Customs (Amendment) (EU Exit) Regulations 2022

John Baron Excerpts

Monday 14th March 2022 General Committees

[The Financial Secretary to the Treasury (Lucy Frazer)]

I beg to move,

That the Committee has considered the Customs (Amendment) (EU Exit) Regulations 2022 (S.I. 2022, No. 109).

It is a pleasure to serve under your chairmanship, Mr Sharma.

The regulations consist of two measures that are being introduced following a review of customs enforcement rules. The measures make minor changes to legislation that will not have significant implications for traders or place additional burdens on them. None the less, the regulations will help to ensure that trade between Northern Ireland and Great Britain can continue smoothly and that traders in GB have appropriate safeguards where customs enforcement rules are applied by Her Majesty’s Revenue and Customs.

The first measure makes a number of changes relating to vehicles and goods travelling between Great Britain and Northern Ireland. First, it will ensure that HMRC can collect information about goods—for example, alcohol or tobacco—that are imported to the UK on Royal Navy ships from Northern Ireland. That rule already applies to vessels more broadly. The measure makes no change to the way in which the Royal Navy supplies that information to HMRC.

Secondly, that measure will give HMRC new powers to prevent fraudsters from exploiting the rules, for example, by putting goods shipped into Great Britain via Northern Ireland into the British market without paying the right duty. Thirdly, the measure will remove an unused and outdated requirement for information about goods being transported by ship from Great Britain to Northern Ireland. Again, let me stress that those are all minor changes that will place no extra burden on traders.

The second measure is also made up of several parts. The first relates to HMRC’s right to request a security as a condition of releasing imported goods from customs control. That might happen where a customs declaration form cannot be verified immediately, for example, in cases of suspected undervaluation fraud. Our customs officials rightly take a rigorous approach to their work. That means that, in some circumstances, the verification process might take a significant amount of time which, in turn, might mean that goods become commercially worthless to traders and cause storage problems for HMRC. As a result, it is in both parties’ interest to allow the goods to be released from customs control, as long as a trader can provide a security to cover any additional duty owed.

When the UK was in the European Union, traders who disagreed with HMRC’s decision to require a financial security could request a review or appeal to an independent tribunal. Those rights were also supported in domestic legislation. Since the end of the transition period, HMRC has the right to continue to require financial security from importers under the Customs and Excise Management Act 1979. That legislation, however, is not currently linked to statutory rights to request a review or to appeal to an independent tribunal. The regulations will therefore reinstate those rights and give businesses the same right of appeal as under EU legislation.

The final parts of the measure update the 1979 Act so that it reflects terminology used elsewhere in domestic customs legislation. The measure also omits previous amendments to the Act that have not yet come into force and that would have removed HMRC’s ability to require traders to provide a security.

[Mr John Baron (Basildon and Billericay) (Con)]

I would like my right hon. and learned Friend’s assessment of whether the arrangements are proceeding as per the spirit of the EU protocol, given that when the trade arrangements were being negotiated, the feeling was that if there were no disruption to trade elsewhere in the EU, there would be a light-touch approach to the trading relationship between Northern Ireland and the mainland. In effect, however, that has not taken place. What is her assessment of that?

[Lucy Frazer]

My hon. Friend and many Members of the House—on both the Government and Opposition Benches—are very concerned about the implications of the Northern Ireland protocol. For that reason, through the Foreign Secretary, who is leading the negotiations, we are trying to change the arrangements for Northern Ireland. It is important that we do so, because they are having an effect on trade and on societal difficulties in Northern Ireland. As my hon. Friend knows, we have a number of easements on Northern Ireland that ease the requirements that were first put into the protocol. We support them, because they ease trade.

Let me be clear that the regulations do not in any way make it harder for traders to trade between Northern Ireland and the rest of the UK. In fact, they take away redundant provisions, tidy up the legislation and provide an easier and simpler route by way of the provision of a security. I understand the overall concern of my hon. Friend the Member for Basildon and Billericay and I share the concern that we need to get the right approach in Northern Ireland, but I do not think that the statutory instrument should aggravate or concern him unduly as regards Northern Ireland.

--- Later in debate ---

[Mr Baron]

Having served in Northern Ireland in the 1980s, one still has friends and contacts there, if not through the Army then through the civilian population. I reinforce the concern expressed so far about the sense of unease in the Province, particularly in the Unionist community. I think the Minister understands that, but perhaps she needs to go to the Province more frequently and to talk to the Unionists, because passions are running very high.

The spirit of the Northern Ireland protocol—I hope that both sides entered the negotiations in this manner—was that provided it did not distort trade between Northern Ireland and the mainland and did not distort trade in any part of the EU, a light touch could be applied. However, that is not what has transpired. Despite no evidence whatsoever of trade being distorted within the EU in any other market, a hard touch has now been applied to the protocol. I recently heard an example of a Christmas card sent between Northern Ireland and the mainland that attracted a £3 custom charge—that is farcical. If we are not careful, that situation threatens not just trade between Northern Ireland and the mainland, but the Act of Union itself.

I hear loose talk that by invoking article 16 we are somehow reneging on an international treaty, but that is not true, because article 16 is part of the arrangements of the Northern Ireland protocol. It did not stop the EU, as highlighted previously, threatening article 16 when it came to the vaccination programme. I gently suggest to the SNP spokesperson that had we been a member of the EU, we would not have vaccinated as quickly as we did, because it was courtesy of us not being in the European Medicines Agency and under the directive that we were able to roll vaccines out much faster, and a lot of citizens benefited from that. I cite that as one example of the benefits of Brexit, but there are many others, including many more trade deals than the sceptics thought.

Putting that to one side, let me address my comments to the Minister about the SI. It worries me that we seem to be substituting “Great Britain” for “United Kingdom” in the terminology, confusing the issue. That again goes back to the core Act of Union many centuries ago, so I am not happy with the SI. I worry about its implications, about how it will be read in the Province, in particular by the Unionist community, and about the effect it will have on real trade between Northern Ireland, the Province, and the rest of the UK.

I look forward to hearing what the Minister has to say, because I know that that concern runs deep in Government. I have spoken to the Northern Ireland Secretary and the Foreign Secretary. I have shared my concerns and given what insight and reflections I can. Feelings are running raw in the Province, and it comes down to this approach to the Northern Ireland protocol at a time when there is no evidence whatever that a light-touch approach could not be reinstated.