Taxation (Post-transition Period) Bill

Anneliese Dodds Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

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

It is a year to the day since the Chancellor boasted that there was no need to plan for no deal because

“we will have a deal.”

Yet today, as we debate this Bill, we stand on the brink of a no-deal Brexit that would destroy jobs and livelihoods right across the United Kingdom. We have only 22 days to go until the end of the transition period, with still no deal in sight.

When we debated yesterday the Ways and Means resolutions associated with this Bill, a number of Government Members claimed that agreements between nations are often only finalised at the last minute—that there is nothing out of the ordinary about this Government’s approach. That is because for run-of-the-mill agreements there is a fall-back option, a status quo. But failing to reach a deal now does not mean a return to the status quo—that we stay as we are. It means extensive economic damage to the tune of an additional 2% loss of GDP, on top of the 4% loss of GDP that the Office for Budget Responsibility has calculated would be the impact of a very thin deal: the type of thin-as-gruel deal that the Conservatives look set to deliver.

[Mr Perkins]

My hon. Friend is absolutely right, but even the statistics that she refers to regarding the overall impact on the economy mask the absolutely catastrophic impact that no deal would have on individual businesses and individual industries. I had the pleasure of visiting the Toyota factory in Derby. No deal means that the entire purpose of that factory being based in Derby is under serious threat. Alongside those statistics about the overall impact, it is really important that we recognise that the situation is much worse than that for individual businesses and industries.

[Anneliese Dodds]

My hon. Friend is absolutely right. There is potentially a very, very severe impact from no deal, but, as I will go on to explain, there is already a concrete and very acute impact on our economy. I am particularly concerned about the situation for many businesses based in Northern Ireland.

This damage will be long lasting, likely to outlive even the impact of the current covid crisis. Our country cannot afford this. We have already experienced the steepest economic downturn in the G7 due to the covid crisis, and are predicted by the OECD to experience the slowest recovery in the G7. Just the prospect of a potential no-deal outcome is already leading to chaos in the midst of a pandemic. Stockpiling by companies, caused by the threat of no deal, is exacerbating supply blockages at our ports.

[Kevin Hollinrake]

The economic damage that the hon. Member is talking about should a deal not be agreed would also be inflicted on the European Union, particularly certain parts of the European Union, such as the Republic of Ireland. She criticised the UK Government for the way that they have negotiated. Does she have no words of criticism for the EU negotiators in this two-way negotiation?

[Anneliese Dodds]

Of course we need application and a determination to conclude a deal on both sides; that surely is obvious. But the fact remains, as I will go on to describe, that it was the UK Government that, rather than tabling this Bill many weeks ago, which they could have done, decided to effectively retain provisions that threaten to break international law. That is on the Government’s head, and it is something that the Government must surely be responsible for.

The irresponsible approach that we have seen recently speaks to a wider pattern over the last 12 months of recklessness with public finances, broken promises to the British people and short-term thinking that is doing long-term damage to our country. The Prime Minister promised the British people that he would get Brexit done. He said he had an “oven-ready” agreement. Whatever he has got cooking ahead of his dinner with von der Leyen tonight, my message to him is to get on and deliver what was promised.

[Sir William Cash]

I would just like to point out to the hon. Lady that Labour Governments, not to mention Conservative Governments or the coalition Government after 2010—there is a host of examples by a number of Governments—have passed treaty overrides, on exactly the same principles relating to Finance Bills, in the past. If she wants to construe that as breaking international law, she can, but the reality is that it is consistent with article 46 of the Vienna convention.

[Anneliese Dodds]

I am pleased that the hon. Gentleman mentions that situation, because it has been referred to by those who favoured the Government’s approach previously. However, I gently state to him that if he is referring in particular to provisions against tax avoidance—the example of a general anti-avoidance rule—then, sadly, I believe he is mistaken. In that case, that commitment and the ability to apply such rules was actually a fundamental principle agreed to by this country as part of a multilateral agreement that it concluded with the OECD, so I fear that that example is not as telling as he may wish it to be.

With just three weeks to go until the end of the transition period, the Government published late yesterday afternoon the 116-page Bill that we are discussing now, setting out detailed new rules for tax and customs duties. Members of this House have been given less than 24 hours to scrutinise a major piece of post-Brexit legislation that will impact businesses and individuals across the country, especially in Northern Ireland. Many of the clauses in the Bill, particularly those covering customs and excise duties, require the Treasury to make regulations that will set out the actual detail of its proposals at a later date, so even with the publication of the Bill, businesses and individuals still do not have the information they need to prepare for the end of the transition period.

Earlier today, the Chancellor of the Duchy of Lancaster said there would be “further clarity” forthcoming on these matters, but again without saying when. In fact, the Minister talked a few moments ago about those details coming in due course. His letter to Members spoke about the fact that there would be information on this later; “in the coming days” was the formulation at that time. How can he really expect businesses to plan on that basis—on the never-never up to 1 January?

This last-minute approach was not necessary. It is no use pointing to the complexity of the ongoing negotiations. We know that this Bill could have been published a long time ago because the Government have been floating a Finance Bill for months, so why yet another last- minute scramble? My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) set it out very clearly: because the Conservatives had a not-so-cunning plan to use this Bill as negotiations reached a critical point by threatening to override the withdrawal agreement. At a time when we are seeking to negotiate new trading relationships across the international community, and when the Government are trying to project an image of global Britain to the world, this tactic certainly sent a clear message, albeit not the message the Government intended.

It is welcome that the Government finally saw sense yesterday, although we have already seen damage being done. Both in relation to the provisions in the Bill and more generally, the time is running out to ready our country for the challenges ahead. The Public Accounts Committee was clear last week that:

“Government is not doing enough to ensure businesses and citizens will be ready for the end of the transition period”.

It expressed concern at reports from industry bodies that the Government had not provided the key information needed for businesses to prepare. Indeed, the Committee indicated that more than a third of small and medium-sized enterprises still believed that the transition period would be extended.

The Cabinet Office has admitted that it is well behind in recruiting the customs agents desperately needed for 1 January, despite more than £80 million having been spent so far. Yet again, earlier today, the Chancellor of the Duchy of Lancaster refused to specify exactly how many additional customs agents had been recruited. Overall, £4.4 billion has been spent by the Government on preparations for Brexit and the end of the transition period, yet we are still not ready.

[Jesse Norman]

I am terribly grateful to the hon. Lady for giving way. She has criticised the Government for spending £80 million in support of traders and a facilitated approach to the border. Could she tell us whether she thinks that number is too large or too small?

[Anneliese Dodds]

With enormous respect to the Minister, the problem with his Government’s approach is the fact that they do not indicate what they have got with that spending. As I said, £4.4 billion has been spent on preparedness for Brexit and for the end of the transition period, and the £80 million that he refers to, but there is no indication from the Government of how many additional customs officers we have received as a result of that spending. I hoped that he was intervening on me to provide an indication of the additional workforce that has been recruited. It is a matter of regret that he was unable to do so.

[Alison Thewliss (Glasgow Central) (SNP)]

The hon. Lady is quite rightly querying how money has been spent. I do not know whether she has had letters from the Government asking MPs, as small businesses, to get ready for Brexit. I got two of them, including one that referred to me as an MSP, so perhaps the Government are not spending their money particularly wisely or accurately.

[Anneliese Dodds]

I am grateful to the hon. Member for that very relevant point. I am sure that it is not only Opposition Members but Government Members who have had many businesses contacting them, often in despair, about the communications and advertisements asking them to get ready when there is so little indication of what they have to get ready for.

Yesterday morning, the Business, Energy and Industrial Strategy Committee heard from the Food and Drink Federation, which said that the guidance being published now was already too late. Some 43% of its members who supply Northern Ireland have said that they will not do so in the first three months of next year. That is desperately worrying. TheCityUK said that in the worst-case scenario, 40% of the UK’s EU-related financial activity could be lost. Every day between now and the end of the year counts to get a deal, and failing that, to plan for the no-deal outcome that the Prime Minister himself conceded would represent a failure of statecraft.

With that in mind, Labour supports this Bill passing. Labour is a responsible Opposition, and we are determined to see the minimum disruption possible, but we cannot support such continued lack of clarity on critical issues. When businesses need clarity as a matter of urgency, it is not good enough to state that further guidance will be forthcoming. At the very least, they need a timetable for the provision of that greater certainty. They need to know what rules of origin will apply from 1 January. The continued lack of clarity could create unprecedented new costs. They need to know when appropriate tariff codes will be published. They need to know whether the Government will be providing easements, and they need to know these things in concrete terms, not through the winks and nudges that have substituted for clarity so far.

Businesses need to know whether there will be a pause in penalties arising out of this legislation and, if so, what would be done to counterbalance that and prevent wilful avoidance. They need to know whether the measures in the Bill countermand the existing guidance provided to Northern Irish businesses, some of which was updated just on 7 December. They need to know, as revealed in The Irish Times, whether and when the information on the trusted trader scheme for Northern Irish business—details of which have allegedly been coming out of internal communications —is going to be fully published, so that businesses can follow that scheme.

I want to end my contribution by asking the Minister to place himself in the shoes of a small manufacturing company. We have many excellent such companies across the United Kingdom—in Northern Ireland and in Great Britain. Companies will already have faced enormous challenges during this period because of covid. Potentially, they have staff off because they have to self-isolate. Potentially, there is continuing uncertainty about the future of furlough because of this Government’s unwillingness to provide that certainty. Potentially, they were counting on the job retention bonus, but they are not going to receive it. They are now trying to plan which members of staff they will need to have in the company at work to get ready for 1 January. The stress and strain are immense.

The Minister and his Government must do all they can to overcome those uncertainties and help businesses to plan. That is the least they can do for businesses and the people who work for them, who have had such a hard year.