HMRC Impact Analysis: Customs

John McDonnell Excerpts

Tuesday 8th October 2019 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab) (Urgent Question)]

To ask the Chancellor of the Exchequer to make a statement on HMRC’s published impact analysis of introducing new customs legislation and amendments.

[The Financial Secretary to the Treasury (Jesse Norman)]

I am delighted to respond to the right hon. Gentleman’s question. The Government are devoting huge energies, as the House will know, to Brexit preparations. The Prime Minister has stated that the Government’s preference is to leave with a deal, but, if necessary, they will leave without a deal as it is so vital that we get Brexit done and move the country forward. The last thing that businesses need is more uncertainty and delay. A key part of those preparations is to ensure that there is a functioning customs, VAT and excise regime on exit to put the legal underpinnings in place. HMRC has laid 56 regulations to date following last year’s Taxation (Cross-border Trade) Act 2018 .

To support the latest bunch of statutory instruments, which were debated by this House yesterday, the Government published a third edition of the overarching impact assessment of the movement of goods if the UK leaves the EU without a deal. This updates and builds on previous versions of the impact assessment, which were published in December 2018 and February 2018. The new version provides updates to cover the September 2019 regulations, including transitional and other arrangements for safety and security declaration requirements for the period after exit; further temporary customs and excise easements to extend the transitional arrangements after exit; further VAT data-gathering powers to specify the type of information that was collected from postal operators; and, finally, various technical amendments and transitional provisions.

As I have said, our preference is very much for a deal, but the Government continue to ensure that this country is ready for no deal and that the impact on business is minimised as far as possible, which is why we have introduced a series of easements for traders moving goods in the UK to take effect in a no-deal scenario. Those easements, for example, are planned to simplify radically import processes for EU goods, which means that the costs identified in this impact assessment will be mitigated for UK importers. Crucially, the Government are also working to boost the long-term potential of the economy so that the United Kingdom can seize the opportunities that exist for us outside the EU.

[John McDonnell]

Perhaps I can help the Minister fill in some of the gaps in the statement. The Government’s own assessment shows that their no-deal Brexit policy will introduce

“significant ongoing administrative costs impacting on UK and EU businesses of all sectors.”

It is an avalanche of paperwork descending on British businesses in the form of import, export, safety and security declarations. The burden will cost our business sector an annual £15 billion in administrative costs, and that does not even include the costs of complying with the new VAT procedures, which will hit our vital service companies—all this to pursue the hardest possible Tory no-deal Brexit.

We have heard the Prime Minister’s previous crude dismissal of British business. Now we are seeing his words become Government policy. Does the Minister not understand that this only compounds the uncertainty brought about by this Government’s failure to secure a deal that protects the UK economy? A senior No. 10 source, who I most believe to be the Prime Minister’s adviser—well, I say “adviser”—Dominic Cummings, said:

“We’ll either leave with no deal on 31 October or there will be an election and then we will leave with no deal”,

and that everything to do with the duty of sincere co-operation that we have with the EU partners

“will be in the toilet”.

Does the Minister agree with the priorities set out by No. 10 as a result of that statement? Does he also challenge the Institute for Fiscal Studies, which said today that this would push UK debt to its highest level since the 1960s, soaring to 90% of national income?

The reckless incompetence of this Government just knows no bounds, does it? At a moment of national crisis, this Government pose a threat to their own people and the economy they rely upon. Has the Minister any idea of the scale of the destruction of confidence in the British economy that this Government’s stated policy is bringing about?

[Jesse Norman]

This is a long document at some 45 pages or so, but I would have hoped that the right hon. Gentleman could have made it to page 9. He claims that the cost to British business will be £15 billion, but it says perfectly clearly at the bottom of page 9:

“The latest…estimate for the annual administrative burden…is £7.5 billion (updated to reflect 2017 data)”.

I am in no sense happy about that—[Interruption.] I am just correcting the record. The right hon. Gentleman said £15 billion, when in fact the figure is £7.5 billion. That figure is, of course, prior to any mitigations that might be put in place by the Government.

Let me turn to the right hon. Gentleman’s other concerns. He criticised the Government for, as he puts it, failing to secure a deal. All his party had to do was support the perfectly sensible series of deals that have been put before this Parliament, and it would have a deal.

I am not going to comment on unsourced speculation of the kind mentioned by the right hon. Gentleman. Let me just remind the House that when this Government’s predecessor came into office in 2010, debt was at a peacetime high thanks to the previous Labour Government. The deficit was at almost 10% and, interestingly, inequality under the Labour Government was significantly higher than it is today.