Taxation (Cross-border Trade) Bill

Bernard Jenkin Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Sir Desmond Swayne (New Forest West) (Con)]

Will my right hon. Friend give way?

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

Will my right hon. Friend give way?

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[Sir Desmond Swayne]

rose—

[Sir Bernard Jenkin]

rose—

[Anna Soubry]

I said that I would go down the row first. In a moment gents; hang on.

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[Anna Soubry]

I will take another intervention.

[Sir Bernard Jenkin]

I think the point that my right hon. Friend did not want to take is that there are plenty of businessmen who are in favour of leaving the European Union.

The point that I wanted to raise with my right hon. Friend is that her whole argument is passionately based on the fallacy that one cannot have just-in-time supply chains crossing international customs frontiers. In fact, that is the way that most of the rest of the world trades. At Toyota in her own constituency—I met Toyota last week—quite a substantial proportion of its componentry arrives from outside the European Union to be bolted on to its cars. She is putting up these completely false fears that just-in-time supply chains are threatened by trading across customs frontiers.

[Anna Soubry]

I have to say to my hon. Friend that that is absolute codswallop. When I went to Toyota, we were shown exactly the places where the parts had come from. For example, some parts had come from Japan. There was a special arrangement with Japan whereby the parts come into the factory and sit in a bonded warehouse. Those parts number less than 1% of the total. Toyota has 2.5 million parts coming into that factory, and the vast majority come from the European Union—it relies on frictionless trade.

With great respect to my hon. Friend, he is somebody who makes the case that we should be a member of the World Trade Organisation. Let us just get this one straight. If our country joins the World Trade Organisation—[Interruption.] Well, we are a member through our membership of the European Union. If we are a member of the WTO in our own right, we will have to abide by its rules, which say that every member must secure its borders—I repeat, must secure its borders. That does not just mean that our country, when we leave the European Union, must secure its borders, but that the European Union, whether it likes or not, must secure its borders. What does that mean? There will have to be a hard border between Northern Ireland and the Republic of Ireland. It is dishonest and disingenuous for people to stand up and make out that something other than that is the reality.

The White Paper faces up to Brexit reality, and that is what Conservative Members must now do. We have to face that reality, just like I have had to face the reality that we are leaving the European Union. Hon. Members have to do the right thing by their constituents and put trade and business at the heart of Brexit.

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[Mr Leslie]

Yes, indeed.

It is helpful if we view the two Bills we are considering today and tomorrow as a piece, as they interrelate with one another. Many of the amendments tabled for the Trade Bill tomorrow on a customs union are also on today’s amendment paper. I say gently to the Government, “Nice try with your facilitated customs arrangement, but it is not going to fly for a number of different reasons.” I urge the Chancellor and the Minister to stop putting down red lines. They will only find that they come back and embarrass them when they have to accept a customs union.

Let me quickly go into detail on why a customs union really will have to apply in this situation. There may be Conservative Members who agree with me on this point. The facilitated customs arrangement may well apply if we have a free trade agreement with the EU, but only a customs union gets rid of what is known as the rules of origin requirements—the local content thresholds needed to prove whether an FTA is in place to qualify for preferential tariff arrangements. Under a customs union, we do not have to have rules of origin checks. That is a massive advantage of the customs union.

[Sir Bernard Jenkin]

That is not actually correct. It is quite common in a free trade agreement to have what is known as an auto-pact, so that there can be frictionless arrangements, for example for the motor industry. The same could apply for aerospace.

[Mr Leslie]

There are certain manufactured goods where they have that, but across the piece of a whole economy we do not see a circumstance where rules of origin have been abolished in the way the hon. Gentleman describes. Rules of origin are really quite burdensome for manufacturers to prove. They have to count the content and document where components come from. They then have to lodge those documents as they cross the border. My point is that the facilitated customs arrangement, with its rules of origin requirements, will have friction at the border. For that reason, we are going to have to accept that a customs union is preferable.

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[Yvette Cooper]

No, I will not, because there is a time limit and I want to finish my speech early so that others can contribute.

Members who oppose any form of customs union are underestimating the significance of rules of origin checks which, according to the Government’s own analysis, can burden businesses with additional costs amounting to between 4% and 15%.

[Sir Bernard Jenkin]

Why would any company bother to carry out expensive rules of origin checks if paying the tariff, which might be as little as 2%, would be much cheaper? It is as simple as that.

[Yvette Cooper]

That is really flipped logic. The hon. Gentleman is effectively saying, “They do not have to do the checks because they can all just pay the tariffs.” Why on earth are we going through this whole process in the first place if all we are going to get is a tiny reduction in tariffs that no one will take advantage of in order to get any benefits?

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[Tom Brake (Carshalton and Wallington) (LD)]

I hope that the penny is now dropping among those who inflicted the EU referendum and the subsequent chaos on the country as to precisely what damage this Tory farce is doing to our standing in the world and to our economy. We are two years on, yet no real progress has been made. Tory rivalries, leadership ambitions and factionalism are making this country a laughing stock, and Tory Members should be ashamed. I am sorry to say that Labour Front Benchers also often contribute to the farce.

I want to speak in favour of accepting new clauses 1 and 12 if they are pushed to a vote, and to speak against new clause 36, which is clearly a wrecking amendment. I hope that, when the Minister responds, he is able to explain why new clause 36 does not drive a coach and horses through the Chequers agreement. Everyone in the House knows that it does, but Ministers appear to be pretending that it does not. I commend the right hon. Member for Broxtowe (Anna Soubry), who is no longer in her place, for the anger and passion that she brought to the debate, and for starting to set out the consequences of Brexit. So far, the debate has been rather short on consequences. There has been a lot about aspirations, ambition, ideology and speculation, but rather little about the consequences of Brexit. Some Government Members pretend that Brexit will have no impact on the UK economy. Others are more honest, including the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), who has just left his place—

[Sir Bernard Jenkin]

I am here.

[Tom Brake]

I am sorry—the hon. Gentleman is present. He was more honest. I hope that he does not feel that I am misinterpreting him, but I listened carefully to him, as I hope others did, when he spoke on the “Today” programme on Radio 4 this morning, and I think that what he was doing, perhaps paraphrasing our outgoing Foreign Secretary, was to say, “F*** business”. He was saying that all businesses care about are profits, but I think they care about whether they are able to do the job they are required to do and provide the jobs in this country.

[Sir Bernard Jenkin]

Unlike probably the vast majority of right hon. and hon. Members, I actually used to work in manufacturing industry. I worked for the Ford Motor Company, and I also used to invest in manufacturing businesses. It really is a bit rich when people who know next to nothing about manufacturing lecture those of us who have been in business on the things we know about. Does the right hon. Gentleman dismiss the views of people such as Sir James Dyson and J. C. Bamford and the many other manufacturers who wanted to leave the European Union when we had the referendum?

[Tom Brake]

The hon. Gentleman might be surprised to hear that I also worked in business before I came into Parliament. I worked for manufacturing businesses, among others. He mentions the two businesses which he in fact can mention because they are in favour of coming out of the European Union. We have heard rather a lot about those two businesses. One has of course relocated most of its production to China, so I am not sure it is particularly well positioned to talk about these things—

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[Sir Bernard Jenkin]

I am very pleased to follow the right hon. Member for East Antrim (Sammy Wilson), who has put on the record a great deal of fact and truth about the way in which the Northern Ireland issue has been treated in the negotiations and by the negotiating parties. What he missed out in his remarks was that this was not an issue until the Varadkar Government were elected. The expectation was that there would be an invisible customs frontier in Northern Ireland. That was confirmed by Bertie Ahern when he gave interviews on the subject. It was confirmed by the head of the Irish customs organisation when he gave evidence to the Irish Dáil. It was confirmed by Jon Thompson, the head of Her Majesty’s Revenue and Customs, when he initially gave evidence to the Treasury Committee. This was not an issue until it was made an issue.

We are being asked to believe two extraordinary things. The first is that the Irish Republic itself might put infrastructure at the border of Northern Ireland, when the only reason that the Irish Republic recognises that there is a frontier between the Republic of Ireland and Northern Ireland is that it signed the Good Friday agreement—the Belfast agreement. Secondly, when President Juncker appeared in front of the Dáil a few months ago and was pressed to give an assurance that he would not force the Republic to put infrastructure at the border, he more or less gave that assurance. In fact, it was perfectly clear that he was not going to say, “We will force you to put infrastructure at the border,” so it is clear that the EU is not going to force anyone to put infrastructure at the border.

It is still the policy of the Government that we might leave even without a withdrawal agreement, on WTO terms. Under such circumstances, we will not put any infrastructure at the Irish border in Northern Ireland, and we will challenge the Irish Republic and the EU Commission not to do the same in the interests of peace in Northern Ireland. It is perfectly possible to manage an infrastructure-free customs frontier in Northern Ireland, and that is what will happen. It is pure obstinacy on the part of the Commission that it will not negotiate with the United Kingdom a free trade agreement on the basis of making an agreement with the whole United Kingdom, instead of excluding Northern Ireland.

[Kevin Hollinrake]

My hon. Friend is making some very good points. I certainly do not argue that we should be members of customs union, but the Freight Transport Association recently gave the example of a situation whereby a trailer full of 40 different consignments goes from Birmingham to Belfast, and then goes into 40 different white vans in Belfast. How does my hon. Friend propose that we would meet our responsibility to pay customs in such a situation?

[Mr Speaker]

Order. I am immensely grateful. May I encourage the hon. Member for Harwich and North Essex (Sir Bernard Jenkin) to draw his remarks to a close? He is within his time, but a lot of other people want to speak and I am being pressed by people who, quite understandably, want time. If the hon. Gentleman—with his brilliant eloquence and pithiness—could wrap up in a minute or two, that would be marvellous.

[Sir Bernard Jenkin]

Thank you, Mr Speaker. Just to answer my hon. Friend’s point, I think that we have to be practical. There will be a change in the way in which people treat consignments because they are crossing a customs frontier, but as the technology develops it will be possible to track individual consignments or multiple consignments in trucks across customs frontiers. We have discussed this matter with Revenue and Customs in this country. Ultimately, in future—looking ahead 10 or 20 years—the idea of customs frontiers existing between countries that trade tariff-free will become obsolete. To hinge our entire Brexit policy on the issue of not having customs declarations and customs frontiers is very last century, and we should not be captured by that.

My remarks are directed primarily at amendment 72, which I confess has turned out to be disappointingly uncontroversial. It was the intention of the European Research Group, a group of Conservative Back Benchers, to table four amendments—one or two of them in the light of the Chequers agreement and the White Paper—to test our understanding of the intention of Government policy. Every single one of our amendments, we believe, reflects Government policy. I do not imagine that the Government would have accepted any of them as calmly as they have if they did not reflect Government policy.

[Mr Grieve]

No, it is because they are useless.

[Sir Bernard Jenkin]

My right hon. and learned Friend, who seems to be becoming a remainer again, judging from his article in the Evening Standard—

[Anna Soubry]

Oh, come on.

[Sir Bernard Jenkin]

No, that is what he said. He said that we will have to rethink Brexit completely if we cannot get a satisfactory arrangement. That is the direction he is going in. I respect his view, but throwing around insults like “useless” is not elevating the debate.

My amendment 72 simply removes from the Bill an extraordinarily powerful Henry VIII provision that we should be signed up to a customs union with the European Union simply by order. Following the amendment that my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve) tabled to clause 9 of the European Union (Withdrawal) Bill, I thought that what is sauce for the goose is sauce for the gander. I do not suppose that I shall hear him speak against my amendment, because it puts Parliament back in control of the decision to join a customs union with the European Union. That is what I think we should do.

[Mr Speaker]

Ahem!

[Sir Bernard Jenkin]

I end on this one point, Mr Speaker. We have heard a lot about 40 MPs having an excessive amount of influence in this Chamber. In fact, 17.4 million people voted leave in the referendum, and 70% of Conservative MPs and 60% of Labour MPs represent leave constituencies. It would be bizarre if, in the end, the House of Commons, which was elected predominantly on leave manifestos, put up road blocks against leaving the European Union, and I do not believe that it will.

[Mr Speaker]

Thank you. The time limit will have to be reduced, with immediate effect, to five minutes.