Valuation Office Agency

Mel Stride Excerpts

Wednesday 24th October 2018 Written Statements

[The Financial Secretary to the Treasury (Mel Stride)]

I am today announcing the start of a tailored review of the Valuation Office Agency (VOA). As an Executive agency of HM Revenue and Customs, the VOA is required to undergo a tailored review at least once in each Parliament. The structure, efficiency and effectiveness of the VOA and the governance arrangements it has in place will be considered as part of this review. I will inform the House of the outcome of the review as appropriate.

[HCWS1092]

Finance (No.3) Bill

Mel Stride Excerpts

Monday 15th October 2018 Written Statements

[The Financial Secretary to the Treasury (Mel Stride)]

Finance (No.3) Bill will be published on Wednesday 7 November.

Explanatory notes on the Bill will be available in the Vote Office and the Printed Paper Office and placed in the Libraries of both Houses on that day.

Copies of the explanatory notes will also be available at: www.gov.uk.

[HCWS1002]

Business Rates: Small Retail Businesses

Mel Stride Excerpts

Tuesday 9th October 2018 Commons Chamber

[The Financial Secretary to the Treasury (Mel Stride)]

Madam Deputy Speaker, may I say what a pleasure it is to see you in the Chair after the recess? It is also a pleasure to realise that I have an hour and 16 minutes in which to address my response to my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown), but I may cut it down just a little bit to please the House.

I thank my hon. Friend for bringing this important debate to the House tonight. It is entirely characteristic of him that such a debate is in his name, because throughout his parliamentary career he has been a strong advocate of business both across the country and, importantly, in his constituency. He was right to highlight in his opening remarks the sheer size and importance of our small business community—there are 5.7 million small businesses, a figure that he cited—and the recent growth that we have had under the coalition Government and this Government. He has worked closely with the British Independent Retailers Association on various thoughts and proposals, some of which he put forward this evening and to which I shall respond in a moment.

My hon. Friend is right that business rates are an important tax. When we consulted on business rates back in 2015 and considered the various alternatives, several different suggestions were made, such as turnover taxes, taxes on gross value added and so on. Inevitably, with every kind of measure or metric that one focused on, they had their own particular drawbacks and complexities and so on. The conclusion that was reached at the time was that business rates were a stable tax that is difficult to avoid because property is static by definition. Of course, as my hon. Friend also rightly pointed out, business rates raise around £25 billion a year, which is a significant contribution to our public services and funds, in turn, our doctors, nurses, policemen and policewomen and so on.

The Government recognise that business rates represent a high pressure on small businesses, particularly for high street retailers. Rates are a fixed cost that cannot be avoided, irrespective of whether a business is profitable or otherwise, which is why we have undertaken a series of important measures. In the 2016 Budget, we made 100% small business rate relief permanent, at that time increasing the threshold for the relief and taking 655,000 of the smallest businesses out of business rates altogether. We also increased the threshold for the standard multiplier, taking 250,000 properties, including most high street shops, out of the higher rate of business rates.

However, that is not all. Following the most recent property revaluation in 2017, we introduced a £3.6 billion transitional relief scheme to cap and phase in bill increases. Additionally, at spring Budget 2017, we announced an extra £435 million to support those businesses facing the steepest increases in bills, including £110 million to support 16,000 small businesses losing small business rate relief or rural rate relief to limit increases in their bills to the greater of £600 a year or the real-terms transitional relief cap for small businesses in each year. We also provided local authorities with £300 million of funding for discretionary relief to support individual cases in their local area.

In parallel to all that, we have taken significant steps to ensure the fairness of the business rates system as a whole. That is why, at spring Budget 2017, the Chancellor announced that we would reform the revaluation process to make it fairer. I am pleased to say that we have delivered on that by increasing the frequency of business rates revaluations from every five years to every three years, following the next revaluation. That is an important point in the context of what my hon. Friend said about the difference in the rates being paid by the out-of-town store and by retailers on the high street. If we can have more frequent revaluations, as rateable values on the high street perhaps fall, we can more quickly pass on the benefit of that within the system.

[Rachael Maskell]

Does the Minister recognise that inequality exists between property size and turnover and that online businesses do not have the same huge valuations as retailers on the high street? Therefore, there is a complete dissociation between the success of a business and its ability to pay under a rateable system, whether that system is based on turnover or profitability, as opposed to a system that is dependent on an external landlord and the rents that they are charging for their property.

[Mel Stride]

The hon. Lady will probably be aware of the Chancellor’s speech at our recent party conference, in which he spoke quite strongly about the importance of a level playing field for online businesses that derive value in the United Kingdom and end up paying very little tax and about the international tax approach that we may look at taking unilaterally as a consequence. The most important thing overall is that the Government recognise that when it comes to high streets and the smaller retailers to which the hon. Lady refers, we should take measures to reduce the burden of rates, particularly among smaller businesses, in the way that I have described this evening. That makes bills fairer for everyone, as they more closely reflect the current rental values and relative changes in rents. To ensure that ratepayers benefit from this change at the earliest point, the spring statement 2018 included an announcement that the next revaluation would be brought forward by one year to 2021.

Before I address some of the specific points raised by my hon. Friend, it is worth highlighting that, at autumn budget 2017, we brought forward the planned switch in the indexation of business rates from RPI to CPI by two years. This switch is worth £2.3 billion over five years, and the move to CPI is worth £4.1 billion in total by 2023. So once more, the Government are making a significant investment to recognise the pressures that rates introduce.

My hon. Friend raised the specific issue—

[Sir Geoffrey Clifton-Brown]

Before my right hon. Friend goes on to the specific BIRA proposals, may I put to him something about the out-of-town retailers, particularly supermarkets? As I explained to the House, the rateable system is based on rents payable, which one would assume in a market would sort itself out. The problem with out-of-town supermarkets is that they have a monopoly on these sites and they manage artificially to keep the rents low, so their rates are unfair compared with the in-town shops, as I have already demonstrated with my Stow-on-the-Wold example. Something needs to be looked at. I do not know whether the issue could be looked at in a revaluation system or whether legislation is needed, but it is an issue particularly when the out-of-town supermarkets are competing with the small in-town businesses. For example, the owner of a card shop recently told me that the out-of-town supermarket started selling cards and immediately put him out of business.

[Mel Stride]

I thank my hon. Friend for his intervention. I know that the Valuation Office Agency is thorough in the way in which it conducts revaluations. It is an independent agency. However, I note the point that he has made, and if he would like to write to me or meet me to discuss it in the context of potential undervaluations, I am open to doing so.

The points that my hon. Friend made included the idea of an allowance instead of the threshold. I assume that he wanted to apply that allowance to all retail businesses, and of course that would come with some cost. It would mean providing further additional relief to some companies or businesses that do not currently receive it.

[Sir Geoffrey Clifton-Brown]

I hope that I chose my wording very carefully. I said that the allowance would be applied only to businesses that qualified for small business relief. It would be nonsense automatically to give the big businesses an allowance. That would cost the Treasury, and I want to make it clear that my proposals are revenue neutral.

[Mel Stride]

I thank my hon. Friend for clarifying that point, and I am sorry that I misunderstood. He asked what the costs of compliance were under the current system and suggested that, if we changed it, we might be able to absolve ourselves from those costs and pass the benefits on to these businesses. That is certainly something that I am happy to look at and discuss with him. The overarching point is that we had a fundamental review of business rates in 2015, and many of the issues that my hon. Friend has raised were carefully looked at.

My hon. Friend said that he recognised that change would take some time, and we are likely to be considering these matters over some reasonable period. He raised the issue of the confidence of small business retailers at the moment, and this is where I would broaden the debate’s scope a little by saying that it is not just bearing down on business rates that is the mission of this Government. We also provide the employment allowance and we are bringing down small business tax rates, with corporation tax having fallen from 28% in 2010 to 19% now and set to reduce further to 17% in time. A lot of small businesses, including retailers, will be benefiting from other measures such as fuel duty freezes. We have just announced that fuel duty will be frozen for yet another year—the ninth year in succession.

In conclusion, let me again thank my hon. Friend for this very important debate. He is focusing on one of the great challenges of our time for our high streets, which lie at the heart of our local communities. It behoves us all to do all we can to make sure they are live, whole and thriving.

[Sir Geoffrey Clifton-Brown]

I want to impress on the Minister that this problem is not going to go away. The decline of our high streets is getting worse. It is accelerating, so the Government cannot just sit back. With great respect, just providing allowances in the rating system to try to make this work means that the tax base is being eroded, because the allowances have to be provided. The Government need to look at this seriously to see how they can make the system work a little better, particularly in favour of small businesses.

[Mel Stride]

My hon. Friend is absolutely right; high streets face a variety of challenges, of which business rates is but one. One of the greatest challenges they face is the change in how we are now shopping, with just over 18% of all retail now going online; that presents a huge challenge and that number is likely to increase in time. That tells us that high streets will need to transition, reinvent themselves, change and come up with new ways to serve their local communities and drive traffic into our high streets. We recognise the importance of making sure that all those things are looked at through the planning system and the reviews we are carrying out at the moment and through the important work we have been carrying out to date. I see this debate as being very important in that regard. We will continue to keep this under review in terms of making sure we keep those cost pressures through the business rates system as low as they can be for our important high street retailers.

Question put and agreed to.

Oral Answers to Questions

Mel Stride Excerpts

Tuesday 11th September 2018 Commons Chamber

[Jo Swinson (East Dunbartonshire) (LD)]

10. What steps he is taking to ensure that large international technology companies pay an appropriate level of tax in the UK.

[The Financial Secretary to the Treasury (Mel Stride)]

Mr Speaker, I echo your welcome to the hon. Lady. It is good to see her in her place. It is absolutely right that all companies in this country should pay a fair rate of tax. The Government recognise that for some businesses—typically online companies—the current international tax regime is not entirely appropriate. We are working with the OECD and the European Union to find a solution to that, and we have made it clear that in the event we cannot reach a position where we can move multilaterally, we will take unilateral action.

[Jo Swinson]

I thank the Minister for that answer. The fact that Amazon’s UK profits trebled, yet it ended up paying less tax, shows how the tax model is broken for large international tech companies. He said that the UK may act unilaterally if international progress is not made at sufficient pace. With the OECD report not expected until 2020, is he prepared to wait that long before starting to act? Does he anticipate perhaps joining in with our European Union allies on the 3% interim revenue tax before then?

[Mel Stride]

We are not only working with the European Union; we are also working closely with the OECD. At our persuasion, it has recently decided to bring forward that report to 2019. We are making progress at the multilateral level, but as I have clearly stated, we should all be in no doubt that we are prepared to take unilateral action, should that be appropriate.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

The question is whether there is a level playing field. When my right hon. Friend hears that bookshops pay around 11 times more total tax than Amazon on the same £100 of turnover, does he think we are striking the right balance to enable our town centres and communities to thrive?

[Mel Stride]

When it comes to business rates, which are the heart of the taxes that my right hon. Friend referred to, we have done a great deal since 2016. We will by 2023 have provided reliefs totalling some £10 billion, much of which will fall as relief to the high street. I take on board the comments he has made. As with all taxes, we will keep business rates under review.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

Contrary to the comments of the Financial Secretary to the Treasury, international co-ordination on tax has frequently been blocked by the Government. We saw that particularly when it came to the taxation of trusts with both David Cameron and now the current Government arguing against more transparency. It is no surprise that, as a result, a director of Fidelity International and other experts are saying that the Amazon case shows

“how tax policy hasn’t moved on.”

Why are this Government letting giant multilaterals get away with it and letting everybody else down?

[Mel Stride]

Let me be extremely clear to the House: this Government have an exemplary record on clamping down on avoidance, evasion and non-compliance. We have one of the lowest tax gaps in the entire world, at 5.7%, far lower than was the case under the Labour party. We have brought in a number of rules under the base erosion and profit-shifting project—a project of which we were in the vanguard. For example, tax deductions for interest expense came in in 2016 and yielded £3.9 billion by 2021, and the diverted profits tax that we introduced in 2015 has already raised some £700 million.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

11. What assessment he has made of the effectiveness of tax incentives to support the sale of companies to employees.

[The Financial Secretary to the Treasury (Mel Stride)]

We have brought in a number of incentives to encourage employee share ownership, not least employee ownership trusts, which provide a capital gains tax advantage to those businesses selling shares into the trust and tax advantages to employees alike. We have also brought in enterprise management incentives, company share option plans, the save-as-you earn scheme and the share incentives plan as well.

[Lloyd Russell-Moyle]

Small and medium-sized businesses are the lifeblood of the economies of local communities, but with 60% of small businesses with no succession plan after their founders retire, what are the Government doing to ensure that employee ownership is one of the options going forward to keep businesses going?

[Mel Stride]

I have set out a number of the schemes that the Government are moving forward with, and, of course, that has been with great success. In 2016-17, some 3 million employees entered into SIP share arrangements, 400,000 entered into arrangements under save-as-you earn with an average value of shareholding of some £5,000, and 3,500 employees were offered EMI schemes in that particular year.

Securing the Tax Base

Mel Stride Excerpts

Thursday 19th July 2018 Written Statements

[The Financial Secretary to the Treasury (Mel Stride)]

The Government are fully committed to doing what is necessary to protect the Exchequer and maintain fairness in the tax system. Therefore, the Government are announcing today that legislation will be brought forward later in the year which corrects a number of loopholes and omissions.

VAT offshore looping arrangement

The Government are announcing today that secondary legislation will be introduced later in the year to tackle VAT avoidance which takes advantage of a particular type of offshore looping arrangement, as well as examining further measures to tackle variations of this type of avoidance. By taking this action, the Government will maintain fairness in the tax system and will protect up to £100 million of future annual tax revenues. The Government are also considering additional measures to protect further tax from being lost on variations of these schemes, which could be adopted extensively across the VAT exempt sectors.

Offshore looping avoidance

Providers of financial services generally cannot reclaim the VAT they incur on their costs because their services are VAT exempt. An offshore loop is a cross-border structure that enables these VAT costs to be recovered by routing services primarily carried out in the UK via a body located in a non-VAT territory. Those services are then used to provide insurance and other financial services back into the UK market. This is contrary to the intention of the VAT system and distorts competition to the disadvantage of domestic UK suppliers.

Targeted action

This measure addresses a particular version of offshore looping which is currently found almost exclusively in the insurance sector and involves looping supplies via non-VAT territories. While this scheme is currently the subject of litigation, the Government have decided to legislate to put the issue beyond doubt and prevent any ongoing distortion of competition through use of this scheme.

The Government will amend UK law using secondary legislation later in the year. This will reduce the scope of the current VAT relief for exporters of financial services by excluding financial intermediation in supplies made ultimately to UK customers. This will mean that the UK providers of these financial services will no longer be able to gain a VAT advantage by acting as an agent for an overseas associate when the services are in fact being provided to their UK customers. The draft legislation and explanatory note will be published today and will be available on the gov.uk website.

Further action

The Government are also examining further legislative options for closing other versions of avoidance schemes involving such arrangements. This would ensure that revenue is protected in the future and that the system is fair for all and that those that seek to benefit from this type of arrangement do not get an unfair advantage.

Another variant of offshore looping, involving the provision of repair services to insurers, was addressed in 2016. Alongside that, the Government also considered further action, particularly in respect of the application of the VAT use and enjoyment provisions, but concluded that further change was not merited at that time. However, given the additional risks since identified, the scope of the options now under consideration will be much broader, including the use of measures outside of the UK VAT system altogether. Further details will be set out as part of the normal tax-making process.

Interest for late payment and repayment of taxes

Additionally, the Government are announcing today that they will introduce retrospective legislation in the Finance Bill 2018-19 to correct omissions from enactments that enable HMRC to charge interest for late payment of taxes and to pay interest on repayments to taxpayers. This legislation will also include interest charged as part of the diverted profits tax regime. By taking this action, the Government will guarantee the integrity of the tax base.

The legislation will apply retrospectively to cover all relevant interest charged or applied and will not change either the interest rate or amounts charged or repaid by HMRC to date. The legislation will apply to all taxpayers and any existing or future claim or appeal where these omissions have been identified.

The main taxes affected are corporation tax, stamp duty and stamp duty land tax. Further detail can be found in the accompanying draft clause and explanatory note.

[HCWS889]

Treasury

Mel Stride Excerpts

Tuesday 17th July 2018 Ministerial Corrections

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

My first specific question is, assuming that the tax treaty comes into force fairly shortly, in what tax year would the new arrangements arise? In other words, would these veterans be charged at the new rate of 20% or more in the current tax year—2018-19—or would it only cut in, as it were, in a full tax year, in 2019-20? For anybody who is looking to plan, that is an important piece of information that, understandably, they want to know.

[Mel Stride]

My right hon. Friend asked in which tax year the measures would kick in, and the answer is in 2019-20 at the earliest.

[Official Report, First Delegated Legislation Committee, 18 June 2018, c. 8.]

Letter of correction from Mel Stride:

An error has been identified in my response to my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois).

The correct response should have been:

[Mel Stride]

My right hon. Friend asked in which tax year the measures would kick in, and the answer is from 1 January 2019.

Taxation (Cross-border Trade) Bill

Mel Stride Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Mr Speaker]

I call the Financial Secretary to the Treasury, Mel Stride, but, as I do so, I must advise the House that the right hon. Gentleman is accompanied tonight, on his 13th wedding anniversary, by his good wife Michelle and their daughters Ophelia and Evelyn. It is an unusual way to spend the evening, but we hope they are enjoying it and we look forward to hearing the right hon. Gentleman.

[The Financial Secretary to the Treasury (Mel Stride)]

Mr Speaker, that is quite an introduction; thank you most graciously for your lovely comments—you will no doubt be injecting some zip into my marriage.

The Government have been clear that when we leave the EU we will leave the customs union; this is a matter of fact. And when considering the end state, the Government will not be seeking to negotiate any form of customs union. The Government proposal will create a UK-EU free trade area which establishes a common rulebook for industrial goods and agricultural products. This will maintain common high standards in these areas, but also ensure that no new changes take place in future without the approval of Parliament. As a result, we will avoid friction at the borders and protect jobs and livelihoods, as well as meet our commitment to Northern Ireland. We are proposing a new business-friendly customs model with the freedom to strike new trade deals around the world, a facilitated customs arrangement.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

I wish the right hon. Gentleman—my old friend, who was my former economics tutorial partner at university—a happy anniversary, but why are services less important than goods?

[Mel Stride]

Services are most certainly not less important than goods; they make up about 80% of the economy and we will retain greater freedoms in terms of being able to do deals around the world in that respect. But under this approach, the UK will apply its own tariffs and trade policy for goods intended for the UK and the UK’s tariffs and trade policy for goods intended for the EU. This option meets the UK’s strategic objectives for our future customs relationship with the EU.

[Mr Kenneth Clarke]

I congratulate my right hon. Friend on his wedding anniversary. He has mentioned the facilitated customs arrangement, which is the point of the White Paper. In describing it, the White Paper states at paragraph 17:

“However, the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK,”

and also says we are not expecting it to be replicated in Europe. New clause 36 directly contradicts that. I gather that there are legalisms that the people who advised on the White paper no doubt did not consider when we put in the reference to reciprocity. Now my right hon. Friend is going to give us legalisms as to why it does not matter if we take reciprocity. The political point of these amendments is to destroy the White Paper and the arrangements it proposes. If he accepts them, their supporters will come back for more. Why does he not vote against them and leave them in the tiny minority in the House of Commons, that they actually represent?

[Mel Stride]

I thank my right hon. and learned Friend for that intervention. I have very little time, but I will come on to his point. The main point is that one has to read paragraph 17a of the White Paper in its entirety to grasp its full meaning, rather than take one part of it.

I will now address the amendments before us today. New clause 1 and consequential amendment 2, as spoken to initially by my right hon. Friend the Member for Broxtowe (Anna Soubry), would establish a negotiating objective for the UK to maintain its participation in the EU customs union and make the commencement of parts 1 and 2 of the Bill conditional upon the outcome of those negotiations. I have already set out that the UK leaving the EU customs union is a straightforward legal consequence of leaving the EU, so the Government must reject these amendments, as well as amendment 1.

The same applies to other amendments before us today: new clauses 1, 3, 4, 11 and 12 and their various consequential amendments, as well as amendments 8, 9, 12 and 14, but that does not mean that we will not seek to enter into a business-friendly and pragmatic arrangement that maintains trade that is as frictionless as possible between the UK and the EU27 as part of our future partnership with the EU. That is because this Government fully recognise, as was set out so eloquently by my right hon. Friend the Member for Broxtowe, the vital importance of the EU as a trading partner that in turn supports the economy and jobs and prosperity throughout the UK.

Let me now turn to new clause 36, tabled by my right hon. Friend the Member for Witham (Priti Patel), which would prevent the implementation of a new arrangement that would see HMRC accounting for duty collected by HMRC to the Government of another territory or country unless the arrangement was reciprocal. The Government have been clear in the White Paper that under their proposed facilitated customs arrangement, the UK and the EU would agree a mechanism for the remittance of relevant tariff revenue. The UK proposes a reciprocal tariff revenue formula taking account of goods destined for the UK entering via the EU and of goods destined for the EU entering via the UK. The White Paper itself states:

“The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue. On the basis that this is likely to be the most robust approach, the UK proposes 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.”

New clause 36 is consistent with the Chequers proposal and the White Paper, so the Government are content to accept it—

[Amber Rudd (Hastings and Rye) (Con)]

Will the Minister give way?

[Mel Stride]

I will not give way, no. [Hon. Members: “Give way!”] I have a lot to cover, and I will not give way.

Amendment 72, tabled by my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin), seeks to ensure that clause 31 cannot be used to form a customs union between the UK and the EU without primary legislation. As I have set out, the Government have been clear that as we leave the European Union, we will also leave the EU’s customs union, so the Government have no objection to this enhanced level of parliamentary security—[Interruption.] I have four minutes remaining, but I will take one intervention if it is brief.

[Amber Rudd]

My right hon. Friend will be aware that there is some concern on this side of the House regarding new clause 36. He has set out why he is prepared to accept it, but will he reaffirm for those of us on both sides of the House who have those concerns that this will not impact on the negotiating strategy of the UK Government?

[Mel Stride]

The negotiating strategy of the UK Government is to seek reciprocity in this respect, and that is set out very clearly in the White Paper. Importantly, amendment 72 does not interfere with the Government’s purpose. We have no objection to the principle behind the amendment and we therefore accept it.

Amendment 73, tabled by my hon. Friend the Member for South Thanet (Craig Mackinlay), will remove a specific power that will enable HMRC to make regulations covering the application of VAT to goods in circumstances where we reach a customs union agreement with other customs unions or territories under clause 31. The Chequers agreement does not propose such an arrangement with the European Union as part of the future economic partnership, so the Government accept this amendment.

The effect of new clause 37, tabled by my hon. Friend the Member for Tewkesbury (Mr Robertson), would be to ensure that Northern Ireland would not form part of a separate customs territory from Great Britain. This new clause is a straightforward statement of Government policy. It ensures that the Government will not act in a manner incompatible with the commitments made in the joint report of December last year, when we committed to protecting the constitutional integrity of the United Kingdom, as well as to turning the joint report commitments into legally binding form. The Government also accept this new clause.

I shall turn now to our future VAT arrangements with the EU. New clause 2 seeks to establish a negotiating objective to maintain the UK’s participation in the EU VAT area. This would limit our ability to appropriately consider our future VAT policy, and for that reason we reject it. The Government are also making an amendment to a schedule to the Finance Act 2008. Amendment 83 is consequential on the new customs framework provided for in the Bill and is necessary to ensure certain excise penalties remain in place on EU exit.

I now wish to turn briefly to the powers in the Bill. It is critical that we have these powers to allow us to respond flexibly, but we accept that in some cases it may be considered proportionate to apply the made affirmative procedure, and I am grateful for the discussion that I have had with my hon. Friend the Member for Eddisbury (Antoinette Sandbach) in this regard. It is on this basis that the Government have brought forward amendments 75, 76, 79, 81 and 23, which apply the made affirmative procedure to the powers under clauses 30, 42 and 47—the powers to make general provision in relation to import duty and to deal with retained EU VAT and excise law.

Clause 25 permits disclosures for customs duty purposes and makes it clear that disclosures that would contravene the Data Protection Act 1998 are not permitted. We accept the Scottish National party’s amendments 33 and 34, which seek clarity in that regard.

Finally, we have had a full, robust and comprehensive debate today, as is entirely appropriate for a Bill of such importance. It is important for our ability to continue as one of the world’s great trading nations after our departure from the EU and to accommodate our future customs arrangement within our future economic partnership with the EU.

[Mr Speaker]

For one sentence, I call Anna Soubry.

--- Later in debate ---

[Mr Speaker]

Order. Colleagues will understand me if I say that I think there might be some evidence of what I might call ritualism involved in this matter, but it is up to people to find their own salvation, and I think that the Financial Secretary to the Treasury is well able to do so, with help from others if he is so minded.

[Mel Stride]

rose—

[Mr Speaker]

Order. It is very good of the right hon. Gentleman, but I think that the Government had previously signalled, and I had been advised—although this is not a matter for the Chair—that they had accepted this amendment. However, when it was put to the vote, and Scottish National party voices shouted Aye, there was what might be described as an instinctive reaction of No from some quarters. If that is what the right hon. Gentleman was attempting to articulate, we are most grateful to him.

[Mel Stride]

Thank you, Mr Speaker. The instincts on our side are often divided, but not on this matter. We are at one in accepting amendment 33, as well as amendment 34, tabled by the Scottish National party.

[Mr Speaker]

Well, an absence of Tellers will suffice to achieve the objective of the Minister. Division off.

Amendment 33 agreed to.

Amendment made: 34, page 17, line 4, at end insert—

‘(8) In this section, “the data protection legislation” has the same meaning as in the Data Protection Act 2018.’ —(Kirsty Blackman.)

Clause 31

Territories forming part of a customs union with UK

Amendment made: 72, page 18, line 34, at end insert—

‘(4A) In the case of a customs union between the United Kingdom and the European Union, Her Majesty may not make a declaration by Order In Council under subsection (4) unless the arrangements have been approved by an Act of Parliament.’—(Sir Bernard Jenkin.)

This amendment provides that the delegated powers under this clause may not be exercised until a proposed customs union with the European Union has been approved by a separate Act of Parliament.

Clause 32

Regulations etc

Amendments made: 75, page 19, line 15, leave out paragraphs (a) and (b) and insert

“any regulations to which this subsection applies”.

Amendments 75 and 76 provide that regulations under Clause 30 (general provision for import duty purposes) cease to have effect if not approved by the House of Commons within 28 days of being made.

Amendment 76, page 19, line 21, at end insert—

“( ) Subsection (2) applies to—

(a) the first regulations under section8 (the customs tariff),

(b) any other regulations under that section the effect of which is an increase in the amount of import duty payable under the customs tariff in a standard case (within the meaning of that section), or

(c) regulations under section30 (general provision for import duty purposes).”—(Mel Stride.)

See the explanatory statement for Amendment 75.

Clause 39

Charge to export duty

Amendment made: 77, page 27, line 12, at end insert—

“( ) the interests of producers in the United Kingdom of the goods concerned,”.—(Mel Stride.)

This amendment requires the Treasury, when considering whether to impose export duty and the rate of export duty that ought to apply to particular goods if it is to be imposed, to have regard to the interests of UK producers of those goods.

Clause 42

EU law relating to VAT

Amendments made: 78, page 29, line 45, at end insert—

“( ) No regulations may be made under this section on or after 1 April 2023.”

This amendment provides that the powers to make regulations under Clause 42 (EU law relating to VAT) are not exercisable after 31 March 2023.

Amendment 79, page 30, line 1, leave out from “section” to end of line 2 and insert

“must be laid before the House of Commons, and, unless approved by that House before the end of the period of 28 days beginning with the date on which the instrument is made, ceases to have effect at the end of that period.

‘( ) The fact that a statutory instrument ceases to have effect as mentioned in subsection (6) does not affect—

(a) anything previously done under the instrument, or

(b) the making of a new statutory instrument.

( ) In calculating the period for the purposes of subsection (6), no account is to be taken of any time—

(a) during which Parliament is dissolved or prorogued, or

(b) during which the House of Commons is adjourned for more than 4 days.”—(Mel Stride.)

This amendment provides that regulations under Clause 42 (EU law relating to VAT) cease to have effect if not approved by the House of Commons within 28 days of being made.

Clause 47

EU law relating to excise duty

Amendment made: 80, page 32, line 47, at end insert—

“( ) No regulations may be made under this section on or after 1 April 2023.”—(Mel Stride.)

This amendment provides that the power to make regulations under Clause 47 (EU law relating to excise duty) is not exercisable after 31 March 2023.

Clause 48

Regulations under ss. 44 to 47

Amendments made: 81, page 33, line 12, after “section” insert “, or regulations under section 47,”.

This amendment provides that regulations under Clause 47 (EU law relating to excise duty) cease to have effect if not approved by the House of Commons within 28 days of being made.

Amendment 23, page 33, line 30, leave out “47” and insert “46”.—(Mel Stride.)

This amendment is consequential Amendment 81.

Clause 51

Power to make provision in relation to VAT or duties of customs or excise

Amendment made: 82, page 34, line 41, at end insert—

“( ) No regulations may be made under this section on or after 1 April 2022.”—(Mel Stride.)

This amendment provides that the power to make regulations under Clause 51 (power to make provision in relation to VAT or duties of customs or excise) is not exercisable after 31 March 2022.

Schedule 4

Dumping of goods or foreign subsidies causing injury to UK industry

Amendments made: 103, page 66, line 26, leave out from “that” to end of line 30 and insert

“it is not in the public interest to accept it.

‘(2A) In considering that, the Secretary of State must accept the TRA’s determination that requiring a guarantee in accordance with the recommendation meets the economic interest test (see paragraph 25), unless the Secretary of State is satisfied that the determination is not one that the TRA could reasonably have made.”

Amendments 103 and 108 provide that the Secretary of State may reject a recommendation by the TRA to apply an anti-dumping or anti-subsidy remedy only if the Secretary of State is satisfied that it is not in the public interest to accept the recommendation. In deciding that, the Secretary of State must accept the TRA’s view that the economic interest test is met, unless satisfied that the TRA could not reasonably have come to that view.

Amendment 104, page 68, line 42, leave out

“such period as the TRA considers necessary”

and insert

“a period of 5 years unless the TRA considers that a lesser period is sufficient”.

Amendments 104 and 105 provide that the recommended period for the application of an anti-dumping amount or a countervailing amount is 5 years unless the TRA considers that a lesser period is sufficient to counteract the dumping, or the importation of subsidised goods, which has caused or is causing injury.

Amendment 105, page 69, line 1, leave out from beginning to “and” in line 3.

See the explanatory statement for Amendment 104.

Amendment 106, page 69, line 8, at end insert—

“( ) In the case of a recommendation of such a prior date made by virtue of paragraph 19, the reference in sub-paragraph (2)(a) to a period of 5 years is to be read as a reference to a period of 5 years plus the relevant period (within the meaning of paragraph 19).”

This amendment ensures that where it is recommended that an anti-dumping amount or a countervailing amount is applied to goods from a date on or before the day of publication of the relevant public notice under clause 13, the default recommended period of 5 years for the application of the amount (provided for by Amendment 104) is extended by that prior period.

Amendment 107, page 69, line 8, at end insert—

“( ) See also paragraph 21 regarding the possibility, following a review, of extensions or variations to the period for which an anti-dumping amount or a countervailing amount applies to goods.”

This amendment is consequential on Amendment 105.

Amendment 108, page 70, line 12, leave out from “that” to end of line 17 and insert

“it is not in the public interest to accept it.

‘(2A) In considering that, the Secretary of State must accept the TRA’s determination that the application of an anti-dumping amount or a countervailing amount to goods in accordance with the recommendation meets the economic interest test (see paragraph 25), unless the Secretary of State is satisfied that the determination is not one that the TRA could reasonably have made.”

See the explanatory statement for Amendment 103.

Amendment 109, page 72, line 11, leave out

“5 year period referred to in paragraph 18(2)(b)”

and insert

“period referred to in paragraph 18(2)(a)”.

This amendment is consequential on Amendments 104 and 105.

Amendment 110, page 75, line 28, at end insert—

“(zi) the injury caused by the dumping of the goods, or the importation of the subsidised goods, to a UK industry in the goods and the benefits to that UK industry in removing that injury,”

Paragraph 25(4)(a) of Schedule 4 lists certain matters which the TRA and the Secretary of State must take account of, so far as relevant, when deciding whether the application of an anti-dumping or anti-subsidy remedy is not in the economic interest of the UK. Amendment 110 inserts an express reference in that list to the injury caused by the dumping of the goods or the subsidised imports to a UK industry in the goods and of the benefits to that industry in removing that injury.

Amendment 111, page 76, line 9, at end insert—

“(zi) the UK industry referred to in sub-paragraph (4)(a)(zi) and other producers of goods,”

Amendments 111 and 112 make clear that the references to “affected industries” in paragraph 25 of Schedule 4 continue to include the injured UK industry referred to in Amendment 110.

Amendment 112, page 76, line 10, leave out “producers and”.—(Mel Stride.)

See the explanatory statement for Amendment 111.

Schedule 5

Increase in imports causing serious injury to UK producers

Amendments made: 113, page 81, line 32, after “plan” insert

“or the TRA waives the requirement for the application to be accompanied by such a plan”.

This amendment enables the TRA to waive the requirement for an application for the initiation of a safeguarding investigation to be accompanied by a preliminary adjustment plan.

Amendment 85, page 84, line 12, leave out from “goods” to end of line 14 and insert

“or to specified relevant goods;

(b) that all the relevant goods, or specified relevant goods, should be subject to a quota for a specified period during which a lower rate of import duty should be applicable to imports of goods within the amount of the quota than is applicable to imports of goods outside the amount of the quota (referred to in this Schedule as a ‘provisional tariff rate quota’).

(3A) Where the TRA makes a recommendation under sub-paragraph (3)(a) in relation to relevant goods it must, as part of the recommendation, recommend to the Secretary of State how a provisional safeguarding amount applicable to those goods should be determined.”

This amendment enables the TRA, where it makes a provisional affirmative determination during a safeguarding investigation, to recommend that goods be made subject to a provisional tariff rate quota as an alternative to recommending that a provisional safeguarding amount be applied to the goods.

Amendment 86, page 84, line 16, leave out

“the application of a provisional safeguarding amount”

and insert

“applying a provisional safeguarding amount to relevant goods, or making relevant goods subject to a provisional tariff rate quota,”.

This amendment is consequential on Amendment 85.

Amendment 87, page 84, line 22, leave out sub-paragraph (5) and insert—

“(5) The TRA may only make a recommendation under one or other of paragraphs (a) and (b) of sub-paragraph (3) in relation to any particular relevant good.

(5A) The TRA may make a recommendation under paragraph (a) or (b) of sub-paragraph (3) in relation to specified relevant goods (rather than all the relevant goods) only if the recommendations which it makes under that sub-paragraph, when taken together, cover all the relevant goods.

(5B) If the TRA determines that there are one or more recommendations which it could make under sub-paragraph (3) in relation to all the relevant goods, or that there are one or more recommendations which it could make under sub-paragraph (3) in relation to specified relevant goods, it must make that recommendation or one of those recommendations (subject to sub-paragraphs (5) and (5A)).”

This amendment is consequential on Amendment 85. It has the effect that the TRA may recommend that goods in relation to which a provisional affirmative determination is made should be subject either to a provisional safeguarding amount or a provisional tariff rate quota, but not both, although some of the goods may be subject to one type of provisional remedy whilst the rest are subject to the other type of remedy.

Amendment 88, page 84, line 35, leave out “11(3)” and insert “11(3)(a)”.

This amendment is consequential on Amendment 85.

Amendment 89, page 84, line 41, leave out

“The recommendation referred to in paragraph 11(3)(b)”

and insert

“A recommendation under paragraph 11(3)(a)”.

This amendment is consequential on Amendment 85.

Amendment 90, page 84, line 42, at end insert “(see paragraph 11(3A))”.

This amendment is consequential on Amendment 85.

Amendment 91, page 85, line 11, leave out “11(3)” and insert “11(3)(a)”.

This amendment is consequential on Amendment 85.

Amendment 92, page 85, line 12, at end insert—

“TRA’s recommendations regarding provisional tariff rate quotas

12A (1) This paragraph applies to a recommendation by the TRA under paragraph 11(3)(b) in relation to goods.

(2) The specified period referred to in paragraph 11(3)(b)—

(a) must not exceed 200 days, and

(b) if the recommendation is accepted by the Secretary of State, must begin on the day after the date of publication of the public notice under section 13 giving effect to the recommendation.

(3) The recommendation must (in addition to the specified period) include—

(a) the TRA’s recommendation regarding—

(i) the amount of the quota,

(ii) how the quota should be allocated, and

(iii) the rates of import duty that should be applied to goods subject to the quota, and

(b) such other content as regulations may require.

(4) The TRA must consult the Secretary of State before making a recommendation regarding the allocation of the quota.

(5) The things recommended by the TRA by virtue of sub-paragraph (3)(a) must be such as the TRA is satisfied are necessary to prevent serious injury which it would be difficult to repair from being caused during the investigation to UK producers of the goods.

(6) Regulations may make provision for the purposes of sub-paragraph (5) about how the things which the TRA is satisfied are necessary to prevent the serious injury described in that provision are to be determined.”

This amendment makes provision about the content of a TRA recommendation that goods should be subject to a provisional tariff rate quota. See the explanatory statement to Amendment 85 concerning the making of such a recommendation.

Amendment 93, page 85, line 14, leave out “11(3)” and insert “11(3)(a)”.

This amendment is consequential on Amendment 85.

Amendment 94, page 85, line 37, leave out sub-paragraph (5).

This amendment is consequential on Amendment 85.

Amendment 95, page 85, line 40, leave out

“of a provisional remedy in respect of goods”

and insert

“for which a provisional safeguarding amount applies to goods”.

This amendment is consequential on Amendment 85.

Amendment 96, page 85, line 42, at end insert—

“Secretary of State’s power to subject goods to a provisional tariff rate quota

13A (1) If the TRA makes a recommendation under paragraph 11(3)(b), the Secretary of State must decide whether to accept or reject the recommendation.

(2) The Secretary of State may reject the recommendation only if the Secretary of State is satisfied that—

(a) making goods subject to a provisional tariff rate quota in accordance with the recommendation does not meet the economic interest test (see paragraph 21), or

(b) it is not otherwise in the public interest to accept the recommendation.

(3) If the recommendation is rejected, the Secretary of State must—

(a) publish notice of the TRA’s provisional affirmative determination in relation to the goods, of the recommendation and of the rejection of it,

(b) notify interested parties (see paragraph 29(3)) accordingly, and

(c) lay a statement before the House of Commons setting out the reasons for rejecting the recommendation.

(4) If the recommendation is accepted, the Secretary of State—

(a) must publish notice of the TRA’s provisional affirmative determination in relation to the goods, of the recommendation and of the acceptance of it,

(b) must notify interested parties accordingly, and

(c) is required under section 13 to make provision by public notice to give effect to the recommendation.

(5) The period for which goods are subject to a provisional tariff rate quota ceases (if it has not already expired) when the safeguarding investigation in relation to the goods terminates.”

This amendment makes provision about what the Secretary of State is to do if the TRA recommends that goods should be subject to a provisional tariff rate quota. See the explanatory statement to Amendment 85 concerning the making of such a recommendation.

Amendment 114, page 86, line 32, at end insert—

“( ) But sub-paragraph (5) is to be read as if paragraph (b) were omitted if the TRA waived the requirement for the application to initiate a safeguarding investigation in relation to the relevant goods to be accompanied by a preliminary adjustment plan.”

Paragraph 14(5)(b) of Schedule 5 to the Bill requires the TRA to be satisfied that an adjustment plan is in place before recommending to the Secretary of State, following the making of a final affirmative determination in a safeguarding investigation, that a definitive safeguarding amount should be applied or a tariff rate quota imposed. This amendment disapplies the paragraph 14(5)(b) requirement in cases where the requirement to provide a preliminary adjustment plan was waived at the point when the application was being made for the initiation of a safeguarding investigation.

Amendment 97, page 88, leave out lines 1 to 13 and insert—

“(7) If a provisional safeguarding remedy has been applied to some or all of the goods as part of the same safeguarding investigation, sub-paragraph (8) applies for the purposes of sub-paragraphs (2)(b) and (4)(b).

(8) The length of the specified period referred to in paragraph 14(3)(a), so far as relating to goods to which a provisional safeguarding remedy has been applied, is to be treated as extended by the length of the specified period for which the TRA recommended that a provisional safeguarding remedy should be applied to them.

(9) Where the application of sub-paragraph (8) results in the length of the specified period referred to in paragraph 14(3)(a), so far as relating to goods to which a provisional safeguarding remedy has been applied, exceeding 1 year, sub-paragraph (4)(b) is to be read as if references to goods were references to the goods to which the provisional safeguarding remedy has been applied.

(10) In this paragraph, references to the application of a provisional safeguarding remedy are to—

(a) applying a provisional safeguarding amount to goods, or

(b) making goods subject to a provisional tariff rate quota.”

This amendment is consequential on Amendment 85. It explains what effect the period of a provisional tariff rate quota is to have where the TRA later recommends the application of a definitive safeguarding amount. The amendment also incorporates the existing provision about the effect of the period of a provisional safeguarding amount.

Amendment 98, page 89, leave out lines 6 to 18 and insert—

“(7) If a provisional safeguarding remedy has been applied to some or all of the goods as part of the same safeguarding investigation, sub-paragraph (8) applies for the purposes of sub-paragraphs (2)(b) and (5)(b).

(8) The length of the specified period referred to in paragraph 14(3)(b), so far as relating to goods to which a provisional safeguarding remedy has been applied, is to be treated as extended by the length of the specified period for which the TRA recommended that a provisional safeguarding remedy should be applied to them.

(9) Where the application of sub-paragraph (8) results in the length of the specified period referred to in paragraph 14(3)(b), so far as relating to goods to which a provisional safeguarding remedy has been applied, exceeding 1 year, sub-paragraph (5)(b) is to be read as if references to goods were references to the goods to which the provisional safeguarding remedy has been applied.

(10) In this paragraph, references to the application of a provisional safeguarding remedy are to—

(a) applying a provisional safeguarding amount to goods, or

(b) making goods subject to a provisional tariff rate quota.”

This amendment is consequential on Amendment 85. It explains what effect the period of a provisional tariff rate quota is to have where the TRA later recommends that goods be subject to a tariff rate quota. The amendment also incorporates the existing provision about the effect of the period of a provisional safeguarding amount.

Amendment 115, page 91, line 8, leave out “the adjustment plan” and insert “an adjustment plan as”.

This amendment is consequential on Amendment 114.

Amendment 116, page 93, line 27, at end insert—

“(zi) the serious injury caused by the importation of the goods in increased quantities to UK producers of those goods and the benefits to those UK producers in removing that injury,”

Paragraph 21(3)(a) of Schedule 5 lists certain matters which the TRA and the Secretary of State must take account of, so far as relevant, when deciding whether the application of a safeguarding remedy is in the economic interest of the UK. Amendment 116 inserts an express reference in that list to the serious injury caused by the importation of the goods in increased quantities to UK producers of the goods and of the benefits to those producers in removing that injury.

Amendment 99, page 93, line 43, after “a” insert

“provisional tariff rate quota or a”.

This amendment is consequential on Amendment 85.

Amendment 117, page 94, line 1, at end insert—

“(zi) the UK producers referred to in sub-paragraph (3)(a)(zi) and other producers of goods,”.

Amendments 117 and 118 make clear that the references to “affected industries” in paragraph 21 of Schedule 5 continue to include the injured UK producers referred to in Amendment 116.

Amendment 118, page 94, line 2, leave out “producers and”.

See the explanatory statement for Amendment 117.

Amendment 100, page 96, line 18, after “a” insert

“provisional tariff rate quota or a”.

This amendment is consequential on Amendment 85.

Amendment 101, page 97, leave out lines 24 and 25.

This amendment is consequential on Amendment 85.

Amendment 102, page 97, line 29, at end insert—

“‘provisional tariff rate quota’ has the meaning given by paragraph 11(3)(b);”.—(Mel Stride.)

This amendment is consequential on Amendment 85.

Schedule 8

VAT amendments connected with withdrawal from EU

Amendment proposed: 73, page 135, leave out paragraph 14.—(Craig Mackinlay.)

Question put, That the amendment be made.

Taxation (Cross-border Trade) Bill

Mel Stride Excerpts

Monday 16th July 2018 Written Statements

[The Financial Secretary to the Treasury (Mel Stride)]

I have today published a written submission outlining the Government’s analysis of how the English votes for English laws principle relates to all Government amendments tabled for Report stage of the Taxation (Cross-border Trade) Bill.

The Department’s assessment is that the amendments do not change the territorial application of the Bill.

I have deposited a copy of the submission in the Libraries of the House.

[HCWS857]

Leaving the EU: Customs Arrangements

Mel Stride Excerpts

Tuesday 10th July 2018 Westminster Hall

[The Financial Secretary to the Treasury (Mel Stride)]

I will certainly leave two minutes for my hon. Friend the Member for Wimbledon (Stephen Hammond).

It is a pleasure to serve under your chairmanship again, Mr Streeter. It is also a pleasure to follow the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). I believe we might be facing each other next week on another occasion. There seems to be a sense that something is happening on Monday or Tuesday next week. I also congratulate my hon. Friend the Member for Wimbledon on securing the debate.

As many have suggested, it might be worth me injecting as much clarity as I can on the Government’s position. While Members made extremely valid and well-put points about the downsides of an arrangement in which we perhaps have no deal and there is a hard border between us and the EU27, I am not so sure that the merits of the proposition that the Cabinet agreed at Chequers have come through.

As we all know, the main problem with a hard border or even with the maximum facilitation arrangements is that we would have a border between ourselves and the EU27. We would have various degrees of friction that we would seek to reduce under the max fac model through various facilitations and the use of technology, but we know there would be costs associated with that kind of arrangement. That is why at the Chequers meeting we wisely moved towards something that works much better in that respect. In terms of the cost of the kinds of frictions we might have with some of the scenarios that have been conjured up this afternoon, the head of HMRC tallied the cost of the additional customs declarations that would have to be entered into as a consequence of a border between ourselves and the EU27 at about £20 billion a year. Those are not insignificant costs to business, which the Government most certainly recognise.

The model we are now looking at is a facilitated customs arrangement, where we will act effectively as the agent for the European Union at our borders when it comes to goods coming through the UK into the EU. We will be collecting the European Union’s tariff at that point. For goods going directly into the United Kingdom for consumption or end use in our jurisdiction, we would apply the UK tariff at that point.

We would also have a common rulebook, which means that for regulation pertaining to goods and agricultural products, we would not, at least initially, have any regulatory misalignment between ourselves and the EU27. The significance of that is that we will therefore not require border and customs arrangements between ourselves and the EU27, and indeed between Northern Ireland and the Irish Republic.

[Kirsty Blackman]

On goods that are coming in from a third country, how will the Government work out on which bits of a shipment to charge the UK tariff, and on which bits to charge the EU tariff?

[Mel Stride]

I point the hon. Lady to her question about the White Paper. There will be more detail to come on just those kinds of questions, and of course much of this will remain to be negotiated. Our estimate is that the vast majority—well in excess of 90%—of goods coming in could be charged directly at the border as an EU good, or would be non-tariff anyway under both EU and UK arrangements, or face the UK tariff accordingly. A very small proportion might fall into the category to which she refers.

[Helen Goodman]

That was the crux of my questions. Listening to the Minister, I realise I perhaps did not formulate it quite as accurately as I should have. The question is not how much comes for one purpose and how much comes for another purpose. The question is how the person importing knows what the purpose will be, and where the final user will be. That is the tricky question. I can see the Minister frowning, so he knows it is tricky as well.

[Mel Stride]

When goods come in and the end-use cannot be determined, we foresee a situation where we might have to charge the higher tariff, with a rebate mechanism in place once the end-user can demonstrate that those goods have indeed been consumed, or found their end-use, in the United Kingdom. As I say, some of those matters will be addressed in the White Paper that will be with us this week.

Hon. Members have rightly mentioned supply chains and the importance of goods and components going in and out of the EU27. The points raised by the hon. Lady in the context of Nissan will be accommodated substantially by the model we are putting forward. My hon. Friend the Member for Wimbledon mentioned VAT systems. We have made it clear that we are looking in the negotiations to ensure that we have the best of the arrangements that are there at the moment, in terms of systems and making our VAT interactions as smooth as possible, albeit we will look to control rates of VAT. In the recent Budget the Chancellor commented on the abolition of acquisition VAT and the move towards import VAT. We recognise that there are certain cash-flow impositions on the part of business that we will want to take into account.

A number of hon. Members rightly mentioned ports, and I think a couple specifically suggested that a two-minute delay could lead to a 17-mile tailback at Dover. We are, of course, extremely cognisant of that risk, but once again, it applies if we need border and customs arrangements in place at the port of Dover, Holyhead and the other ports that have been mentioned. Under this model, that would clearly not be the case.

My hon. Friend the Member for Wimbledon also made a point about free trade deals and how the approach of the facilitated customs arrangement would facilitate them. Most importantly, as distinct from being in “the” customs union, or in a customs union with the customs union, we would not operate a common external tariff, so we would be free to set our own tariffs. The fact that we have a common rulebook between ourselves for goods and agricultural products means that the issue of regulatory barriers, which might otherwise be in place for us in doing FTAs and bringing goods into the UK that might then go on to the European Union, would also be substantially resolved.

[Stephen Hammond]

The Minister is obviously right in what he has just said about tariffs. Does he also accept that the rulebook and some of the standards in it are likely to restrict our ability to have free trade with certain countries if they do not meet those standards?

[Mel Stride]

My hon. Friend is right inasmuch as that is potentially the case if there are any inconsistencies—we might otherwise have varied our rules accordingly to accommodate an FTA. However, the Government have made it clear that although we will have total alignment at the start, we will not seek an arrangement where we will be unable to deviate from that in the future, albeit we recognise that there will be consequences for doing so.

A number of hon. Members raised the issue of preparedness, and I assure them that we will be in a good position and ready on day one if we have a no-deal situation. The Chancellor allocated £3 billion for Brexit preparations in the last Budget. Her Majesty’s Revenue and Customs received £46 million last year and around £250 million in this financial year. We have already recruited, or have in train the recruitment of, around 1,000 new staff going into HMRC with a focus on borders. We have said that we will move that figure up to between 3,000 and 5,000. Some Members mentioned the customs declaration system. The National Audit Office has suggested that we are broadly speaking where we need to be to ensure that that system comes online and live before March next year.

The hon. Member for Streatham (Chuka Umunna) asked why the EU would allow us to collect EU tariffs when there are no such arrangements with any other trading partner. We are in a unique situation. We are a very large trading partner with the European Union. We have complete alignment at the moment in regulations with that market, so we start from a position that is not occupied by others.

I think I have gone through most of the points raised by the hon. Member for Bishop Auckland (Helen Goodman). I am grateful that she said that initially she broadly welcomed the proposals, and we should all do.

My hon. Friend the Member for Eddisbury (Antoinette Sandbach) made the very important point that we are seeking an arrangement that can command the broad support of the British people—an arrangement that ensures that the UK and the EU have frictionless access to each other’s markets for goods; that provides regulatory flexibility in the way that I have described; that enables commitments to Northern Ireland to be met and the Good Friday agreement to be honoured; that sees us leave the common agricultural policy and the common fisheries policy; that allows us to deliver an independent trading policy; that ensures that, in future, all laws in the UK will be legislated for by our Parliament; that restores the supremacy of UK courts; and that ends the free movement of people and vast payments to the EU. The broad majority of people in our country will welcome that achievement.

I hope that, particularly in the debate on Monday, Parliament as a whole comes together. This is a moment in our history where there are undoubtedly significant opportunities, but also a number of challenges. I hope we see the debate through that prism, rather than through anything that is rather more narrow and party-political. On that note, Mr Streeter, I gladly give the Floor to my hon. Friend the Member for Wimbledon.

[Mr Gary Streeter (in the Chair)]

Thank you very much. Mr Stephen Hammond will have the final word.

Crown Dependencies: Double Taxation Agreements and Protocols

Mel Stride Excerpts

Monday 9th July 2018 Written Statements

[The Financial Secretary to the Treasury (Mel Stride)]

Double Taxation Agreements and Protocols with The Crown Dependencies (Guernsey, the Isle of Man and Jersey) were signed on 2 July 2018 in London. The text of the agreements are available on HM Revenue and Customs’ pages of the www.gov.uk website and will be deposited in the Libraries of both Houses. The text of the agreements and protocols will be scheduled to draft Orders in Council and laid before the House of Commons in due course.

[HCWS837]