Leaving the EU: Economic Analysis

Debate between Chris Leslie and Mel Stride

Wednesday 28th November 2018 Commons Chamber

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

Thank you, Mr Speaker—I think.

On reflection, it was probably quite wise of the Chancellor not to come here to give this statement. He definitely owes the junior Minister a stiff drink afterwards, because he is not waving, but drowning, especially as in this dodgy prospectus he has essentially admitted that we will not know on what free trade agreement the country is being asked to vote on 11 December. Does he not realise that the reason so many Members will not buy the dodgy sales pitch he is peddling today is that nobody is convinced about this Brexit lottery and just being told “Have faith, keep your fingers crossed, go with us in this giant leap in the dark”?

[Mel Stride]

It is not a giant leap in the dark to have a political declaration that makes clear that the deal that both sides will pursue in good faith will have at its heart a deep free trade agreement between ourselves and the EU27 with no tariffs, no quotas, no additional charges and so on, and will give us an end to free movement, end our sending vast sums of money to the EU and see us free to go out and do deals with other countries around the world.

Leaving the EU: UK Ports (Customs)

Debate between Chris Leslie and Mel Stride

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

Debate between Chris Leslie and Mel Stride

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.

Taxation (Cross-border Trade) Bill

Debate between Chris Leslie and Mel Stride

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.

Duties of Customs

Debate between Chris Leslie and Mel Stride

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

[Mel Stride]

The Bill deals with our leaving the European Union, which means, as a simple matter of law, that we will be leaving the customs union. However, it does indeed allow for a transition period in which there could be a very close customs association with the European Union.

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

How?

[Mel Stride]

The Bill will be presented this evening. When the hon. Gentleman reads it tomorrow, he will be more enlightened as to how it can facilitate a period of transition.

--- Later in debate ---

[Mel Stride]

We will be guided by HMRC on the number of staff required, and we are working closely with it on this issue. As the hon. Gentleman will know, Jon Thompson, the head of HMRC, has suggested that between 3,000 and 5,000 staff will be needed in a day one contingency scenario, if that is where we end up, and he and HMRC are in discussions with us about both the timing of the pressing of the buttons on these issues and the costs involved. The hon. Gentleman can rest assured that HMRC will be provided with whatever resources it requires to ensure that we are ready on day one.

[Mr Leslie]

Will the Minister assure us that the Bill, which, of course we do not have but which he is saying we will be able to see—although not until we have debated this paving resolution—will contain arrangements for sanitary and phytosanitary regulatory checks at Dover and the channel tunnel entrance and exit? They are not there at present and if we were going to institute customs checks, we would similarly have to institute those regulatory checks. Has Her Majesty’s Revenue and Customs allowed for that in the budget as well?

[Mel Stride]

The hon. Gentleman makes it sound as though the fact that we do not have the Bill available right now is in some way inappropriate or not right, but he will know that this Bill is a finance Bill—a taxation Bill—and it is coming in under Ways and Means. I will introduce the Bill at the end of this debate, having the opportunity to walk the Floor accordingly and to be admired by many Members on both sides of the House when I do so. He will also be aware that HMRC is involved in our ongoing negotiations on the issues he has raised, and these things will come out of those discussions in the normal manner.

Finance Bill

Debate between Chris Leslie and Mel Stride

Tuesday 2nd July 2013 Commons Chamber

[Chris Leslie]

Madam Deputy Speaker, I am grateful for your protection from the sedentary chuntering of Government Members. They ignore anything they hear, not just from the Opposition but from the International Monetary Fund, which has pointed out that this has been the slowest recovery for a century. There has been barely 1% growth since the 2010 spending review, and the Chancellor predicted there would be 6% growth by now. Living standards have fallen and many families are finding it difficult to make ends meet. Life is much harder.

[Mel Stride]

The hon. Gentleman mentions the important pursuit of growth. Will he enlighten the House on what happened to his party’s five-point plan for growth, including his commitment to a reduction in VAT?

National Insurance Contributions Bill

Debate between Chris Leslie and Mel Stride

Tuesday 23rd November 2010 Commons Chamber

[Mel Stride (Central Devon) (Con)]

The hon. Member for Brent North (Barry Gardiner) referred to the regrettable consequences of Government policy in terms of unemployment. I believe that, in large part, the entire Bill is regrettable because it introduces rises in national insurance for employers and employees, on businesses, at a time when we look to them for growth, as the hon. Gentleman rightly points out. But the reason for that is the policies pursued by the previous Government. Because of the hour, I do not intend to rehearse those this evening, save to point out that we have ended up in a situation where the interest alone on the money that we owe is £43 billion a year—more than we spend on education and defence. That is a national disgrace.

I welcomed my right hon. Friend the Chancellor’s Budget of 22 June, particularly the balance that he struck between seeking reductions in expenditure and accepting that we have to raise certain taxes. He weighted it far more towards the former than the latter, which has to be the right policy. The hon. Member for Brent North is right: the Office for Budget Responsibility itself has said that 500,000 jobs will be shed as a consequence of the fiscal consolidation in the public sector, and PricewaterhouseCoopers has suggested that perhaps another half a million private sector jobs will go as a consequence of that. We need to create jobs in the private sector.

According to the Treasury, in the past six months 300,000 jobs have been created in the private sector, so the capacity is there. It was as inevitable as it was regrettable that national insurance would go up. Labour first started talking about increases in national insurance as far back as the latter part of 2008. Of the three major taxation streams going into the Treasury, national insurance is the second most significant. In fact, in 2009-10 £150 billion was raised from income tax, £96 billion from national insurance and £70 billion from VAT. National insurance is efficient to collect, and in 2011-12 we will raise £9 billion as a consequence of the increases. In my opinion and that of many economists, the rise was totally unavoidable.

I wholly welcome one aspect of the Bill—well, not so much the Bill but the secondary legislation that will be enacted later—and that is the increase in the threshold for employers’ national insurance to £21 per week above indexation. I welcome that because it will take some of the pressure off our employers.

National insurance, however, is not a good tax; as we know, it punishes those who employ people rather than taxing the earnings from straightforward investment, which does not employ people. I urge the Government’s Front Benchers to make sure that, when the recovery gathers pace and we start to get the deficit down, national insurance for employers and employees should be right at the top of the list of taxes that we seek to reduce.

I welcome the national insurance holiday, about which much has been said in this debate, and particularly its targeting of new businesses. It should reach about 400,000 new businesses and about 800,000 new employees. I say that as somebody who set up his own small business, starting from scratch 20-odd years ago, and built a company both here and in the United States. One of the most important and fragile moments of a company’s growth is that very starting point; that is when a company is most vulnerable. The help will be hugely welcome.

To my horror, I have found myself being slightly persuaded by the right hon. Member for Delyn (Mr Hanson), as he started to open up the discussion about whether the holiday should apply across the entire country or whether, as I think he was suggesting, it might be applied in a different way, to pick up areas in the south-east, Greater London or the eastern region that might value the help more than other parts of the country. I would like to think that Government Front Benchers might think about that aspect a little further, although I suspect that when we start to try to cherry-pick small parts of the country, we will end up with a highly complex and potentially very expensive scheme. However, I would like to think that we might consider the matter in Committee.

I also welcome the fact that this is retrospective legislation that applies to companies set up since the emergency Budget in June, and that it is not prescriptive in the sense of requiring a certain type of employment in order for companies to qualify. There was a scheme in the 1990s to get the long-term unemployed back into work that was not nearly as successful as it might have been had it not been so prescriptive.

I am pleased that the Government, in recognising the importance of business, also set out in the Budget reductions in corporation tax in steps from 28% down to 24% over the period of the comprehensive spending review, with the small business rate falling to 20%. That will give us one of the lowest levels of corporation tax in the G20, and the fifth lowest in the G7.

I have some concerns about the national insurance holiday. We must ensure that we avoid so-called recycling whereby, for example, companies set themselves up as apparently a new business although they have been operating before, or come into the market as a new business and then close down and rebrand themselves. I note that clause 5 deals with that issue. My plea is that we do not make the whole operation unduly onerous and complicated for businesses that wish to take advantage of the scheme. My hon. Friend the Member for Chichester (Mr Tyrie) spoke in particular about the importance of keeping complexity down. The tax code in this country now runs to 11,000 pages. We have enough complexity—we do not need more.

The Bill also deals with EU regional funding constraints. Under articles 107 and 108 of the treaty on the functioning of the EU, companies are not permitted to receive more than €200,000 in state aid over a three-year period, given the regionality of the way the scheme works. Clause 8 seeks to handle that. Again, it is imperative that whatever information HMRC requires from those companies is kept to the minimum so that the system is not bogged down in red tape.

[Chris Leslie]

Has the hon. Gentleman had an opportunity to look at the regulatory impact assessment describing the steps necessary to implement the NI holiday, which is estimated on the Treasury’s own figures to cost £22 million? A lot of companies will have to use manual processes instead of the software that they had used to pay their national insurance, and it will require 240 extra staff at HMRC to administer the scheme.

[Mel Stride]

The hon. Gentleman adds to my point. Indeed, I believe that the cost to HMRC will be £12 million, and the cost imposed on business is estimated at £75 million. I accept that that is a large amount of money in the context of a scheme that is effectively injecting £940 million. It is therefore most important that we keep complexity and red tape to an absolute minimum.

It is important to ensure that this incentive is well advertised, given that it is permissive in allowing companies to apply for it but is not necessarily automatically granted. The HMRC material refers to advertising it on Business Link websites, and so on. If we are to get up to 400,000 businesses involved—1,000 are involved at the moment—we will have to advertise this nationally with a push to ensure that it is taken up. In particular, we need to ensure that we lower the proportion of so-called dead-weight businesses that are taking it up—in other words, those that would have employed additional people even in the absence of the scheme. It is really important that we give this a wholehearted push.

I welcome the national insurance holiday provisions in the Bill. I agree with my hon. Friend the Member for York Outer (Julian Sturdy) that it is important to consider other aspects such as encouraging lending and getting the Bank of England issuing credit condition surveys in which it talks about the banks lending again. We also need to cut back on red tape. This is a big opportunity to get back to a culture that is positive about new business. I should like us to have the kind of culture that we had in the 1980s, when we were open for business and companies were being set up. That is when I went out there and set up my business and created wealth and employment for people. That is the aspect of the Bill that I wholeheartedly welcome.