Oral Answers to Questions

Mark Menzies Excerpts

Tuesday 11th December 2018 Commons Chamber

[Mr Hammond]

There are a couple of points there. First, I should just say to the hon. Gentleman that I was actually congratulating him the other day on his display of synthetic anger, which is one of the best in the House. On the wider point, the high street is facing challenges because of the uptake of online retailing across the UK at a faster rate than in any other large economy. That means that our high streets will have to adapt. The Government cannot save the high street from the need to change. What they can do is support it as it goes through that process of change.

[Mark Menzies (Fylde) (Con)]

22. I am currently working with Fylde Borough Council and St Anne’s Town Council on a package of measures to regenerate the town of St Anne’s in my constituency. Will the Chancellor of the Exchequer meet me briefly in order to talk through how we can best take advantage of the excellent package of measures that he put forward in his Budget?

[Mr Hammond]

I would be very happy to meet my hon. Friend. My hon. Friend the Exchequer Secretary is the expert on this matter and he might find a meeting with him more fruitful, but either one of us is very happy to meet him.

Taxation (Cross-border Trade) Bill (First sitting)

Mark Menzies Excerpts

Tuesday 23rd January 2018 Public Bill Committees

[Peter Dowd]

Q Finally from me, in relation to the appeals process, you identify in paragraph 6.1 of your evidence:

“We are concerned that taxpayers’ rights in relation to an effective appeals process are retained. This Bill could be”—

you do not say “will be”—

“a backwards step in relation to an effective appeals process, because it affords such wide discretion to HMRC. We wish to see the adoption of clear unambiguous legal requirements for customs matters, which minimise commissioners’ discretion.”

Could you tease that out a bit more? That is in paragraph 6.1 of the Chartered Institute of Taxation’s evidence.

Jeremy White: A thorn in the flesh of the people who contributed to that section was clause 23, and in particular where certain results—particularly approvals—are treated as never having been granted if HMRC considers that approval would not have been granted if a deficiency was known at the time it was granted. That is just one example. There are a number of parts of the Bill where this construction is used whereby one authority—an administrative authority, a parliamentary authority or a Minister—considers that kind of discretion.

Yes, that is a useful construction in English for granting a power to make an instrument, but when it comes to affecting a trader’s relationship and whether they can be in business or not because they have got an authorisation, it should then be subject to the ordinary appeal to the simple, low-cost traders’ tribunal that we have learned to admire. All of the other authorisation-type decisions that HMRC could make are subject to appeal, and they are preserved properly by the Bill. The trouble is the Bill then adds in a few more, using a construction such as “considers” and “discretions”. It is bad enough now that sometimes we have to tell a client, “Sorry, you’re going to have to pay the money to go to the High Court and challenge the Ministers or HMRC on the basis of judicial review,” which is very expensive, discourages litigation and often discourages people from obtaining a remedy for their dispute.

This should not be controversial. It should be, “Yes. That is the right thing to do.” If we were able to add to a shopping list, we would say, “Can we please have all of the current disputes going on in the High Court in customs matters dealt with in a tribunal as well, please?” but that may be asking too much. If the scope of the Bill is wide enough for that and you could amend it to get that in, that would be good. We should not really have customs issues going to the High Court at all. They should all be dealt with in the first-tier tribunal tax chamber.

[Mark Menzies (Fylde) (Con)]

Q I would like to return to the point made by Helen Dennis on fair trade. Do you agree that it is very important that the Government have a wide remit within the scope of the Bill? Some of the current rules regarding EU regulations and tariffs are detrimental to fair trade. I will cite one example. Colombian coffee producers export low-value green coffee into the EU for the value to be added, usually in Germany and in some cases in Italy. Massive value is added here in the EU to the benefit of German manufacturers and large German brands, which therefore has huge detriment to the coffee producers back in Colombia. That is one example. There are many. Having a wide scope in the Bill will give the Government, in the fullness of time, the ability to make sure that free trade arrangements work as consumers in this country think they work, as opposed to how the EU has currently drawn them up.

Helen Dennis: A lot has been said about value addition and its potential post-Brexit. Our view is probably that the tariffs are not the key issue here. We already have duty-free, quota-free access for the least developed countries. If we take a country such as Colombia, or a GSP-plus country such as Bolivia, it is able to access the market with roasted coffee as well, duty free, but as I said before, with the free trade agreements, they may not all transition over necessarily. The biggest issue in terms of trade policy and development continues to be subsidy rather than EU tariffs. There are other issues, such as rules of origin or just getting the investment in roasting and processing facilities, that are more of an obstacle to moving into that kind of value-added activity.

Having said that, there is still scope for improving the tariffs. That goes back to the point about how we and the Government do that. Do we say that the Secretary of State has that power and authority, every three years or so, to revise the preference scheme to extend product coverage and potentially country coverage, and so on? Is that a conversation that happens through regulations under delegated powers, or is it something that a Committee of the House or another grouping, or Parliament in its entirety, would want to discuss, debate and have a vote on? There are lots of issues to unpack. I would certainly agree with the premise of your question, but some of the detail on that particular issue around coffee roasting does not impact as many countries as is sometimes talked about.

[Mark Menzies]

Q But those people that it does affect, it affects in a great way. That is why it is really important to have a wide scope in the Bill, so that we can get into the detail in the fullness of time, and get it right.

Helen Dennis: I agree with you on that. There are certain products that we work with, such as bananas and sugar, that are not covered by the GSP. There may be products that we would want to include within a new preference scheme, and we would want to have the opportunity to bring those proposals forward. The Bill certainly does that, by granting the power to the Secretary of State to make those decisions.

The one thing I would want to flag up is that a decision about tariffs affecting one country impacts on other countries. It is important that when those matters are being brought forward, a thorough impact assessment is done of the impact not only directly on that economy but on neighbouring or other competitor countries. If we go back to Colombia for example, it is a big exporter of cut flowers. There is competition between east Africa and some of the Latin American countries. There is no right or wrong answer, but if we are going to make tariff changes, we need to make sure that we have thoroughly considered the potential impacts.

When the Bill lists the things that the Secretary of State or Chancellor must have regard to, at the moment there is nothing that relates to development impact. From our perspective, we would like to see something added there, so that we are thinking about UK interests and consumers, of course, but we are also thinking about development impact when we make changes.

[Douglas Chapman (Dunfermline and West Fife) (SNP)]

Q I would like to ask an additional question. In the previous session we heard that, for example, in terms of SMEs, 130,000 small businesses would be affected by this kind of legislation for the very first time. Does the panel have a view on the particular challenges that the Bill might bring to small business and its impact, especially if Mr White’s book has to be trawled through every time some decision has to be made? What is the panel’s view on that?

Barbara Scott: I work a lot with SMEs who currently find it very hard to understand the Community legislation on customs and international trade law. It is complex and there are a lot of different strands to it. Trade is complex. Things are different depending on what you are doing, whether coffee from Colombia or bicycle parts from China. The legislation and the effect on business is very different, unlike other laws, such as VAT or corporation tax, which generally impact in the same way on most businesses.

This is a huge step change for SMEs and particularly for those who have only traded within the EU. It will be a tough challenge for HMRC to reach out to those people, get them involved and explain how the new legislation will work. There is clearly going to have to be a lot of propaganda and information out there. It is a huge challenge for the state.

Jeremy White: And there is a cost. The SMEs will have to employ agents, because they will not be able to employ in-house staff. I have been told that SMEs will sell out to someone who does have the assistance. The only frictionless trade known to man is customs union. Anything else is costly and can only be managed—just—with all the simplified procedures of the UCC in operation, plus all the information systems that are there to support them. That is big money.

Barbara Scott: When we talk to customs about this, we are constantly hearing, yes, they are being given more resources and will be employing more staff, but can business afford to do that—suddenly to employ new people and understand these new processes? It is a huge cost. People ask, “What is that cost?” It is very difficult to measure. I do not think anyone has attempted to do so yet. It will be a very difficult time for SMEs in particular.

Sue Davies: I cannot comment on SMEs but I want to make the point that if there are additional costs for businesses, they will feed through and lead to increased prices for consumers. That is why it is really important that we have as efficient a system as possible, which still maintains the right level of protection for consumers.

Taxation (Cross-border Trade) Bill (Second sitting)

Mark Menzies Excerpts

Tuesday 23rd January 2018 Public Bill Committees

[Mark Menzies (Fylde) (Con)]

Q This is specifically for Rosa. You mentioned that you had concerns over the lesser duty rule. I wonder whether you could give us some specific examples of where you feel the lesser duty rule currently is not working.

Rosa Crawford: This is something that the trade remedies alliance, which Ben from Unite mentioned, has been working on with manufacturers associations. We have produced evidence on that and we could supply it to the Committee.

I know there has been specific research on the use of the lesser duty rule in the case of solar panels. We have been in discussion with officials on that. There is an argument that the lesser duty rule applied to the import of solar panels allowed a balance with affordable solar panels. The specific discussion was on social housing and allowing those panels to be provided to social housing, but there was also a measure of action taken against unfair trade practice. Talking to colleagues working in the glass associations and other manufacturer associations, they saw those solar panels as being of a lower quality. I am not speaking from a technical point of view, but they had enough information to judge that those solar panels were of a lower quality.

When we think about the importance of using high-quality materials in social housing—obviously in the shadow of the Grenfell disaster—with solar panels just one aspect of that, that judgment always needs to be made about the low price and the quality of the product. Obviously, there is an implication for support for British industry and what you do to the British industry that could have made a higher-quality panel, and for investment around skills and training to bring in those panels.

[Mark Menzies]

Q Do you have any other examples of the lesser duty rule that we should be aware of?

Rosa Crawford: There will be other examples that I can supply to the Committee. The trade remedies alliance will be happy to provide those.

Ben Richards: On specific cases, that is why we are working collectively with the employers organisations. The trade unions and employers are working together because our interests are combined here. Particularly in relation to the lesser duty rule, it is very interesting that very few other World Trade Organisation members use such a rule as this. Indeed, the European Union in its trade remedies regime is moving towards making the use of the lesser duty rule much more conditional, because it has seen weaknesses in having a mandatory lesser duty rule. In the changes that are taking place at the moment in the EU trade remedies regime, there are some important developments in relation to the lesser duty rule over there.

Kathleen Walker Shaw: May I add a supplementary point on the concern for the lesser duty rule? The problem with that particular form of remedy, because you are creating a sort of cap on the level of remedy, is that it is based on the assessment of injury, which is a difficult thing to do accurately. The difficulty that we have, as I say, particularly with industries that are working on moderate profit margins, is that those industries could be put out of business by the fact of the injury being assessed at a perhaps inaccurate level.

A lot of these fledgling industries that we are looking at, such as clean energy—solar panels is a good example—are new forms of industry that we want to see develop in the UK, and the Government have on more than one occasion identified them as being great growth industries. However, China also likes the look of that market, as does Vietnam. If we are not prepared to protect British industry to grow those new industries, then by overuse of the lesser duty rule we are cutting them up before the roots have started to take in the ground. It is a consideration for us more widely to look at the lesser duty rule in terms of our economic ambitions for UK manufacturing industry into the future, because we are in a position of “cake and eat it” there on a lot of young industries.

[The Chair]

I think the Minister would like to ask a question at this point.

Finance (No. 2) Bill

Mark Menzies Excerpts

Committee: 1st sitting: House of Commons
Monday 18th December 2017 Commons Chamber

[Mel Stride]

My hon. Friend is absolutely right. I think it would pay all Members dividends to consider the comments made by Mervyn King at the time of the last crisis, when he said that the Bank of England had very limited scope to deal with the issues that were faced at the time. Since then, of course, we have fundamentally changed the structure of the oversight of banks. We have ensured that the Bank of England is at the heart of it, and that the independence of the Bank and the other institutions that we have set up is paramount. That is partly why the position of the banks is so much stronger than it has been hitherto.

We prevented the banks from reducing their corporation tax liabilities when they were required to pay compensation for misconduct, effectively applying additional taxes. The shift towards taxing profits means that the recovery in banks’ profitability will translate into higher tax receipts for the Exchequer, while also ensuring a sustainable long-term basis for the taxation of banks.

[Mark Menzies (Fylde) (Con)]

It is important that we raise record sums from the banks to pay for vital public services, but is there not a balance to be struck? We need healthy banks, not only to support small businesses and provide mortgages for first-time buyers, but to ensure that there are banks in our high streets.

[Mel Stride]

My hon. Friend is right, and this is all about striking the right balance. We recognise that banks need to pay their fair share because of the systemic risk that they can feed into the economy, and because, some years ago, the British taxpayer stood behind the banking system. The other part of the balance is to ensure that our banking system remains competitive in comparison with others in the world, and can, in turn, leverage the competitiveness of our own industries through its lending.