Duties of Customs

Anna Soubry Excerpts

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

[Mel Stride]

My hon. Friend raises an important point that goes to the heart of the Bill. This is a framework Bill, so it will allow us to make sure that we can deliver wherever the negotiations land. It does not presuppose any particular outcome from the negotiations; its purpose is to enable the outcome of the negotiations to be put into effect.

[Anna Soubry (Broxtowe) (Con)]

I have made it very clear to people in Broxtowe that I believe in our continuing membership of the customs union and the single market. Can the Minister help me with this? Will the measure be able to cope with all eventualities, including our staying de facto as a member of the customs union through a period of transition? Could we—if everything goes the way I would like—even stay a member of the customs union under this Bill, if that were the will of the Government and the House?

[Mel Stride]

The Bill deals with our leaving the European Union, which means, as a simple matter of law, that we will be leaving the customs union. However, it does indeed allow for a transition period in which there could be a very close customs association with the European Union.

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[Peter Dowd]

The right hon. Gentleman misses the point. This is part of the whole pattern and process by which this Government accrue and accrue powers. Government Members do not seem to grasp that concept, but the fact is that the Government continue to pull powers to themselves and do not devolve them to any of the other nations.

[Anna Soubry]

I think the hon. Gentleman is really struggling on this. It makes eminent sense that the Government should have the powers to deal with all eventualities. Perhaps he could help this place by explaining the Labour party’s current policy on the customs union. Is the Labour party in favour of us remaining in the customs union de facto as we go into transition, or is it against that? Is it in favour of our staying in the customs union by way of a final deal, which I think is an eminently good idea?

[Peter Dowd]

I will tell the right hon. Lady what we are in favour of: parliamentary scrutiny. It was John Bright who reportedly coined the phrase “the Mother of Parliaments”, which is completely alien to Conservative Members and, obviously, to the right hon. Lady. I suspect that he, along with many other Radical and Conservative parliamentarians, would be turning in his grave at the idea that a Government living on borrowed time have the arrogance, hubris and others would say bluster to treat Parliament in the fashion this Government are intent on doing.

Conservative Members have to ask themselves this question: did their constituents send them to this House to acquiesce is the systematic stripping away of parliamentary scrutiny, which is not in the national interest, or did they send them here to hold the Government to account, regardless of their party allegiance? The Minister should take seriously the concerns I have raised, as many others inside and outside the House have, about the fast and loose approach the Government are taking to parliamentary scrutiny.

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[Anna Soubry (Broxtowe) (Con)]

I rise not only to support those excellent amendments, but to make it clear that I shall be voting for them. That is because I made it clear in the run-up to the general election in June that I would continue to make the case for the customs union, the single market and the positive benefits of immigration to everybody in Broxtowe. Having been returned to this place, admittedly with a diminished majority but with an extra 1,800 votes, I take the firm view that to be true to the words I have said and to my conscience, I am going to vote for these amendments. It is an absolute pleasure to follow some of the excellent contributions we have heard tonight, notably those of the hon. Members for Nottingham East (Mr Leslie) and for Edinburgh South (Ian Murray), and the right hon. Member for Carshalton and somewhere equally pleasant—

[Tom Brake]

Wallington.

[Anna Soubry]

Exactly—somewhere equally pleasant.

The pleasure I have in speaking in this debate is primarily this: the fact that we are actually having a debate and, moreover, we are actually having a vote. We are providing this House and this place at last with an opportunity to have a real and meaningful say in the future of our country, which has been denied within this place ever since 23 June 2016. If only the Government had at that time—I can understand why in many ways they could not—looked to build a consensus and to find what elements united us far more than had divided us during the EU referendum debate, we would not be in the unholy mess we are undoubtedly in today. As this Brexit reality or nightmare begins to dawn increasingly on the people of this country, we see that this scenario of either deal or no deal is not the real option facing the British people. We are being painted the idea of the hard Brexit as something that we should prepare for, and although it is right of the Government to be responsible and examine that, the reality is that we are more likely than not to not get a deal.

Not only are all the things the Prime Minister promised and said she did not want—no deal—likely, but in quarters of this place some people are positively urging and welcoming that. I find it utterly perverse and bizarre that my party, the party that has always been so proud to be the party of business, is increasingly being seen as the party that no longer represents business in this country. Let us be absolutely clear: the overwhelming majority of businesses, not just in Broxtowe, but the length and breadth of this country, do not want a hard Brexit. This is not just a choice between a hard Brexit—that no deal—or a bad deal, because there is a third option, one that has not even been debated and until tonight has certainly not been voted on. I refer to this third way; tonight we are talking about the customs union, but in my view this also includes the single market.

I am not going to repeat the excellent arguments advanced by the hon. Member for Edinburgh South, but I absolutely endorse all the arguments he made and the interventions that he took from other hon. Members who also see the value of the customs union. It delivers what I think the British people want. Overwhelmingly the majority of people in this country are thoroughly cheesed off with the whole darned thing; they are fed up with Brexit. They are fed up with the arguments and the squabbling. I am going to be blunt about it: they are getting fed up with a Government who have still not worked out what their policy is for the transitional deal or for the final deal. Some might say that that is shameful, given all the time that has progressed since we jumped, as I fear we did, into triggering article 50. Some of us—my goodness, we know how we got all the attacks for having said this— did caution the Government, saying, “Please don’t trigger article 50 until at least the Germans have had their elections and that stable Government have been put in place.” I get no pleasure in saying how right we were to put that caution forward. The British people are looking at all of this, they are fed up to the back teeth with it and they want us to get on with it. I do not demur from it—we should get on with it—but not in the way that a small ideological group of people, mainly in my own party, I am sorry to say, are now urging the Government to do: by leaping off the cliff and getting no deal.

[Ian Murray]

When the history books are written about this period of time, the right hon. Lady’s name will be prominent for trying to pull her own Government back from the brink, so we all appreciate the work she is doing on this. We have heard all the arguments tonight, and I, too, am delighted we are debating the customs union. The Government are suggesting a frictionless and seamless border and frictionless and seamless customs arrangements, so does she agree that the best thing they could do to deliver that is to stay in the darned thing?

[Anna Soubry]

I could not agree with the hon. Gentleman more. That is what the people need to understand now: there is this third option. There is this other way of getting a Brexit. We would be out of the European Union, so we would have satisfied the 52% of voters on that, but we would deliver what everybody wants, which is the best possible Brexit that is in the interests of everybody in this country, with the economy, jobs and prosperity right at its heart. This would solve the problem that Northern Ireland faces and that Ireland faces, because we would keep the customs union.

[Lady Hermon]

I am deeply disquieted by the fact that prominent Conservative Members are seemingly in favour of no deal as we leave the EU, because today’s Belfast Telegraph carries a report saying that republican organisations in Northern Ireland and Sinn Féin are hoping that there is a hard Brexit. They are exploiting that idea to then campaign for a border poll to try to rip Northern Ireland away from the rest of the UK. That is extremely concerning to me, as a Unionist.

[Anna Soubry]

I listen to the wise words of the hon. Lady, as she, more than many, knows exactly the serious consequences of getting this wrong. It is not just about trade and the economy in Northern Ireland; it is also about the politics. I take the point that there is a huge danger of abandoning the customs union and going for some ghastly hard border, which plays right into the hands of Sinn Féin, the IRA and all the rest of them.

I am not going to speak for much longer, because I agree with so much of what has been said by the three Members I particularly picked out and by the hon. Lady. I am old enough to remember my father having a car and when we asked what had happened with it and why did we not have it, we were told, “It is down in the garage and we are waiting for a part. It hasn’t cleared customs.” Some other Members will remember that, too. The terrible problem with much of this debate is that so many people are so much younger than I am and they have never experienced this. People like me are old enough to remember the days of having to have our suitcases opened at customs control, but this is lost on huge swathes of our population. Yet here we are actually beginning to plan for a return to those bad, dark days when we were the sick man of Europe.

So we need to stay in the customs union for the sake of our economy and because it will deliver what the people want: we will get on with this and we will make progress. We can take it, because it is there on a shelf and we can take it off the shelf. We may have to tweak it here and there but it will get us on and it will deliver Brexit, and it will ensure that we can then look at these huge other domestic problems we face.

I was going to say something else, but I have no doubt completely forgotten it. It matters not, though, because these are important matters. [Interruption.] Ah, I know what it is. As I said the other day, history will record the profound irony, which cannot be right, that the overwhelming majority of right hon. and hon. Members in this place agree that we should be in the customs union and the single market. The only reason why that is not even on the table anymore—this is an uncomfortable truth—is because, I fear, my party is in hock to 30 to 35 hard, ideologically driven Brexiteers. The British people will not thank my party unless we stand up for business and for the economy. We must deliver Brexit but also make sure that we deliver for the British people.

[Stephen Doughty]

The right hon. Lady talks about the extremists in her own party; does she share my horror that a former Minister in the Department for Exiting the European Union is planning to make a speech tomorrow morning in which he actually advocates our dropping off the cliff and going on to WTO rules, and in which he will tell the Prime Minister that she needs to take forward a no-deal Brexit? What an absurdity!

[Anna Soubry]

I do not like to speculate or comment on things about which I do not know, but that is terribly interesting.

Finally, I just need to ask: why are we leaving the customs union? Apparently, we are leaving the customs union so that we can make trade deals with other countries. It is the stuff of complete fantasy. As the hon. Member for Nottingham East rightly pointed out, we already have this fantastic arrangement: the customs union and single market, the biggest in the whole world. We are turning away from that, causing this dreadful self-inflicted wound, looking into other places and dreaming of deals that will never be done. Was there ever a better example than if we look to America? Look at Bombardier, and look at the most protectionist, anti-free-trade President that that nation has probably ever seen. That is the reality. There is no wonderland ahead of us; what there is ahead is real economic damage to our country unless we stay in the customs union. That is why I shall vote for the amendments tonight.

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[Jonathan Edwards]

That is grounds for huge concern, because these trade negotiators will be up against expert teams that have been carrying out such negotiations for many years, and this is not just about the EU deal. If it is the British Government’s intention, as one of their first options, to take on the United States in trade negotiations, I would advise them to take the advice of the experts who told the Exiting the European Union Committee in the previous Parliament that the UK should perhaps look to smaller countries for their initial trade negotiations, rather than something as powerful as the US trade lobby.

The EU customs union’s numerous existing international trade deals have already have been mentioned. Those deals cover more than 50 countries, and several other trade negotiations are ongoing. A third of all EU members’ trade outside the EU is with those countries. When the Department for International Trade was set up and the Secretary of State for International Trade answered oral questions for the first time, the first question I asked him was what would happen to all the trade deals that we already enjoy around the world. His view was that they were going to be renegotiated, seamlessly, but I fear that that showed extreme naivety on his part. Why would those countries agree to the same terms and conditions with a far smaller trading bloc, which is what the UK will be, as they agreed with the EU customs union? Surely they will want to renegotiate so that they look after and promote their own interests, rather than just accept what is on the table.

The British Government’s intended policy of leaving the single market and customs union is already having a huge impact on Welsh people’s standard of living. The Centre for Economic Performance has calculated that Brexit has already cost the average worker in Wales £448 annually, with its effect on wages and the higher cost of living disproportionately affecting people in Wales—and that is before we actually leave the EU.

With 90% of Welsh food exports destined for the EU customs union, a reckless Brexit could be disastrous for the communities I serve in rural Carmarthenshire. In a recent meeting with sheep farmers, I was amazed to find out that 50% of their produce was sold domestically, with 50% sold in Europe. Domestic markets will not be able to fill those gaps if we lose unfettered access to European markets.

It is also worth concentrating on some of the tariffs associated with food products. The average tariff on dairy products is 38%. For meat products, we are talking in the region of 58% to 70%. That would clearly make our food products destined for the EU completely uncompetitive. Farmers are preparing for 2019-20 at the moment, so they need answers now. They cannot wait for a protracted trade negotiation.

I also want to concentrate on the impact of leaving the customs union on the border between the British state and the Republic of Ireland. Much has already been said on this matter tonight and it has also had considerable media coverage, not least because the border on the island of Ireland is one of the three sticking points that need to be resolved before we reach first base in our negotiations with the European Union. Despite the fact that both sides have focused on this matter since the beginning of the negotiations, we are no nearer a solution. Indeed, press reports over the weekend seemed to indicate that things are getting even more difficult.

The British Government have miscalculated the resolve of the European Union. The EU’s overriding priority in these negotiations is maintaining the integrity of the single market and the customs union. Therefore, in choosing to leave those frameworks, the UK will become a third country—in other words, a competitor. In those circumstances, we will not get a “have your cake and eat it” solution. As the right hon. Member for Broxtowe said, the British Government are living in fantasy land. There will be no such thing as a special partnership. If we are not part of the single market or the customs union, the best thing that we can hope for is a free trade agreement similar to that of Canada. A welcome development in recent months is the fact that both Labour and the Government have agreed that a transition is a good idea, but the key question is what happens at the end of the two years.

[Anna Soubry]

Does the hon. Gentleman agree that the reality is that we will not get a great deal because the EU does not want to give us a great deal? If it gives us a great deal, it would have to give one to a whole load of other people who might decide to leave the European Union. Although I am not saying that it wants to punish us—I do not think that it does—it does have a responsibility to keep the European Union together.

[Jonathan Edwards]

The right hon. Lady captures my sentiments exactly. By deciding to leave the single market or the customs union, we effectively become a competitor —a third country. On that basis, the overriding priority of the European Union is to protect its interests. A lot of the problems that are arising in our negotiations, as we heard from the hon. Member for Glenrothes (Peter Grant), could be dealt with if we said that we wanted to stay in the single market and the customs union.

The transition period is a welcome development, although I am slightly unclear about whether the British Government and indeed the Labour party are arguing for being in “the” customs union or being in “a” customs union with the European Union, because they are diametrically opposed. Even if we did decide to stay within the single market and the customs union for the transition period, the key question arises of what happens at the end of that two-year period. If we are to have a free trade agreement such as that with Canada, it will take far longer than two years to negotiate.

With reference to the border on the island of Ireland, Michel Barnier, the chief negotiator on behalf of the European Union, has said that the EU will not tolerate the UK using this soft border between the six counties and the Republic as a way of avoiding the trade consequences of leaving the customs union. That is the crux of the problem. Even if the British Government’s position stands, there will be two types of borders between the Irish Republic and the British state. There will be a soft border on the island of Ireland and a hard border on the maritime divide between Ireland and Wales. Inevitably, that will have a huge impact on Welsh ports.

We heard earlier about the huge tailbacks that we can expect at Dover and some of the Channel Island ports. Welsh ports will face exactly the same situation, and the infrastructure is not there to deal with such challenges. That might lead to business being diverted away from the traditional Wales-Ireland trade routes to trade routes between Belfast and Scotland and England. Therefore, instead of businesses flowing between Dublin, Dun Laoghaire, Rosslare and Cork to Holyhead, Fishguard and Pembroke, they will be flowing between Belfast and other parts of the UK. We must remember that the Welsh ports sustain thousands of jobs. This is all an unintended consequence of the British Government’s muddled policy.

I want to finish with a point about the impact of leaving the customs union on the UK’s constitutional arrangements. International trade is a reserved matter. However, trade policy could have massive ramifications on the ability of the Welsh, Scottish and Northern Irish Governments to deliver on devolved competences. For instance, if the British Government were to allow food products of a lower standard to enter the UK, it would obviously have an impact on Welsh agricultural policy, not least our ability to export to our main European market in the customs union. If the British Government, for whatever reason, open up public services to further private interference, which has been the concern of many experts in this field, it would fundamentally undermine the ability of the devolved Governments to deliver competences within their public services for which they have responsibility. There is probably a whole range of other problems that I have not even considered yet.

In recognition of those potential problems ahead, the trade White Paper does talk about reconstituting the Board of International Trade with representatives from all four constituent parts. However, that does not go anywhere near far enough. In my view, trade policy would have to become an area of shared competence between the British and the devolved Governments. Within the EU customs union, EU trade deals need the endorsement of all member states and even some other governments, as we saw with the issue of Wallonia during the comprehensive economic and trade agreement discussions. It would be absolutely incredible to me if trade policy was the sole preserve of Westminster, with the interests of Wales, Scotland and Northern Ireland neglected, and our devolved and democratic Governments and Parliaments not allowed to have a say on that. In my view, Brexit will make a new UK constitutional settlement inevitable. Inter-governmental networks within the British state will need to be formalised and strengthened. If we fail to do that, every trade deal could be a constitutional crisis.

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[Stephen Doughty]

I wholeheartedly agree with my hon. Friend’s points. I can indeed see his constituency across the waters of the Bristol channel. I will come on to say something specifically about the aerospace industry, which is crucial not only for his constituents, but for many of mine and for the whole of Wales.

Our report made very clear the costs involved. It highlighted the fact that an Institute for Government report has stated that the introduction of customs declarations on EU trade could cost traders between £4 billion and £9 billion a year, based on its various estimates, including an expected 200 million additional declarations after Brexit. Mark Corby has estimated that the additional cost is likely to be between £19 billion and £26 billion a year, as a result of losing the customs and trade facilitation and duty benefits that EU membership offers.

We must also look at the costs of putting in place all the infrastructure. We have heard much discussion today about infrastructure, whether at Dover or at other ports. I am thinking in particular of Welsh ports, especially in relation to the maritime border between Wales and the Republic of Ireland, which is important to get right. This is not only about the relationship between Northern Ireland and the Republic of Ireland, but about the maritime border between Wales and the Republic. Jon Thompson, the chief executive of HMRC, has told the Public Accounts Committee that HMRC estimates the costs at between £300 million and £450 million in the scenario of the UK leaving the EU without a deal and that between 3,000 and 5,000 additional staff would have to be recruited.

These are huge sums, and it is very important that the public understand the costs, the risks and the practicalities. However they voted in the referendum and whatever form of Brexit they prefer, these are the sorts of facts that we need to put before the House and the country when we are taking decisions about the nature of our future relationship with our European partners.

I said that I would talk about the aerospace industry, and I draw attention to the relevant declarations in my entry in the Register of Members’ Financial Interests. Airbus has been very clear that its work involves 80,000 trips between the UK and EU countries a year, which relies on a seamless flow of goods and people, and that removing the seamless nature of that will be dangerous for its business and its prospects. Airbus and companies in its supply chain currently collect limited data for customs needs, but on the assumption that the UK becomes a third country, it would need to produce a customs declaration on wings and satellite components moving from the UK to the EU27. One early assumption is that this would require as many as 50 datasets for declarations, including for country of origin.

At the moment, the Airbus transport aircraft fly from Toulouse, Hamburg and Broughton with only two hours between landing, loading and departure, but should they need to await additional customs inspectors or paperwork, that would lead to delays and have an impact on its delivery schedule. As many Members will be aware, there are heavy commercial penalties for missed deliveries and delays in parts and equipment. This is not just a trifling matter: Airbus spends £5 billion a year in its UK supply chain. We are looking at the problems of transferring small parts and equipment back and forth, which has an impact not only on Airbus directly as a company, but on all those involved in its supply chain, which stretches much further than the thousands it employs directly.

[Anna Soubry]

Does the hon. Gentleman know of any Government plan to solve this problem for Airbus? I think this would be fatal to such a fantastic project, which completely relies on all these different components moving right across the European Union so frictionlessly. Does he know whether anybody has come up with an alternative?

[Stephen Doughty]

I am not aware of any alternative. Indeed, we can sense growing frustration in the country at the moment about the lack of such information. In fact, Airbus has come out in public today to make very clear its view that we need a “lengthy transition”, in its own words, and it has made a very clear statement about what it wants if it is to keep its business going.

I have mentioned Rolls-Royce. I was recently visited by Unite’s shop stewards from its manufacturing facilities in Derby, who were very clear about the implications for them. Simon Hemmings, the chief negotiator for Rolls-Royce staff, said:

“If we are not in the customs union there will be job losses. If we have a hard Brexit, the foundations we have built…for the next generation of engines will not be built upon. They will be built elsewhere.”

That is absolutely clear: some aerospace parts cross the channel five times as they move along the various assembly lines in factories in both the UK and continental Europe. That is just one example, one industry that contributes an incredible amount in terms of high-skill, high-tech jobs not only to Wales, but to south-west England, Derby and more widely. We ignore the concerns of those businesses at our peril.

The Home Affairs Committee was clear about the implications—for example, concerns about IT systems, the lead times needed to train new customs officials and the worries about whether the Home Office, which maintains Border Force, which would carry out many of the customs checks on behalf of HMRC, plans only 300 extra staff, even though HMRC says between 3,000 are 5,000 extra staff are needed. Where is the planning going on? Who is in charge of the process within the Government? Whatever the final scenario, it is crucial that we have trained, skilled staff in place. It is crucial to our security that staff who are there to police our borders, checking passports and other identity documents and people who may be involved in illegal activities, are not diverted into dealing with customs backlogs. One can imagine a situation in which we crash out with no deal, leading to queues—Operation Stack on steroids—and the Government suddenly having to drag staff back and forth, with delays at borders and delays at customs. If we do not plan and get the staff in place, we will have serious problems.

The report is clear that, given the lead times for changes in staffing, technology and infrastructure, Border Force, HMRC and other public sector agencies need to clarify rapidly whether and what changes will be required for transition, and crucially, how much they will cost. It is only right that the British public and Parliament see the costs of a no-deal Brexit, or a hard Brexit versus some of the other options, such as staying in the customs union.

Our report states that

“If no deal is reached on customs arrangements, it will result in all those involved in customs in the UK experiencing a huge amount of change in a very short time, with a vast increase required in capacity and processes at the border, with the risk of either significant delays at points of entry, or of inadequate checks taking place.”

The Minister said earlier that cliff-edge changes were in no one’s interest and spoke of a two-year implementation period and various plans that he will produce. I hope that if, as I suspect, we hear from the more extreme elements on the Government Benches saying, “Get on with a no-deal Brexit. Let’s fall out of these arrangements,” he will be the first to condemn and criticise those voices. To do otherwise would be at odds with his statements today.

These matters are fundamental to the future of our economy, our jobs and our ability to trade with the rest of the world. It is important that they are given due scrutiny and that we understand the full costs. I commend the many speeches that have been made in this debate.