Customs Safety and Security Procedures (EU Exit) (No. 2) Regulations 2019

Baroness Neville-Rolfe Excerpts

Monday 7th October 2019 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, to give a degree of context about the scale of smuggling into the United Kingdom, the Government’s most recent figures, from August 2019, suggest that there was lost revenue to the United Kingdom of £2.5 billion in smuggled tobacco alone. To put it into further context, HMRC estimates that lost duty on smuggled tobacco represents 14% of all duties. For alcohol, HMRC considers 8% of all duty revenues being lost through smuggling and crime.

How does this happen? It is because of the context that the Minister described—this is my first opportunity to interact with him, so I welcome him to his position. As he said, these measures and security checks have been there for a purpose. Yes, we have seen progress in the form of a reduction, but the figures are still stark. Any one of us during the short debate on this statutory instrument could do a quick news check: “HMRC”, “crime”, “smuggling”. With the checks, mechanisms and security procedures uniform and in place across the European Union, the Government take credit for the reduction in organised crime. Parts of our national security strategy are contingent on eradicating organised crime from the Balkans and thereby smuggling into the United Kingdom. I sit on the International Relations Select Committee. During our inquiry last year on the Balkans, we were told by the Government that their top priority in respect of the Balkans was smuggling into the United Kingdom from organised crime. It was therefore no surprise that when this issue was debated in March there was considerable disquiet that a waiver for a year would, in effect, put in place a new regime. That was debated in March and those concerns were highlighted, so it is almost breathtaking that this is considered an urgent matter. As the noble Lord, Lord Tunnicliffe, said in the previous debates on statutory instruments, it is urgent only because the Government have not acted earlier, and we may be in a position of crashing out of the European Union. The terminology of urgency in relation to bringing forward this measure is not a result of our not being unaware of these issues, it is just that the Government and HMRC do not have mechanisms in place.

The Minister said that there would be a transition period for businesses which were not prepared, but what have the Government been doing over the past seven months in order that there is heightened preparedness? In all our debates in this House since March on what the Government claimed was no-deal planning, they have spoken of heightened preparedness. We saw most recently that HMRC had to auto-enrol businesses to have an economic operator registration number; now there is a waiver for security procedures. What proportion of trade in goods into the United Kingdom will this measure cover? Have the Government prepared an impact assessment with regard to law and order and our strategies for reducing organised crime? If the Minister were able to highlight where that is, it would be helpful. I was not able to find it, so it would be helpful to know whether the Government have prepared such an assessment. The Government’s own Explanatory Memorandum states:

“This instrument will be covered by an overarching HMRC impact assessment”.


It then gives a link. I looked at the link, but I could not see anything relating to this instrument, so it would be helpful if the Minister were able to state what the position is.

The Minister’s terminology was interesting. He referred to the measure being “transitional”, but if you have a transition you start from the status quo until a new mechanism is in place. This is the new mechanism; a waiver is a new mechanism. It is not a case of the status quo carrying on until there was some form of agreement with the European Union as to what the procedures would be for imports from the European Union, because that would be covered if we had a withdrawal agreement. If we do not have one, this is not a transition—it is a new system that may well last for 12 months, as the Minister said. Can the Minister give clarity on that? He said that this is for 12 months, but Regulation 3(3) suggests that there could be,

“different extensions for different exporters, goods, places or means of transport, or any combination of these”,

if a further public notice is provided. I may have misread the measure, but it would be helpful to know where the restriction of it being only for a year is: that is a genuine question.

The Minister referred to one element of the declarations being waived for empty containers. How will we know if they are empty? If no declarations are required, what is the distinction between an empty container and a full one? How will our authorities be able to know? The Minister is suggesting that there would be no checks, on any grounds whatever, on any containers coming across the Northern Ireland border. I remind the Minister that, according to Northern Ireland government figures, there were 46 million transport crossings at 15 points on the Northern Ireland-Ireland border last year. What mechanisms are in place to ensure that none of the containers that cross the border will have any kind of determination for their security, at destination or source? Not only would there be no checks, there would be a waiver at source and on receipt at the destination. What will that mechanism look like? Nothing that the Minister said today gives clarity on what that would be and how it would cover many elements of 46 million vehicle crossings. There is also little in the revised Northern Ireland protocol. It is of concern that the Government did not do specific impact assessments.

One element raised by the business community in March, in relation to the other measure to which the Minister referred, was the reciprocal nature of this. Can the Minister confirm that this is indeed part of a reciprocal agreement with the European Union? If there are to be no mechanisms and if this is a unilateral waiver—which would, I suspect, have to be applied to all other countries under WTO rules—it opens up the European Union market via Northern Ireland. If the Minister can clarify that this is part of a reciprocal arrangement, some in the business community may be slightly eased. If not, there are considerable difficulties in having a unilateral system and none of the benefits referred to by the Minister will apply. Presumably, they will apply only to those wishing to export to the United Kingdom—our economic competitors—rather than the British businesses which wish to export from the United Kingdom. Given that the Government have been very coy in giving information about how many British businesses have registered with their destination countries for an EORI number, it would be helpful to know about the reciprocity of this too.

Finally, 40% by value of UK imports and exports are from air freight. How will this mechanism apply to the European aviation single market, which we are also leaving, and the interaction between the security procedures and checks that many businesses have had to comply with? Given that, as the Minister indicated, this should be in place if there is no deal, what response have the Government had from the air freight industry?

In many respects, these are very concerning measures. As the Government say, they could last 12 months but potentially longer and are, potentially, unilateral rather than reciprocal. They potentially open up many areas of abuse, especially on the United Kingdom’s land border with the European Union. As the Minister indicated at the outset, this mechanism does not apply to goods between the Republic of Ireland and Northern Ireland. What mechanisms will? I hope that the Minister is able to respond to these points.

[Baroness Neville-Rolfe (Con)]

My Lords, I echo the comments that have been made welcoming my noble friend to the Front Bench. I support the regulations that we are discussing today but I have some questions; I hope my noble friend can reassure me.

If we have a no deal, the culture at the ports and on the border in Ireland could change. Other member states may be less concerned about what is sent to us in the UK than they have been in the past. I note that there will be a 12-month period when no safety and security declarations will be required. That is probably sensible, to keep the lorries rolling, but, to put it simply, we in this House need to understand what will happen with the enforcement of important laws at the ports and on the border. How will we stop the import of illegal migrants, dangerous knives, machine guns and cocaine—all the things that the Home Office, very sensibly, tries to keep out—let alone illegal cultural works, exotic plants and animals that are prohibited from coming into the UK? What will happen at the ports and on the Irish border? Can the House have some reassurance about how these laws will be enforced in the transitional period and in the longer term?

[Lord Tunnicliffe (Lab)]

My Lords, I congratulate the Minister on his new role. It will be interesting to see if he will be the permanent Treasury representative; it is an onerous task that has worn out many a noble Lord.

I am generally unhappy with Explanatory Memorandums and the Minister has gone out of his way to make my point for me. His speech illustrated how an Explanatory Memorandum should be. It is about imports, exports, empty bits and combined declarations. That I can understand but not much more because I do not understand the export and import business. I hope the Minister forgives my somewhat naive questions. It seems that these regulations are designed to create frictionless trade. Unlike the other instruments, there is no problem with deal or no deal because the powers are discretionary in all cases; if there is a deal HMRC can withdraw its discretion.

Taking imports first, the regulations say that there will be no requirement for declarations on any imports from EU countries for 12 months. That is simple and straightforward. What I do not understand is whether EU countries—I was about to say the French—will require the declarations to be generated, even if we do not want them. I do not understand what WTO rules say on things like that. Is there a worldwide agreement that these declarations should be flying about unless there is an equivalent mechanism, which the EU has internally? I hope the Minister will be able to answer the question of whether the French will feel the need to require declarations to be made. The reverse of that is the key question the noble Lord, Lord Purvis, asked. We may not want to make declarations for 12 months for our exports, but how will EU countries react to that? Are these declarations pieces of paper? I do not really understand. When you get to Calais do you say, “Here is my declaration; the British have said this is good”? Will lorries without these declarations, having avoided a friction problem on this side of the Channel, end up in a big lorry park while they somehow or another overcome this process?

Finally, I did go through all the paragraphs and paragraph 3.2 talks about public notices being issued when these discretionary factors come into effect. I have trouble with the fact that it is being done by the made affirmative process; clearly, had the Government started earlier it would not be urgent. If there is a need for a public notice for these things to happen, should that public notice not already have been published?

[Lord Bethell]

My Lords, I thank noble Lords very much for a really intense debate on a key Brexit measure that has been brought to the House. A lot of expertise has been brought to it, and it is my intention to try to reassure the House that this important statutory instrument has been carefully thought through, that it is very much a product of consultation with the haulage industry and that it works as part of the Government’s Brexit programme in a thoughtful way.

The noble Lord, Lord Purvis, spoke about the very large amount of smuggling that there already is and asked what proportion of trade is affected by the waiver. Goods moving to the UK from the EU are not currently subject to safety and security declarations: that is a key point of this debate. This is a new measure that will introduce new requirements on imports to the UK. It is difficult to measure exactly, right now, what proportion is involved, but I undertake to write to the noble Lord about the exact proportion of trade affected by this transitional period in which entry summary declarations will be required. I will get back to him with a precise figure, since he asked such a specific question.

The noble Lord, Lord Purvis, asked about the impact on air freight. Interaction with air freight is exactly the same as it is with land ports. Entry and exit summary declarations apply to air freight in exactly the same way, and these easements will also apply in exactly the same way. Declarations will still be required for the rest of the world. On whether these waivers are something new, the waiver is not currently a requirement for hauliers. Declarations are not required by importers in any case so deferring them for a year is not thought to have a big impact on either smuggling or crime.

[Baroness Neville-Rolfe]

Can I could seek further reassurance? Will the rules that are currently applied to keep these heinous crimes at bay continue, or will that actually be a problem because of the sheer scale of no-deal activity? That is my concern. Obviously, the security notice, once introduced, will help as well, because there will be a further item that can be checked, but is there going to be a problem in the interim? If the Home Office and its people at the borders are going to continue to do all they are doing at the moment, that would be good to know.

[Lord Bethell]

The sheer scale is enormous, but the feedback from the haulage industry and HMRC is that they are putting in place the measures necessary for the highest level of declarations. Most of the measures put in place to tackle crime and smuggling are intelligence and data-led; they do not involve inspection of vehicles on a mass scale. The noble Lord, Lord Purvis, referred to 46 million crossings of the Northern Irish border. Quite clearly, only a very tiny proportion of those could possibly involve any kind of inspection. So, in answer to my noble friend’s question, the same intelligence and data-led measures will be in place, even during this deferment.

The noble Lord, Lord Purvis, asked whether the 12-month waiver could be extended by Regulation 3(3). I reassure him that Regulation 3 is for exit summary declarations only. A 12-month waiver for any entry summary declaration is in Regulation 4 and I reassure the noble Lord that this cannot be extended under the SI. Let me clear up some confusion about the impact assessment. The HMRC impact assessment was republished this morning. I would be happy to share a link to it and a copy of it. It was widely distributed and makes important reading.

--- Later in debate ---

[Baroness Neville-Rolfe]

I see the point of passing this order, even if we do not have a reciprocal situation. Business has asked for it. We rightly have done what is necessary. HMRC has done that. I also think that if we behave in a good way, the other member states will be able to see that we have done this, which helps, as it were, to keep the lorries rolling. That could be helpful in forward discussions in a difficult situation of no deal, which I do not think any of us want to see.

[Lord Bethell]

My noble friend puts it very well. I note the obvious disquiet in the Chamber, and I am very glad to undertake to write, as requested by the noble Lords, Lord Tunnicliffe and Lord Purvis, to try to clarify this. However, I can only present to the House what is before me. I cannot bring to noble Lords a trade agreement with the EU and I cannot resolve our future trading arrangement with Ireland because those two things are massively out of the scope of this statutory instrument and well beyond my pay grade or my ability to answer in the debate this evening. As my noble friend put it, all I can do is to present to noble Lords a statutory instrument that has been asked for by the industry and HMRC. I hope that it will provide some kind of example and format for our trading partners to lock into and set an example on energy and oomph and on technical jigsaw-making that they can connect with. The Treasury thinks that this is the kind of format that we should aspire to in the future to create the right kind of statutory framework for a successful trading future for the country. It is in that spirit that I commend these regulations to the House.

Motion agreed.