European Union (Withdrawal) Bill

Helen Goodman Excerpts

Committee: 5th sitting: House of Commons
Wednesday 6th December 2017 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

My hon. Friend is making a good case. There is a further cost that he is not taking into account, which is the cost to the public finances. We know that the Red Book takes no account of the £40 billion or £50 billion in the divorce bill, which means that the Government’s forecast—or the OBR’s forecast—for the public finances will be shot to pieces. That means interest rates will go up faster than anticipated and the cost of Government borrowing will go up. This is a major economic event and we need an assessment of that as well from the Government. Does my hon. Friend agree with me?

[Mr Leslie]

Yes. All hon. Members, not just the Government—there are such hon. Members even on the Labour Benches—will want to commit public resources to all sorts of things, and they need to recognise that if the cost is £60 billion, that is not something to be sniffed at. In a couple of years’ time the deficit is projected to be about £30 billion a year, so we are talking about the equivalent of two years of deficit to be added, presumably, to the national debt at that point in time. That is all notwithstanding what happens to our wider economic circumstances. These things should not just be dismissed.

We should be putting the House of Commons at the centre of this process and not treating it as a peripheral part of the Brexit arrangements. That is why this new clause is so important. Brexit is a costly exercise and Parliament needs to have the chance to properly reflect on it. A potential divorce bill of £1,000 for every man, woman and child in this country certainly should not just be brushed aside. When we ask ourselves what we are getting for this arrangement, we see that we are getting the chance to rip up the finest free trade agreement—a frictionless, tariff-free agreement—of anywhere in the world, for the chance to have something inferior. The current path we are on is not about taking back control; this is about losing control. The idea that Parliament should simply step to one side and agree to have control taken away from it is not acceptable to me and to very many hon. Members. This new clause would at least drag Brexit back into the sunlight and let the public hold those responsible to account.

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[Jenny Chapman]

It is a real pleasure to be called to contribute. I wish to speak to new clause 80 and amendments 339 and 340 in my name and the names of my right hon. and hon. Friends.

New clause 80 would require a vote in the House on the financial settlement that the Government agree with the European Union. Further, it would require the House to be informed in its decision on that matter by reports from the Office for Budget Responsibility and the National Audit Office. Amendments 339 and 340 would prevent tax or fee-raising powers from being established via tertiary legislation and limit any fees that are levied by public bodies to the cost of the service that the fee is intended to cover.

I should start by referring Members to the third report of the House of Lords Delegated Powers and Regulatory Reform Committee from September, which examined the Bill before us today. The report draws our intention to the fact that the delegated powers memorandum notes that those powers would enable

“the creation of tax-like charges, which go beyond recovering the direct cost of the provision of a service to a specific firm or individual, including to allow for potential cross-subsidisation or to cover the wider functions and running costs of a public body.”

The report alerts Parliament to the danger of allowing organisations full-cost recovery of their services without parliamentary scrutiny as it could allow them to gold-plate the services that they offer. As the report says:

“A tax-like charge means a tax.”

And it

“should not be allowed in subordinate legislation. They are matters for Parliament, a principle central to the Bill of Rights 1688. Regulations under clauses 7 and 9 cannot impose or increase taxation.33 But regulations under Schedule 4 may.”

The report goes on to make the point that that means that Ministers can tax. They can

“confer powers on public authorities to tax and they can do so in tertiary legislation that has no parliamentary scrutiny whatsoever.”

New clause 80 also addresses this issue of a lack of parliamentary oversight. As we all know, the Government are in the process of attempting to conclude the first phase of negotiations with the European Union. Part of that process is agreeing a financial settlement, which reflects the obligations that the United Kingdom has incurred as a result of its membership of the European Union. Labour has always been clear that Britain should meet its obligations. We cannot seriously hope to make new agreements on the international stage if we are seen to go back on what we have already agreed. Britain is a far better, fairer and more reliable ally than that.

As the Chancellor said when he attended the Treasury Committee today:

“I find it inconceivable that we as a nation would be walking away from an obligation that we recognised as an obligation.”

He continued:

“That is just not a credible scenario. That’s not the kind of country we are and frankly it would not make us a credible partner for future international agreements.”

On that, we are agreed. But we have also been clear that the deal must be fair to the taxpayer. Already the Government are attempting to bypass the scrutiny that should take place in this Chamber. This money belongs to the UK taxpayer and they have a right to know how much, and for what they are paying. It is true that the public interest in discovering more about the financial settlements that the Government intend to make with the EU is great, and that there will inevitably and rightly be extensive media coverage. The details, some certain and some speculative, will be pored over by commentators. Estimates will be made and objections proffered on the basis—sometimes, I venture to say—of inaccurate or incomplete information. That is not a satisfactory way to proceed. The House must get a grip of this process and demand the ability to scrutinise and take a view on the deals reached.

Our new clause argues that this House should have a vote, and also that the vote should be properly informed. Being properly informed means that independent analysis by the OBR and the NAO must be provided to assist this House in its consideration of the deal. We are going to need that, because the financial settlement will not be straightforward, and unvarnished truths will be hard to come by. Crudely speaking, the Government will try to make the amount look as reasonable as possible and the EU will try to show that it has everything that it thinks it is due.

The Government will want to highlight estimates that show how payments will be less than half the €100 billion liability, once UK projects have been taken into account. As Alex Barker in the Financial Times put it last week:

“Ministers are banking on Treasury budget wizards making the exit price look as small as possible.”

The two sides in the negotiation could look at the same agreement and come up with net estimates that are quite different.

[Helen Goodman]

I am just puzzling over how the Government think this will work. Has my hon. Friend thought about this: it is highly likely that we will make not one big payment, but a number of payments over a period of time, which means that the payment could be spread into another Parliament? Given that no Parliament can bind its successor, how does she think that the Government can make this agreement?

[Jenny Chapman]

That is a very interesting point. As a fellow member of the Select Committee on Procedure for several years, I am not surprised that my hon. Friend has spotted this. I would be fascinated to hear what the Minister has to say about that when he gets to his feet later this evening.

Parliament ought to have the ability to debate, scrutinise and reach its own conclusion on this matter. If we do not, we will be the only people not tussling with it. This Parliament wants to do as the people said we should: take back control. The Chief Secretary to the Treasury said in response to an urgent question from my hon. Friend the Member for Nottingham East (Mr Leslie) that to give Parliament details about the settlement

“would not be in our national interest”—[Official Report, 29 November 2017; Vol. 632, c. 327.]

That is not good enough. She said that she will “update the House” when there is more to say, but we do not want to be updated; we want the ability to decide.

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[Stephen Timms (East Ham) (Lab)]

I am pleased to follow the hon. Member for Aberdeen North (Kirsty Blackman). I share her bemusement at where we have got to on the impact assessments, which we have now been told do not exist. Like her, I would have thought that that work would have been done—it certainly should be done. If it has not been done—we have been told that it has not been done—it urgently needs to be done so that the Government and the House can take an informed view about where we are heading.

I wish to speak briefly to my amendments 152 and 153 to schedule 4, which touch on the matter raised by my hon. Friend the Member for Darlington (Jenny Chapman). She pointed out that while it was a good thing that Ministers could assure us that no new taxes would be introduced as a result of the sweeping powers that the Bill gives to Ministers—I am glad that new taxes are not going to be imposed on us through the use of these powers—nevertheless the Bill gives them the powers to impose charges. My hon. Friend is absolutely right to make the point, which was also made by the hon. Member for Aberdeen North, that there is frankly precious little difference between taxes and charges. There are wide powers in the Bill to impose new charges, so my amendments 152 and 153 are intended to constrain the power of Ministers to impose charges, which could be almost limitless in scope. I hope that the Minister, in winding up the debate, will be able to give assurances to the Committee that these powers will not be used in ways that none of us would want. I hope that by probing the Minister’s intentions through my amendments I will receive the assurances I seek.

Amendment 152 would amend line 35 of schedule 4, on page 32. The schedule is slightly alarmingly worded, and the amendment is to part 1, which deals with the power to provide for fees or charges. Paragraph 1(3) lists various things that Ministers can introduce regulations to do: to prescribe fees or charges; to provide for recovery of any sums payable; and to confer power on public authorities to do rather similar things. The sub-paragraph explicitly allows Ministers to introduce regulations on those three things, but its first line also reads:

“Regulations under this paragraph may (among other things)”.

Apart from the three specific things, which, frankly, sound rather alarming, it seems that there are some other, non-specified things that the schedule would empower Ministers to do. Amendment 152 simply proposes the deletion of the words “among other things”, so that at least Ministers can do only three things to demand money from taxpayers or charge payers.

[Helen Goodman]

I just want to make sure that I have understood what my right hon. Friend is saying. Surely what is being proposed here is that Ministers’ ability to use secondary legislation to impose taxes should be constrained, and they will be allowed to impose charges—not that if the Brexit bill is ginormous and the public finances are in a mess, Ministers will have stood at the Dispatch Box now and committed never to increase income tax. That is the correct understanding, is it not?

[Stephen Timms]

My hon. Friend is absolutely right. The amendment simply constrains Ministers’ ability to introduce new charges—she calls them taxes, and she has every right to do so—under the secondary legislation envisaged in schedule 4. What I hope the Minister will do is assure us that by “among other things” he is not envisaging some great long list of new money-raising powers.

[Helen Goodman]

Before my right hon. Friend moves on, is it not worth considering those EU agencies, such as the European Medicines Agency, that are financed by charges on the industry, not by the taxpayer? We should really be hearing from the Minister how the Government propose to fund such agencies in future.

[Stephen Timms]

My hon. Friend is absolutely right. We come directly to that point in amendment 153, in which we propose to add to schedule 4 the words set out on the amendment paper, which I shall read out. We propose to constrain Ministers’ powers by saying, first, that regulations

“may not be made for the purposes of…creating a fee or charge that does not replicate a fee or charge levied by an EU entity on exit day”.

That is exactly the point my hon. Friend has just raised. We of course recognise that a lot of charges are imposed at the moment by EU bodies of one sort or another—she mentioned a very important one—and that, in future, comparable fees or charges may well need to be levied by UK entities, but the aim of the first paragraph of amendment 153 is to make it clear that Ministers cannot impose new fees or charges for which there is not already a counterpart from the EU entity.

[Stephen Timms]

I had not considered that, and the right hon. Gentleman may well have a point. I would be interested to know whether that is indeed the case. That interesting point is certainly worth pursuing, and I would welcome it if he expanded on that later.

Secondly, amendment 153 states that Ministers cannot bring forward regulations for the purpose of

“increasing a fee or charge to an amount larger than an amount charged by an EU entity for the performance of the relevant function on exit day.”

Let me take the example my hon. Friend the Member for Bishop Auckland (Helen Goodman) mentioned. The European Medicines Agency does very important work, and it charges the industry for that work. I am suggesting that the secondary legislation powers in schedule 4 should not be used to introduce a charge for the same function that is higher than the one currently charged by the European Medicines Agency. There may well be a loss of economies of scale in leaving the European Medicines Agency, and it may well be that undertaking that function purely for the UK will be a less efficient process than doing it EU-wide, as the European Medicines Agency does, but I do not think the secondary legislation powers in the schedule should be used to impose on industry or any charge payer a fee that is higher than the one currently charged by the EU entity.

I accept that there may well in due course need to be some higher fees or charges than those currently levied by EU entities, because the process may well be less efficient when carried out at a UK-only level, but I do not think the secondary legislation powers should be used for that purpose. If Ministers want to bring forward a proposal to impose a higher fee or charge, they should do so through the proper parliamentary process, with scrutiny by this House, not through secondary legislation powers.

[Helen Goodman]

One of the points made to me by those in the industry is that if these fees and charges shoot up, that will have an impact on their competitiveness, which is the last thing we want. Does that not reinforce my right hon. Friend’s point?

[Stephen Timms]

Once again, my hon. Friend is absolutely right. Indeed, my amendments arise specifically from the discussions I have had with those in the tech sector who are worried about the prospect of being hit by substantially larger fees and charges in the future, which is exactly what the powers in the schedule would allow Ministers to do.

I very much hope that the Minister will give us an assurance that these powers will not be used in that way, and that we will not find that industry and charge payers of other kinds are hit by fees or charges that are not being charged at the moment or are higher than those currently being charged. I very much look forward to the Minister’s response.

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[Ian Paisley]

I will take your instruction, Mr Hanson, but I think that the right hon. Member for Carshalton and Wallington (Tom Brake) knows where I stand on that point.

I was hoping to hear some clarity from Labour’s Front Bench tonight, instead of more confusion. I was hoping to hear some key arguments about why the Opposition are putting forward some of these amendments to deal with the consequences of the divorce bill. I wanted to hear them deal with who should pay, with freedom of movement and with the single market. I wanted a hard and fast line, but I am afraid that we heard even more confusion.

We have had a diet of this confusion for some time. The right hon. Member for Hayes and Harlington (John McDonnell) said that we must leave the single market and respect the referendum result. The hon. Member for West Bromwich East (Tom Watson) said that we should stay in the single market and the customs union permanently. The hon. Members for Leicester South (Jonathan Ashworth) and for Darlington (Jenny Chapman) said on another occasion that we have to leave the single market. The right hon. Member for Hackney North and Stoke Newington (Ms Abbott) said that we should keep freedom of movement. The right hon. Member for Islington North (Jeremy Corbyn), the Leader of the Opposition, and the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), the shadow Brexit Secretary, have said that freedom of movement ends with Brexit.

We really need more clarity from the Labour party. If it is going to try to persuade us on these key issues, it needs a single position. At least the Government, for all the problems that have been pointed out, have a single position. I think that would be a good starting point.

[Helen Goodman]

I am pleased to have the opportunity to support new clause 17, moved with great elan by my hon. Friend the Member for Nottingham East (Mr Leslie), new clause 8, tabled by the Labour Front Benchers, and amendments 152 and 153, tabled by my right hon. Friend the Member for East Ham (Stephen Timms).

It seems completely reasonable for the House to expect the Government to produce papers explaining the basis of the payments that we will have to make in order to secure a successful Brexit. We want to know from the Government in writing what legal obligations they accept, what they agree to in relation to our obligations under the current five-year EU budget, what they believe our long-term liabilities are—such things as pensions—and how our share of the EU’s assets are being taken into account in the calculation. For example, it would be extremely helpful to know the Government’s position on the European Investment Bank, because we still do not have clarity on that. That will obviously play some part in the divorce Bill. We need to know what the number is, but we also need to know whether it has been worked out in a reasonable way, because at the moment it is not at all clear how the assessment has been made. We are asking for a parliamentary opportunity to look at this.

We also want to know Ministers’ plan for how the payment will be made. What will be paid earlier and what will be paid over time? What account will Ministers take of fluctuations in the exchange rate? The pound has fallen by 12% since the referendum in the summer of 2016. That is not a huge amount, but it has a significant impact on these numbers. If the Government agree a figure of £50 billion, it would increase the bill by €6 billion or £5 billion. How will the Government manage such exchange rate risks?

[Tom Brake]

Does the hon. Lady agree that a good way for the Government to publicise precisely how much the bill will be is for them to put the figure on the side of a red bus and for senior members of the Government to drive around the country publicising the £45 billion down payment?

[Helen Goodman]

That is a good, eminently sensible idea. I will return to the public’s attitude when I wind up my remarks.

This is a significant sum. When we bailed out the banks 10 years ago, we spent £133 billion. Now we are talking about a figure of £50 billion, which will have a significant impact on the public finances. I am sympathetic to the remarks of the hon. Member for Aberdeen North (Kirsty Blackman) on the inadequacies of the current estimates procedure. Given that this is an exceptionally large sum of money on an exceptionally important item, and given that this is exceptionally politically sensitive, we expect a much better way for Parliament to approve the sums of money. That is what new clauses 17 and 80 are driving at.

I am worried about the impact on the public finances. Not only is this a big number, but it seems to be a big number that the Chancellor did not take into account when putting together the Red Book, in which he included the current net payments to the EU of £9 billion a year up to 2019 and, thereafter, £12 billion a year of continued expenditure on items coming back to this country that are currently the responsibility of shared EU programmes, such as agricultural support, universities and R and D. He put in £3 billion for transitional costs, such as new computer systems at HMRC and the Rural Payments Agency, but he did not put anything in for the divorce bill. His forecast of the deficit coming down and of debt starting to fall towards the end of this Parliament is bound to be wrong unless the Government present the British people with a whopping great tax bill.

[Peter Kyle]

Does my hon. Friend agree that, considering our current trajectory under this Government, the other big black hole in the Red Book is how much we will have to pay for access to the single market after we leave?

[Helen Goodman]

My hon. Friend is right, but I am confining myself to the impact of new clauses 17 and 80.

We need to understand how Ministers will cope with this big bill when the deal is done. Will Ministers give everybody a massive tax bill—and it will be a massive tax bill, because we are talking about at least £800 per person, or £3,000 per household—or will they increase Government borrowing?

I return to the simple point about the promises that were made by, among others, the Under-Secretary of State for Exiting the European Union, the hon. Member for Wycombe (Mr Baker), during the referendum campaign—the £350 million a week for the NHS that we saw on the side of a bus. This is £16 billion a year. After the Brexit vote, I had a number of public meetings with my constituents and asked them what their expectation was when they voted to leave the EU. I will never forget this nice old lady saying, “Helen, it will be marvellous, because now there will enough money for the Government to reopen the A&E in Bishop hospital.” That is obviously not what the Government have in mind. It is incumbent on them to be open and clear with the British public, and that is what new clauses 17 and 80 are driving at.

[Dr Paul Williams (Stockton South) (Lab)]

We have all heard the famous phrase “a week is a long time in politics”. Well, it has now been almost 18 months since the public voted to leave the EU and in that time lots of new issues have come to light. From leaving the single market and customs union, to the renewed tensions over the Irish border, we know things now that voters could not have been expected to know all those months ago. We also know that the Brexit divorce bill is likely to cost the Treasury upwards of £50 billion. That is almost £2,000 per household that could have been put to more positive use but instead becomes the opportunity cost of Brexit. Some people will say, “That’s money that would have been paid to the EU anyway”, and to some extent they are right. The difference is, however, that the money we paid to the EU in the past bought us collective benefits and access to shared resources, such as Euratom and the European Medicines Agency, that are now at risk as a result of Brexit.