Taxation (Cross-border Trade) Bill

Baroness Kramer Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 4th September 2018 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I start by saying to the Government that it is a travesty that this Bill comes to the House as a supply Bill. The Government attempted to get it classified as a money Bill in the other place, and they failed. But it was completely unnecessary for the Government to put in the four-word phrase that turned this into a supply Bill. That was done simply to prevent any amendment by this House. No Government would do that if they had confidence in the content in the Bill and the very use of the manoeuvre, frankly, underscores the Bill’s inadequacies.

The Government have claimed on numerous occasions that the Bill is merely technical, designed to enable Customs to function post Brexit. If that were so, the content of the Bill would not presuppose any particular outcome from the ongoing negotiations of our future relationship with the EU. Instead, it sets up barriers to negotiating an arrangement that would allow the UK to remain in the customs union and the single market. Those barriers were reinforced when the Government chose to support the four amendments from the European Research Group—the militant hard-Brexit wing of the Conservative Party. But then, we are beginning to recognise that so much of this process has been about power struggles within the Conservative Party, and the national interest, jobs, the economy and our young people are all relegated to an incidental role in what really matters to the Government—which of them will be Prime Minister. That is why today I am moving the Motion in my name and on behalf of my colleagues, and I will be pressing it to a vote because I disagree with the noble Lord, Lord Tunnicliffe: the attention of the Brexiteers has to be drawn by action and comment, and the kind of action we can take in this House is to vote when we are able.

Some will ask why I am bothering to do that when the Chequers proposal, much of which is expressed in the Bill’s clauses, is already dead. They have a point. The facilitated customs agreement is unacceptable to Barnier and the EU leaders; the Tory Brexiteers absolutely hate it—David Davis and others have said that they will vote against it; and, frankly, most Tory Remainers cannot stomach it. But that is exactly my point: a proper process through this House would have allowed workable structures to be proposed, debated and offered to the Commons.

The facilitated customs arrangement is unworkable; it does not provide for a frictionless commercial border between the UK and the 27 for goods, never mind that it utterly neglects services, which, as we often point out in this House, are 80% of the UK economy and often wrapped into, not separate from, manufacturing. The FCA’s complexity in dealing with imports and tariff differentials is an invitation to fraud on an industrial scale, especially when it comes to parts and bulk imports. There is no hope of policing a system of this extraordinary complexity with so many loopholes and difficulties inherent in it. It deals only in very limited part with the Irish border issue, which is surely critical to all of our negotiations, and it is completely confused over the handling of country of origin requirements. Indeed, as best I can work out, it expects the EU to renegotiate every trade deal, of which there are 40, so that for exports UK parts are treated as local EU content. Yet it also insists that for imports the EU and the UK will operate separate country of origin regimes—in other words, a completely non-reciprocal arrangement. That is just the beginning of some of the many complexities around country of origin. It also loads on to businesses layer after layer of form-filling and activity tracking along with, as I say, country of origin being only one of those intensely complex burdens.

I talked to someone running a small business manufacturing party goods for sale across most of Europe who is very much up on these issues. He has calculated that the cost of the new paperwork alone would lose him every single one of his European customers. Frankly, it is death to his business. The FCA requires us to leave the EU VAT area so that VAT would have to be paid at the time goods cross the border in both directions. The cash-flow hit would wreck many companies, especially small ones. Our biggest manufacturers are writing to us with desperate pleas for resolutions, guarantees of no delays at our borders and no trade or non-trade barriers. The FCA and its reliance on authorised economic operator status for the big players is costly and cumbersome, even for those that have a whole legal and technical department to begin to grapple with its requirements.

I would love to hear from the Government what the real cost is to businesses of their Chequers proposal. Which businesses will be unable to survive? Which will have to lose customers or leave the UK? Which jobs are under threat, and where? Moreover, what about the costs to the Government? Our major ports have struggled to manage existing international trade, which is why the European Commission is taking us to court for a number of failures. Many of our smaller ports have no customs staff to speak of and our key trade arteries, our roll-on roll-off ports, cannot cope with even a two-minute delay.

Therefore, I say to the Government: show us the numbers and tell us the cost of leaving the customs union. Or is this simply a political decision with the implications for our economy merely being sketched in effect on the back of a fag packet? The Government counter any questions with a complacent discussion of “no deal” and are advising warehouse building, stockpiling and planning to move activity to the 27. Frankly, that will be an economic disaster. I will not spend more time talking about “no deal” because I am sure that others will pick up the issue in the course of the debate, but I do not believe it is something any Government should contemplate, and I am shocked by constantly hearing that we will be able to enjoy a prosperous future, deal or no deal.

I have not even touched on the constitutional issues. The Delegated Powers and Regulatory Reform Committee has done its usual outstanding job, and I am sure other speakers will talk more extensively about them. But once again we are seeing Henry VIII provisions, and especially in this case a significant expansion in the use of public notices. All of this underscores once again why the Bill should go through this House being subject to detailed scrutiny, which would tackle exactly that kind of issue.

From pretty much every perspective, this customs Bill is inadequate and wrong-headed. It should at the very least allow our continued membership of the customs union and the single market; it should require a proper economic assessment of leaving the customs union, and it should respect Parliament and the balance of power. Given that it does none of these, frankly, I would argue that the people should be able to have a say again, on both this shambles of a negotiation and any final deal. For those reasons, I have tabled the Motion to amend that stands in my name.

--- Later in debate ---

Moved by

[Baroness Kramer]

At end insert “but expresses profound concern that the proposals in the bill are based on the Government’s flawed commitment to leave the single market and Customs Union, that the Government have failed to produce a comprehensive economic assessment of the consequences for the United Kingdom’s economy of being outside the Customs Union, that they have sought to limit the role of Parliament, and in particular the role of this House, in the revision and scrutinising of the bill, and that they have failed to provide an opportunity for the people of the United Kingdom to have a vote, prior to the United Kingdom’s departure from the European Union, on the terms of the new relationship between the United Kingdom and the European Union”.

[Baroness Kramer]

My Lords, in the light of the need for scrutiny, so illustrated by this debate, I beg to move the amendment standing in my name on the Order Paper.