several areas in which performance may be considerably better than the headline figures.

First, there are areas in which easement by British government policy will help improve performance. There are three of those easements: the delay in the submission of customs declarations, which we discussed last night; a period of grace to get a guarantee in place to cover additional duties; and the phasing-in of pre-arrival requirements for the entry summary declarations. Secondly, we do not know what the EU will do to improve the situation and, thirdly, the behaviour of importers may introduce new efficiencies. With those in mind, I am hopeful that the headline figures may prove higher than those if a no-deal Brexit were ever to occur.

[Lord Purvis of Tweed (LD)]

My Lords, I am grateful to the Minister for speaking to me before Questions; I welcome that courtesy.

In its impact assessment, HMRC itself suggests that many of its assessments are cautious. This is an impact assessment just on the export of goods to the EU for UK bureaucracy; the £15 billion a year is on UK bureaucracy. As indicated, it does not cover exports of services or the likely reduced revenue to the UK Treasury from those extra business costs. It does not include any estimate of the additional bureaucracy costs to the recipient market in the EU. All those must together be marginally more than £15 billion, but—even if it were just the cautious £15 billion—that is massively more than any estimate the Prime Minister has made of the financial benefit to the UK of leaving the European Union with no deal at all.

As we heard from the noble Lord, Lord Callanan, after being pressed by me and others, the Government are working on a package of assistance to benefit the agricultural sector and for the new tariff regime that we will put in place. Indeed, as the readiness report said, there will have to be mechanisms for off-setting new VAT procedures for services and new procedures for VAT processes on parcels—not included in the impact assessment. What are the mitigation measures and what is their value? What is the emergency package that would be necessary for the agricultural sector and small businesses? The Government have not published any information in global sums about what those mitigation factors might have to be. Finally, what is the global cost to British businesses of the increase in tariff prices, in addition to this bureaucracy that HMRC is indicating?

[Lord Bethell]

The noble Lord makes very thoughtful points, but I remind him that the estimates in this report are a responsible, thoughtful and transparent effort to calculate the kind of costs that a no-deal Brexit might bring about. They cannot anticipate how the EU might respond, how tariffs might be negotiated or how a trade deal with the EU might affect those costs. With so many imponderables, it would be extremely difficult to tot up a large total of the kind he asks about. I am happy to ask officials whether there is some kind of arithmetic that can be done and to write to him with whatever they can come up with.