Loan Charge 2019: Sir Amyas Morse Review
David Davis Excerpts(4 years, 9 months ago)
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Mr David Davis (Haltemprice and Howden) (Con)
I beg to move,
That this House believes that the Loan Charge is an unjust and retrospective tax; notes that the law on the Loan Charge was not settled until 2017; and calls on HMRC to cease action on loans paid before 2017.
The motion is in my name and those of the hon. Member for Brentford and Isleworth (Ruth Cadbury) and my right hon. Friend the Member for New Forest East (Dr Lewis), and is supported by some 40 other Members of the House.
I start by commending my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) for having the courage to beat me to the punch in this particular debate. It may seem strange to outside observers that in the midst of a global pandemic and a huge national crisis that we are talking about a tax technicality—at least, that is how it might appear. But actually it is one of the great virtues of our country that no matter what the crisis, whether it is a pandemic or warfare, the House always pays attention to issues of natural justice. We never ignore issues of natural justice, even in times of crisis. As a matter of justice, which this is, it is not a party political issue. In politics and our business, justice is a matter of honour that we deliver to the British people, and that is what we intend to do today.
The loan charge is an injustice with very large consequences. We have all met and listened to constituents who are facing utter financial ruin as a result of this policy. It is ruining people’s lives. There have been at least seven suicides caused by the stress, anxiety and financial hardship of this policy. To give the House a flavour of that—because it does not apply just to those who have committed suicide but to those who are under stress—here is what the family of one loan charge victim told the all-party group about his suicide note:
“He wrote about being at the end of his tether with the Loan Charge matter. He wrote such awful things about himself things that just weren’t true, that he clearly thought about himself at the time. He wrote that he did not set out to do such wrongdoings; he wrote about being unable to speak to his GP about his anxiety as he was ashamed, his fear of going to prison, his disgust in himself for getting mixed up in the Loan Charge and his belief that he would now go to hell.”
In the case of this individual, the loan charge policy took not just his money, but his self-respect and eventually his life. And there could be more. According to the loan charge all-party group, 39% of those affected have had suicidal thoughts. I think the Minister will be hard pushed to think of another Government policy that has caused more than a third of those affected to consider suicide. It is no surprise that it is having that effect on people. Some 68% have suffered depression, 71% face bankruptcy, and 49% could lose their homes. I said in the previous debate on this issue that the power to tax has the power to destroy, and that has never been more clearly demonstrated than here.
Sir Edward Davey (Kingston and Surbiton) (LD)
I congratulate the right hon. Gentleman on bringing this debate to the House. In the all-party loan charge group, we took evidence from a number of family members of people who had committed suicide as a result of the loan charge, and I can underline the point that he is making. The impact on people who had been law-abiding and hard-working throughout their lives has been quite traumatic. In a particular case that I remember—I am sure that the hon. Member for Brentford and Isleworth (Ruth Cadbury) will remember this—the person who took his own life did not owe a huge amount of money. It was the fact that he had been made to feel like a criminal when he was anything but a criminal.
Mr Davis
The right hon. Gentleman makes an extraordinarily powerful point in his own skilful way. I say this back to him: his group took that evidence before the added economic stress of the coronavirus. Many of the individuals affected will be contractors. They will be people who perhaps have no rights at the moment and certainly no way of finding the money to meet the demands on them. Even small sums of money will bring enormous pressure to bear on the individual. So he is right: this is not some vague and abstract tax issue. This is about people’s lives. That is why I was pleased when the Government launched the Amyas Morse review into the policy, and in December, he published a detailed report. I commend him for his heroic attempt to find a compromise, because that is really what he did. The facts and the conclusions are a little different, and that is because he was trying to find a compromise. However, when it comes to matters of natural justice, I am afraid that a compromise is nowhere near enough. Such a detailed review deserves detailed scrutiny, and I am going to spend a small amount of time looking at his central findings.
Sir Amyas recommended a December 2010 cut-off date for the loan charge. All loans before that date will be out of the loan charge scope. In a piece for The House magazine some time ago I referred to that as arbitrary, and Sir Amyas responded. He said:
“It is not an ‘arbitrary’ date. It is the date from which the Finance Act 2011 ensured that tax was charged on income paid through loan schemes.”
But that simply did not make sense, even in its own terms. The Finance Act was not law in December 2010; it was simply draft legislation. It was not passed for another eight months—until July 2011. HMRC does not, or certainly should not, take its instruction from draft legislation. It certainly should not take it from press releases, which was what actually went out on that day. It takes its instruction from settled law—and the words “settled law” matter.
Sir Amyas went on to argue in his piece that, once the 2011 Act was passed,
“tax should have been understood as being due from that point.”
But even in 2011 the law was far from clear after the Government suffered a series of defeats in the courts.
Bob Stewart (Beckenham) (Con)
My constituents just do not have any extra money—they have used it all up each year. After 2010, they were continually told by financial experts and the companies they were contracted to, “All is well—carry on.” Suddenly in 2017, they faced a massive bill, and they just cannot cope.
Mr Davis
I am talking about how we got to that position. I will come on to talk about the financial status of these people, but my hon. Friend is right: these are not rich people.
HMRC, which has claimed that this is clear law, lost the Dextra Accessories Ltd and Sempra Metals Ltd cases in 2002 and 2008 respectively, when the courts specifically rejected the idea that the loans could be subject to income tax. HMRC then lost a case in 2012 and again in 2014, demonstrating that the 2011 legislation had not clarified the law to the satisfaction of the courts. That is a key point—it was not a question of it not being to our satisfaction or our constituents’ satisfaction, but it was not to the satisfaction of the courts. The fact that HMRC lost twice and then won twice tells us that even experienced, highly informed judges spending a great deal of time studying these cases found it a difficult issue to resolve.
Sir Desmond Swayne
Is not the proof of the pudding in the fact that the 2017 legislation was introduced? The loan charge itself is standing proof that previous legislation was not sufficient to tax the people involved, otherwise that would have been done.
Mr Davis
As usual, my right hon. Friend trumps my argument in advance, but I will come back to that in a second.
What that demonstrates—and what my right hon. Friend’s point demonstrates—is a failure of the Treasury and HMRC to write clear and comprehensible legislation. If the judges cannot understand it, what chance is there for ordinary laymen—people who cannot afford to employ an accountant? We are not talking about city slickers or international bankers; we are talking about locum nurses, social workers, careworkers and hospital cleaners.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
The right hon. Gentleman’s point that these are not city slickers and tax-avoiding, money-grabbing sorts reminds me of my constituent, Caroline Cheasty. She was a social worker in the public sector, with 24 years’ experience in local authorities. She had a career break, and when she wanted to go back as a locum, she was advised to either form a plc or go with an umbrella company—that is what she did. She came to my surgery in tears. Does he agree that the Government should go after the promoters of these schemes, not the little people?
Mr Davis
I do. The hon. Lady tempts me into a political point, because the Blair Government were the most active promoter of these schemes, but she is right in general.
When something is as unclear as this tax law obviously was, we do not take the date of resolution from the first date that HMRC wins—we do not keep going until we get the answer that the Government want. We take it from the day it is finally resolved in the Supreme Court. The case was not finally and definitively settled by the Supreme Court until 2017, when it found in HMRC’s favour on the Rangers, Dextra and Sempra cases. The Government—this relates to the point made by my right hon. Friend the Member for New Forest West—then passed further legislation to clarify the law. Even after the court case, they passed legislation to clarify the law. If it was so clear, why did we need a new law in 2017? That is the fundamental point.
Dr Julian Lewis (New Forest East) (Con)
My right hon. Friend is making an unanswerable case in logic, but I would like to put another political point to him. The cause of tax avoidance is not normally associated with such parties as the Labour party or the Liberal Democrats, but I am sure he would acknowledge that Members from both those parties have played a leading role in trying to put this injustice right.
Sir Edward Davey
The intervention from the right hon. Member for New Forest East (Dr Lewis) was spot on: this has brought the House together. The issue is not about tax avoidance. I think everyone on both sides of the House agrees that tax avoidance should be clamped down on, and there is no disagreement that the loan charge could apply in the future. What has deeply concerned many of us is that this is an offence against the rule of law, which is supposed to be a basic British tradition—one of our core values, which is taught in our schools. I therefore totally agree with the points made by the right hon. Gentleman.
Mr Davis
I thank the right hon. Gentleman—I nearly called him my right hon. Friend, from my days on the Public Accounts Committee.
When financial advisers and accountants could not understand the law, when employers could not understand the law, and when the courts could not agree on the law until 2017, how could an ordinary layperson possibly have understood the law?
The Supreme Court’s eventual decision, overturning three decisions before it, reflects changing national attitudes on the responsibility of the taxpayer—the point the right hon. Gentleman has just lighted on. As a result, one organisation representing the professions involved explicitly changed its guidance to its members. It said:
“Members must not create, encourage or promote tax planning arrangements or structures that…set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation and/or…are highly artificial or highly contrived and seek to exploit shortcomings within the relevant legislation.”
In what year was that changed guidance handed out by the professions? 2017.
Kevin Hollinrake (Thirsk and Malton) (Con)
My right hon. Friend is making some very good points, which I agree with. However, does he not agree that if something looks too good to be true, it usually is? In my business, we have been brought this kind of scheme a number of times by our advisers over the last 30 years, maybe with a barrister’s letter saying, “Don’t worry. It’ll be fine. You can reduce your tax bill hugely by adopting this scheme.” We have always rejected them because we knew the risk. Does my right hon. Friend agree that there is a requirement on the individual who subscribes to one of these schemes to make sure they understand the risks and that there is no guarantee the scheme will actually reduce their tax burden?
Mr Davis
My hon. Friend is, of course, a skilled businessman; he knows what he is doing, and he is across this sort of thing—it is his job to be across it—but I am not so sure we could say that about a locum nurse or a social worker. This issue was actually at the centre of Sir Amyas Morse’s arguments. He took the view that the attitude from 2017 should apply back to 2010, even though the law was not clear. He took the view that the principle of a taxpayer’s responsibility for their own tax affairs must be upheld. That is the point my hon. Friend is making, and it is right—but only when the law is clear. That means that the Government have a responsibility to make the law clear and not to punish ordinary, hard-working taxpayers when Ministers fail to live up to that responsibility.
HMRC itself seems to disagree on the importance of the taxpayer’s responsibility. Why do I say that? Because until 2014, it did not approach the individual taxpayers; it approached the advisers. It approached the companies that insisted—they did not ask, but they insisted—that these locums and social workers took up this option. HMRC went to the advisers until 2014—until the issue suddenly started to become quite controversial.
Last year, the Prime Minister himself commented on this issue. He said:
“The real culprits in this matter, if I may say so, are not so much the individuals themselves who have decided to use the loan charge as a way of minimising their tax exposure. It’s the people who advised them that it was a sensible thing to do. In my view, we should find a way of going after them.”
That is the Prime Minister’s view, and I happen to agree, unusually.
Mr Davis
If the hon. Lady will forgive me, I am trying to constrain my speech to 15 minutes, and it is beginning to be a struggle with so many interventions.
In summary, these people are now suffering because of a history of poorly drafted regulation and legislation and poor management by HMRC, targeted on the wrong people.
On many occasions, the Minister and his predecessor have told me and the House that the loan charge is not retrospective. In his report, Sir Amyas Morse states:
“The Loan Charge can look back 20 years…This design has been described by HMT as ‘retroactive’.”
The report describes the loan charge throughout as backward looking. HMRC denies that it is retrospective; it says it is retroactive. If I may say so, that is a distinction without a difference. When I looked up “retrospective” in a thesaurus, guess what it said? It defined the word as “retroactive or backward looking”.
Mr Davis
Yes, I will send HMRC a copy of Microsoft’s thesaurus. Not only that, but in paragraph 3.8 of his report, Sir Amyas states:
“The Review’s legal advisers found that there was no precedent for that element of the design.”
That is the retroactive, retrospective or backward-looking element. There was no legal precedent for that design. I hope, frankly, that the Government will now stop playing with words and finally concede that this is indeed a retrospective measure—an unprecedented retrospective measure.
The only just, fair and rational resolution is to remove the retrospective nature of the loan charge and set the cut-off date when the law became clear—when the Supreme Court finally settled the matter in 2017 and when the Government felt it necessary to legislate to make clear what they meant in the first place. That is why, as I made clear, if the Government do not act to address this issue, Parliament—all of us who take this very seriously—will have to act for them and make clear that, in the future, HMRC can under no circumstances act retrospectively. If we cannot solve this, here comes a Finance Bill. I suggest that the Minister should make one simple adjustment to his plans before they are published: change December 2010 to July 2017. That would resolve the issue. It would lift enormous pressure off 50,000 of our constituents, and it would put the Government in a morally defensible, justifiable and decent position.
Tax law is the only part of English law where “innocent until proven guilty” does not apply. If HMRC tells us we owe it money, then, until we prove otherwise, we owe it money. It is therefore very important that the law is clear—that it is not subject to reinterpretation by subsequent Governments and it does not move with social mores or whatever; it is simply clear. That is what we have to do. In the interests of natural justice and the financial and mental wellbeing of thousands of our constituents, it is time for the Government to change their mind and remove this harrowing burden from the 50,000 people who have been caught by it.
Peter Dowd (Bootle) (Lab)
It is a long time since I read Adam Smith, but as I recall, the fourth maxim goes along the lines of, “Take from the taxpayer only that which is needed for the public realm.” Of course, the converse of that is that the more people do not pay their taxes, the more the rest have to pay to balance up, so Adam Smith’s statement is not absolutely unambiguous.
As almost everyone has said today, tax avoidance should not be allowed. It should not be encouraged. It should be discouraged in any way possible, because the rest of us who do pay our taxes have to support those who do not, so I do not have a problem with the concept of clamping down on tax avoidance. Retrospection has been used since the second world war, but it has always been commensurate with the needs of the nation. I do not want to get into a big argument about retrospection, but the issue is there. An excellent document from the House of Commons Library sets it out perfectly reasonably, and people have to take their own view.
I completely accept that many people took advice from a variety of organisations and that advice was wrong. I do not dispute that. These enablers ripped people off. Their scams were like other scams we have had, whether it is the recent leasehold scam, the payment protection insurance scam, or the endowment mortgage scam. These scams have existed for a long time, as the south sea bubble scam shows. They go back an awfully long time—
Peter Dowd
Precisely—before the right hon. Gentleman was a Member, although not much before, I imagine.
Mr David Davis
These occasions often show the House at its best, and that is certainly true today.
I start by paying tribute to the Loan Charge Action Group, the all-party group—particularly its chairman—and all who have contributed in the debate, which has been excellent, albeit slightly one way in terms of its emphasis. Why is that? Because this is a matter of justice, not technicalities. It is a story of unclear law not very competently clarified in 2011 and then rewritten in 2017. It is a story of HMRC allowing the real villains—the employers and advisers who forced people into this position—to carry on getting away with that, and of HMRC failing to intervene during that period to stop them.
I am afraid the Morse review is wrong. That was brilliantly exposed by the chairman of the all-party group. There is, in truth, only one answer, but before I come to it, I have 40 seconds, so I will say one other thing to those on the Treasury Bench and the Opposition Front Bench. All of us in this House believe in fair taxation. We all believe that we should pay our dues. When you are doing deals with Vodafone and Google, where they pay from 10% down to 4%, do not turn round to an ordinary locum nurse and say, “It’s too good to be true. You should have known.”
Mr Davis
No, I will not. I only have seconds.
There is only one answer in this debate. I am afraid that Amyas Morse is wrong. The answer is laid out in our motion. HMRC should cease action on all cases before July 2017, and then justice will be done.
Question put and agreed to.
Resolved,
That this House believes that the Loan Charge is an unjust and retrospective tax; notes that the law on the Loan Charge was not settled until 2017; and calls on HMRC to cease action on loans paid before 2017.
Economic Update
David Davis Excerpts(4 years, 9 months ago)
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Rishi Sunak
I thank the hon. Member for her comments. I can reassure her that I am listening. I welcome all the suggestions that she has made, and indeed all those that other hon. Members will make. We are listening intently to hon. Members, and to businesses and others, to ensure that we provide the support required.
Let me answer the hon. Member’s specific questions. The Barnett consequentials resulting from today’s package will be about £3.5 billion. I understand that my right hon. Friend the Chief Secretary to the Treasury will be speaking to the Scottish Finance Secretary tomorrow to explain in more detail how that will work. Earlier this week we released the Barnett consequentials to the devolved authorities before the money has been drawn down in England, as would be typical, in order to provide advance on the Barnett consequentials to all devolved authorities in recognition of the circumstances that everyone is grappling with, so that they can plan appropriately. I hope that will be welcomed.
Obviously, it would not be appropriate for me to comment on specific interventions in any particular company, whether an airline or anything else, but I agree with the hon. Member that in general we are interested in protecting people’s jobs. When I stand here and talk about supporting businesses, I am keen to support businesses because that is the best way to protect jobs, and ultimately that is the best way to protect people.
The hon. Member asked about cash grants. In thinking about the scale of the grants and how significant they might be, let us take the £10,000 grant available for anyone currently in receipt of small business rate relief. The typical rateable value on one of those properties would be approximately £7,000. That is a good proxy for a year’s worth of rent. A £10,000 cash grant is therefore reasonably significant in covering what is probably a business’s biggest fixed cost. When we look at what the average income of one of those smaller businesses might be, again we see that it will be significant.
The hon. Member talked about pubs and the leisure sector. Not only will there be a business rates holiday for the sector for the next 12 months, but for all businesses in the sector, regardless of their rateable value, there will be a £25,000 cash grant for businesses up to £51,000.
The hon. Member asked about insurance. The statement is welcome on insurance. With regard to retrospectively changing insurance policies, she rightly identified that that would most likely cause solvency issues with insurance companies, so it is perhaps not the most appropriate course of action, which is why we have several other measures for providing support directly to businesses in those circumstances. She will probably be aware that very few businesses actually have the requisite insurance in any case, so although the steps set out today are welcome, it is important that we think more broadly about direct support.
I welcome the hon. Member’s question on maternity pay, which I will discuss with my right hon. Friend the Secretary of State for Work and Pensions and reflect on. With regard to renters, as I said in my earlier answer, my right hon. Friend the Secretary of State for Housing, Communities and Local Government will shortly announce further measures to protect renters.
The hon. Lady talked about other countries, and about fiscal responses and individual measures. Every country is doing this slightly differently, but, broadly, are trying to do the same things through different means. I think that the best way to judge us is by the total scale of our fiscal response, and on that metric, as a percentage of GDP benchmarked to nearly all developed countries, we have what is to date one of the most comprehensive and significant packages of scale—which, as I have said, underlies our commitment to doing what it takes to get the country through this.
Mr David Davis (Haltemprice and Howden) (Con)
I strongly welcome the Chancellor’s enormous loan and guarantee package, but he himself recognised that he is supporting the liquidity of businesses rather than their long-term viability. We want to see employment protected, so may I ask him to fund business not just in ways that enable the maintenance of employment, but in ways that actively incentivise it? It is not the same thing. Block grants will not do it. May I also ask him, when he does that, to do more than just taking the route of sectoral support packages? If he takes that route, tens of thousands of small businesses will fall through the cracks.
That, unfortunately, means an incredibly tailored system. The Chancellor will have to design rather intricate mechanisms to ensure that we pay people properly, which may involve small claims courts, the insurance business and British chambers of commerce and the like. I ask him to consider doing that, however. What he has done today is important in terms of maintaining liquidity, but his main aim must be to maintain the viability of the British economy.
Rishi Sunak
My right hon. Friend has made a good point. I believe that providing liquidity now ensures sustainability for the future, but he is right to identify the further steps that are needed to provide support on fixed costs such as employment, and preserving and incentivising that employment. This is work that we are undertaking as a matter of urgency.
Motorhomes and Vehicle Excise Duty
David Davis Excerpts(4 years, 11 months ago)
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Ruth Jones
The hon. Gentleman makes a powerful point. As I said earlier, these vehicles are not designed to be used as cars because they are not used to transport goods and people as cars are. He is quite correct in that.
I urge the Minister to listen to the industry, to Members from all parts of the House and to the thousands who enjoy using their motorhomes, and to get this mess sorted out.
Mr Clarke
That is a typically passionate intervention from my hon. Friend. I take his points to heart, and the Government are listening. Clearly in this context, we can only make announcements at fiscal events. It is important to note that we are hearing the strong messages that people are sending out.
Mr David Davis
The Minister has my sympathy. I have a sense of déjà vu from the omnishambles Budget, when the last attempt was made to attack pasties and caravans. At the time, I spoke to a predecessor in his post. I said, “You will lose taxes as a result of the impact on jobs, trade and so on.” He said, “Well, we don’t do calculations that way in the Treasury”, to which my response was, “You ought to.” This policy is masquerading as a green policy. It is destroying jobs in my constituency in Haltemprice already. It is hurting the poorest in our society in terms of their natural holidays travelling around the country. As we have heard, it is replacing staycations with trips to Cyprus and so on, which will use more in one trip than these vehicles use in one year. I look forward not to the Minister solving the issue today—I know that that is not within his reach—but to it being solved in the Budget.
Mr Clarke
I thank my right hon. Friend for his remarks. Everyone who bears the scars of taking on him and his colleagues in the context of the 2012 Budget changes will well remember that. The Government are certainly resolute that it is sensible to have a system in place that discriminates on the basis of emissions. How we calibrate that, and the way in which we operate the system, is kept under constant review. It is worth, in that context, pointing out that the current VED system applies to all light passenger vehicles, not just motorhomes, with a recorded CO2 figure registered from 1 April 2017. That includes all vehicles that fall within the category M1.
I imagine that all Members spend their time reading up on category M1, which covers those vehicles defined as designed and constructed for the carriage of passengers and comprising eight seats or less, in addition to the driver’s seat. In addition, regulations relating to the worldwide harmonised light vehicle test procedure include a requirement for any multi-stage build vehicle, including motorhomes, to record their CO2 emissions and fuel consumption on their type approval certificate.
Mr Clarke
I thank my hon. Friend for his remarks. He, like many others, has been assiduous in drawing attention to companies in his constituency that stand to be affected. Clearly, we planned to have a fiscal event in the autumn. Events supervened, and I am very glad that they did, but the March Budget gives us the opportunity to assess the tax, as we do all taxes, in the round.
To defend the Government’s record on this matter, we were explicit that motorhomes with a CO2 figure would be part of the graduated VED system introduced in 2017, and my officials are in constant dialogue with the automotive sector. I have held productive talks with the National Caravan Council, accompanied by you, Sir David. Talk about having a partial Chair.
Mr Clarke
The right hon. Gentleman raised the issue with me in the House at Treasury questions. He is obviously very committed to ensuring that we look at it again. Of course, VED is a one-off expense that is paid at the point of purchase; it does not accrue to the running costs per se. The way in which we tax that is through fuel duty. If someone drives more miles, they will pay more fuel duty. That is the real correlation and link. However, I recognise that, if people do not use the vehicles a great deal during the course of any given year, VED represents a substantial one-off cost in the first year of operation.
Mr Davis
I thank the Minister for being so generous in giving way. On that exact point, perhaps the best thing to compare, if he wants to look at more than one-off costs, is the first six years, which can be reasonably compared. A light commercial vehicle doing 8,000 miles a year will have to meet £3,325; for a motorhome doing 3,000 miles a year, it is £4,460. It is a ridiculous comparison.
Mr Clarke
We are trying to standardise the way in which we deal with VED. There is a particular grievance at the moment that it applies to motorhomes but not to vans, for example, as the hon. Member for Newport West mentioned. In the 2018 Budget, the Government confirmed that vans would move to a CO2-based emissions system, which will apply from April 2021. At that point we will have at least ended the imbalance between the treatment of one sector and another. Clearly, we need to look very closely at how we move forward, in order to ensure that the operation of VED does not penalise people who use such vehicles relatively infrequently. I understand the distinction between vehicles that are on the road every day or every week and those that may be on the road for only a month or two in any given year.
Oral Answers to Questions
David Davis Excerpts(5 years, 2 months ago)
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Nic Dakin (Scunthorpe) (Lab)
Mr David Davis (Haltemprice and Howden) (Con)
Dr Matthew Offord (Hendon) (Con)
Jesse Norman
I am grateful for the question. Of course any injury to individuals from any act of Government or their agencies is to be deeply regretted. I recognise that, and if it has happened here, it is appropriate for the House to feel that way.
I have no powers to direct Sir Amyas Morse. I understand that he is taking evidence from external sources, including the loan charge all-party parliamentary group and the Loan Charge Action Group, which acts as its secretariat. I have met the APPG and the secretariat separately. So the matter is being fully addressed. The details of settlement have been set out on gov.uk.
Mr David Davis
On the issue that my hon. Friend the Member for Wellingborough (Mr Bone) raised with the Minister, the hard fact is that seven people facing challenge or investigation for the loan charge have taken their own lives. He can attribute cause as he wishes. The fact is also that the distress has been caused by the historical incompetence of HMRC and the subsequent willingness of Ministers to use retrospective taxation. Are the Government going to give up on the premise of using retrospective taxation, or does it fall to the House to pass laws that will stop them doing so in future?
Jesse Norman
The legislation is not retrospective. [Hon. Members: “It is.”] There are defined circumstances in which HMRC and the Government may seek to use retrospective taxation, and they do so with extreme care and attention. All that I am doing is referring my right hon. Friend to the facts as reported to the IOPC. As he will be aware, these are immensely difficult cases in which many circumstances and factors may be in play.
Oral Answers to Questions
David Davis Excerpts(5 years, 5 months ago)
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Jesse Norman
I can only admire the ingenuity of a man who can crowbar a question about the Ministry of Justice, unrelated to the loan charge, into this issue. Let me point out to the hon. Gentleman that regardless of what may be the case on that, HMRC is taking tens of billions of pounds, relating to avoidance and evasion matters, that are due. He should be very grateful and delighted about that.
Mr David Davis (Haltemprice and Howden) (Con)
The loan charge all-party group claims evidence for four suicides relating to the loan charge and HMRC has referred itself with respect to one. When I asked a parliamentary written question on the assessment the Treasury had made of the impact of the loan charge on the mental health of the people subject to pursuit, the answer was, to put it mildly, less than satisfactory. Will the Minister now tell us what effect the Treasury believes its policy has had on the mental health of all the people subject to pursuit in both the public and private sectors?
Jesse Norman
May I put on record my surprise that a former chairman of the Public Accounts Committee, with its concern for the public finances, should take that view? Some people may have been very adversely affected in mental health terms and we must protect them at all times using all proper measures. HMRC is attempting to do that. However, there is a much larger number of people who are simply seeking to avoid paying tax due.
Equitable Life
David Davis Excerpts(5 years, 10 months ago)
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Mr David Davis (Haltemprice and Howden) (Con)
I start by congratulating my hon. Friend the Member for Harrow East (Bob Blackman) and the hon. Member for Leeds North East (Fabian Hamilton). I hope they will take it in the right way when I say that their continued presence here after a decade gives me an overwhelming sense of déjà vu. Having spent a couple of years’ penance on the Front Bench, I come back to find that, despite their sterling efforts, the issue is still before us.
The Equitable Life scandal is one of the greatest failures, perhaps the greatest failure, of public oversight and regulation in modern times, so it was the right decision to act in 2010. But, sadly, to act only partially was a failure of moral leadership, as my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) intimated.
The ombudsman’s report in 2008 was unambiguous, as the hon. Member for Leeds North East said, in calling for all those affected by injustice and maladministration from 1990 onwards to receive full compensation. The chairman of Equitable Life himself said that the report was inarguable. The report made no distinction between post-1992 and pre-1992 investors, and nor did anyone else—not the victims, not Equitable Life, not the ombudsman and not the Public Administration Committee. The Government’s rationale was that people who invested before 1992 were not affected by the scandal. Well, I am afraid that I completely disagree. These were long-term investments that were affected by ongoing and long-running maladministration. They were affected by the continuing failings of both Equitable Life and the regulators. Moreover, as we have heard, nearly all the pre-1992 cases involved some of the oldest and most vulnerable victims—they were also probably the poorest—who have so far received only a paltry sum of money. If the state fails to regulate properly, it inevitably forces that cost on to the consumer, and it is incumbent on the Government to make that right—and make it right in full.
The ombudsman was clear that there were fundamental failings by the then Department of Trade and Industry, the Government Actuary’s Department and the Financial Services Authority. The truth is that they knew, for most of the time, that this was a fraudulent Ponzi scheme. My hon. Friend the Member for Harrow East has described it as such and we should understand that Ponzi schemes are frauds—it is straightforward and simple. The Government failed to ensure that accurate returns were in the public domain; they failed to take ample opportunities to step in; and they failed to use their full range of powers. So, frankly, it seems to me that the Treasury plucked a cut-off date from thin air—there is no other way of describing it.
The ombudsman called on the Government to compensate the victims fully: to put them in the position they would have been in if the scandal had not occurred. That is the test: where would they have been if this scandal had not occurred? Leaving aside the pre’92 victims, that is a far cry from the 22p in the pound that has, in effect, been paid to many of those whom we have chosen to compensate. As has been said, this ultimately comes down to an issue of public trust. These victims were not wealthy investors. Typically, in my constituency at least, they were retired factory workers, teachers, nurses and small businessmen, who believed they were setting themselves up for at least a tolerable and reasonable retirement—I was tempted to say a comfortable one. That is a perfectly honourable, reasonable and laudable ambition for all our citizens.
As my hon. Friend made clear, the Conservative party promised in our 2010 manifesto to compensate the victims—not partially compensate them or compensate some, but compensate them. Like him, I was a signatory to that—indeed, I was heavily involved in getting it to happen. So I feel personally committed to it, too. It was right there in black and white, and it is there with my signature on it, just like everybody else’s. A failure to right this wrong will only serve to further undermine the public’s trust in politics and financial institutions
The Government say, or said then, that this comes down to an issue of “affordability”, but affordability is always a decision of priority: what comes first? The Government did not say that they did not have any money—they said they did not have enough money. What is more important than this: keeping our word, supporting the poor, upholding an institution that is important to people in the future, as well as these victims? All those things make this issue incredibly important. So in my view the affordability argument was flawed in the first place, but that was the position. Now, even that falls down, because we are supposedly, as the Prime Minister tells us, at the end of the era of austerity—good. That should be good for every citizen, but it should be good first and foremost for those who have done the right thing, for those who have looked after themselves and for those who reasonably could have expected the Government to protect them.
Tom Tugendhat (Tonbridge and Malling) (Con)
Will my right hon. Friend give way?
European Union (Withdrawal) Act
David Davis Excerpts(6 years ago)
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John McDonnell
I recognise the valid intent of that intervention, and if the hon. Gentleman will stay the course with me a bit longer, I might be able to respond to it.
Mr David Davis (Haltemprice and Howden) (Con)
I, too, welcome the right hon. Gentleman’s approach and the tone and tenor of his opening remarks. I hope that during his speech—perhaps not immediately—he will lay out his criteria for acceptance of whatever the outcome should be, not in terms of his rather artificial six tests, but real criteria in the national interest.
John McDonnell
I believe that under a comprehensive customs union agreement, it is so much more unlikely that there would be any need for that fall-back position, and we would be able to offer permanency in an agreement rather than something that is a defective insurance policy.
Others may agree with the Chancellor on his initial assessment, and, in that case, I cannot see why this arrangement—
John McDonnell
Let me press on.
A variety of commentators have criticised the Prime Minister’s proposals, none more scathing than Mervyn King, the former Governor of the Bank of England. Leaving aside his description of the Government’s handling of this issue as
“incompetence of a high order”,
overall he says:
“It simply beggars belief that a government could be hell-bent on a deal that hands over £39 billion, while giving the EU both the right to impose laws on the U.K. indefinitely and a veto on ending this state of fiefdom.”
Many will share the view expressed by Nicole Sykes, the CBI’s head of EU negotiations, which were revealed in an email where she said that there is
“no need to give credit to negotiators I think, because it’s not a good deal.”
Let me move on to my third point, which is Labour’s alternative. I believe that the majority of hon. Members in this House agree that the Prime Minister’s deal is not a good deal. So over the next few days, and possibly—as was hinted at this morning—for even longer, Members will be searching for a way forward. I believe that Labour’s proposals for a new approach to our European relationship offer that way forward. Our European partners will have seen that the Prime Minister’s deal that they reluctantly endorsed has not proved to secure the support it requires in this House or in the country. I believe that they will see the need, now, for a constructive renegotiation if both their and our own economic interests are to be protected in the long term. Indeed, that is what has happened in the past.
Labour’s new deal will secure the economic interests both of ourselves and our European partners. It rests on three posts. Labour would prioritise a permanent and comprehensive customs union—yes, with a British say in future trade deals. We would deliver a strong, collaborative relationship with the single market—and yes, we would guarantee that the UK does not fall behind in rights for workers, consumers and the environment. Labour has always been clear: we respect the referendum result, but we have always said that we want a Brexit that puts jobs and the economy first—and that is exactly what Labour’s approach will do.
Stewart Hosie
This is actually the problem with this debate. There has been a series of almost universally identical assessments from dozens of different organisations, yet some people—I want to be careful about the tenor of this—have ignored all expert opinion. There has been the gut instinct reaction, “That’s what we’re going to deliver and”—by sheer force of will—“things will be better.”
Stewart Hosie
Hold on a moment.
I think it is important—this is why I have laid it out in this way today—to demonstrate that, from the start of the exercise, pre-referendum, between the referendum and the withdrawal agreement and since the withdrawal agreement, expert opinion tells us one thing. The hon. Lady is perfectly at liberty to disagree with that. She might come back in five, 10, 15 or 20 years and say, “I told you so. It wasn’t that bad.” But if we go in blindly to something as substantive and perhaps irrevocable as this and get it wrong, the public will never forgive us.
Mr Davis
The hon. Gentleman, quite rightly, makes the point that a number of expert economic opinions all say much the same thing, but of course that is exactly the same as was the case before the referendum. [Interruption.] Members may not like the facts, but I will repeat the facts to them. Exactly the same was true before the referendum. The Government’s forecast was in the middle of those expert opinions and the outcome was approximately £100 billion out in the first two years after the referendum. So there is a reason to say that the experts may be all talking within a hall of mirrors.
Stewart Hosie
I do not doubt that some of the assessments given for what might have happened to date, before we leave, were wrong. I was very clear from the outset of the referendum that nothing would happen. My personal view was that nothing would happen in the first couple of years. Indeed, even after we leave I do not think the impact will be immediate. But when we look at big foreign direct investment decisions on £1 billion investments to access a market of 500 million or access a market of 70 million, I suspect at that point we will begin to see some very substantial and negative consequences for the UK economy.
Mr David Davis (Haltemprice and Howden) (Con)
Before I attempt to pick up on the shadow Chancellor’s final views on where we are going, rather than on where we are, I draw the House’s attention to a wider issue, which I think goes to a quite important set of facts that the hon. Member for Dundee East (Stewart Hosie) was talking about in terms of Scotland’s export arrangements. When economic historians look back on this time in 100 years’ time, I suspect that they will view Brexit as small by comparison with what has happened with the entire global trade. In the last third of the century, we have seen a huge transformation in the wealth of the world off the back of free trade. About a quarter of the world’s population, or well over 1 billion people, have been raised out of absolute poverty—$2 a day or thereabouts—by free trade. It has been a magnificent story over about one third of a century.
In that time, this has had an impact on us, too. We have gone from having 60% of our trade with the European Union and 40% with the rest of the world 20 years ago to nearly the other way around—in a couple of years, 60% will be with the rest of the world and 40% will be with the European Union. I am loth to quote forecasts, given the bad name that they are being given at the minute, but the projection—not a forecast—is that that will continue.
To pick up on the point made by the hon. Member for Dundee East, if we take the top three markets for British goods, or UK goods, in the rest of the world versus Europe, the top European ones of Germany, France and the Netherlands are dwarfed by our sales to America, China or Australia—our top three in the rest of the world. I take his point that we have to look very carefully, as we did when I was in government, at the regional balance of some of these exports, but the aggregate picture is very clear. Our trading future is more in the rest of the world than it is in Europe. This has huge implications—massively underestimated by Treasury and Bank of England forecasts over and again—for the need to keep our freedom to do trade deals to maximise our ability to exploit that.
I am not going to spend very long on the actual proposal that the Government have put in front of us, because it seems to me very clear that it will not survive the end of this debate. Very quickly, the Attorney General’s advice tells us that the backstop would endure indefinitely and that it would tie us to the customs union with no escape. That has massive implications for what I just said. The deal would still leave us, whatever the Chancellor says, subject to the rule of the European Court of Justice, albeit by a back-door and concealed route. It would see Northern Ireland carved out of the United Kingdom and tied to the European Union single market and the customs union, and it gives away £39 billion in exchange for the vaguest of political promises on a future deal. Because of all that and because we would be locked in at the discretion of the European Union, it puts us in a formidably bad negotiating position for the future. In my view, other than the constitutional issues, that is the most serious practical aspect of what is proposed. I do not believe that it will survive, which means that the shadow Chancellor’s question, “What are the future options?” is the central question of the debate.
Peter Grant (Glenrothes) (SNP)
I am grateful to the former Secretary of State for giving way. I note his reluctance to believe in forecasts, but he has not always been reluctant to forecast. In fact, on 25 May 2016, a month before the referendum, he said:
“The first calling point of the UK’s negotiator immediately after Brexit will not be Brussels, it will be Berlin, to strike a deal”.
If my memory serves me right, he became that “UK’s negotiator immediately after Brexit”. Can he tell us how the striking of the deal in Berlin went and when will we see it? Is that what he has in his hand now, or has he lost it?
Mr Davis
People have to read more than one line of a speech. Perhaps the hon. Gentleman’s iPad is too small to carry more than one sentence. I also said that the critical part of the negotiation would not be the first two years, but the last three months, when France and Germany would determine the outcome. If the hon. Gentleman wants to quote me again, he should get it right next time.
Richard Graham
May I make one small point? My right hon. Friend has focused on the backstop on the Northern Irish border, and he has quoted the Attorney General as saying that we could be in that indefinitely, but surely the “if” is if we decide to go into the backstop in the first place. The other option is to extend the transition. Does he not agree?
Mr Davis
That is what is laid out in the proposal, but the transition will then come to an end, and at the end of that, we will still have to make a decision on where we are going, backstop or no. I am afraid that we are always in, and the point is that it is at the behest of the European Union, not at our behest. I have nothing against the European Union, but it is the negotiating partner that may gain an advantage from delay.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
May I reassure my right hon. Friend on that point? It is clear from article 3 of the protocol that it is not necessarily a right for us to have that extended transition. We can only ask for it, and that is a different thing.
Mr Davis
Yes, that is also true, but the general point is that the overall timetable is not in our control; it is in the other side’s control. As we have seen throughout this entire negotiation, the moment we gave away sequencing at the beginning, we gave an advantage to the other side. My right hon. Friend the Member for Clwyd West (Mr Jones), the former Minister of State, is nodding: he remembers it.
There are essentially three emblematic conclusions to this. The first is the World Trade Organisation, which we have talked about already—I doubt whether it will be a deliberate conclusion, but it is a possible one—the second is Norway, which a number of Members on both sides of the House have suggested might be the best outcome, and the third is Canada plus, plus, plus. There are compromises between them; there are mixtures of them; but those three essentially capture the possible outcomes.
Let me start with the issue on which I disagree with pretty much everyone who has spoken so far: the World Trade Organisation deal, the so-called no deal. The Chancellor called it a strict no deal, because he knows full well all the preparations that have been made in the Government to create a basic no deal, or basic negotiated outcome. There is a whole stratum, a whole spectrum, of possible types of no deal. Some of them deal with the issues that my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) raised earlier—aviation, data and so on. If this deal goes down, as I think it will in a few days, there will be a scramble in London and Brussels to start putting those one-on-one, unilateral negotiations together. So there is a range of possibilities.
Helen Goodman
I am slightly puzzled why the right hon. Gentleman is so critical of the backstop arrangement, given that he himself signed off the original draft in December last year.
Ms Dorries
Aviation and the WTO were mentioned earlier by my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston). The EU itself is looking for a deal on aviation, as we would be, so there is actually no difference. The EU still does not have a deal on aviation.
Jim Shannon (Strangford) (DUP)
It was said earlier that all the regions in the United Kingdom would support the backstop. Members of the Democratic Unionist party in the House do not support the withdrawal agreement. Does the right hon. Gentleman recognise—I suspect that he does—that Unionists feel alienated by proposals that will weaken our position in the United Kingdom of Great Britain and Northern Ireland, because the EU will have the final say on what happens in relation to the single market and the customs union over Northern Ireland?
Mr Davis
Let me reinforce the point that I made to the hon. Member for Bishop Auckland (Helen Goodman): I told the Prime Minister that last December, as everyone now knows.
I do not take a utopian or a dystopian view of the WTO option. There are Conservative Members who think that it will be the best option in the long run, because it is the freest in terms of outcomes, and there are those who fear it as a complete disaster. I think that it is neither. There has been an enormous amount of black propaganda about the outcome of the WTO proposal. A month or two ago, we heard that the supplies of insulin would dry up. No, they will not. We talked to pharmaceutical companies and to the NHS, and they did their checks. No drugs will dry up, full stop. My hon. Friend the Member for Mid Bedfordshire (Ms Dorries) mentioned aviation. We were told that planes would be grounded, but a European Commission briefing document showed in January 2018 that there would be EU-wide contingency measures ensuring no stoppage of aviation.
Antoinette Sandbach
I should be grateful if my right hon. Friend looked at the evidence that pharmaceutical companies have given to the Business, Energy and Industrial Strategy Committee about the catastrophic results of a no-deal Brexit. I recall him saying that we would not need an implementation period, because we would have had our deal by now. I am afraid that it is not as easy or as simple as he appears to wish to outline.
Mr Speaker
Order. It is in order for Members to intervene, and it is in the nature and tradition of parliamentary debate in this place. However, I hope that I can be forgiven for making the point that if Members intervene and are not subsequently called to speak, they will not complain—brackets: what are those pigs I see flying in front of my very eyes?
Mr Davis
What a pity, Mr Speaker. I enjoy interventions, as you well know.
My hon. Friend the Member for Eddisbury (Antoinette Sandbach) has misquoted me from somewhere. It was I who negotiated the implementation period element, precisely because it is not without hiccups. It is not without issues. There will be practical issues in the first year of a WTO outcome, but that does not overwhelm the big advantages—the massive advantages—of having the freedom to negotiate our trade deals in the future.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
Will the right hon. Gentleman give way?
Mr Davis
I am afraid not, on this occasion. I hope that the right hon. Gentleman will forgive me. I have just almost been given instructions.
Let me now say a little about delays at Calais. The first thing to say is that the French do not intend them to happen. I know that, in our chauvinist way, we expect the French to misbehave, but that is not their intention. The prefect of the Calais region, the representative of Calais and the head of French customs have all said in terms that they will do everything in their power—through lower inspection rates, light-touch phytosanitary inspections and the rest—to ensure that the trade between Calais and Dover will work. If there is a hiccup—we have had them before, with driver strikes and so on—we shall be able to divert 20% to 40% of the trade to other ports. That is a good example of the wild assertions that are simply not right.
I am very sorry that the Chancellor is not here, because I wanted him to hear what I had to say about the projections to which the hon. Member for Dundee East referred and on which I think he relied rather too much. It was not “The Rees-Mogg Times”, or some other organisation on one side of the debate, that criticised the Bank of England. It was a Nobel prizewinner, Paul Krugman—hardly a Brexiteer—who castigated the Bank, as did Andrew Sentance, a former member of the Monetary Policy Committee, who, again, is not a Brexiteer. Those were simply disgraceful polemical projections. They were not forecasts in any way, and I think that the Bank will come to regret them, if it has not done so already. So that is the practical element.
There is another issue to bear in mind. The WTO option is a walk-away; that is the problem—it is a walk-away. It is an outcome that we do not want, but we need it to have a proper negotiation; that is a hard fact that we have to face. We all think that we will suffer most from a WTO outcome, but that is simply not the case. There is an asymmetric arrangement here. We have a floating pound, to cite the German chief economist of Deutsche Bank, and the movement of the pound is what has protected us so far in the past two years, and it will protect us again. We have unilateral capability that nobody else in Europe will have: the ability to change our taxes and regulations to make sure we get the FDI—foreign direct investment—that the hon. Member for Dundee East talked about.
Finally, of course, we have the upside of the other free trade agreements, and that is another reason why I am sorry that the Chancellor is not present, because one of the big differences between him and me is that he does not believe free trade agreements deliver a large economic bang for their buck. The past 30 years of world history, however, show that there are billions of people in the world who might just take a different view on that.
The second option I want to talk to briefly is the Norway option. I looked at that option very carefully; indeed, I got castigated from my own side for paying it too much attention, but I thought that it was very important to ensure every single possible option was explored well, and I was approached by, and talked at great length to, my hon. Friend the Member for Grantham and Stamford (Nick Boles).
Norway plus appears to its protagonists to have three virtues. First, they say that it is the easiest option to negotiate; it involves the smallest movement and therefore is the simplest negotiation. Secondly, they say it meets the conditions of the referendum. Thirdly, they say it is the softest of soft Brexits. All those are possibly good arguments, except that they are not true. The negotiation would not be simple; we cannot simply stay in the EEA, as that does not work. Jean-Claude Piris, ex-head of the EU legal service, said in terms that we will have to renegotiate every single clause of the EEA arrangement. It will require unanimity from 30 different members, and they will exact a price. One of the advantages of Norway, we would think, is that we could control our own fisheries policy, but would we get that with a vote from Denmark, from France and from Spain? No, we would not. That is one of the problems: the negotiation hurdles are very big. It is reported that Michel Barnier said this was a possible outcome, but only in conjunction with customs union membership. With the two together, we are locked in; we are basically in a worse position than the Government’s proposal. We are basically locked into the single market—no say and no control, but in every other respect, including the free movement of people and paying money, we will be locked in. Norway does not find it satisfactory politically, and, frankly, a country like ours certainly should not. So that does not work. Finally, it is said that this option delivers on the result of the referendum. No, it does not. Free movement, money, independent trade policy, jurisdiction of the supranational courts, rule taker—on all those criteria, we fail under Norway.
So what is left? The last option is the free trade agreement. I have long thought this was the best option. This is the one that has been called Canada plus, plus, plus and super-Canada and a variety of other names, and somewhere buried in the middle of my old Department of DExEU there is a pile of papers laying out how this can be done in detail, including some legal text. The concept is simple, and that is important in this context, because we will have very limited time in the last few months to negotiate this. I made the point a couple of years ago when making this argument that these are the three months that matter: the EU always takes the negotiation down to the wire—to the last day, the last hour, the last minute, the last second, and sometimes it stops the clock to allow the negotiations to conclude. And that is what is going to happen here; I suspect we are going to go deep into time on this.
Why was this option attractive? It was attractive because we could build it from precedents. Canada is an EU-negotiated precedent, and we could add to it—this is the plus, plus, plus bit—all the bits that are not good about the Canada option. There is no decent mutual recognition agreement; we can lift that out of South Korea or the Australian deal. There are no decent phytosanitary arrangements; we can lift that out of New Zealand. So we can go back to the EU and say, “Here we have a proposal constructed entirely of your own precedents. It can’t undermine the single market, because you negotiated it. It can’t undermine the four principles, because you negotiated it.” That is the attraction of the Canada plus, plus, plus option—it is based on that template. It is all based on precedents previously negotiated by the Commission. So it is perfectly possible for us to create a draft legal text on the basis of where we are now and put that back to the EU and say, “The £39 billion rides on this. You have to agree the substantive elements before we sign off and then you have to agree the detailed elements by the end of 2019.” There is plenty of time to do that on the basis of existing boilerplate text. That is what we should be doing. We should stop grovelling to Europe and start grasping our future.
Leaving the EU: Economic Analysis
David Davis Excerpts(6 years ago)
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Mel Stride
I echo your congratulations, Mr Speaker, to the right hon. Gentleman on his very special day. In the case of the political declaration, the right hon. Gentleman will know that it does not give a specific outcome because that is to be negotiated as we go forward, as was always going to be the case. However, while the analysis that we are presenting today is anchored on the Chequers arrangements and the July White Paper, it of course provides a sensitivity analysis around that to reflect the fact that there is a spectrum of potential outcomes.
Mr David Davis (Haltemprice and Howden) (Con)
The Treasury, the OBR and the Bank of England between them produce numerous forecasts every year. When was the last time that any of them got one right?
Mel Stride
I suspect that in the history of highly detailed, complicated economic forecasts with myriad variables, there is probably not one in the entire history of the planet that has been entirely right in every respect. However, that is not an argument that my right hon. Friend can deploy not to go out and do an honest, sensible appraisal of what the likely outcomes are going to mean, both fiscally and in terms of GDP, as we go forward.
Taxation (Cross-border Trade) Bill
David Davis ExcerptsMonday 16th July 2018
(6 years, 5 months ago)
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Madam Deputy Speaker (Dame Eleanor Laing)
Order. It will be obvious to the House that a great many people want to speak. We have three hours of debate left, but we cannot continue with speeches of the length that we have had so far, although there is nothing wrong with what any hon. Members have done. We will therefore start with a time limit of 12 minutes.
Mr David Davis (Haltemprice and Howden) (Con)
For the convenience of members of the Gallery, I should start by saying that this is not a resignation statement—that was last week. This week is a return to my normal business, as an ordinary Back Bencher carrying out the scrutiny of business. I thought that it would be rather mundane until I walked into what appears to be this rhetorical firefight that we have had so far in the debate.
Before I come back to that, the Taxation (Cross-border Trade) Bill and its partner, the Trade Bill coming tomorrow, are vital pieces of legislation. In the newspapers at the weekend, I read that some people were so cross with the White Paper that they were proposing to vote against this. Well, I do not think that they can be much more cross than I am with the White Paper, but I urge them not to vote against it. These are vital pieces of legislation and they are necessary, whether we have the Government’s White Paper policy, my old White Paper policy, the FTA that some have talked about or indeed even the World Trade Organisation outcome. In every single case, we need these Bills and therefore I will be supporting them.
I want to speak directly to the new clause proposed by my right hon. Friend the Member for Broxtowe (Anna Soubry). I will do so without impugning anybody’s motives or questioning whether somebody is acting in the national interest or not and I will not be firing off any gibes. I am not quite sure who she was referring to when she talked about having an excessive attachment to public office, but I do not think it was me. The simple truth is that this is a vitally important argument. It is central to the whole question of the economic aspect of Brexit—Brexit is not just economic; it is democratic as well, but it is central to that—and I will put to one side in my arguments the fact that being out of the customs union was in the Conservative party’s manifesto and therefore, in theory at least, one we are committed to.
The arguments go right to the heart of the principal issues. The proponents of the new clauses have a clear belief in the national economic interest, but they clearly believe that being outside the customs union will lead to a precipitate loss of trade and that the loss of the ability to make trade deals matters less than that potential loss of trade. That is the core of the argument. It is pretty straightforward in that respect.
Let us look at some facts. Back in 1999, the United Kingdom—we are talking about the customs union, so this is about goods—was exporting 60% of its goods to the European Union and 40% to the rest of the world. Since then, that has gone down by approximately 1% per annum, so it is now about 45% to the European Union and the rest to the rest of the world. Pretty much by the end of this decade, it is likely to be 60:40 in favour of the rest of the world, so because it takes away the right to our own commercial policy, the prospect of staying inside the customs union favours the shrinking minority of our trade over the expanding, fast-growing majority of that trade. That is the very simple, fundamental, initial point that we should take on board. It also presumes that being outside the customs union will significantly damage trade because there will be friction at the border.
Mr Kenneth Clarke
One of the most remarkable features of the last 20 years has been the globalised economy and the very rapid growth and emergence of major new markets, so inevitably the balance of our trade was going to grow with them and decline with the European Union. We want to remain as attractive to investors from the new economies as to the old. It does us no advantage in our dealings with China, Brazil and India to damage the value of our access to the European market. Outside events have altered this balance; it is not a failing of our EU arrangements.
Mr Davis
My right hon. and learned Friend was being uncharacteristically inattentive, because that is exactly what I said: because of the growth in world trade, that is what is going on. He is exactly right that we should take a great interest in the fast growth in world trade because we are best placed, probably of most countries in the world, to take the most advantage of that. Also within his comment was the presumption, which I was about to address, that friction in our trade with the European Union—low friction, but friction—will cause enormous damage.
John Redwood
Will my right hon. Friend confirm that many successful manufacturing businesses in Britain today have these just-in-time supply chains bringing in large quantities of raw material and component from outside the EU through a system of authorised economic operators, electronic manifests and the settlement of any bills not at the port? There are not people sitting in boxes in the port taking the money.
Mr Davis
My right hon. Friend is exactly right. It is an issue that I will return to in a second, but before I do I want to make a point about friction. The presumption in all this is that we have a magical, frictionless system at the moment. Actually, we will have seen on our television screens that that is not true. This entire House will have watched Operation Stack in progress over various years. Operation Stack is what we do when one of the ports gets locked up for one reason or another—a strike in France or whatever. It has been operated 74 times in 20 years. In 2015, it took up 31 days of friction, and our businesses—the just-in-time businesses and the perishable goods businesses—all coped with it, so let us not frighten ourselves in doing this negotiation. Nobody wants it and nobody likes it, but they cope with it. My hon. Friend the Member for Dover (Charlie Elphicke) pointed out that with World Trade Organisation facilitation, we will actually minimise the friction on trade through these ports, as was reinforced by my right hon. Friend the Member for Wokingham (John Redwood).
Secondly, while people understandably focus on some of the pressure points—most particularly Dover, which we heard about a second ago—they forget that there is strong competition between the ports on the North sea and the ports on the channel. Zeebrugge, Antwerp and Rotterdam all want to increase their throughput at the cost of the Calais-Dover crossing. They are already preparing for increases in throughput in their own areas when we are outside the EU and preparing for the increase in work—because there will be some increase in work—but again, as my right hon. Friend said, it will not happen at the border. It will happen before they get there or after they pass through it, so our so-called dependency on French ports will turn out to be illusory.
Thirdly, in support of the arguments that any friction at the border is unacceptable we hear lots of talk about supply chains. We had it from my right hon. Friend the Member for Broxtowe who proposed this new clause. The simple truth is that this ignores the fact, as my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) pointed out, that lots of international supply chain operations operate across borders where there are customs, tariff and currency arrangements. I happen to know one of them very well, because I operated a business across just such a border myself—between Canada and the USA. [Hon. Members: “Thirty years ago.”] I went back last year.
Mr Davis
No, I will not give way.
I went back last year to look at it again, and yes it was 15-year-old technology. It could be better now; it could be faster. What happens in Detroit, the centre of the American motor industry? In Ontario, across a very difficult and constrained border, tougher than Dover, there is an entire industry supplying parts, components and engines for that motor car industry. It operates across a border that has tariffs on it, too.
Kevin Hollinrake (Thirsk and Malton) (Con)
Will my right hon. Friend give way?
Mr Davis
No, if my right hon. Friend will forgive me.
The issues that remain at the border will depend on the customs policy we decide on, which very clearly will alter how that border operates. It will include rules of origin, as has already been pointed out; tariff-paid status, if we are in the future customs arrangement, which is more difficult than rules of origin; and regulatory compliance. None requires action at the border. All can be dealt with by electronic pre-notification or pre or post-audit at either origin or destination.
Without doubt, the most difficult issue in the negotiations as they relate to borders has been Northern Ireland. There is no way, however, that a UK Government are ever going to install a hard border in Northern Ireland—that is as plain as a pikestaff. No UK Government would risk the peace process, which has been going on for decades. Neither would the Irish Government. I cannot imagine in a century that an Irish Government would do that either. What many people forget, however, are that there is already a border there—there is a currency border, a VAT border, an excise border, and there are other tax borders. They are operated north and south of the border by the UK and the Irish tax and customs collection organisations, operating together using intelligence- led intervention.
Much is made of the 300 border crossings. One of the outstanding issues with being outside the customs union is, as somebody said, the issue of rules of origin, but in Northern Ireland, while there may be 300 border crossings, there are only six ports. Rest-of-world imports can actually be surveilled and controlled very straightforwardly. This issue, which has become much more difficult since it was politicised—it was actually working quite well in the negotiations before it was politicised—is eminently soluble, by technical means and co-operation between the two states.
Joanna Cherry (Edinburgh South West) (SNP)
If what the right hon. Gentleman says about the border is so, why was he part of a Government that agreed to the backstop last December?
Mr Davis
They did not agree to the backstop; they agreed to the joint report that talked about full alignment. [Interruption.] Does the hon. and learned Lady want to listen to the answer? She will remember me standing at the Dispatch Box saying that we interpreted full alignment as outcome alignment and relating directly to the issues in the north-south strands—principally, agriculture, transport, and environment as it applies to the single electricity market. Those are the primary strands, and they are eminently soluble, by arrangements that already exist in Northern Ireland—for example, the carve-out on environmental legislation. It is a very straightforward issue, but it has been blown up into something else by the other side of the negotiations.
The risk and costs of having a customs border are less than is being claimed, and what we would give up to join a customs union is much more than is imagined. The EU is a slow and not very effective negotiator of free trade agreements. We keep hearing about its size and negotiating power, but the fact that it represents 28 different countries means it comes up with sub-optimal outcomes all the time, and actually we are the country that does least well out of the EU’s free trade agreements. They almost never involve services, for example, which are our primary trade. The EU is a slow and not very effective negotiator of trade deals.
Yvette Cooper
That is really flipped logic. The hon. Gentleman is effectively saying, “They do not have to do the checks because they can all just pay the tariffs.” Why on earth are we going through this whole process in the first place if all we are going to get is a tiny reduction in tariffs that no one will take advantage of in order to get any benefits?
Mr David Davis
The logic is actually very simple. Empirical evidence shows that in international trade, companies seek to claim their rebates and do what is necessary to avoid tariffs when a tariff is lower than 3%, not when it is above. What that tells us is that the cost of rules of origin administration is less than 3%. Companies are rational operators. The numbers that the right hon. Lady cited from a supposed Government study were wrong.
Yvette Cooper
I would caution the right hon. Gentleman against dismissing the rules of origin checks. There is a huge worry about the burden that they will impose on small businesses in particular. There is a big difference between large and small businesses in this regard. It might be worth large businesses claiming the money back because they can set up systems to do so, but for small businesses the process can be devastating. I am thinking particularly of the huge number of small businesses that have not yet traded outside the EU and for which rules of origin will be a new burden.
Why on earth would we want to add these additional burdens and checks on businesses that have not faced them before? I find myself in a very strange position. I, as a Labour MP, am arguing far more strongly and passionately against these additional burdens on businesses than those on the hard right of the Conservative party, who ought to be arguing against such burdens.
Ian Murray (Edinburgh South) (Lab)
It is a great privilege to follow the right hon. Member for Witham (Priti Patel). We sit on the Select Committee on Foreign Affairs together and agree on much of its work. However, I am afraid that we agree on nothing when it comes to Brexit, and we have those battles in the Committee.
It is unfortunate that we have been left here this evening with a set of four amendments from the group of Conservative rebels who want to take us off a cliff edge. That is what the amendments are designed to do. We have unconfirmed reports that the Government may accept the amendments. I do not know whether the Financial Secretary to the Treasury will nod to indicate that he will accept them, but if he does, I hope he has a match or a lighter in his pocket, because he would do just as well to set the Chequers agreement alight, given the consequences.
On top of all that, the former Secretary of State for Exiting the European Union, the right hon. Member for Haltemprice and Howden (Mr Davis), must now regret leaving the Government, given that after threatening to resign five times, he finally went through with it by resigning following the Chequers agreement, which is just about to be ripped up by his own Front-Bench team and replaced with a much more hard-line position that will take us off the cliff with a hard Brexit. If he had only stayed on a few more days, he may have been able to see through the proposals that he started.
Ian Murray
I am happy to give way to the right hon. Gentleman, given that I mentioned him.
Ian Murray
I am delighted to hear that he would have resigned regardless, but he must surely have some regret. Perhaps we should be glad that he resigned, given that he stood up in this Chamber, as a former Secretary of State, and tried to persuade the House that Operation Stack and having trucks and lorries queued up at our ports was positive for the country. I have never known a former Secretary of State to look at something like Operation Stack, which would be a tragedy for our economy had it continued for much longer, and turn it into a positive. If that is the kind of argument he is offering to this House and to the country, we should ensure that we vote down most of these amendments.
I find it extraordinary that after going through this process—these debates give me déjà vu—we are still hearing arguments about the customs union and the single market. The Government managed to botch together what is now called the Chequers agreement and now, a week away from this Parliament adjourning for the summer recess, they have completely torn it apart by again pandering, as the right hon. and learned Member for Rushcliffe (Mr Clarke) said, to 30 or 40 people on the hard right of the Conservative party. Those people would be being much more honest if they just stood up and said that they want the cliff-edge hard Brexit, rather than tabling amendments that drive a coach and horses through the agreement that the Government managed to reach.
Iraq Inquiry Report
David Davis Excerpts(8 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Davis (Haltemprice and Howden) (Con)
I beg to move,
That this House calls on the Government to conclude the National Security checking of the Iraq Inquiry report as soon as possible in order to allow publication of that report as soon as possible after 18 April 2016, and no later than two weeks after that date, in line with the undertaking on time taken for such checking by the Prime Minister in his letter to Sir John Chilcot of 29 October 2015.
As an aside, Mr Speaker, I never cease to be impressed by your short-term memory.
The second Iraq war was started to liberate the Iraqi people. Instead, it shattered their country. It was intended to stabilise the middle east. Instead, it destabilised the middle east. It was intended to remove a threat of weapons of mass destruction that did not exist. Instead, it exacerbated and massively increased a threat of terrorism that does exist. It was supposedly fought in defence of our values, but it has led to the erosion of civil liberties at home and the use of torture abroad. Because we were misled on the matter, Parliament voted for the war by 412 to 149. So there were very good reasons for setting up the inquiry in the first place.
The war led to the deaths of 4,800 allied soldiers, 179 of them British. The lowest estimate of Iraqi civilian casualties was 134,000, but plausible estimates put the number up to four times higher. The war immediately created 3.4 million refugees, and half of them fled the country. It cost the British taxpayer £9.6 billion, and it cost the American taxpayer $1,100 billion. It has done untold damage to the reputation of the west throughout the middle east and, indeed, among Muslim populations at home and abroad. Initiated to protect the west from terrorism, it has, in fact, destroyed the integrity of the Iraqi state and triggered a persistent civil war that has created the conditions for perhaps the worst terrorist threat yet to the west: ISIL or ISIS. The war has done huge harm to the self-confidence and unity of the west, in effect neutering our foreign policy. The war was, with hindsight, the greatest foreign policy failure of this generation, and I say that as someone who was misled into voting for it.
It has been more than six and a half years since Gordon Brown launched the Iraq inquiry and more than five years since it heard its last evidence. It has been more than a year since this House, in a similar debate, called for the Government to publish the Iraq inquiry report as soon as possible, and yet that report has still not been published. It is no surprise that one of the most pre-eminent politicians of our era, the highly respected and very civilised ex-Foreign Secretary, Douglas Hurd, branded the delays a scandal. He is right. They are a disgrace.
In 2009, the then Leader of the Opposition, who is now Prime Minister, was scornful about the suggestion that the report would not be published before the 2010 election. In 2009, Sir John Chilcot told families that he would complete the inquiry in a year if he could, but that it would definitely not take more than two years. In fact, the evidence taking did not conclude until 2 February 2011. Nevertheless, at that time—more than five years ago—Sir John Chilcot said:
“It is going to take some months to deliver the report itself.”
It has been 62 months and counting.
Then the inquiry started the classification process. Under the inquiry protocols, there are nine different categories of reason for turning down the classification—for preventing Sir John not from seeing the information, but from publishing it. What the inquiry can publish is determined by a series of protocols that have criteria so broad that a veto on application can be applied virtually at Whitehall’s discretion.
Compare that with the Scott inquiry into the Iraqi super-gun affair. It also covered issues of incredible sensitivity in terms of national security, international relations, intelligence agency involvement, judicial propriety and ministerial decision making—the whole gamut. Sir Richard Scott was allowed to decide himself what he would release into the public domain, unfettered by Whitehall, so that whole tranche of time—that couple of years—would have been unnecessary. By contrast, Sir John Chilcot, a former permanent secretary at the Northern Ireland Office who chaired an incredibly sensitive inquiry into intercept—some Members of the House may remember that—and who is considered a responsible keeper of the Government’s secrets, is tied up in protocols subject to the whim of Whitehall.
There have been long negotiations between the inquiry and Sir Jeremy Heywood, the Cabinet Secretary, and his predecessors over the disclosure of some material, most notably correspondence between ex-Prime Minister Tony Blair and George W. Bush. There is no point whatsoever in the inquiry if it cannot publish the documents that show how the decision to go to war was arrived at. That is, after all, the point of half the inquiry. Chilcot wrote in a letter to the Cabinet Secretary:
“The question when and how the prime minister made commitments to the US about the UK’s involvement in military action in Iraq and subsequent decisions on the UK’s continuing involvement, is central to its considerations”.
The negotiations between Chilcot and Jeremy Heywood concluded only in May 2014, when it was announced that an agreement had been reached. The process was clearly frustrating for Sir John. He queried why it was that
“individuals may disclose privileged information (without sanction) whilst a committee of privy counsellors established by a former prime minister to review the issues, cannot”.
He was of course referring to Alastair Campbell and Jonathan Powell’s respective diaries, which quoted such information, again without Whitehall veto.
Then came the excruciatingly long process of Maxwellisation. This is meant to be a process of notifying any people criticised in the report so they can correct factual errors and be ready to respond to those criticisms when they become public. It is not intended to allow protected negotiation between the commission and teams of expensive lawyers—incidentally, those expensive lawyers are paid for by the taxpayer—who negotiate ad nauseam, at any cost, to protect their client’s reputation, even over and above the national interest. That is what is happening.
We know that finally, after all that, the Iraq inquiry is now due to submit its report to the Government next week. The next stage will be security clearance before publication. The Prime Minister stated last October that he fully expected security clearance to take less than two weeks, the time taken by the equally enormous Saville inquiry. Let us remember that the Saville inquiry took decades to come to its conclusion, but it was cleared in two weeks. I cannot believe that clearance will take any longer than that, given, as we already know, that every single piece of this report has already been negotiated with Whitehall, presumably on the basis of security considerations.
Given that, and the Prime Minister’s declaration that he is as exasperated as anyone by the delays to publication, the public ought to expect the report to be published in the first week of May. That should be the reasonable conclusion, but that is not the case. There are now reports that the publication of the report will be postponed until after the EU referendum at the end of June. This is frankly outrageous. It is for this reason that I, together with right hon. and hon. Members from all parties in this House, have called for this debate. We demand that the Government publish the report as soon as security clearance is complete, and certainly no more than two weeks after its receipt.
While this inquiry has lumbered on, there have been at least three significant foreign policy decisions that could have been dramatically different had we had the benefit of the Iraq inquiry’s findings. The decision to intervene in Libya was intended to prevent a massacre, but since then, partly because we changed the aim to regime change, the country has descended into civil war and miserable, fractured chaos. On the question of regime change, when the Prime Minister first asked this House to support military action against the Assad regime in Syria in 2013, the House turned him down. Had the House not blocked military intervention, we could have ended up as military supporters of our now sworn enemies, IS. In Iraq, the UK is of course involved in the ongoing civil war that has raged since the invasion in 2003.
There are lessons to learn from the Iraq war about our foreign policy, our political decisions to go to war and our military operations. The longer we leave it, the less useful these lessons will be, and the more likely it is that we will make the same mistakes. When decisions such as those that were made in Libya, Syria and Iraq are made without knowledge of the facts, mistakes are made and sometimes people die as a result. Therefore, it is not hyperbole to say that the delay to the Iraq inquiry could cost lives because bad decisions may be made. I would go further and say that it probably has cost lives because bad decisions were made. Indeed, many of the revelations in the report will come too late to be useful in relation to decisions that have already been taken. This is the irrecoverable harm that has been caused by the delays—the unconscionable delays—in this inquiry.
Mr Graham Allen (Nottingham North) (Lab)
The right hon. Gentleman is absolutely right that the Iraq war was the most appalling miscalculation and the most idiotic way of conducting foreign policy in living memory. As he is looking to the future, does he accept that the fracture within Islam that the war exacerbated and the Pandora’s box that was then opened of violence and extremism within Islam, both in the middle east and internationally, are sadly the gift of the Iraq war that will keep on giving, and that there may be decades’ worth of interventions from extreme Islamic elements across the globe?
Mr Davis
I do not think it is a question of “may be”; I think there will be the continued disruption of international affairs and the continued threat of terrorism. Europol’s assessment that there are 5,000 jihadists in Europe implies an arrival rate of 1,000 a year, and the rate is going up, not down. It is clear that the hon. Gentleman is absolutely right.
That brings us to a significant point. When the individual Prime Ministers involved in each of the decisions I mentioned made their decision, I am sure that in their own mind they were doing the right thing—they were trying to save lives, to save a civilisation or to intervene to prevent further terrorism. The trouble is that every single one of them made simplistic decisions, without detailed understanding. The complexity of the issues they were reaching into was beyond their knowledge. It is correcting, enhancing and improving that knowledge that the inquiry report is all about.
I am no pacifist, but I find myself horrified at the thoughtless, aggressive and unnecessary interventions by the west in areas that it does not understand. I did not like the Gaddafi regime; I did not like the Saddam Hussein regime; I do not particularly like the Bashar Assad regime, but ripping them out has led to something even worse. The hon. Member for Nottingham North (Mr Allen) is therefore absolutely right in his analysis, which demonstrates why this report and its speed of preparation are so important.
Mr Andrew Mitchell (Sutton Coldfield) (Con)
My right hon. Friend is making an immensely compelling point. Does he agree that when the report is published, which, I like him, hope will be as soon as possible, although the tendency in the British media will be to use it as a trial of the former Prime Minister—Blair guilty or innocent—the great gain of the report will be in showing how the whole mechanism of government worked in the run-up to the decision to go to war? A Prime Minister is not Dr Strangelove; this is about how the whole machine in Whitehall works.
Mr Davis
My right hon. Friend will forgive me if I do not follow him down his comparison between Dr Strangelove and past Prime Ministers, but he is right in one respect: the most important element of this is what we learn from our mistakes. However, there are also issues of accountability and closure, which I will return to in a moment.
Pete Wishart (Perth and North Perthshire) (SNP)
I am reluctant to interrupt, because I am very much enjoying the powerful case that the right hon. Gentleman is making, but I invite him to ignore the representations of his colleague, the right hon. Member for Sutton Coldfield (Mr Mitchell), because this war is bound up with one key individual: Tony Blair. For ever and a day, he will be associated with this particular war. It was personalised around the personality of that Prime Minister. As far as I am concerned, he could have a tattoo across his forehead reading “Iraq”, such is his legacy. This will be a comment and a statement about his day. I was in this House when we voted to go to war, as was the right hon. Member for Haltemprice and Howden (Mr Davis), and I had to listen to the nonsense and drivel that was that former Prime Minister’s case for war. Please let us make sure that where blame is to be apportioned, it is apportioned rightly.
Mr Davis
I will come back to this issue in the latter part of my speech. My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and I have a very dear common friend who thinks that Mr Blair should be at The Hague, so there is a range of opinion on this, but to come to that conclusion today would be to pre-empt the report. I do not intend to do that, but I do intend to turn to the issue of accountability in a minute.
Mr Graham Allen
Just to get the balance correct, if we go back to the time of the vote, a majority of the non-payroll vote in the Labour party—122 Members, and I was proud to be one of the organisers—actually rebelled against their own Government. Had the Conservative party supported us we would not have gone to war. Those are historical matters, but it is important to place on the record that the biggest ever parliamentary rebellion within a governing party was by the Labour party on the issue of taking us to war. Many of us at the time realised that it would be a disaster, but none of us realised what an appalling disaster it would be—one that would carry on for decades and influence us domestically as well as in the middle east.
Mr Davis
The hon. Gentleman has made his point well, but one of the issues that the report will face up to, one hopes, is the veracity of what was told to the House that day. That will be one of the key issues, which is why the argument between Sir John Chilcot and Whitehall is very important. Reading between the lines of his letters, that argument was very much about what decisions were taken before the House made its decision and after—what was told to the House, whether it was accurate, whether it was based on impartial briefings and whether, indeed, the politics of the issue coloured the views of important components of the state. I am not going to attempt to answer those questions today, but I would be incredibly disappointed if the commission’s report did not actually answer them in plain English. That is why I would not be drawn by my right hon. Friend the Member for Sutton Coldfield, who is a very great friend of mine. The report has to answer those questions; what the tabloid and other press do with the report the day after publication is not for me.
I will press on, briefly, with the lessons to learn not just about the war but about how we should conduct these inquiries. The Government now intend to review the Maxwellisation process, in which those who have been criticised in a report are given the chance to respond. That is to be welcomed, as Maxwellisation has been responsible for half the delays here. It is clear that strict time controls are needed for future inquiries. It cannot be right that those who are to be criticised can delay publication for their own interests, so I hope that strict time controls will arise as a result.
There is no reason for further delay. It has been suggested that the delay between the report being security cleared and its publication is because it needs to be proof-read and typeset. That would be unacceptable if true. The report is already in electronic format. It has already been repeatedly checked for accuracy, and will be checked again by the security services. It will have been read by more people than some newspapers. The fact is that the report has been pored over by many people for five years. We are in the 21st century, not the era of hot lead typesetting. Someone said to me this morning that I might have summarised the rather long motion rather more crisply by saying, “This House instructs Sir John Chilcot simply to press ‘send’.”
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I am sure that the right hon. Gentleman agrees that the public at large, and bereaved families in particular, deserve answers, so redactions must be kept to an absolute minimum. Those families should not have to endure any further suggestions of a cover-up.
Mr Davis
The hon. Lady is absolutely right, but, to be honest with her, I will be astonished if there are any redactions in the report. I remember that once, when I was Chair of the Public Accounts Committee, a report was given to me about the overrun of MI5 and MI6 on their buildings. It had four chapters: the introduction, the chapter on MI6, the chapter on MI5 and the conclusion. The chapters on MI5 and MI6 were virtually identical, except that all the redactions were different. We rang up MI5 and said, “MI6 has agreed to all these,” then we rang up MI6 and said, “MI5 has agreed to all these,” and then we removed nearly all the redactions. They were political—they were redactions to preserve the interests of the bureaucracy involved, not the national interest. The simple truth is that the facts in the report have already been cleared. That is what two years of the argument was about. If there is a single redaction, I and others will be looking at it very closely and asking why it was not redacted years ago instead of now. The hon. Lady is absolutely right about the rights of the families in this affair.
There is no doubt that the whole country is fed up with waiting for the final report, but none more so than the families of those 179 British soldiers who died fighting for their country in Iraq. The families have suffered for years as this inquiry has dragged on and on, and it would be disgraceful to make them wait for months longer, just because the Government are worried about what effect—if any—the report will have on the referendum. I cannot imagine what impact that might be, given that there is no party political advantage in this to either side.
The Conservatives and Labour both supported the war. As the hon. Member for Nottingham North said, half the Labour party stood back or voted against it, and there is no advantage either way. The inquiry was started by Labour and supported by the Prime Minister. It is therefore inconceivable that the Government should seek to wait until after the June referendum to publish the report, and I hope that when the Minister replies to the debate, he will make it clear that that will not happen—I am sure he will address that point directly.
Let us put this issue in context. If the report waits until June, it will be seven years since the inquiry started, and some parents of the dead soldiers will have been waiting 10 or 12 years for an answer. To give the House a simple comparison, the Israeli Government appointed the Winograd commission in 2006 to investigate the war with Lebanon. It produced its interim report not in seven years but in seven months, and it was highly critical of the existing Government that had set it up. The final report was produced after 17 months. Any argument for delay on grounds of political sensitivity or national security would be far more pressing in Israel, where that is a matter of daily life and death to all its citizens. Because of that, it is also a matter of very high and extremely important politics. If Israel can produce a report in seven and 17 months, we should be able to do it in a lot less than seven years.
Some people will, of course, be held to account in this report; otherwise it will properly be dismissed as a whitewash. That is to be expected and must be right. However, this is principally about learning from mistakes that we made as a nation, and ensuring that we do not make the same mistakes again. It is also about remembering those who have suffered great loss, and giving them some measure of solace in the truth and some degree of closure. This is about doing the honourable thing by those who have made the ultimate sacrifice on behalf of their nation, and to delay any further for no good reason would be an insult to those brave soldiers who died in the Iraq war, and a cruel insult to their families who have waited more than six years for a proper answer.
Sir Gerald Howarth
Indeed. I could not possibly disagree. That is entirely right.
Secondly, we felt the inquiry was necessary
“to consider how we should adjust our whole military posture to the new type of military operations we face, including at the tactical level: whether our soldiers, sailors and airmen are getting the right training package for that type of warfare; whether…we have the right equipment for the task; whether we have the correct balance of forces, and what needs to be done so that we do not become disproportionately reliant on urgent operational requirements—a kind of panic-buying formula—to make up the shortfall in equipment.”—[Official Report, 11 June 2007; Vol. 461, c. 583.]
Thirdly and finally, there had already been several Select Committee inquiries, and there was a real need for a comprehensive inquiry by an independent committee established by the Government. We suggested there was real urgency. In introducing today’s debate, my right hon. Friend mentioned the effect of the time lag. At the time, I said:
“The reason for the relative urgency is that, as my right hon. Friend the Member for Richmond, Yorks”—
now Lord Hague—
“said, while the events are fresh in people’s minds and the e-mails have not been destroyed, we need to learn whatever lessons we can from the background to operations in Iraq so far, and to apply them to Afghanistan before it is too late.”—[Official Report, 11 June 2007; Vol. 461, c. 585.]
So there was an imperative, and a great disservice has been done to everybody, in that the inquiry was not established in the immediate aftermath of the Iraq war but indeed was six years late. As I said, the bereaved are owed an explanation.
Mr David Davis
My hon. Friend has been a Defence Minister and shadow Defence Minister. What is his opinion of the argument put at the time that, whenever our forces are in the field, we cannot have an inquiry, which seems madness to me? We had a successful inquiry into Norway, for example.
Sir Gerald Howarth
I agree with my right hon. Friend. He mentioned Norway, and indeed there is plenty of precedent. I think that that was an excuse for not holding an inquiry, and I think that it was a mistake.
It is not just the bereaved who are owed an explanation, however. Those of us who were in the House at the time are owed one as well. All of us bore a responsibility for the decisions that we made on whether to vote for the war or not, and those of us who were on the Front Bench bore a special responsibility. However, we had no more information than what we read in the newspapers.
When I voted for the war, I did so for three reasons. First, I had had a meeting in New York with Hans Blix, the United Nations chief weapons inspector, who had said that he had no doubt that Saddam Hussein intended to develop weapons of mass destruction, and that if he could develop them he would use them, but he—Hans Blix—could not, at that point, find them. He said that just a month before the war started, and I thought that it was pretty compelling.
My second reason was, of course, the “45 minutes” claim. I remember this vividly, because it was all over the front page of the Evening Standard. We were told that Saddam Hussein could launch what I think were described as “battlefield biological and chemical weapons” at 45 minutes’ notice, and reach the sovereign British base of Cyprus. I thought, “I have a responsibility. I am a shadow defence Minister.” I could hear Mr John Humphreys, on the “Today” programme, saying, “Well, you knew all about this, Mr Howarth, so why did you not take action at the time?” I felt that that claim had to be taken seriously.
Thirdly, I thought that, as a key ally of the United States, we had a very close relationship with that country, and we had to have a good reason for not supporting our US friends. I realise that that view will not be shared universally in the House.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It is an honour to speak in the debate, but I take no pleasure in doing so. I do not think that we should be having this debate, because the Chilcot report should have been published by now.
Time has been a huge issue since the genesis of the report. We should particularly bear in mind that Sir John Chilcot promised that the report would be delivered by 18 April, or the week commencing 18 April, and I understand that he will honour his word. Also, the Prime Minister promised to have it security-cleared within a fortnight, which would be by the week beginning 2 May. The promise that I seek from the Minister is that the Government will keep their word, and that a fortnight after Sir John Chilcot has delivered his report, we shall see it published.
As many have said, and as was said at the press conference, publishing a report is not a difficult matter these days. It is no longer a matter of “cold lead”. It is, as we heard from the right hon. Member for Haltemprice and Howden (Mr Davis), a matter of pressing “send” and the thing is published. People have waited far too long for this report, and further delays are only adding to the pain of the families who are looking for closure. Delays also add to the ever-increasing time during which we have failed to learn the lessons of Iraq, which we should have learned several years ago.
There are further timelines relating to the Chilcot report. On 29 January last year, there was a debate—also hosted by the right hon. Member for Haltemprice and Howden—on a motion calling for the report to be published by 12 February 2015. There was uproar in the House during Prime Minister’s questions and at other times when it was suggested that the report could be delayed beyond the general election of May 2015. We are now in April 2016, and again there is uncertainty about the report.
This report was kicked off in 2009, but there was another timeline before that of impatience for the report. I remind the House of a cross-party debate held here on 31 October 2006, when I was quite a new MP, having been here for about a year and a half. It was led by Adam Price, the then hon. Member for Carmarthen, East and Dinefwr. It is instructive to go back and look at the words that Adam used at the beginning of his speech. He said:
“It is about accountability. It is about the monumental catastrophe of the Iraq war, which is the worst foreign policy disaster certainly since Suez, and possibly since Munich. It is about the morass in which, regrettably, we still find ourselves. It is also about a breakdown in our system of government—a fault line in our constitution that only we, as Parliament, can fix. Fix it we must, if there are not to be further mistakes and other Iraqs under other Prime Ministers, in which case we shall only have ourselves to blame.”—[Official Report, 31 October 2006; Vol. 451, c.163.]
Those words still ring true today.
There was another debate, to which Tony Blair refused to come, despite saying a few weeks earlier to a Conservative Member that he would come at “any time” to a debate on Iraq. Part of the defence for that was that soldiers were in the theatre of operation, but that was admirably dealt with by Douglas Hogg, then a Conservative MP and now Lord Hogg. He said during world war two, the debate on the Norway debacle was led by his father, and that took place when troops were in action. The key moment of the Norway debate—I am not certain about the name of the inquiry—led to the removal of Chamberlain and the installation of Churchill, which may have been instrumental in changing the course of world war two, because this Chamber had shown that it was not afraid.
Mr David Davis
The House needs to address this idea that we cannot debate or investigate anything when troops are in the field. When I have spoken to our troops in the field, they have said that they want our democracy to work properly. They want to feel that they are fighting for an honourable cause. In future, we should dismiss this idea that we are undermining our troops; we are standing up for something that will ensure that their lives are not wasted in the future.
Mr MacNeil
The right hon. Gentleman is quite right. People, and especially troops, want to feel that this place is not on auto-pilot. They want to know that it is living, functioning, thinking and reacting to lessons. As was said, to commit troops to a morass and refuse to learn lessons is an absolute abdication of the House’s responsibility.
Mr Holloway
I entirely agree with the hon. Gentleman in the sense that the original invasion of Afghanistan was highly effective and that the Afghan people essentially removed al-Qaeda and the Taliban, but unfortunately it was the disastrous NATO deployment to Afghanistan that whipped up the insurgency. I shall come on to that point in a minute if I may.
As I was saying, people do not get promoted for telling the truth. I sent my first draft of this speech to a friend who is a well-known and courageous BBC foreign correspondent. He emailed me, saying, “Reminds me of being attacked for negative coverage that I put out in Iraq and Afghanistan by officials who later admitted, either privately or in memoirs, that things were actually worse than I was saying in my news reports.”
With some hugely honourable exceptions, the same is true of senior military officers. After a recce of Helmand in 2004, a military officer reported back to his boss, a general at Permanent Joint Headquarters. The general asked him, “So, what’s the insurgency like in Helmand?” The officer replied, “Well, there isn’t one, but I can give you one if you want one.” At the time, the mission statement at PJHQ actually stated that the military were to give “politically aware” advice. The top brass volunteered the UK for Helmand and, as in Iraq, assured Ministers that it was doable with the original force numbers.
We experienced exactly the same with the lack of equipment. Military people in Afghanistan constantly reminded us that we had enough helicopters to do the job. A few weeks before Colonel Rupert Thorneloe and Trooper Joshua Hammond were killed by an improvised explosive device, Rupert wrote that he and his men were making “unnecessary...road moves” because of the lack of helicopters. He went on to say:
“This increases the IED threat and our exposure to it.”
A senior British general briefed the Defence Committee at ISAF headquarters in Kabul, and basically tore my head off for being a naysayer. When I was back in Kabul a few weeks later, again on a private trip, I went to see him at the end of the day. As I rather nervously walked into his office, I said, “Well, general, are we still winning?” He said, “If we damn well are, I’ll be dead by the time we do.” I was hearing one thing in public and another in private.
As a soldier, I was in Iraq before the war in 1991, and in 2003 I found myself back on the ground. As I have said before, I will never forget driving into Mosul after the regime dissolved and the city collapsing into anarchy before our eyes. It was the first time as a journalist that I had kept a sub-machine gun close to me. There were bodies on the streets. There was chaos, and a really nasty, threatening environment. American jets were coming down low, fast and noisily to intimidate people. I went to a police station to find out where the American troops were in the city. Saddam Hussein lookalikes were standing around, and the police brigadier general told us where the Americans were. Just before we left he said, “When you find the Americans, can you please get them to come up here and give us our instructions?” I hope you will agree that it was pretty astounding that, as their regime was falling, they were taking instructions from the Americans. I found the American colonel, and when I had done my business with him I said, “By the way, the Iraqi police brigadier general up the hill wants his instructions.” The American colonel said, “You can tell him to go **** himself.” It was quite extraordinary.
We ignored other experts who could have helped us. Of all the people who knew anything about Iraq, who suggested it was a good idea to dismantle Ba’athists like those police officers from the various structures of government? Would any expert have thought that that was a good idea, if asked? I do not know of anyone, apart from General Tim Cross, who thought about our responsibility to the people of Basra after the invasion.
In Afghanistan, too, the experts were consistently ignored. I was there in 1984—for part of my gap year before I went to university—when the mujahedeen were fighting the Russians. No one listened to our officials who had run the training programme for the Afghan resistance. No one listened to the senior ex-mujahedeen commanders living in north London or in the suburbs of Kabul. No one heard the concerns being expressed by the expert contractors to our foreign intelligence services, who knew many of the Taliban leadership personally. No one spoke to the agronomists who had been working for decades in the Pashtun belt.
Mr David Davis
Does my hon. Friend agree that the criticisms he is rightly laying at the door of several different establishments should properly be laid at the top of those establishments? Just before the Iraq war, a regimental colleague of ours serving in the planning section of the Ministry of Defence said to me, “David, I have never known a war in which the British officer class has been less happy”—so somebody was asking questions and not getting any answers.
Mr Holloway
Absolutely. If my right hon. Friend will forgive me, I will give the House one more anecdote on this subject. I had a barbecue in my garden in Gravesend for the officers of a regiment that was about to go to Afghanistan. I asked the officer who would be responsible for engaging with the local community in Helmand province how he would do that. He came up with a pretty unconvincing answer. About 15 minutes later the colonel, the commanding officer who was about to lead his troops on a six-month tour, took me aside and said, “Adam, I’ll tell you the best way to influence the people living in Helmand positively towards us: it’s not to get on the plane in the first place.”
No one listened to the experts. The Pakistanis, for example, know a little bit about Afghanistan and the Taliban, and the Russians certainly do—but of course, as ever, we knew it all. I remember sitting in Kabul with the general who had looked after Helmand province for a couple of years after the Russians had left. I said to him, “ISAF must be consulting you the whole time.” He looked down at his four mobile phones and said, “No one has rung me yet. I am still waiting for them to ring.”
Mr David Davis
This has been a very good debate. Every speech has been impressive, well-informed and passionate. There are three reasons why Chilcot matters: one is learning lessons; one is holding people to account; and one is giving closure to those who have suffered the loss of their nearest and dearest. From the point of view of the last of those reasons, I want to say through the Minister to Sir John Chilcot that publication in June or July is incomprehensible and unacceptable. In the Gallery is Peter Brierley, whose son Shaun died 13 years ago in the service of his country. In my mind, he represents the 179 families who have lost sons, daughters, brothers, sisters, husbands, loved ones, wives and, in some cases, mothers and fathers. We owe them a debt. We call ourselves right hon. and hon.—and sometimes gallant—Members, and this is a matter of honour: let us give those families closure.
Question put and agreed to.
Resolved,
That this House calls on the Government to conclude the National Security checking of the Iraq Inquiry report as soon as possible in order to allow publication of that report as soon as possible after 18 April 2016, and no later than two weeks after that date, in line with the undertaking on time taken for such checking by the Prime Minister in his letter to Sir John Chilcot of 29 October 2015.