Oral Answers to Questions

Chris Leslie Excerpts

Tuesday 11th September 2018 Commons Chamber

[Robert Jenrick]

My hon. Friend and my hon. Friend the Member for Sherwood (Mark Spencer) have been campaigning on this for several years, and we recognise its potential to unlock economic opportunities in Mansfield and Ollerton. Within the east midlands franchise, we have included a requirement that the operator should come to the Secretary of State for Transport within a year with a business case for extending passenger services to my hon. Friend’s communities. The Department for Transport and the Treasury will consider that business case very carefully.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

Does the Minister accept that crucial investment from the European Investment Bank and the European regional development fund recently underpinned the midlands engine investment fund and that a hard Brexit risks pulling the rug from underneath many critical investment projects? He knows in his heart that a “cake and eat it” Brexit is a pure delusion and that his European Research Group colleagues still cannot explain how it would work. Would it not be better if we just let the public sort this out and have a say with a people’s vote?

[Robert Jenrick]

The public have already had a say, and in the east midlands, which we are discussing, the public were very clear that they want to leave the European Union. Infrastructure investment will be substantially higher over the course of this Parliament than it was under the last Labour Government—25% higher in the east midlands and 40% higher in Yorkshire and the Humber. The primary reason for that is this Government’s responsible management of the public finances.

Taxation (Cross-border Trade) Bill

Chris Leslie Excerpts

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

[Anna Soubry]

My right hon. and learned Friend is right, as ever.

The truth is that both main political parties are now in the grasp of the few who falsely claim to speak for the many. A lack of ability, or perhaps courage, the over-liking of the safety and sanctity of ministerial office or, frankly, just a quiet life, on whichever side of the House, and a guaranteed income for a loyal Back Bencher with a handsome majority, mean that our country is hurtling not just towards the extremes of British political life, but over the Brexit cliff, which the overwhelming majority of leavers did not vote for—indeed, they were promised the precise opposite.

The time has come for the nonsense to be stopped. The time has come for people to show courage and do the right thing by our country. We are leaving the European Union, but we have to leave in such a way that protects jobs and prosperity—and peace in Northern Ireland—for everybody in this country. It is time for people to put aside the ideology and the nonsenses that invariably come from not inhabiting the real world. Let us face up to reality, as this White Paper seeks to do, and reject these two ludicrous amendments that the Government have agreed to. In due course, let us wake up to the further reality: we will end up in the single market and the customs union; the only question is when.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

I commend the right hon. Member for Broxtowe (Anna Soubry) for the passion with which she has spoken. She spoke authentically about the care and attention that she has taken to look into the supply chain issues, the just-in-time delivery systems that are the foundation of modern manufacturing in our country. She was not taking an ideological view, which certain Conservative Members, who may guffaw at that, might take, but thinking about the economy: our constituents’ jobs and all the prosperity and tax revenues that pay for the vital public services that we need to keep this country going. The national health service, the education system, housing and local government all depend on a healthy, vibrant economy.

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[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

The hon. Gentleman misunderstands amendment 73. One of the other amendments, which the Government have also accepted, would stop them having a Henry VIII power for a new customs union. If a new customs union were to be introduced by legislation, amendment 73 could be brought in under that customs arrangement. It simply retains power for this House.

[Mr Leslie]

We have got the hon. Gentleman’s measure now. He used to be an entertaining curiosity, but no longer. He represents a major present threat to the future of our economy and our constituents’ jobs. He is trying to scupper our smooth frictionless arrangements for businesses that currently have to pay VAT but can do so because we treat it as a matter of dispatches and arrivals, rather than its having to be paid upfront. By deleting paragraph 14 of schedule 8, the hon. Gentleman would hole future VAT arrangements below the water line.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

Are we not seeing here an insertion of further red lines when we have enough of them already?

[Mr Leslie]

Exactly. It would be sensible of the Government to read the runes and start thinking about where there is a consensus in Parliament for a positive way forward rather than constantly laying down or accepting more red lines, or caving in to threats from those who are very loud but represent a tiny minority viewpoint.

New clause 2 is really important because it would preserve our current role of participation in the EU VAT area. I hope hon. Members will see the purpose of that. I think we currently have 25 million customs declarations paying VAT at the border. That will potentially rise to 255 million. Imagine the bureaucracy, the cost of administration and the paperwork for our VAT system if those declarations also have to be made at the border. Amendment 73 would end up taking out our participation. I intended to raise this issue as a matter of debate, but perhaps I should press new clause 2 to a vote, because the EU VAT area is absolutely crucial to avoiding a hard border.

It is important that we pick out the problems with the Chequers arrangement. I understand that the Prime Minister is trying to find some sort of balance, but I am afraid to say that the notion of a facilitated customs arrangement just does not quite get us to where we need to be. I am delighted with the acceptance of how important a common rulebook for goods is to our country. That recognition of economic reality is important, but it is only one piece of the jigsaw that we need. For instance, we need to ensure that the 80% of our economy in the services sector is not completely abandoned and that we lose out as a result.

[Heidi Allen (South Cambridgeshire) (Con)]

I would just like to reflect on how refreshing it is—it is probably what the majority of the country wants to see—that sensible people are working cross-party to try to find a way forward in this dreadful mess. I agree with the hon. Gentleman on the Chequers arrangement. It is an opening bid to the EU, is it not, saying, “Okay, come back and tell us which pieces you are happy or unhappy with.”? I am interested in whether he knows Labour’s position on the wrecking amendments, specifically amendments 73 and 36. Will he and his party will be joining us in voting against them?

[Mr Leslie]

Well, I will certainly want to vote against amendment 73, but my hon. Friends will make their own remarks in their own time. I do not know what their intentions are, as I have not had a chance to hear from them. Intuitively, I doubt very much that my hon. Friends, knowing what the hon. Member for North East Somerset (Mr Rees-Mogg) is up to, knowing where the members of the ERG come from on the political spectrum—the hard right Brexit perspective—and knowing how important the economy is to the future of this country, will abstain on amendment 73.

[Stephen Doughty]

It is very clear, as my hon. Friend says, who those Members are working with and what their agenda is. They are working with the likes of Nigel Farage and others who would like to see us crash out, so that they can deregulate the economy and change it into a Singapore-style tax haven on the edge of Europe where they can pursue their right-wing fantasies.

[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.

[Vicky Ford]

On the rules of origin, the hon. Gentleman may wish to read the pan-Euro-Mediterranean convention on rules of origin, which covers a broader area than just the customs union. It is possible to have agreement on rules of origin outside the customs union.

[Mr Leslie]

My experience is very different in terms of the information I have. If we look across the range of goods as a whole, there are problems with rules of origin outside the customs union.

The second problem with the facilitated customs arrangement is that it breaches article 3 of the General Agreement on Tariffs and Trade—GATT—which is part of the World Trade Organisation rules. Article 3 is the national treatment principle, which says that we should not treat imported goods unfairly relative to domestically produced goods. Because of the track and trace requirements in the facilitated customs arrangement architecture, we will have to treat imported goods differently to those produced and made in the UK.

The third problem is that if we want to make free trade agreements with the rest of the world, the Government are shooting themselves in the foot with the facilitated customs arrangement because article 24 of GATT states that we have to eliminate substantially all trade barriers between constituent trade authorities. If the UK is having to collect tariffs on behalf of the EU, that introduces a barrier that will have to fetter future free trade agreements. I do not particularly believe we can get better FTAs beyond the customs union; I think our leverage as part of the EU is superior, but on a technical level a facilitated customs arrangement, I am afraid to say, is just not going to wash.

[Hilary Benn (Leeds Central) (Lab)]

On the important issue of rules of origin, which my hon. Friend has just raised, we have heard the argument from some people is that it is not a problem. If it is not a problem, then why do the Government, in paragraph 23 of the White Paper, state that the UK is proposing

“no routine requirements for rules of origin between the UK and the EU”?

[Mr Leslie]

Exactly. Presumably the Government think they can negotiate on that between the UK and the EU bilaterally, but actually that is not the way that this works. Under the WTO arrangements, we have to make sure we have the same application of rules as we would in other arrangements around the world.

A customs union is not just preferable; it is the only realistic option. The idea that the European Union is going to say, “Fine, we’re happy with you splitting the four freedoms” is for the birds. That is not going to happen, especially as populism is running riot worldwide. The EU feels very firmly that it wants to defend the international rules-based system. It feels very firmly that the four freedoms of the single market and the customs union are integral to it. The idea that Switzerland provides an example, when it has endured decades of constant treaty negotiations year after year after year—that is not a model Britain should seek to parallel.

The idea that we should simply hope that by focusing on the withdrawal agreement we can secure our future is also a fallacy. The notion that we will be able just to staple on to the back of this arrangement, on a few sides of A4, political statements on our future relationship with the EU is deeply dangerous. We have to make sure that we settle these issues—I know the former Brexit Secretary agrees on this particular point. The idea that what is said on one side of exit day will necessarily be enforced on the other side of exit day is just not true. There is no legal enforceability to any warm words about our future relationship. These issues have to be set out at this particular stage.

[Wera Hobhouse (Bath) (LD)]

Does the hon. Gentleman not agree that it is time we listen to the people who run businesses, rather than sit in our comfortable seats telling people what to do?

[Mr Leslie]

Yes, and the problem we have had is that ideology and populism have been running this country for the last few years. We need to stop that and assert common-sense economic reality much more. As the right hon. Member for Broxtowe was saying in her speech, this transcends the political parties. This is not a time to be playing party political games of advantage. Our country is absolutely at stake here.

--- Later in debate ---

I would extend that to things such as solar panels and insulation products. Would any rational person in this House put VAT on solar panels and insulation products? I do not think that they would, but we have to do it because the EU requires it. Would we not rather like to reduce VAT on domestic heating and fuel? I think we would generally—

[Mr Leslie]

Will the hon. Gentleman give way?

[Craig Mackinlay]

I will; I would enjoy continuing my speech so please intervene.

[Mr Leslie]

Did the hon. Gentleman notice that, in March 2016, the European Union agreed, on the so-called tampon tax issue, to allow zero-rating? Therefore, the point that he made is completely debunked.

[Craig Mackinlay]

I am sorry, but that must have passed me by. I know that, to get around the difficulties that were caused by the tampon tax and the significant debate that we had in this Chamber, of which I was a part, the Government agreed to sort of equal the amount that was collected to pass it to charity. So it seems bizarre that we have not taken the steps that are available.

The other thing about going along with the VAT directives and how VAT is managed is that we have been subject to the missing trader intra-community fraud, the so-called carousel fraud, which cost this country £1.7 billion last year. It is estimated to cost the EU as a whole into the tens of billions of pounds. Over the period of the administration of VAT in its current form, it could have cost anything up to £100 billion across the EU. Are we really saying that these failed systems are something that we want to be attached to in perpetuity?

The Prime Minister has said very clearly that we will be in control of our tax policy. Just last week, following Chequers, the Secretary of State for the Environment also confirmed that we cannot actually set our own taxes as we would wish to at the moment because VAT is set in accordance with EU rules. That is another area in which we will be sovereign. Amendment 73 would make sure that, no matter what the future holds, primary legislation will be needed to do this. We cannot have the vestiges of some of the worst VAT rules that anybody could ever imagine remaining on our statute book. For that reason and given that powerful debate on the tampon tax, I certainly hope that others across this House will support that amendment this evening.

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[Mr Rees-Mogg]

May I first thank my right hon. Friend the Member for Putney (Justine Greening) for making what I thought was a remarkably gracious speech, in quite a fevered atmosphere, and for putting both sides of the case so generously and kindly?

I want to speak to the four new clauses and amendments that I have supported and, in most cases, put my name to. They are broadly in line with Government policy, which is why the Government have accepted them. New clause 37 relates to the Northern Ireland question. It is clearly Government policy that Northern Ireland should not be removed from the rest of the United Kingdom, and I think that to put that in legislation would be beneficial.

Amendment 72 relates to Henry VIII clauses. I agree with my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve)—or “beacon’s field”, as Benjamin Disraeli pronounced it—that we should not have Henry VIII clauses if we can possibly avoid them, as they are not good legislative practice. The fewer Henry VIII clauses we have, the better. I confess that I would have supported my right hon. and learned Friend in earlier Bills had I not thought that, in so doing, I would have caused suspicion on the other side of the European debate, with people wondering what on earth I was up to. However, I am very pleased that Henry VIII clauses are becoming less popular in the House.

Amendment 73 has been a topic of discussion in relation to no EU VAT regime. This is actually Government policy, as set out by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs on “The Andrew Marr Show”, when he said that once we had left the European Union we would not be part of the EU VAT regime. The difference here is between acquisition VAT and import VAT. Import VAT is the normal way we charge VAT on third countries outside the European Union, whereas acquisition VAT is an EU system. Therefore, if we are leaving, it makes absolute sense to be out of this, and that fits with what the Government have said.

[Mr Leslie]

I do not quite see how the hon. Gentleman can say that that is compatible with the Government’s policy, given that the Chequers White Paper, which was published only last Thursday, states:

“To ensure that new declarations and border checks between the UK and the EU do not need to be introduced for VAT and Excise purposes, the UK proposes the application of common cross-border processes and procedures for VAT and Excise”.

How is his proposal in any way compatible with Government policy?

Oral Answers to Questions

Chris Leslie Excerpts

Tuesday 3rd July 2018 Commons Chamber

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

It is getting completely ridiculous now. When either the Chancellor or the Chief Secretary to the Treasury is finally allowed to have a look at this mythical third customs plan from No. 10, will they at least have the integrity and honesty if it does not deliver the exact same benefits for Scotland—or, for that matter, England, Wales and Northern Ireland—to come to this House and actually say so?

[Elizabeth Truss]

As I have said, we want to secure as frictionless trade as possible with the EU as well as those opportunities with the rest of the world. It would be helpful if the Labour party, rather than trying to reverse the result of the referendum, was instead more positive about the opportunities in the future.

Persistent Rough Sleeping in Nottingham

Chris Leslie Excerpts

Monday 2nd July 2018 Commons Chamber

[Lilian Greenwood]

The hon. Gentleman is quite right that this is about providing people with not just a home, but the means by which they can sustain themselves in a home.

The reasons for the increased numbers are far from a mystery. Crisis cites the impact of welfare reform, rising rents and the housing crisis. People become homeless and sleep rough for many reasons, but the single biggest cause of statutory homelessness is now the end of an assured shorthold tenancy. The cost of private rented accommodation has risen three times faster than earnings in England since 2010, and real earnings are still lagging behind 2008 levels a decade on.

Although I firmly believe that the Government bear a great deal of responsibility for the rise in homelessness and fear that their target of halving rough sleeping over the course of the Parliament and eliminating it altogether by 2027 lacks the urgency that the situation demands, I do very much welcome the Homelessness Reduction Act 2018 and the Government’s decision to develop the national rough sleeping strategy. My reason for seeking tonight’s debate is to address the content of that strategy.

Concern about rising levels of rough sleeping in Nottingham was one of the drivers behind a new investigation commissioned jointly by Framework Housing Association and Opportunity Nottingham, the Big Lottery-funded programme supporting people with multiple needs. “No Way Out: A Study of Persistent Rough Sleeping in Nottingham” was produced by Dr Graham Bowpitt from Nottingham Trent University and Karan Kaur from Opportunity Nottingham, with help from Nottingham’s street outreach team.

The study sought to discover how far the recent increase in rough sleeping might have arisen

“not just from more people coming on to the streets, but also from people remaining there longer or repeatedly”.

It sought to identify

“the characteristics that distinguish persistent rough sleepers from the wider street homeless population, and any common features in their circumstances that might help to explain persistence.”

In the remainder of my speech, I will focus on the study’s key findings before commenting on wider issues in Nottingham and at a national level.

For the purposes of the report, and therefore this debate, the definition of persistent rough sleeper is

“someone who was recorded sleeping rough on at least 10% of nights between 1st April 2016 and 31st March 2017, i.e. 36 nights (the ‘sustained’), or who has been seen sleeping rough in at least three out of the six years between 2012 and 2017 (the ‘recurrent’).”

The report says:

“There were 72 persistent rough sleepers who met the above definition…7 who were both sustained and recurrent, 33 who were sustained and 32 who were recurrent. Of these…10 were women…and 62 men…58 were recorded as of White British ethnicity...most of the others being White (Other)…13 were recorded as having a disability (18%).”

According to the report, Opportunity Nottingham’s beneficiaries are recruited to the programme because they are assessed as having

“at least three of the four prescribed complex needs: homelessness, substance misuse, mental ill-health and offending.”

Of the 72 persistent rough sleepers, 67—that is 93%—had problems with substance misuse. Some 49 were offenders or at risk of offending, and more than half had mental health problems.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

I commend my hon. Friend for securing the debate, and Opportunity Nottingham and NTU for producing the report. My hon. Friend mentioned that over half of those persistent rough sleepers had a mental health issue. Is it not hardly startling that there is a correlation with the reduction in the number of overnight mental health beds—not just nationwide, but specifically in Nottinghamshire? We have lost 176 mental health overnight beds since 2010, and that is one of the core drivers putting people back on to the streets.

Customs and Borders

Chris Leslie Excerpts

Thursday 26th April 2018 Commons Chamber

[Yvette Cooper]

This has been an excellent debate. We have had substantial speeches drawing on huge evidence and experience from across the country and from so many Select Committees, but what the Minister—he did the best he could—delivered in response was not up to the debate. He had lines to take, the words on the page, but in the end there is no meaning behind them, no evidence that underpins them and no future that we can build on them. In the end, I think in his heart he knows that. That is why I urge the Government to bring forward a proper debate on legislation, on amendments. Give the House the opportunity to steer the objectives of the negotiations before it is too late. This is about the future of our whole country, the future of our prosperity, the future of our manufacturing industry and whether we have peace within our borders and across our borders. It is immensely important for our entire future, and too important to be simply left to a massive row and crisis afterwards, when it is too late. The Minister knows, and the Government know, that time is running out. It is time for the Government to stop running away. Let us have this debate; let us support a customs union.

Question put and agreed to.

Resolved,

That this House notes that the EU is the UK’s largest export market for goods, accounting for a total of £145bn of exports and £241bn of imports in 2016; further notes the Government’s expressed aim to secure the freest and most frictionless possible trade in goods between the UK and the EU after 29 March 2019; notes the importance of frictionless trade without tariffs, customs or border checks for manufacturers and businesses across the country who trade with the EU; further notes that the free circulation of goods on the island of Ireland is a consequence of the UK’s and Republic of Ireland’s membership of the EU Customs Union; in addition notes the Government’s commitment to (i), in the UK-EU joint report on progress during phase 1 of the Article 50 negotiations, the maintenance of North-South cooperation and the all-island economy on the island of Ireland, (ii) the Belfast Agreement implemented in the Northern Ireland Act 1998 remaining a fundamental principle of public policy and (iii) the continuation of unfettered access for Northern Ireland’s businesses to the whole of the UK internal market; and therefore calls on the Government to include as an objective in negotiations on the future relationship between the UK and the EU the establishment of an effective customs union between the two territories.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

On a point of order, Mr Speaker. Now that the House has resolved to call on the Government to include as part of their negotiating objectives that the United Kingdom should remain in an effective customs union with the European Union, can you clarify whether the convention set out by the Leader of the House in respect of Opposition day motions that are passed without a Division and become resolutions of the House, whereby the Government have committed to report and reply after three months, will apply in respect of the resolution that the House has just passed?

I say that because this is the first example of a Liaison Committee motion passed in this form. We have no guarantee that legislation will be forthcoming before the summer recess, but that three-month period, as I understand the convention, would put a requirement on the Government. Now that the House has resolved the matter of the customs union—it is the default, consensus view of this House—will you confirm that the Government’s convention should apply to such resolutions? This talk about the non-binding nature of resolutions is very dangerous. If the House has come to a resolution, it means something. The Government are surely under an obligation to come and explain how they intend to acquit themselves in response to that resolution.

Leaving the EU: UK Ports (Customs)

Chris Leslie Excerpts

Monday 19th March 2018 Commons Chamber

[Mel Stride]

I thank my right hon. Friend for her question, but of course we do not yet know, as we negotiate these arrangements with the EU27, exactly what form of arrangements will be in place. Of course we will be assessing those carefully.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

May I press the Minister a little more on his two alternatives to the customs union? He has posited the idea that one is a technological solution, but he has already acknowledged that it is not viable, because of the border with Northern Ireland, so this all rests on a customs partnership arrangement. Will he confirm not only that that would that require the UK to assess two separate tariff arrangements internally—one for us and one for the EU—but that we would be looking to the EU to assess both its own and the UK’s tariff arrangements simultaneously? Does that happen anywhere else in the world?

[Mel Stride]

We have made it clear all along that the new customs partnership is an extremely innovative approach and would be a first, because this is a unique situation in which we and our European partners have a strong trading relationship and a near complete alignment of rules and regulations pertaining to our trading arrangements. The hon. Gentleman suggests that there is no alternative to the new customs partnership in relation to the border between Northern Ireland and Ireland, but that is not the Government’s position. We are confident that by using facilitations and various arrangements—[Interruption.] If he focuses for a moment on the kind of activity that is happening across the border between Northern Ireland and Ireland, such as fuel laundering, he will see that it has proven perfectly reasonable for the Police Service of Northern Ireland to intercept those engaged in such activities, well away from the border and very effectively, by using targeted approaches, as we might be able to do going forward.

European Affairs

Chris Leslie Excerpts

Thursday 15th March 2018 Commons Chamber

[The Financial Secretary to the Treasury (Mel Stride)]

I am delighted to open the second day of this very important debate. At the outset I want to set out the status of our negotiations and reiterate this Government’s vision for a future economic partnership with the EU. I will in particular focus on the important issue of financial services within any future trade agreement, and remind the House that we have been very clear that the decision to leave the EU does not mean some loveless divorce or division. There is indeed no need for this, given that the economies of the UK and the EU are inextricably connected, and given our long and shared history of common values and shared challenges, and I have no doubt that any future economic partnership must recognise and reflect these facts.

We stand at the threshold of a new beginning with our European partners, and a renewal of our commitment to ensure the continued prosperity and stability of both the UK and the EU. Before I turn to our future economic partnership with Europe, it is important to set out just how far we have come, and what awaits us as we progress our discussions.

The agreement in December was a significant step forward. The joint report issued by the UK and the EU set out progress on three areas: a fair deal on citizens’ rights that enables families who have built their lives together in the EU and the UK to stay together; a financial settlement that honours the commitments we undertook as members of the EU, as we said we would; and an agreement in relation to Northern Ireland. We are confident that this collaborative spirit, which led to the December agreement, will endure as we take our approach forward into the next phase, including at the European Council next week.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

On this concept of a collaborative, open spirit, trying to find solutions and securing frictionless trade, the Minister will have seen today’s Sky News report that the Government are insisting on non-disclosure agreements with a variety of industry groups, transport bodies, hauliers and others in trying to find their way through. Why are the Government insisting on gagging business organisations in that way?

[Mel Stride]

It is standard practice for the Government to use non-disclosure agreements, and delivering a seamless post-Brexit border is a top priority for us. Non-disclosure agreements with key delivery partners for the border are crucial to the open exchange of information and opinion on options and scenarios, and they ensure that all planning negotiations and decisions are based on what is achievable and most appropriate for the UK to ensure a safe and secure border.

In respect of our future trading relationship, draft EU negotiating guidelines have been circulated to the EU for comment, and we expect final guidelines to be formally adopted next week at the March European Council. We trust that these will provide the flexibility to allow the EU to think creatively about our future relationship, and, looking ahead, we are confident that we will conclude a deal on the entire withdrawal agreement by the European Council in October. This confidence is not just grounded in our mutual interest of striking a deal, but also because we enter these negotiations from a point of striking similarity: our rules, regulations, and commitment to free trade and high standards are the same. So, as we build this new relationship, we are doing so from a common starting point.

The next milestone in the negotiations will be an agreement of an implementation period. We saw the implementation period prioritised in the Chancellor’s Mansion House speech and the Prime Minister’s Florence speech, alongside a frictionless customs arrangement and a comprehensive agreement on trade in goods and services. The implementation period is the essential first step to ensure that we can all experience an orderly exit from the EU, plan accordingly, and enjoy certainty during the transition.

--- Later in debate ---

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

There is a quote to place on the side of a big red bus, which I hope the right hon. Member for Wokingham (John Redwood) will drive around the streets of Wokingham in the years to come—especially if we do end up with no deal, which he seems to be advocating is absolutely fine, and the UK crashes out of our long-standing alliance with our friends and nearest and greatest trading partners and we end up with, as the Treasury forecasts, a hit of 8% to our GDP by 2033.

[John Redwood]

indicated dissent.

[Mr Leslie]

The right hon. Gentleman shakes his head. Those on the Front Benches will be noting that figures from Her Majesty’s Treasury have been disputed by their own Back Benchers.

It is important that we talk about European affairs. The right hon. Member for Wokingham advocated taking back control as though he on his own, isolated from all around him, can thrive and prosper without relationships and links with the outside world. It is tempting to envisage him locked in this room on his own, with the doors closed, just to see how he would thrive without the sort of relationships and sustenance that others provide.

So too, for the British economy, there is this fallacy about our independent sovereignty—that as a small island, we can cope on our own, without the rest of the world. These days, in the 21st century and in a modern economy, we rely on the rest of the world, and they also benefit from our engagement with them. We risk serious self-harm if we try to pretend that detaching ourselves from those alliances and relationships and going for the very first time towards less market access, as the Prime Minister advocates, is somehow going to make us better off. It will not; it will make us poorer.

[Mr Jim Cunningham (Coventry South) (Lab)]

The right hon. Member for Wokingham (John Redwood) is talking about a world that is long gone, in actual fact. We are a big wide world. I remember when the right hon. Gentleman was a Minister; his judgment was faulty then, and it is as faulty now. He goes on about taking powers back from Europe. The last two days have proved that we are not getting our powers back from Europe under his terms. What is happening now is that the Government are trying to tell us what to do without votes.

[Mr Leslie]

We have to recognise that in so many areas of policy—not just economic or trade policy—we benefit from these alliances and relationships. They do need to be worked on, and we need to somehow give and take a little bit. That is the nature of the global neighbourhood in which we live.

It would be remiss if I did not at this point voice my appreciation for the statements from France and Germany, which have shown their solidarity and fraternity with the United Kingdom in respect of the Russian chemical attack in Salisbury. We are talking about European affairs, and it is important that Europe stands together at an important moment such as this.

But Brexit is bound to dominate this sort of debate, and there are a number of aspects that I want to pick up on. The first is the question of frictionless borders and the trade arrangements that we absolutely have to maintain, not just for our own economic continuance but because of the Good Friday agreement and the need to avoid anything that could diminish the peace settlement in Northern Ireland.

The phase 1 agreement that the Government signed up to said that if they cannot come up with alternative arrangements, full alignment will be the way forward. My understanding is that the Secretary of State for Exiting the European Union has this morning admitted that the notion of a technological option—the “smart borders” option—is just not viable. It is not going to work because it requires hard infrastructure at the borders. You will know, Madam Deputy Speaker, that there are 275 crossing points on the border between Northern Ireland and the Republic of Ireland. The notion of having hard infrastructure—cameras, inspection posts and who knows what else—is clearly not compatible with the Good Friday agreement, so the Government have ruled that option out.

The only option that therefore exists is some sort of magical deal whereby the UK agrees to administer the external tariff arrangements for the rest of the European Union while simultaneously administering our own separate tariff arrangements for goods that are destined just within the UK. That does not happen anywhere else in the world. As well as being a complete bureaucratic nightmare, it would require reciprocity from our European partners with regard to our arrangements. They would have to administer a dual-tariff system for goods destined for the UK and those destined for Europe. It is just not going to happen. When the Under-Secretary of State for Exiting the European Union, the hon. Member for Wycombe (Mr Baker) winds up the debate, he would do well to admit that the phase 1 agreement that he signed up to now means full regulatory alignment and, of course, that a customs union is the best and simplest way to achieve that.

The Government are trying their best and scrabbling around, asking the road haulage industry, trade bodies and other cargo and freight companies, “What are your volumes of traffic and what’s happening in trade?”, and making them sign non-disclosure agreements, to try to gag them if they dare to speak, even to their own trade body members, about their conversations with Ministers. That just shows how desperate the situation is.

[Peter Grant]

Has the hon. Gentleman considered the possibility that the reason the Government want non-disclosure agreements in every discussion is that the next time Labour Front Benchers table a Humble Address motion, they will use the fact that they have signed up to a non-disclosure agreement to prevent Parliament or anybody else from finding out what on earth is going on?

[Mr Leslie]

It is very tempting to table a series of motions to keep extracting documents from the Government. For all the bluster of the Chancellor’s spring statement, I still regard the best documents published by the Treasury for quite some time, albeit reluctantly, to be the 30 PowerPoint slides that show, among other things, a £55 billion black hole in our public finances by 2033 if we opt for the middle scenario—the FTA-style scenario—and cuts to our public services that would result in the imposition of at least another decade or more of austerity. My hon. Friend the Member for Sheffield Central (Paul Blomfield) made an excellent speech and I say to him and my other Front-Bench colleagues that, having got the Labour party to support a customs union, the logic of all their arguments points to supporting retaining our participation in the single market, to avoid that austerity in years to come.

I want to finish on the arguments relating to the single market. We need to remember that the UK is an 80% service sector economy. While being in the customs union is good for the 20% of the economy that is based on physical or manufactured goods, 80% of our economy is based on services. That is why the single market matters—because it applies particularly to trade in services. Many trades and services will not be tariffed, taxed or diminished—they may be banned altogether, particularly in the field of financial services, which the Financial Secretary mentioned in his opening remarks. Financial services alone represent 11% of our economy and contribute £66 billion in revenue to our Exchequer every single year. That £66 billion pays for the schools and hospitals in the constituencies of all hon. Members, but, again, the Government are scrabbling around and trying to find some sort of mutual agreement on financial services. Just getting it referenced in a flimsy, two-sided A4 document on the future trade relationship will definitely not suffice.

[Sir William Cash]

Will the hon. Gentleman explain why it is that we have an £82 billion deficit with the other 27 members of the European Union, according to the Office for National Statistics?

[Mr Leslie]

In some areas we buy more of their goods than we sell, and in others we sell more goods than we buy. We have a significant surplus in financial services. We do financial services particularly well in this country. The Investment Association is exceptionally worried about the lack of co-operation agreements, which is a particularly technical term. We currently have such agreements by virtue of our membership of the European Union, but they will lapse on exit day. To what extent are the British Government seeking new or rolled-over co-operation agreements with each of the other 27 member states—perhaps the Under-Secretary of State can get advice on this from his officials by the time he winds up—so that the activities of some financial services are even legal in those countries?

The single market is also about goods, because some goods contain services aspects. Medical products require certification in order to be sold around the European Union. On the automotive sector, the Society of Motor Manufacturers and Traders has referred to the dangers of non-tariff barriers: regulatory alignment or divergence could be thrown into chaos if we leave the single market. I think about the single market benefits that consumers in the UK gain because they have safe products, a right of redress and enforcement on consumer goods. That is why the single market matters, and there are other issues besides.

[Robert Neill]

The hon. Gentleman is making an important point. An obvious example are goods that are sold with an insurance policy attached, which is a classic case of an area in which we are world beaters. Once we start to disentangle one part of the financial ecosystem, then we of course damage the whole lot, whether in trade with the EU or elsewhere.

[Mr Leslie]

The hon. Gentleman gives a perfect illustration. Let us imagine a driver, with insurance cover, departing from Belfast and crossing the border. At present, doing so does not require any particular change by the time he or she arrives in Dublin. After exit day, however, the applicability of the insurance product might be null and void, and it will certainly require adaptation. This is not just about physical goods or the transfer of manufactured products, because some of these invisible products matter massively as well. If there was a car accident during that journey from Belfast to Dublin, where does the liability rest and who will enforce it? All such questions have been left entirely unanswered as the Government barrel headlong towards March 2019.

Of all the things that a single market would affect, the Good Friday agreement is the one I feel most strongly about, because I cannot see a solution to that particular problem that does not require the UK staying in and participating in the single market and the customs union. I say to all Members, including my Front Benchers and especially Conservative Members, that we cannot just assume that a customs arrangement for hard goods crossing borders will be adequate to maintain the principles maintained in the Good Friday agreement.

The red lines chosen by the Prime Minister were hers; they were not on the ballot paper in the referendum. Indeed, Daniel Hannan MEP and others have said that nobody even questioned the single market during the referendum campaign. It is now for Parliament to say politely to the Prime Minister that those red lines are not correct. If the Government have the courage to take forward the trade Bill and the Customs Bill, and certainly when the European Union (Withdrawal) Bill comes back from the House of Lords, they will have to confront the fact that there is a majority in Parliament for a customs union and, I believe, for a single market. Let us get on with it, and sort this problem out.

Spring Statement

Chris Leslie Excerpts

Tuesday 13th March 2018 Commons Chamber

[Mr Hammond]

I am grateful to my right hon. Friend. We have already relaxed the borrowing cap for local authorities in areas with high demand and low affordability. We will monitor the consequences carefully and keep how it delivers under continuous review.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

The light that the Chancellor can see at the end of the tunnel is the Brexit locomotive barrelling headlong towards him, and towards our schools and hospitals. What will he do to prevent that free trade agreement-style scenario, which his own Treasury officials say will leave a £55 billion train wreck in our public services?

[Mr Hammond]

As the hon. Gentleman knows, I am committed to delivering a Brexit that protects British jobs, British businesses and British prosperity, and I spend a significant amount of my working time ensuring that that is the route we follow. I expect that we will make further progress at the March European Council. I understand the concerns that he expresses on behalf of British businesses, but I talk to businesses all day, every day, because that is my job—[Interruption.] The shadow Chancellor says so does he, so he will know this already. Business is concerned about what the consequences of a bad Brexit deal could be, but business is much more concerned about the consequences of the policies advanced by his right hon. Friends on the Opposition Front Bench.

Taxation (Cross-border Trade) Bill

Chris Leslie Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Mel Stride]

The 13th directive—as the hon. Lady will know, is principally used by countries and businesses outside the EU for the purposes of reclaiming VAT within the UK—will not necessarily be an issue, depending on where the negotiation between us and the EU lands. It is quite possible—indeed, the Bill facilitates this—that continued engagement with IT platforms will allow an easy and effective method of making the kind of reclaims to which the directive relates. She raises the question of whether we have to be ready by next January. If we have an implementation period, for example, we might have considerably longer to bring the process into effect.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

To clarify, is it the Government’s policy to try to remain a member of the EU VAT area? That issue matters massively to hundreds and thousands of businesses.

[Mel Stride]

The purpose of the Bill is to ensure that on day one we are ready for whatever eventuality we are faced with. For example, the Bill moves us away from acquisition VAT to import VAT, as would be the case—[Interruption.] The hon. Member for Nottingham East (Mr Leslie) thinks that that is some extraordinary revelation—almost a divine revelation—but it is actually in the Bill, as he will find if he reads it. To get technical, if he really wants to find out where this will end up, I think it inserts new section 15 into the Value Added Tax Act 1994. All these possibilities will be facilitated, but it will depend on where the negotiation lands.

--- Later in debate ---

[Mel Stride]

It is entirely true that we cannot have our cake and eat it—[Interruption.] I am paraphrasing the EU, not the Government’s position. Our position has always been that we foresee a mutually advantageous trading relationship with the European Union’s customs union and, for the purposes of this afternoon’s debate, the important point is that this Bill provides and facilitates the ability to produce exactly that.

It is important to provide certainty and continuity to businesses, including the hundreds with which the Government have met and consulted since the referendum. Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. That commitment and progress on the issue were formally recognised at last month’s European Council, and it will continue to inform our approach in the future.

The Government set out in their future partnership paper last summer and in the White Paper for this Bill two options for our future customs arrangements—two options that most closely meet those objectives. One is a highly streamlined customs arrangement, which comprises a number of measures to help to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new, technology-based solutions. The other option is a new customs partnership: an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU. The Government look forward to discussing both those options with our European partners and with businesses in both the UK and the EU as the negotiations progress.

The Government have already taken a number of important steps to ensure readiness for EU exit, including most recently at the Budget when my right hon. Friend the Chancellor of the Exchequer announced £3 billion of funding for Departments and the devolved Administrations to support their preparations. HMRC is on course to deliver a functioning customs service on day one that enables trade to flow, HMRC to collect revenues and the UK to have a secure border. The Treasury has already effectively allocated over £40 million of additional funding to HMRC this year to prepare for Brexit and continues to work with HMRC to understand its ongoing Brexit requirements. The Taxation (Cross-border Trade) Bill represents a significant part of our preparations.

[Mr Leslie]

I am grateful to the Minister for giving way. I sense that he is coming to a conclusion, so I wanted to get this particular question in. The programme motion specifies when he and the Government want the Bill to come back for Report and Third Reading, but how many sittings does the Minister intend the Bill to have in Committee? Many hon. Members would have expected a Committee of the whole House, but that does not appear to be the case and the Committee stage will happen upstairs. Will he guarantee that significant time will be available in Committee for those lucky Members to scrutinise this legislation properly?

[Mel Stride]

I will make two points. First, as the hon. Gentleman will know, such matters are for the usual channels, and his party is an important part of the usual channels. Secondly, the Bill will of course receive the normal high level of scrutiny as it passes through the House—line by line, clause by clause. Amendments can be tabled, debated and divided on if necessary. The Bill will then come back to the House on Report and for Third Reading. If he has any particular representations to make about the number of sittings in Committee, he should perhaps speak to his Whips, who can then speak to our Whips, and I am sure that we will all end up in a happy place on the issue he has raised.

--- Later in debate ---

[Peter Dowd]

My hon. Friend makes a good point that we need to have absolute scrutiny of the Government’s proposals.

We know what the Government would do with the powers contained in this Bill. They would tear up protections for British producers and consumers, throw workers’ rights on to the bonfire and create a free-market offshore tax haven—a miserable pound-shop economy. The Government know the price of everything and the value of nothing.

The Government do not have the authority to act in that way. The referendum and the recent election show a country divided, and it is Parliament’s job to reflect the country’s will and to develop a workable consensus. This Government, much like the disastrous Major Administration, have no mandate to implement such far-reaching changes, which is why the Labour party’s reasoned amendment would deny the Bill a Second Reading. We demand that the Government return with a Bill that sets out a clear path to our mutual objective of creating a functioning institutional framework for the handling of customs once we leave the European Union, one that provides the proper powers of scrutiny to Parliament, as promised by the leave campaign and as determined by the citizens of the UK in the recent election. Anything less is an affront to our democratic process and will only spell disaster for our country as this weak Prime Minister becomes prey to the worst instincts of many Conservative Members.

[Mr Leslie]

My hon. Friend spoke earlier about how many tens of thousands of businesses could end up with severe cash-flow problems if we leave the EU VAT area. Will he confirm that the Labour party’s policy is to try to continue participating within the EU VAT area?

[Peter Dowd]

I am happy to have a conversation with my hon. Friend outside the Chamber, but this is about the Government’s policy, not ours.

HMRC resourcing is another issue that we have to address. Everyone in this House agrees that we must avoid the nightmare scenario of gridlock at UK ports, with lorry queues stretching as far as the eye can see, yet the Government continue to do Brexit on the cheap with their refusal to fully fund and resource HMRC. Its staffing levels have been cut by 17% since 2010, and they are set to be cut further this year as it plans to close 137 offices across the country. The Minister must recognise the urgent need to hire and train more customs officers and HMRC staff, particularly if the Government are to meet their over-ambitious target of a fully operational customs system by 2019.

Although the Treasury is keen to tout technology as its magic solution to customs post Brexit, Ministers have failed to offer specifics on what a new customs system will look like and on whether it will even be ready in time. At the same time, there remains huge underlying questions about whether the current customs declaration service programme can deal with the sheer workload and pressure post Brexit.

A new IT system is no substitute for a fully resourced and staffed HMRC. Even with a transitional arrangement with the EU, the Treasury must recognise the urgent need to increase HMRC’s budget and staff, which is why the Opposition will attempt to amend the Bill to require Ministers to report back to Parliament on HMRC staffing levels and on the progress on testing and implementing these new systems.

--- Later in debate ---

[Richard Graham]

My hon. Friend is absolutely right. He brilliantly pre-empts the point I was about to make, which is that although some Opposition Members have described the uncertainty that they say the Bill will cause, the Bill will precisely help to avoid the cliff edge that all of us—but, above all, businesses—want to avoid. I thank him for his intervention.

The key is that the Bill will ensure that a customs regime is in place for cross-border business to flourish, whatever the results of the negotiations. To be honest, I think my right hon. Friend the Member for Broxtowe (Anna Soubry) underestimated the importance of technology not just in business, but for our customs processes. Regardless of whether or not we had decided to leave the EU, replacing the existing customs system, CHIEF, with the new IT platform, CDS, will, although it comes with a caveat about new Government IT systems, help our customs regime—it is currently rated fifth out of 160 countries in the world for its efficiency by the World Bank—to maintain or improve our position. The trusted trader system used by Canada and Australia, for example, has obvious replicability for trade at the border between Northern Ireland and the Republic of Ireland.

At the same time, the Bill is not devoid of ideas. The earlier customs White Paper outlined the two key negotiating positions for the Government, the first being a streamlined option and the second being a new customs partnership. My own belief is that if our European partners—that is entirely the right word for members of an organisation with which we have 44% of our exports—prove pragmatic in their interpretation of the new partnership, I very much hope that option 2 will prove possible. This option would allow the UK to mirror EU customs arrangements and trade policies for goods that are eventually to be consumed within the EU—even if they are first used, as it were, in the UK—thereby ensuring that the right amount of EU duty is paid without introducing new customs processes between us. This would be a practical benefit from a new partnership that I very much hope will come forward from the negotiations.

Let me turn to the amendment. The hon. Member for Bootle (Peter Dowd) talked with some passion about the manufacturing jobs in his constituency—rather fewer, I have to tell him, than the 4,000 manufacturing jobs in Gloucester; we all have manufacturing as a key element of our constituency business. He has concerns about the Bill’s impact on manufacturing, and the amendment therefore raises three objections to the Bill, which I will come on to. At the same time, there is clearly a certain demand from Opposition Members for an internal Labour debate about their party’s position on the customs union. The hon. Member for Nottingham East (Mr Leslie) would like a special debate on whether the preference of the leading Opposition party is for a customs union or for the customs union, and I am sure others from the Scottish National party would add weight to his discussions on that subject.

The truth is that Labour’s objection to powers coming back to the UK because we are “denied any detail”—the hon. Member for Bootle used that phrase—is bizarre, given that the whole point of the Bill, as my hon. Friend the Member for Stirling (Stephen Kerr) mentioned, is to avoid a cliff edge by putting in place the mechanisms needed, whatever the result of the negotiation, which has not yet started in detail. At the same time, Labour is complaining that the Bill gives powers back only to the Government, rather than to Parliament. In fact, of course, all the detail post-negotiation would come to Parliament through secondary legislation, on which all of us in this House would decide.

[Mr Leslie]

Has the hon. Gentleman had a chance to look at clause 31(4) in relation to forming a customs union with the United Kingdom? He can correct me if I am wrong, but I do not think that that would necessarily come before Parliament. It would be done by Her Majesty through an Order in Council.

[Richard Graham]

On that specific detail, the hon. Gentleman may well be right, but, ultimately, Parliament will decide the shape of any future agreement.

--- Later in debate ---

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

The Bill has profound implications for our economy, for many of our constituents, and for businesses that operate in our constituencies. It gives the Government considerable powers to levy customs duties on goods coming from the European Union, which would be an incredibly damaging spiral for the British economy to enter into as it would not only affect employment opportunities and business costs, but put in jeopardy the stability of the border between Northern Ireland and the Republic of Ireland. The notion that the proposed duties will apply and that we will somehow also retain frictionless, uninspected borders is oxymoronic—it is not possible. Despite a rather cleverly worded phase 1 agreement between the Government and the European Union, in which they basically decided to kick the issue into the long grass to be determined later on, the question has not yet been resolved and the situation is incredibly serious.

The referendum ballot paper did not mention customs duties or VAT, and it certainly did not mention the customs union. That was not the subject of the question that the British public were asked. Perhaps some Government Members read something between the lines, or perhaps when they squinted in a particular way and stood on one foot they read something on the ballot paper that the rest of the country did not. The country has not voted to leave the customs union, yet the Government and the Prime Minister take it totally for granted that we should all naturally accept that outcome.

[Stephen Kerr]

I am sure that the hon. Gentleman was conscious during the entirety of the referendum campaign. I certainly was and I can assure him and the House that there were frequent references to the definition of the European Union as a single marketplace and a customs union. In fact, that was how the EU came to be defined on television and in the debates. I do not know where the hon. Gentleman was, but it was very clear that the British people knew exactly what leaving the European Union meant. To say otherwise is, frankly, to turn one’s back on the common sense of the British people.

[Mr Leslie]

Just because the hon. Gentleman asserts that it was very clear does not mean that that was the case. In fact, his own friend and colleague, Daniel Hannan, a Member of the European Parliament, was very clear that the single market was incredibly important and that no one proposed leaving it. Many other hon. Members said similar.

[Phil Wilson (Sedgefield) (Lab)]

It was also made quite obvious during the referendum campaign that £350 million a week would be spent on the NHS, but I do not think that has come to fruition either.

--- Later in debate ---

[Mr Leslie]

Perhaps we all just dreamed about that—it was something that we conjured out of thin air and imagined.

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

The Prime Minister at the time was perfectly clear that leaving the European Union did indeed involve leaving the single market and the customs union. It is sophistic in the extreme to suggest that people did not mean to leave the European Union and its institutions when we voted to leave.

[Mr Leslie]

Well, let the Prime Minister of the time come to tonight’s debate and say that himself.

[Mr Simon Clarke]

He is not here.

[Mr Leslie]

Oh, that’s right—he is not here anymore. I vaguely remember who the Prime Minister was at the time.

The ballot paper text is a matter of record for all to see. It asked whether we should remain in or leave the European Union, but it did not go into the details, because in a parliamentary democracy those sorts of details are naturally left to us. This is on our shoulders. We are accountable to our constituents for interpreting that referendum result and putting it into effect, always with an eye on protecting their best interests. That is our job—it is what we are elected to do.

Government Members may think that it is in their best interests to leave the customs union, but that was not on the ballot paper. I disagree with them. I do not think that leaving the customs union is in our best interests, and certainly not those of my constituents. We are talking about a potential impact on half the goods traded by the United Kingdom, as half our goods trade goes to the European Union. These are not inconsiderable issues. Some 2.5 million lorry journeys a year through Dover might be affected. Whole businesses have set up “just in time” business models, down to a matter of minutes, for how goods and components will be sourced throughout supply chains and how inventories will be sourced from across the whole European continent, but they now face being upended not only by the potential duties imposed by the Bill, but by other, non-tariff barriers including bureaucracy, additional form-filling, registrations and inspections. Goods coming in might have to go to one side, both at the port of departure and at the port of entry, to be checked for sanitary and phytosanitary compliance. There are all sorts of inhibitors to the free flow of goods. I and other Opposition Members are talking about free trade. That is what we should be standing up for, which is why this is an incredibly important issue.

[Kerry McCarthy (Bristol East) (Lab)]

I draw attention to my entry in the Register of Members’ Financial Interests. This is not just about goods being physically sold in other European countries. Musicians who tour Europe face real uncertainty about whether their instruments and merchandise, whose sales a lot of bands rely on, will be viewed as imports into those countries. There is a lot of uncertainty about what will actually be classed as a good crossing a border.

--- Later in debate ---

[Mr Leslie]

I will come on to that when I discuss part 3 of the Bill and the VAT consequences for not just businesses, but potentially consumers as well.

[Richard Graham]

I know that the hon. Gentleman holds his views deeply and sincerely; colleagues of mine hold very different views equally sincerely. Surely the crucial thing for all of us, however, is that the Bill allows for any of those possible outcomes. It does not predetermine the result of the negotiations or determine whether the United Kingdom will have a future free trade agreement with the European Union that replicates almost completely the existing customs union. Therefore, surely we can agree tonight about the importance of having a mechanism in place that avoids the cliff edge that all the businesses in all of our constituencies want to avoid.

[Mr Leslie]

If only that were the case. In fact, that same point is raised in paragraph 9 on page 6 of the explanatory notes, which states:

“The Taxation…Bill does not presuppose any particular outcome from the UK’s negotiations with the EU.”

That is not true. The Government have absolutely presupposed that the customs union is off the table. It is the ultimate presupposition, if ever anyone wanted a definition. This Bill apparently does not allow us to stay in the customs union, but it should allow us to do so, because I happen to believe that there is a majority in this House of Commons for membership of the customs union. I have a little job of work to do to continue to persuade my own party’s Front Benchers of that particular point, but I will try my best to do so because I think they will eventually recognise that being part of the customs union is incredibly important for our economy not just in the transition period, but for the longer term. I believe that the numbers are here in the House of Commons to support that and that it will eventually be proven.

I am disappointed that the Government have tried to twist parliamentary procedure by deeming this measure to be a money Bill. It is Mr Speaker who will decide whether or not it is a money Bill, and I think he will do so at the end of this particular Commons procedure. The Government, though, in a slightly tricksy way, are putting through the Bill following a Ways and Means resolution. Why have they done that? They have gutted the Trade Bill and stuck everything they possibly can into what was the customs Bill so that it cannot be amended by the House of Lords. It is the most obvious trick in the book—rule 101 for a Minister. I have been around the block a number of times, and I have to tell the Minister that there are whole clauses in the Bill, such as clause 31, that are about the formation of a customs union. How is that a matter purely for a money Bill? It is absolutely an issue of public policy to do with our trading alliances that the other place should have every right to pass comment on. If it has advice and suggestions for this place, it should be allowed to amend the Bill.

[Stephen Doughty]

I completely agree with my hon. Friend’s point. Is it not underlined by the fact that the Government’s programme motion neglects to state how many days’ scrutiny the Bill will receive in the Public Bill Committee, let alone on the Floor of the House, but does state that the Committee will be done by 1 February? If the Committee does not start for a week or a couple of weeks because the Finance Bill and other measures are going through, there will be an extraordinarily small amount of time for detailed scrutiny of a 56-clause Bill with numerous schedules that will potentially have serious impacts on our economy.

[Mr Leslie]

That is why I suspect that the other place will look at the truncated scrutiny. I tried to get this out of the Minister earlier—not the Minister before us, but the Financial Secretary to the Treasury. It was not a Cabinet Minister who came to the Chamber to introduce the Bill, by the way, but I am told that a reshuffle might be going on, so perhaps the Chief Secretary or even the Chancellor are in negotiations. The junior Minister acquitted himself reasonably well at the outset—as well as he possibly could, given the line that was scripted for him to take—but I think that a Cabinet Minister should have presented a Bill of such scale and importance. It deserves proper scrutiny in this place, with the right number of Committee sittings, because otherwise the other place will have to do that job for us.

[The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)]

I am happy to confirm that the Bill will have eight Committee sittings in the House of Commons.

[Mr Leslie]

I can only hope—fingers crossed—that I am selected for the Committee. I know that my hon. Friends on the Front Bench will be keen to have me on it. I try my best to be as constructive as possible at all times, so I hold out great hope for that.

Part 1 of the Bill is very wide-ranging. My hon. Friends have made speeches about trade remedies in respect of anti-dumping and subsidy provisions. Perhaps the Minister will use his winding-up speech to cast a little more light on what the UK’s policy will be on competitive trade and, in particular, on subsidy issues. I know that Government Members have an interest in many aspects of trade with places such as China and other non-market economies. The question about subsidies is important, so I would like to hear a little more from the Government about what their policy stance will be. Will we cut and paste the existing EU approach or not?

A number of big decisions have to be made. When our constituents find out that we will have the power to raise or lower a particular duty, the widget manufacturers or whatever in our constituencies who might be prone to it, or whose competitors might be prone to it, will take great interest in contacting Members of Parliament to say, “Will you push the Government to raise this duty?” or, “Will you push Ministers to lower that duty?” This has the potential to fill our inboxes for decades to come.

Members of the European Parliament—we have sort of outsourced much of this policy to the EU for 40 years—have a number of scrutiny powers in respect of customs and excise and trade agreements that we will not have when those matters are brought to the House of Commons. I worry very much about trade agreements. Members of the European Parliament have the right to comment on them and even to suggest amendments to them. Of course, they then give final consent to trade agreements, but that is not part of the current Administration’s package under the customs and trade Bills.

[Vicky Ford]

Will the hon. Gentleman give way?

[Mr Leslie]

I give way to an eminent former Member of the European Parliament.

[Vicky Ford]

I remind the hon. Gentleman of what the Financial Secretary said from the Dispatch Box: any new free trade agreement that the UK signs up to will be subject to the affirmative procedure in this place.

[Mr Leslie]

Of course, that is an unamendable procedure. I think that, at the very least, the Government will be pushed by the other place into a super-affirmative procedure whereby the Commons has a Committee that looks at the details and suggests amendments and changes. Ministers may then plough ahead if they want, but a super-affirmative procedure would mirror more the powers of MEPs in these matters. A simple aye or nay would be a dilution of the scrutiny powers that we currently have democratically via elected Members of the European Parliament.

I want to focus on part 3 of the Bill. In the past couple of days, a lot of attention has been given to the number of firms that do business across the European Union. They think of their trade not as imports and exports, but as arrivals and dispatches. Whether they are buying components from Birmingham or Bristol or from Brussels or Berlin, they treat them all the same for customs and excise and VAT purposes. That will potentially not be the case under the Bill.

Even if we stayed in the single market and the customs union, we would not necessarily be in the EU VAT area, which is outwith the customs union. That is another decision that Ministers will have to face up to and take. I would like the Bill to be amended so that we stay in the EU VAT area or, at the very least, have a proper impact assessment of the implications of leaving it. That is the position of the British Retail Consortium, which argues that leaving it would mean a potential bureaucratic burden for businesses that currently, if they are importing goods from EU member states, can treat the acquisition VAT through the normal quarterly lodgings of their VAT returns. Henceforth, those firms will potentially have to pay VAT up front—it is known as import VAT—at the point of entry, so at the border, at the port, at Dover, at the channel tunnel or wherever it comes in, each time there is that level of transaction. To look at it in the round, the customer would pay the same amount of VAT at the end point, but it would be incredibly disruptive to the cash flow of those firms.

I looked online and at the explanatory notes, thinking that there must be a regulatory impact assessment of that situation, because the Bill abolishes acquisition VAT and introduces import VAT on goods, including those from the European Union. There does not seem to be a particularly rigorous impact assessment. I do not know whether I have missed it. There was one for the Trade Remedies Authority, but there does not seem to be one for the import VAT proposals. There ought to be an impact assessment, because that is Cabinet Office best practice, but I cannot seem to find it.

Again, I do not think voters were necessarily tuned into the implications on the EU VAT area when they cast their votes on the ballot paper. I may be criticised again for saying this, but I did not see the EU VAT area on the ballot paper. Perhaps I was not looking closely enough. Perhaps Government Members will help me out and point to where it was.

Currently, 140,000 British companies have to go through the rigmarole of registration and compliance when importing from outside the EU. A further 132,000 firms that do not trade beyond the EU but source their imports and components from within the EU will potentially be added to that. Knocking on for 300,000 businesses will be hit by this. According to HMRC’s own statistics, the number of transactions that are hit by customs duties and, therefore, potentially by import VAT will go from 55 million trades to 255 million trades a year, with all the paperwork and rigmarole associated with that level of bureaucracy.

[Stephen Doughty]

My hon. Friend is making incredibly important points about the practical implications of the Bill and the proposed changes. Was he not concerned, therefore, that the Financial Secretary refused to confirm whether any additional customs officers were being proposed or were in training? In fact, he seemed to suggest that they would be reallocated from other roles within HMRC or the Home Office. Given the scale of the additional bureaucracy that is being proposed, is that not deeply worrying?

[Mr Leslie]

We will have to hear from Ministers how they propose to deal with the extra 200 million trades going through the new system. I hope to read more in the impact assessment. If the Government can cope with, or have proposals to ameliorate, some of that administrative burden, we would like to see it in the impact assessment.

On top of that, my hon. Friend should know that, as I think was mentioned earlier, HMRC currently has a computer system or IT software called CHIEF. What does it stand for? I will not try to deal with the acronym—oh no, I can; you will be glad to know, Madam Deputy Speaker, that it stands for “customs handling of import and export freight”. CHIEF will be retired in January 2019—keep that date in mind, as it is crucial in the transition. We are moving to a new system called the customs declaration service. It is costing £157 million to implement and is potentially great news, but all these 130,000 new traders will suddenly be brought into this new system, and they will need to be given time, leeway and flexibility to get used to a system that they currently do not have to operate. I want to hear from the Minister what approach the Government will take to gradually phase in the new system while bringing so many extra businesses into that procedure.

[Jim Shannon (Strangford) (DUP)]

We have had the good fortune over the last week to see some of the news, including BBC news. In the last week the BBC has visited businesses on the mainland. There seems to be a confidence among businesses and private enterprise across the whole United Kingdom of Great Britain and Northern Ireland in what the Government are doing in relation to the points that the hon. Gentleman is making. Does he accept that a lot of those companies understand the issues and are happy to put them in the hands of the Government?

[Mr Leslie]

That is not quite the impression I am getting from the business community. Trade bodies, such the British Retail Consortium and others I have mentioned already, are voicing their concerns, but many businesses are also waiting to see if there is any clarity on the details of how this will pan out. The warm words about phase 1 agreements—“We can sort these things out”, “Don’t worry, it will all be fine”—will only butter so many parsnips. Ultimately, businesses want to know how it will affect their bottom line, how they will cope, what sort of new systems they will need to put in place, what sort of employees they will have to bring in, and so on.

[Stephen Doughty]

I am afraid I disagree with the hon. Member for Strangford (Jim Shannon). He and I get on very well, but I am not hearing the same thing. The Freight Transport Association has made very clear the consequences of even marginal delays to customs procedures, such as those caused by the introduction of a new IT system and the additional time spent processing declarations. It has said that the addition of an average of two minutes to customs processing would result in a 17-mile queue from Dover back to Ashford; four minutes takes the queue back to Maidstone; six minutes back to the M25; eight minutes, and we are at the Dartford crossing and Essex. We could not have a clearer illustration of the types of problems that could be caused. These are substantial changes and, even with the best will in the world, they will have substantial impacts on trade.

[Mr Leslie]

That is why we should not just rush the Bill through as though it were a minor, technical copy-and-paste exercise. These are fundamental decisions we are having to grapple with, both in this House of Commons and in the other place, and it is not appropriate that it be deemed a money Bill. Yes, aspects are to do with taxation, but others are not and broaden out into trade and other areas. The Government might think they can deal with this tactically in that way but I do not think it appropriate.

I encourage my Front-Bench team, and all hon. Members, to support remaining in the customs union. I give notice to my Front-Bench team in particular. I asked the shadow Chief Secretary to the Treasury about the Labour party’s policy on the EU VAT area, a specific area of policy we need to get to grips with. The Bill should be amended so that we retain our involvement and participation in the EU VAT area, as that is the clearest, simplest way of retaining the current benefits. I am sure that amendments will come along on this issue, and when they do, I hope that all hon. Members will think carefully about what to do.

As for this evening, I worry that this VAT issue is yet another potential horror story in the Brexit saga. We pull at one thread and yet more issues start to tumble down on top of our constituents and the business community. It is not right to facilitate duties being put on trade with our nearest neighbours and closest economic allies across the EU, and that is why I hope that we will oppose the Bill this evening.

--- Later in debate ---

[Vicky Ford (Chelmsford) (Con)]

It has been a great pleasure to listen to the debate tonight. I have always said that when it comes to EU negotiations, the devil is in the detail. It has been good to hear many Members discussing real detail tonight, because that will give us more confidence that we will be able to address the specifics in the negotiations ahead.

Some colleagues have suggested that we should try to maintain the status quo and stay in the customs union permanently, but I do not believe that that is practicable. I speak not only as a former Member of the European Parliament but as the person who chaired the European Parliament’s Committee responsible for the customs union. Staying in the customs union might help to sort out our trade with Europe, but what would it do for our trade with the rest of the world? Perhaps we would be able to negotiate to continue the existing free trade agreements that Europe has with other parts of the world, but the EU does not stand still. It will be negotiating new trade agreements. Trade negotiations are always controversial and always involve trade-offs. British interests are not always directly aligned with the rest of the EU, and having to accept future trade deals without any say over the terms is not a practicable solution, so a new relationship with the EU is needed.

It is also not practicable simply to do nothing and to try to cut and paste the relationships that we have with other parts of the world on to our trade with the EU. That particularly applies to our trade across the channel, because the journey times are too short for paperwork to be processed and the trade volumes are too high. There would be delays, which would push up costs and raise prices, hitting the interests of consumers and businesses on both sides of the channel. It is therefore good that both the UK Government and Governments across Europe are looking at bespoke solutions, and the Bill keeps our options open, including the potential for a customs union with the customs union, which may be the exact sort of deep partnership we look for in the future.

It is important to look at the detail. Import VAT and when it falls due is really important for small businesses in all our constituencies, but the Government have recognised the issue and do not want small businesses to face more costs. The Manufacturers’ Alliance has pointed to concerns about the detailed methodology on calculating remedies, the supremacy of the lesser duty rule, and the timing and nature of the economic interest test, but all those issues can be dealt with in Committee and are not good reasons to vote against the Government tonight. There is the really important issue of the cumulative rules of origin, which are vital for advanced manufacturing and the car sector, but Ministers have again made it clear that they are aware of the issue, which affects manufacturers on both sides of the channel.

In an ideal world, we would want our future customs relationship to be agreed before we agree the legislation here, but we are not in a position to do that. Any future trade deal with Europe needs all 27 other countries to agree to it, and we need to be ready to act with whatever the solution is. I am particularly pleased that Ministers have said that they are committed to delivering either the streamlined customs arrangement or a new customs partnership, and I urge Ministers and Governments on both sides of the channel not to give up on an innovative solution yet, because it is in the interests of businesses and consumers on both sides of the channel to find and deliver such solutions.

[Mr Leslie]

On a point of order, Mr Speaker. The Bill that we are discussing has been designated as an aids and supplies Bill, and potentially as a money Bill, which I understand is in your gift at the end of the Commons proceedings. Could you confirm that no decision is imminent on your part on the designation of the legislation as a money Bill? I am not seeking a ruling from you this evening, but perhaps you could reflect on whether it is fair use of procedure for the Government to have unilaterally designated the Bill as an aids and supplies Bill, because there are measures in the Bill, particularly in relation to the customs union, that the other place might have a great appetite for amending. Obviously it is not for us to determine the procedures that take place in the House of Lords, and while that is not a matter for you, will you confirm that you have not yet made a decision on the designation of this Bill as a money Bill and that, as far as you are concerned, the House of Lords can do what it will with the Bill, should it pass to the other end of the building?

[Mr Speaker]

I am grateful to the hon. Gentleman for his point of order. The short answer is that I am making no decision at all at present about the certification of a money Bill. Such decisions do fall to the Chair from time to time, but they tend to be made at a slightly later stage in the process, and I will not be making a decision tonight. More widely, the hon. Gentleman advances an argument about what he thinks are appropriate arrangements in respect of the Bill, given its contents and implications, and I will reflect carefully upon what he and other Members have said. I hope that that is hopeful to Members and to the House.

Exiting the EU: Costs

Chris Leslie Excerpts

Wednesday 29th November 2017 Commons Chamber

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

(Urgent Question): To ask the Chancellor of the Exchequer to update the House on the expected costs of exiting the European Union.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

Our negotiating team is currently in Brussels discussing our exit from the European Union—in fact, our officials have been working on it for months. It would be completely wrong of me to cut across those discussions by commenting on speculation about the financial settlement, and it would not be in our national interest.

The Prime Minister made it clear in her Florence speech that EU member states would not need to pay more, or to receive less money, over the remainder of the current budget period as a result of our decision to leave. She also made it clear that, in the spirit of our future partnership, the UK will honour its commitments made during its period of membership. As we have said before, nothing is agreed until everything is agreed. Any settlement that we make is contingent on us securing a suitable outcome, as outlined by the Prime Minister in her Florence speech. We will meet our commitments and also get a good deal for the UK taxpayer.

We want to see progress towards our preferred option, which is an implementation period followed by an ambitious future economic partnership. In the Budget, we have set aside £3 billion, in addition to the £700 million that we have already allocated, to make sure that our country is fully prepared for all eventualities. What we have seen today is simply media speculation. We will update the House when there is more detail to give.

[Mr Leslie]

The British people were promised a dividend from Brexit. They were told that leaving the EU would save us a fortune. Those who campaigned for Brexit daubed their hubris across the side of a giant red bus, promising a windfall of £350 million every week for the NHS. That was not just a whopping lie, but the direct opposite of the truth.

Will the Chief Secretary confirm that if the divorce bill comes in at somewhere between £40 billion and £67 billion, as is speculated, that could be a payment of £1,000 from every man, woman and child in this country? Is this speculated divorce bill not just the tip of the iceberg? If we are being honest about the true costs of Brexit, should we not also add in the lost revenues to the Exchequer set out in the Red Book—something in the order of £20 billion by 2021—the £3.7 billion of Brexit preparations for all the duplicated agencies, new border arrangements, lorry parks in Dover and so forth, and of course the higher cost of living for all of our constituents as prices keep on rising?

How do the Chief Secretary’s constituents react to the idea that they will be lumbered with all these extra costs? Do they not ask her, “What exactly are we getting for this? What wondrous new advantages will we gain by shelling out these astronomical sums?” Will she not be straight with the House that we are paying for the privilege of putting the world’s most efficient free trade, tariff-free, frictionless agreement into the bin, and being told to pay for the privilege of downgrading to an inferior deal with our European neighbours? Why is she being so coy about the deal that is being done? The Government have gone from “go whistle” to “where do we sign?”

In a week when the Government will still not fully publish the Brexit impact assessment papers to this House, we are now hearing rumours that Parliament and the public may never be told the full amount. When will Parliament be told what is actually happening and will we get a vote on the sums of money involved? Will the Chief Secretary, right here and right now, scotch this nonsense that the true costs of Brexit will be hidden away in a convenient backroom deal in the negotiations? The British people need to know whether there is a deal and how much the Government have put on the table in the negotiations. If she will not tell us, why does she think that the only people who cannot be told are the British public and the British Parliament? This is not what the British public voted for in the referendum. It is not taking back control; it is losing control.

[Elizabeth Truss]

I can tell the hon. Gentleman what my constituents say: “The country has voted to leave the European Union.” What they want to see is us getting on with that and securing the best possible deal for Britain. If we look at the Opposition Benches, we can see Members who, like the hon. Gentleman, voted to stay in the single market and the customs union, and we also see Opposition Front Benchers who voted to leave the single market and the customs union. Today we read that the shadow Home Secretary wants a second referendum. That is not remotely helpful in securing the best possible deal.

The hon. Gentleman knows perfectly well that we are in negotiations as we speak. If we were to talk about numbers and aspects of the deal in this House, we would be cutting across our negotiating position. The people of Britain want us to get on with it, to take the advantages of leaving the European Union, to make the most of the opportunities and to secure the best possible deal. We are well on the way to doing that. I suggest that, rather than trying to refight the referendum battle, which is exactly what the hon. Gentleman seems to be doing, he needs to get with the programme and to start talking about how he can be helpful.