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

Anneliese Dodds Excerpts

Thursday 1st February 2018 Public Bill Committees

[Mel Stride]

I will respond because, as ever, the hon. Lady made some helpful comments.

On taking into account sustainable development and the interests of producers, I refer the hon. Lady to the point that she made herself, which is that the clause does not prohibit any of those matters being taken into account. The point I made earlier was that the Government certainly do not see the need to specifically reference those matters—or, indeed, the many other matters that the Committee and individual parliamentarians may feel are important in this context—in order that we do not have an exhaustive list, but rely on the common sense and good public policy making of the people who make such decisions.

Duties, whether they are import duties or export duties, which are potential though unlikely, are a slightly strange instrument to use in the food safety context. It would be much more appropriate for the Department for Environment, Food and Rural Affairs to look at those issues and use its powers to take action where clear breaches of food safety have occurred or are likely to occur.

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

It is a pleasure to see you in the chair, Mrs Main. I am grateful to the Minister for those remarks. I want to focus on amendment 79 and press him a bit on sustainable development.

There is an important consideration here, which relates to our discussion earlier about what will happen if the UK leaves the EU without a deal and falls back on World Trade Organisation provisions—something I hope will not happen, but that the Government have not ruled out. The hon. Member for Aberdeen North asked the Under-Secretary of State for International Trade exactly where the powers are to create WTO schedules. I do not know if the Minister has the answer yet—perhaps we will find out later. There is a pertinent issue when it comes to laying those schedules if we have to accede to the WTO as a new member—that is, if we do not conclude a customs and trade arrangement that means we do not need to join separately. A number of the countries that have joined the WTO recently have found it difficult to apply the provisions of the general agreement on tariffs and trade that enable sustainable development, environmental considerations, human health and so on to outweigh having low or non-existent tariffs. When that has been offered to one country, it should therefore be offered to all.

China’s recent dispute about raw materials is a pertinent example. As with all the most recent accessions to the WTO, when China acceded, it was required to submit commitments on export duty that bound it to keep export duty at its current rate or to reduce it in relation to different product lines. If that had been part of the general agreement on tariffs and trade, China would have been able to invoke the WTO’s GATT provisions that say that human health can trump those other considerations, but because there were separate agreements, it was not allowed to invoke environmental considerations.

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[Mel Stride]

I thank the hon. Members for Aberdeen North and for Oxford East for their contributions. On the issue of sustainable development, I can provide the Committee with reassurance that the Government take that area of policy extremely seriously. As the Committee will know, the UK Government have stated their commitments to the UN sustainable development goals that were agreed in September 2015. A publication released on 14 December 2017 outlined the Government’s response to the UN SDGs and their relevance to individual departmental plans. Trade policy is explicitly referenced in five of those 17 goals.

The hon. Member for Oxford East asked me about the letter regarding WTO scheduling, upon which I believe she may still be waiting.

[Anneliese Dodds]

I am so sorry—I think it has been received.

[Mel Stride]

Oh, it has been received. I was going to say that if it had not been, she would receive it imminently. I am pleased that my desire has already been put into effect. I would also be very happy to write to the hon. Member for Aberdeen North about the various issues she raised regarding WTO accession.

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[Jonathan Reynolds]

All the amendments relate, as ever, to the lack of detail in the Bill. The Minister has provided some words of reassurance, which are appreciated, but in the end it comes back to the point that very important details, which industry needs to plan, are missing from the Bill. However, I think that that point has been made, and for that reason I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Anneliese Dodds]

I beg to move amendment 14, in clause 39, page 27, line 20, at end insert—

“() by a relevant select committee of the House of Commons, or

() contained in a resolution of the House of Commons.”

This amendment requires the Treasury to have regard to recommendations of any relevant select committee of the House of Commons or contained in a resolution of the House of Commons in considering whether to exercise the power to impose export duty.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Amendment 15, in clause 40, page 27, line 35, leave out subsections (2) to (4).

This amendment is consequential on NC8.

Amendment 16, in clause 40, page 28, line 6, leave out

“other than regulations to which subsection (2) applies”.

This amendment is consequential on NC8.

Clause 40 stand part.

New clause 8—Setting export duty: enhanced parliamentary procedure—

“(1) This section applies to—

(a) the first regulations to be made under section 39, and

(b) any other regulations to be made under that section the effect of which is an increase in the amount of export duty payable.

(2) No regulations to which this section applies may be made by the Treasury in exercise of the power in section 39(1) except in accordance with the steps set out in this section.

(3) The first step is that a Minister of the Crown must lay before the House of Commons a draft of the regulations that it is proposed be made.

(4) The second step is that a Minister of the Crown must make a motion for a resolution in the House of Commons setting out, in respect of proposed regulations of which a draft has been laid in accordance with subsection (3)—

(a) the rate of export duty applicable to goods specified in the resolution;

(b) any proposed export tariff (within the meaning given in section 39(3)(a)); and

(c) any measure of quantity or size by reference to which it is proposed that the duty be charged.

(5) The third step is that the House of Commons passes a resolution arising from the motion made in the form specified in subsection (4) (whether in the form of that motion or as amended).

(6) The fourth step is that the regulations that may then be made must, in respect of any matters specified in subsection (4)(a) to (c), give effect to the terms of the resolution referred to in subsection (5).”

This new clause establishes a system of enhanced parliamentary procedure for regulations setting export duty, with a requirement for the House of Commons to pass an amendable resolution authorising the rate of export duty on particular goods and related matters.

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[Anneliese Dodds]

I am sorry about the complexity of all the different amendments, but they reflect the Members’ concerns about the Bill as it stands in these particular clauses. I will not speak at length, because many of the issues have already been covered in our previous discussions.

In relation to amendment 14, my hon. Friend the Member for Stalybridge and Hyde has already detailed why we think it would be appropriate to use the expertise and the opportunities for consensus building provided by the Select Committee system in the Bill. I will not go over those arguments again; suffice to say, I hope the Government will consider the arguments that my hon. Friend made, take the opportunity afforded by the Select Committee system and apply it here when it comes to setting export duty and scrutinising the setting of it.

We have covered many of the principles underlying amendments 15 and 16 and new clause 8. Again, we are asking for greater parliamentary scrutiny—this time in the area of export duties. I was thinking about how else I could try to persuade the Government of our arguments, and one issue I decided to focus on was that we have often heard the word “technical” applied to many of these measures. Of course, they are technical when they are about minimal changes to rates, or just alignments between different measures, but we need to appreciate that they can have a significant impact on our constituents, because there are winners and losers when we change the parameters of trade.

Capital is largely mobile, but workers often are not. Academic evidence shows that there can be considerable dislocation when there are changes to trade rules. It may well be the case that, in the past, those matters were often seen as technical, but they have had real-world implications. That is particularly important in our country, where the kind of active labour market measures that might have enabled labour to be more mobile when there are changes to duties that affect working patterns do not exist to the same extent that they do in many countries. Recent research by the Resolution Foundation suggests that people have become less mobile in their jobs, potentially because they do not have that help to alter jobs. It is important to consider these issues carefully when there are not those compensatory measures there for people who might be negatively affected by trade measures that alter the pattern of economic activity in our country.

It is absolutely right and proper that we seek appropriate parliamentary scrutiny of measures that could have a significant impact on the availability of manufacturing jobs, especially in our constituencies. I hope that the Government will bear that in mind. Yes, some of the measures could be described as technical, but they will certainly have impacts on our constituents, and we should all be aware of that while we discuss them.

[Mel Stride]

Clause 39 enables the UK to establish an export duty if it is considered appropriate to do so. Clause 40 sets the parliamentary procedure for doing so. An export duty is, as the name suggests, a tax on goods leaving the country. I used the term “considered appropriate to do so” quite deliberately. The EU has no standing export duty. Indeed, I believe the last time the EU imposed an export duty was in the late 1990s, in respect of wheat.

However, the revised Union customs code, which came into force only in 2016, maintained the EU’s ability to impose an export duty. The EU decided it still needed to maintain the option to impose one in the future. Therefore, in an implementation period, where the UK may be following the EU’s common external tariff for a limited period of time, we may need to retain the ability to impose an export duty in case the EU chooses to apply one. In the longer term, it is right to maintain at least the option to establish one if the circumstances demand, just as the EU retained that flexibility when it overhauled its customs code. In allowing for an export duty, but not introducing one, these clauses reflect the status quo, except with a stronger role for Parliament in approving any future export duty.

Clause 39 allows for the imposition of a new export duty tax and for replication of any part of the customs regime in part 1 as may be necessary to administer it. In recognition of the exceptional nature of export duties, clause 40 specifies that the first regulations made under clause 39, imposing an export duty, are subject to the affirmative resolution procedure.

Amendment 14 would require the Treasury to consider recommendations about the imposition and rate of export duty made by a relevant Select Committee or contained in a resolution of the House of Commons when considering whether to impose export duty. The Treasury will listen closely to recommendations from a range of interested parties, including relevant Select Committees and Members of the House. In addition, Select Committees already have the power to question Ministers on the policy within their departmental remit. The Treasury will answer any questions from the relevant Select Committees.

The Bill will ensure that the Government can respond quickly to exceptional circumstances and impose an export duty, while still giving the House a vote through the made affirmative procedure. Therefore, the Government believe that it is not necessary to include this additional requirement in the Bill.

New clause 8 and consequential amendments 15 and 16 seek to put in place additional parliamentary processes for the introduction of, and any increase to, the rate of export duty. For indirect tax matters, it is common to have a framework in primary legislation supplemented by secondary legislation. The Bill introduces a comprehensive framework for a new stand-alone customs regime, which will be underpinned by the detailed and technical secondary legislation.

The Bill ensures that the scrutiny procedures applied to the exercise of each power are appropriate and proportionate, taking into account the technicality of the regulations and the frequency with which they are likely to be made. As currently drafted, the House of Commons would have a vote on regulations introducing export duty under the made affirmative procedure. The Government believe that to be appropriate and proportionate.

To sum up, although an export duty should be applied only in exceptional circumstances, it is right that the UK has the ability to impose one if it becomes necessary, including if the EU decides to impose one for a limited period while we may be aligned with the common external tariff.

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[Anneliese Dodds]

I am grateful to the Minister for his commitment to respond to any questions that are levelled by Select Committees in this area. That is a positive commitment. It is an area that we will keep an eye on, but after the discussion we have just had, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 39 ordered to stand part of the Bill.

[Peter Dowd (Bootle) (Lab)]

On a point of order, Mrs Main. I indicated earlier that I wanted to speak on amendments 142 to 145 to clause 39, on animal welfare and sentience. I have tried to get in, but if the opportunity has passed, so be it. We may therefore have to pursue it on Report. I want the Committee to recognise that I did wish to speak and did indicate that.

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[Mel Stride]

I am grateful to the hon. Gentleman for his invitation to do some gymnastics, but I do not think they will be necessary, because his questions are easily answered. He referred to my cut and paste button in respect of “appropriate” and “proportionate” and he is right; there is a cut and paste button for those terms, because they are extremely important. At the heart of this is his cut and paste button, in which he regularly says something along the lines of, “All we are asking for is appropriate scrutiny on these important matters.” So the argument has gone back and forth over every area of the Bill as we have ranged across the various clauses.

Moving on to the hon. Gentleman’s remarks about the House of Lords Delegated Powers and Regulatory Reform Committee and its comments on sunset clauses, and his specific question about why we would have sunset clauses in the context of the European Union (Withdrawal) Bill but they would not be appropriate in the case of this Bill, the answers are clear and require no gymnastics at all. They are that the aims of this Bill are different from those of other Brexit Bills.

For example, while the European Union (Withdrawal) Bill makes provision for day one, with the understanding that further primary legislation will be made to supplement it, this Bill will be required in order to maintain a functioning customs regime, an effective VAT regime—as we are currently discussing in the context of these clauses—and an excise regime on an ongoing basis. There is a fundamental distinction between bringing the EU acquis into UK law and handling that process, which is the principal rationale for the European Union (Withdrawal) Bill, and what is happening on a dynamic, ongoing basis in terms of a customs, VAT and excise regime.

[Anneliese Dodds]

Can I read from the Minister’s remarks that the European Union (Withdrawal) Bill does not seek to create new institutions in, for example, environmental policy or other areas, which potentially need to be just as flexible in many ways as the taxation and customs system? I am struggling to grasp the essence of the Minister’s distinction here. Maybe he could provide more information.

[Mel Stride]

I have made the point about the day one situation with the European Union (Withdrawal) Bill and the primary legislation, and so on, that will follow. I will resist the urge to start debating another Bill, other than to repeat the points I have made about this Bill. We are of necessity in the context of customs, customs duties, export duties, import duties, VAT, excise regimes and excise duty. We are dealing with a rapidly changing set of measures going forward. We are in the middle of a complex negotiation, the outcome of which is not clear at this particular moment. That is why in many instances in this Bill where we have had these ongoing repeated debates about whether a stiffer, tougher form of scrutiny is necessary, we feel that a balance has to be struck, which is appropriate and proportionate—to use my cut and paste button again—between the needs of parliamentary scrutiny where it is appropriate, and the ability to get on with the job and ensure that this country is match fit for life outside of the European Union in terms of its imports, exports and trade.

[Anneliese Dodds]

I am grateful to the Minister for his response. However, we have been informed that the reason why sunset clauses are appropriate in the EU (Withdrawal) Bill and not in this Bill is because this Bill needs a more dynamic system—if I understand the Minister’s comments correctly—whereas that is not necessary in the EU (Withdrawal) Bill. I am still struggling, because if we look at an area such as environmental legislation, we have the institutions that are created, the overall framework and then the calibration within it that would respond to scientific information—levels of pollution, for example. There is also an international context with different treaties. Perhaps this is something we could correspond about another time, but I am struggling to discern the fundamental qualitative difference between this policy area, which apparently cannot be amenable to sunset clauses, and those contained in the EU (Withdrawal) Bill.

[Mel Stride]

I will be brief, because we are beginning to go around in circles, but I am very happy to discuss any of these matters offline, or to receive a letter from the hon. Lady, on the points she has raised.

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[Jonathan Reynolds]

There is clearly a fundamental difference of opinion about these clauses. We absolutely support the right and ability of the Government to possess the requisite powers on exit to set the regime that is required. What is in dispute is whether those powers should remain on the statute book for a long time.

It seems entirely reasonable that the Government could come back to legislate for the power that they need in future, rather than giving themselves such a fundamental transfer that changes the balance of power between Parliament and the Government, but we may have to return to that question. Further groups of amendments are on the selection list that cover sunset clauses, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 45 ordered to stand part of the Bill.

Clause 46 ordered to stand part of the Bill.

Clause 47

EU law relating to excise duty

[Anneliese Dodds]

I beg to move amendment 134, in clause 47, page 33, line 7, at end insert—

“(5) No regulations may be made under this section after the end of the period of two years beginning with exit day.

(6) In this section, “exit day” has the meaning given by section 14(1) (interpretation) of the European Union (Withdrawal) Act 2018 and subsections (2) to (5) of that section apply to the term under this section as they apply to the term in that Act.”

This amendment limits the duration of the delegated power under Clause 47 to the period ending two years after the United Kingdom leaves the European Union.

[The Chair]

With this it will be convenient to discuss the following:

Clause 47 stand part.

Clauses 49 and 50 stand part.

That schedule 9 be the Ninth schedule to the Bill.

[Anneliese Dodds]

We have already discussed clause 47 to an extent, so I will just offer a couple of brief observations in relation to amendment 134. My reading of clause 47 is that it disapplies the European Union (Withdrawal) Bill provision that EU legislation should be copied into UK law, and empowers the Treasury to make alternative provisions on excise duty.

Some of our witnesses suggested that that could result in an unnecessarily complicated approach, and I do not feel that the Minister explained why the Government will not just retain the EU customs code during the transition period. The Minister has referred to a cut-and-paste approach. Yes, there is a lot of cutting, but then there is some spraying about of some elements and not others. It is perhaps not as well thought through as we might have hoped.

As with many Opposition amendments, amendment 134 asks the Government to include a sunset clause of two years for the application of these measures. We seek to ensure that the empowerment of the Treasury in these provisions is time limited. As my hon. Friend the Member for Stalybridge and Hyde said in relation to the sunset clause he discussed, the measures could be extended by Parliament if that was felt necessary, but having a sunset clause would prevent the inappropriate extension of the powers that the clause grants.

[Mel Stride]

Clause 47 makes changes that ensure that the status of EU law in relation to excise is clear. The European Union (Withdrawal) Bill lays out the Government’s general approach to EU legislation after EU exit. We need to ensure the consistency and certainty of the existing excise and VAT regimes to ensure that they work effectively after exit.

Excise is an important contributor to national revenue—receipts for 2016-17 were around £48 billion—so it is important that we have clarity on the rules, including the status of EU law in relation to excise. The approach adopted by this clause is consistent with the European Union (Withdrawal) Bill. It results in EU legislation being retained only where it is sensible to do so in respect of excise. There is a similar provision for VAT in clause 42.

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Additionally, the clause defines the term “HMRC Commissioners”. For the operation of part 4, it is necessary to define these terms. The limited definition of excise duty ensures that the provisions in this part go no further than is necessary and relate only to excise duties on goods that are most affected by EU exit. I therefore urge that the clause stands part of the Bill.

[Anneliese Dodds]

I am grateful to the Minister for those helpful clarifications. I note in particular his determination that the provisions should foster continuity with existing provisions in the short term. That seems very sensible. I hope that, even if the Government are not willing to accept Labour’s call for sunset clauses, they will at least take on board our concerns that there must be appropriate ongoing scrutiny of the measures. Above all, they must not go beyond the scope of ensuring that there is an operable regime following whatever negotiations they have.

Many of those areas are very important for our constituents. I am sure that the Minister will remember the discussion that we had around tobacco excise recently in the Finance Bill. I had concerns about the stripping away of public health support for people to stop smoking, at the same time that duties are going up, and about the implications there might be for low-income people. We need to make sure when there is a fundamental change that we have the ability to properly debate and discuss it in the House. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 47 ordered to stand part of the Bill.

Clauses 48 to 50 ordered to stand part of the Bill.

Schedule 9 agreed to.

Clause 51

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

[Kirsty Blackman]

I beg to move amendment 120, in clause 51, page 34, line 39, leave out second “appropriate” and insert “necessary”.

This amendment provides that the power to make regulations about VAT, customs duty and excise duty in consequence of UK withdrawal from the EU is only exercised when it is necessary to do so.

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[Anneliese Dodds]

Surely in that case it would be possible to specify that one of the two options will be chosen and that that is a necessary choice between the two. I am struggling to grasp the need to avoid the word “necessary”.

[Mel Stride]

The point I would make to the hon. Lady is that if we had more than one option, one of them may be appropriate but not necessary, because if we chose that particular option there would necessarily be another option that could be chosen. The essential point is that the word “necessary” is not necessary, but in fact unhelpful—[Interruption.]

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[Kirsty Blackman]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 54 ordered to stand part of the Bill.

Clause 55

Commencement

[Anneliese Dodds]

I beg to move amendment 17, in clause 55, page 38, line 15, leave out

“on the day on which this Act is passed”

and insert

“when the condition in section (Pre-commencement review: resource implications for HMRC) is met”

This amendment is consequential on NC9.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 20, in clause 55, page 38, leave out line 23 and insert—

‘(1A) Section (Pre-commencement review: resource implications for HMRC)and this Part come into force on the day on which this Act is passed.”

This amendment is consequential on NC9.

New clause 9—Pre-commencement review: resource implications for HMRC—

‘(1) The condition in this section is met when—

(a) HMRC Commissioners have carried out a review in accordance with the provisions of this section, and

(b) the Chancellor of the Exchequer has laid a report of that review before the House of Commons.

(2) The review by the Commissioners under this section must consider—

(a) the staff requirements for implementation of the provisions of this Act,

(b) the extent to which provision has been made to meet those requirements;

(c) the information technology requirements for implementation of the provisions of this Act, and

(d) the level of certainty about the meeting of the requirements considered in accordance with paragraph (c).

(3) The review shall have regard to information provided by the Treasury and the Secretary of State about the likely outcome of negotiations between the United Kingdom Government and the European Union.”

This new clause requires HMRC to provide an assessment of the staffing and IT requirements for implementing the provisions of the Bill, and the prospects of those requirements being met prior to commencement of the main provisions of the Bill.

[Anneliese Dodds]

To make things totally clear, amendments 17 and 20 are consequential on new clause 9, so I will focus on that. The new clause would insert provision for pre-commencement review into the Bill. That relates to clause 55, which is about the conditions for commencement. We have asked for the HMRC commissioners to carry out a review that the Chancellor of the Exchequer would then lay before the House. We have asked for that review to examine a number of areas, such as whether the appropriate staffing requirements have been met for the Bill to be implemented properly, the extent to which information technology is ready for implementing the Bill’s provisions and the extent to which the Government believe that all the requirements in the Bill have been met.

The new clause is necessary for a variety of reasons; I will not go through all of them, because we covered some of the material when we talked on Tuesday about a review of resources in relation to the authorised economic operators scheme and the SNP amendment. None the less, there are matters that it is important this Committee covers before we finish. We heard some compelling evidence from witnesses last week who talked about changes that have occurred within HMRC and the resourcing of the customs element of HMRC. In particular, they talked about how a helpline for businesses with customs problems had been removed, the potential impacts of the new regionalised system for HMRC, and how the removal of local offices would mean that HMRC staff will no longer have a physical presence in Scotland north of Glasgow and Edinburgh, and none on the whole south coast of England. The Minister responded by saying that of course customs officials would be able to travel. Yes, that is definitely the case, but as someone who has frequently had to get to Dover by road and by public transport, I can say that that is often not easy. There are significant concerns about that.

There are also continuing worries about whether staff numbers are appropriate. We had a little bit of discussion about that at close of play on Tuesday, again in relation to an SNP amendment. The Minister said then that it was possible that, to deal with the requirements of the Government’s approach, the number of customs officers might increase from 5,000, according to figures submitted to the World Customs Organisation, by between 3,000 and 5,000. Let us say that they increase by 5,000 to 10,000, doubling the current number. I have redone the calculations that I did last Tuesday. That would mean that every British customs officer would still be required to process about 7,700 customs declarations a year. That is still substantially more than their counterparts in other countries: 20 times more than in Australia, six times more than in America, almost twice as many as in Norway and about 20% more than their Swiss counterparts, who seem to process the largest number after the UK, by my calculations on comparable countries. That is without the many additional declarations that might come if the Government decide not to form part of a customs union with the rest of the EU. Therefore, there are legitimate questions to ask about whether HMRC really has the capacity to deliver what is being asked of it.

That is particularly important today. I understand that there are leaked documents suggesting that the EU is concerned that the UK might seek to undercut standards, particularly on taxation requirements. I am not sure whether it mentions customs in that regard, but it is important for the UK to send out a strong message that we want to uphold standards—particularly on something like customs, where there is the potential for a large amount of fraud that could affect other countries, but also on many allied problems mentioned by our witnesses, such as phytosanitary measures, veterinary standards, control of illegal trafficking of goods and so forth. I hope that the Government will give us a strong commitment to properly review resources. We need more than what we have already.

[Kirsty Blackman]

I completely agree with everything that the hon. Lady is saying. It is important for businesses to have certainty about how the extra resourcing will work—if there is extra resourcing—so that they will know how to interact and have confidence that the system will work after exit or implementation day.

[Anneliese Dodds]

I am grateful for the hon. Lady’s support. Due to the changes to the deployment of HMRC in Scotland, the issue is very relevant to many of her constituents. I am pleased that the Government seem to be moving in the right direction. We have a commitment to more staff, which is positive, and the Minister’s responses to my written questions seem to focus more on additional numbers and less on redeployment, as they did in the concerning responses previously. Surely, given the potentially increased amount of activity that a new customs regime would necessitate, we need to be on stronger ground if we are to avoid a difficult time for British businesses and retaliatory measures from the rest of the EU if it feels that we are not upholding our obligations.

[Mel Stride]

Amendments 17 and 20 and new clause 9 seek to require HMRC to review its staffing and IT requirements, with the Chancellor to report that to Parliament before commencement. The Government oppose the amendments. It is not appropriate to legislate to require such a review, because HMRC staffing and IT requirements largely depend on the outcome of the negotiations with the EU and the details of the new customs regime, which will be set out in secondary legislation.

I assure the Committee that the Government are preparing for every possible outcome, and the activities required by the amendments are already happening as part of HMRC’s business planning. I am in discussions with HMRC on a regular basis, including with the head of HMRC, on the details of how we will ensure we have the technology in place.

We have had a number of conversations in Committee about the customs declaration service and the challenges of all the additional declarations that that system may yet have to handle, as well as the hon. Lady’s points on personnel. I am aware of the points she made on access to the various ports, given the changes to the structure of offices in the transformation programme that HMRC is undergoing. She is correct that the figure we will be looking at in terms of additional personnel is between 3,000 and 5,000. I suspect it will be nearer the upper limit than the lower limit, but those decisions are imminent. I hope that those reassurances will lead her not to move her new clause and to withdraw the consequential amendments.

[Anneliese Dodds]

I am grateful to the Minister for those clarifications and commitments, particularly on staffing. It is good to hear that the Government are considering ensuring that there are sufficient human resources. However, as I hopefully made clear in my remarks, I am concerned that, from an international perspective, we will still be under capacity. There may be reasons for that, but I would like the Government to explain them. We seem to be radically below par compared with other comparable nations.

When it comes to IT, the Government have now accepted that there are many challenges, and I understand that the CHIEF—customs handling of important and export freight—system will now be run on for a period. That is sensible, but it would have been good to get that agreement earlier, because not having that assurance before caused business some concern. Obviously, the CDS programme was announced before the European referendum—it has been a long-running process—but it is important that we recognise the additional pressure that that switchover will put on services at the very time a new customs regime might be coming in. I will not press the amendment, but we may move the new clause, as with a number of other new clauses. I am grateful to the Minister for those clarifications, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Peter Dowd]

I beg to move amendment 18, in clause 55, page 38, line 15, leave out

“on the day on which this Act is passed”

and insert

“when the condition in section (Pre-commencement review: effects on frictionless trade with European Union) is met”.

This amendment is consequential on NC10.