Leaving the EU: Impact on the UK

Lord Redwood Excerpts

Wednesday 17th March 2021 Commons Chamber

[John Redwood (Wokingham) (Con) [V]]

I have declared my business interests in the Register of Members’ Financial Interests.

I welcome the opportunity to debate the many opportunities that Brexit presents. It was always the case that, once we had achieved Brexit, the Government needed to use the freedoms it brings to promote the greater health and prosperity of United Kingdom citizens. We meet today with a success already as a result of these freedoms. The United Kingdom Government decided last year not to join the common vaccine procurement system of the European Union. They went their own way. They had confidence in British science and in British medicine, and they had confidence in great companies based in the United Kingdom and in our great universities.

It is tremendous news that, as a result, the United Kingdom helped pioneer one of the first successful vaccines. The United Kingdom pre-ordered a very large number of vaccines for United Kingdom people on the basis that some of these vaccines would be good and would be available for use, and that put the United Kingdom in the position to vaccinate much earlier, saving more lives than those countries can that were not in the happy position of having early supplies of vaccine. Even our regulators were quicker and more agile. Our regulators gave regulatory approval to the first vaccines some weeks before the European regulator, though the European regulator came to the same view in due course.

I think this is a model for how we can use our freedoms more widely to promote our health and better prosperity. I would draw the Government’s attention to a very important policy initiative from President Biden. They may find it surprising to see me recommending something from a Democrat President, but I think his 24 February Executive order—looking at America’s supply chains, and saying that America can do much better at developing its own technology, putting in its own industrial capacity and creating many better-paid jobs by having more capacity in the United States—is a model we should follow. Indeed, it is the model we have been following with the development of the vaccine, which has led to more good jobs in the United Kingdom and more United Kingdom productive capacity.

The Biden initiative starts with a very rapid—100-day —attempt to fix the need for the United States of America to have a much bigger presence in pharmaceuticals, batteries, rare earths and minerals, and semiconductors. There is then an annual programme, involving all the relevant Departments of Government, of going through the supply chains and asking what can be done to use innovation funding, Government procurement and Government regulation to encourage more onshoring and more exciting technical developments. Of course, a country needs to have strong competition law and not to abuse state aids, but many good things can be done with the massive procurement programmes of the British Government, like those of the American Government, to encourage competitive responses in the United Kingdom and to encourage that increasing capacity.

I hope the Government will do more on both the Northern Ireland border issue, where I think we need to be firm—and I support their recent action—and on the fishing industry, where I think we need more rapid progress to build up our fleet and to take back control of more of our fish. That was the promise and that is clearly the intended journey, but I wish the Government would be firmer, because I do not think that at the moment we have the right deal to promote that industry. If we wish to develop our green policies, as we do, we need to do more at home, cut the food miles, cut the fish miles and have more value added in the United Kingdom.

Exiting the European Union (Value Added Tax)

Lord Redwood Excerpts

Wednesday 3rd February 2021 Commons Chamber

[John Redwood (Wokingham) (Con) [V]]

I have declared my business interests in the Register of Members’ Financial Interests.

As the Minister has told us, these are two important statutory instruments for the facilitation of trade generally and for the facilitation of trade within Northern Ireland and between GB and Northern Ireland, and to the extent that they make things easier and allow zero rating of important services and goods, I welcome them wholeheartedly. But, of course, as others have said in this debate, we meet today against the background of clear difficulties and problems in the implementation of the Northern Ireland protocol, where it appears that a number of important impediments to GB-Northern Ireland trade have been inserted, and it is crucial that the talks go well and we get rid of them as quickly as possible.

So when we look at the administration of VAT, which is an important part of the trade process, I would like an assurance from the Minister that these regulations, and all the other VAT and excise rules applying in Northern Ireland and throughout the United Kingdom, will be solely administered and enforced by United Kingdom authorities, because I have much more confidence in them. Will he also assure me that the aim of these statutory instruments, and the wider VAT legislation that they add to and amend, is to ensure that the movement of goods from Great Britain to Northern Ireland, or the other way, will be as smooth and easy as the movement from London to Surrey or from Manchester to north Wales, because that is what I thought we had agreed and signed up to—that Northern Ireland was a fully integrated part of the United Kingdom single market, under our single market and taxation rules? I would like the reassurance through these statutory instruments that we are intending for that to be true.

Will the Minister also confirm that there has for many years during our period in the European Union been an important VAT border between the United Kingdom and the Republic of Ireland, but that it has always worked very smoothly and was not enforced at the physical border, in accordance with the spirit of agreements and not wanting barriers at the land border? It was an electronic border and adjustments were made by computer or by correspondence so that these things could be sorted out in a sensible and decent manner without having to have people queuing at borders to make complex calculations and submissions. If that is the case, does the Minister agree that it is in that spirit that we need to find the answer to the current impositions and difficulties affecting our trade across those borders? It seems very odd that we cannot replicate that success of our past trading, where electronic manifests, trusted trader schemes and so forth, and proper electronic VAT registration worked very well. Surely the UK authorities, if we are the proper and sole enforcement authority in Northern Ireland, can work with trusted traders, VAT-registered hauliers and ferry companies and so forth, and we can accept their certification or word that the goods on their load are entirely GB-Northern Ireland or Northern Ireland-GB. We can then accept, therefore, that there are no other considerations and the loads can then move as smoothly as from London to Guildford or Manchester to north Wales. It would be very helpful to hear the Minister’s views on how that can be achieved and how quickly we can get to that point.

It is absolutely crucial to the people of Northern Ireland, as we have heard from their representatives, that they can trade smoothly with the rest of the United Kingdom. That was fundamental to the spirit of the agreements that the United Kingdom entered into with the European Union over the issue of trade with and between Great Britain, Northern Ireland and the Republic of Ireland. I hope the Minister will have good news for us and that these things can be sorted out quickly.

Taxation (Post-transition Period) Bill

Lord Redwood Excerpts

3rd reading & 3rd reading: House of Commons
Tuesday 15th December 2020 Commons Chamber

[Sir William Cash]

The clauses before us are directly related to what was originally in the United Kingdom Internal Market Bill, and they were there for a very good reason. They were there because it is absolutely essential that we maintain our sovereignty, and the decisions must be taken by Parliament, and should not be taken by the House of Lords, whose Members are unelected. We are the House of Commons, and that part of the House of Commons which is elected has a Government who were elected in December 2019, almost exactly one year ago. In that general election, it was made quite clear that the decision before the British people was effectively to be decided in line with what was decided in the referendum. There are therefore two things joining together, in conjunction with one another: the referendum in 2016, followed by a whole series of enactments of Parliament. That includes the decision on the notification of withdrawal, which was accepted by the Labour party and was voted through in the House of Commons by 499 to around 120. It is not as if anybody could say that the supremacy of Parliament was not made manifest in the light of the referendum.

There was then a series of other enactments, and we eventually ended up with a confirmation of Acts of Parliament, including the European Union (Withdrawal Agreement) Act 2020, which was passed after the general election. Section 38 of that Act made it abundantly clear that we had the right to insist—as a matter of constitutional principle and through the enactment of an Act of Parliament—that the United Kingdom was sovereign, and, furthermore, that we would be allowed to override the withdrawal agreement. That was contained in section 38(2)(b), which specifically refers to section 7A and in turn therefore directly relates, through the use of the word “notwithstanding”, to the overriding direct effect. That is a very important point—a point that is conveniently overlooked by some people, who continually assert that somehow or other the Government have been out of order, breaking international law or breaking constitutional principles. But they never come forward with any arguments; as I said in a recent speech in the House regarding the attitude of the House of Lords, they were basically strong on assertion and empty in argument.

[John Redwood (Wokingham) (Con)]

Does my hon. Friend agree that those of us who could only vote for the withdrawal legislation because it contained clause 38 understood fully that it was a conditional agreement to the withdrawal agreement, because the EU always said that nothing is agreed until everything is agreed, and we wished to see the full package before deciding whether to allow it to be untrammelled?

[Sir William Cash]

Yes, indeed. I sometimes find that Lewis Carroll has some very useful ways of putting things. There was the famous exchange between Alice and Humpty Dumpty, in which Humpty Dumpty says: “Words mean what you choose them to mean. The question is who is to be master, that is all.” Words can be used in all kinds of different ways to try to justify propositions that are unsustainable.

I say with respect, but none the less very firmly, that in this particular case it is absolutely clear that when the decision has been taken by the British people—the voters—in the referendum and has then been endorsed by an Act of Parliament and a whole series of other Acts of Parliament, including section 38, it really is not down to the unelected House of Lords to resist it on the scale that they have, and to claim that they can override the House of Commons. We have just had a whole series of agreements and disagreements going backwards and forwards on the UKIM Bill alone.

As Lord Bingham made absolutely and abundantly clear in chapter 12 of his magisterial book “The Rule of Law”, it is for Parliament to make law and pass Acts of Parliament; it is not for the judges to intervene, to seek to make law and to impugn the sovereignty of Parliament. Anyone who wants to get the full flavour of it should read chapter 12 of “The Rule of Law”, because it is the most explicit and clear statement that one could possibly imagine.

--- Later in debate ---

[Sir William Cash]

Interestingly, I made some reference to the principles that are under discussion in the current negotiations. Of course, we do not know the outcome of those negotiations as we speak—as I said in the previous debate, I wish them well—but it has to be made clear that, certainly as far as I and those of my friends who agree with me are concerned, one of the most crucial questions is that of state aid, because that issue is right at the heart of the discussions and negotiations this week. I asked the Secretary of State for Business, Energy and Industrial Strategy to assure the House that nothing in any treaty text or subsequent Act of Parliament will prevent the UK from having its own sovereign state aid rules, including on energy, so that we are not subjugated to EU state aid rules, nor to the European Court, given that the EU intends, as it has stated over the past week or two—in very bad faith, in my opinion—to impose and enforce its rules against us. Ultimately, of course, that would be done by a majority vote in the Council of Ministers, behind closed doors, without our even being at the table after 31 December. The fact is that we have to assert our sovereignty in the negotiations so that any treaty that emerges from them—if one does—must comply with the assertion of the sovereignty of this House, this country and this Parliament, and must at the same time apply whether in respect of direct or indirect effect.

[John Redwood]

Is it not also the case that the agreement with the European Union is muddled and contradictory? The EU has always said that it understands that the UK is going to be sovereign, so if this House simply asserts our sovereignty, as it can do, that is, in a way, our fair interpretation of the agreement.

[Sir William Cash]

Yes, absolutely. Sovereignty is also a question of fact. I do not want to get into the intricacies of 15th century history, but there was a chap called Henry VII who made it abundantly clear that as far as he was concerned he won the battle of Bosworth and that was it. I do not think we need to pursue that one too much, because sovereignty is quite a simple thing when it comes down to it: it is called political will and legal arguments of the kind I am addressing.

--- Later in debate ---

“Notwithstanding” cannot be a get-out-of-jail card for the country to escape its obligations. We would never get away with that in everyday life. Let us imagine telling a police officer, “Notwithstanding the law on theft, I thought I’d just take the goods out of the shop without paying for them.” I do not think we would get very far if we did that. We cannot set aside our obligations through a clever-sounding word. An agreement is an agreement. A deal is a deal. That is the whole point. If the hon. Member for Stone presses his amendment, I have to tell him, in the friendliest tones, that we will certainly oppose it.

[John Redwood (Wokingham) (Con)]

I have declared my business interests in the Register of Members’ Financial Interests.

I rise to support what may be an amendment that we are going to vote on or may be a probing amendment from my hon. Friend the Member for Stone (Sir William Cash), because I think there has been a deliberate misunderstanding by the EU and its friends over what Brexit is about and what we need to do in order to achieve a proper Brexit. A proper Brexit is taking back control; it is recreating the sovereignty of the people of the United Kingdom through their Parliament.

My hon. Friend has a distinguished career in this place trying to rebuild that sovereignty and watching, year after year, more and more of our powers taken away by successive treaties, by successive directives and regulations, many of them automatic ones over which the UK had little or no influence, and by court judgments which, again, we had precious little ability to shape. He is right that, as we come to legislate for our new arrangements as a sovereign country from 1 January next year, we need to make quite sure that we have back under the control of people and Parliament all those powers that we need to regulate, to govern and to take wise decisions on behalf of the United Kingdom.

I am very worried about some elements of the withdrawal agreement. I was told, as we were all told, that nothing was agreed until everything was agreed, and that that meant the future relationship as well as the withdrawal agreement. The EU decided for its own convenience to sequence things and say, “You have to sign the withdrawal agreement first and then the future relationship agreement will follow.” A bit of flesh was put on the bones of the future relationship in the so-called political declaration, which one would have thought there was a lot of moral pressure to go along with even if it was not as strictly legally binding as they hoped the withdrawal agreement would be.

I now think there has been a lot of bad faith, because, according to both sides, the central feature of the future relationship was always going to be a free trade agreement, and where is the free trade agreement? We now discover that the EU wishes to take all sorts of other powers away from us as the price for the free trade agreement, which we have already overpaid for in the withdrawal agreement and which one would have thought, in good faith, the EU would now grant. It is very much in its interests—even more than it is in our interests—given the huge imbalance in trade, and above all in the trade that would attract tariffs if we had no free trade agreement: the trade in food.

That is really what we are talking about: are there going to be tariffs on food or not? We, the United Kingdom, run a colossal £20 billion trade deficit with the EU on food. We have to impose pretty high tariffs on food from the rest of the world—that makes absolutely no sense where we could not grow any of it ourselves; it may have some benefit for some of our farmers some of the time—but we are not allowed to put any similar tariffs on EU-sourced produce where we could produce it ourselves.

The EU system is to try to use tariffs to buttress domestic production, but it has not worked for the United Kingdom; it has worked the other way. The tariffs have been taken off in order to benefit the Dutch, Spanish, French or Irish suppliers of our market with food at zero tariffs. The EU already has rather more interest in tariff withdrawal than we do, because we could have a range of tariffs that would probably achieve the aims both of cutting food prices by having a lower average tariff and of having a bit more protection on the things that we really could make and grow for ourselves here, which we are not allowed to protect against continental products at the moment.

I therefore think that the Bill could be improved by reminding the EU that we will not be pushed around and we will not suffer too much bad faith from those original negotiations or from the withdrawal agreement itself. I think it was a very imperfect agreement. It is pretty ambiguous in places; it is imprecise in places. I have never felt that anything the Government have done, or thought of doing, was in any way illegal. Lawyers could make a perfectly good case under the withdrawal agreement treaty terms themselves, and anyway, we have the protection of my hon. Friend’s section 38, which made it very clear that this Parliament’s acceptance of the withdrawal agreement was conditional. Why else would anyone have put section 38 in the withdrawal agreement Act unless they were making a point?

[Sir William Cash]

Does my right hon. Friend appreciate that it was the Prime Minister who, after an eight-hour meeting I had in No. 10 that day—17 October 2019—insisted that section 38 was necessary and appropriate?

If we go back to the previous Administration, just imagine where we would be when we consider the Chequers arrangements, and then imagine what it would have been like if we had not decided to vote against that dreadful withdrawal agreement in its original shape. There were provisions that needed to be rectified, and section 38 provides the mechanism that enables us to do that.

[John Redwood]

Indeed. I think my hon. Friend has confirmed that under the previous Prime Minister, when those of us who could not vote for her agreement said that we needed a sovereignty escape clause, we were told that that would not be permissible because it would not be effective implementation of the agreement; which was then reassuring to us, not liking the withdrawal agreement very much and realising that it was a provisional agreement and would be completed only were there to be a satisfactory outcome to the total range of talks. It was a totally artificial constraint that the EU invented that it had to be sequenced, when up until that point everybody had always rightly said that nothing was agreed until everything was agreed.

I would like to hear from the Minister a little more explanation on the detail of the Bill. As I understand it, the Northern Ireland protocol would apply only to goods that are passing from Great Britain to Northern Ireland and then on to the Republic of Ireland, or the reverse—goods coming from the Republic to Northern Ireland and then passing on to Great Britain. Am I right in thinking that that is a very small proportion of the total trade? In what ways will the Government ensure that it is properly defined, so that we do not catch up most goods in those more elaborate procedures? The bulk of the trade will be GB to Northern Ireland and back, or Republic of Ireland to Northern Ireland and back, and it should not in any way be caught up in any of these proposals. I am not sure that we do have a de minimis way of dealing with the so-called things at risk.

It is not clear how the system will work for items at risk where we agree that they are at risk—and I hope it is a UK decision about what is a risk, not some other kind of decision with EU inspectors. It would be helpful to me and the wider community interested in this debate to know how a business would proceed if it had such a good at risk, to whom it would answer, and what decisions would be made about such a good in Excise, because it sounds a rather complicated and difficult arrangement, both for the business concerned and for those who are trying to enforce.

I am trying to tease out from the Minister, in pursuit of the interests of my hon. Friend the Member for Stone and myself on sovereignty, whether we are really in control if the trade has started off from GB and is going to Northern Ireland. What kind of external intervention can the EU or the Republic of Ireland engineer—how is that fair, and how will it be determined? I think that is what we are most worried about in this piece of legislation, and we would be more reassured if there were the override that my hon. Friend proposes. I should be grateful for some explanation.

[Alison Thewliss (Glasgow Central) (SNP)]

I come to this debate with many of the same concerns as I had last week. I shall not repeat them because I think everybody is quite clear on what they were. We come to this debate with the clock ticking louder and louder, and with uncertainty ahead.

I must agree with the right hon. Member for Wokingham (John Redwood) when he says that this is a complex, complicated and difficult arrangement. Yes it is, and it is absolutely baffling why we are still not certain what will happen, with such a close deadline looming. It is impossible for businesses to know what to plan for and how they will manage this, because so much is still uncertain. The Institute for Government’s Jess Sargeant went through some of the outstanding issues in the Northern Ireland protocol still to be agreed, and these are not small things but quite significant things in many cases. There is still great uncertainty about the grace period that was talked about last week, what will happen at the end of it, and what the Government are going to do between then and now, whenever this finishes. What work will they be doing in the meantime? It does feel, quite often, that this Government put things off and leave things, and then say, “Oh gosh, suddenly I have to do that at the last minute.” They do that quite regularly.

--- Later in debate ---

[Kevin Hollinrake]

I am grateful for my hon. Friend’s intervention. I have great sympathy with his points. The difficulty is that when we are in an international agreement, there is a judgment as to whether they are “acting in bad faith” or “prattling on”, and they are subjective judgments he makes. All international trade agreements need an independent body to decide who is breaching the agreement. If Parliament is simply sovereign and is able to say, “In our judgment, you are breaking the agreement”, all trade agreements would fall apart. We saw that in the case of the Mexican Government and the breaching of the terms of GATT, where that judgment was made unilaterally. The independent body, which was the arbitration council of the North American free trade agreement, settled the dispute. That is an international body; it is not subject to one national jurisdiction or the other. There has to be someone who adjudicates; we cannot simply have national sovereignty making a judgment on these points. That is why we have these investor-state dispute settlement bodies.

[John Redwood]

All too often in international trade agreements it does come down to power and sovereignty. President Trump has regularly used national security as a good reason to impose tariffs and override World Trade Organisation rules. The EU, for years, ignored state aid rules to promote Airbus. I can perfectly understand what it was trying to do. It took a long time to catch up with it and in practice the damage, from the WTO point of view, was done.

[Kevin Hollinrake]

Therein lies the difficulty, does it not? As soon as a nation, however powerful, is allowed to make a subjective judgment, it leads to international chaos. We can have international agreements that people sign and adhere to, with independent resolution. My point is that as soon as we have done that, we have handed over the settlement of the issues and disputes to another body, and we are, in effect sharing some of our sovereignty. We do not have total sovereignty at that point. We have sovereignty to sign the agreement and to exit the agreement, but I cannot see how using sovereignty to override an agreement works. I think it would result in chaos.

--- Later in debate ---

[John Redwood]

Does the hon. Gentleman not understand that, from 1 January, the EU and the UK are both full members of the World Trade Organisation, which does not allow its members to charge to trade, controls what tariffs can be levied and says to each of its members that they have to offer most favoured nation status to any other member of the WTO? That is how we do our trade with the whole of the rest of the world, which is bigger than our trade with the EU. Why can we not do that for everything?

[Matt Western]

Our biggest and nearest customer is the EU. It is a critical customer and supplier to so many businesses in the UK, particularly in our manufacturing sector.

Let me briefly turn to the Northern Ireland protocol. We were told that there would be no checks, but as of last week, we have seen the need to implement new checks and controls for goods moving from Great Britain to Northern Ireland and, to a lesser extent, from Northern Ireland to Great Britain. The Government have said rather vaguely that a significant majority of internal UK trade will be tariff-free. I would be interested to know what assessment the Government have made of the precise percentage of GB-Northern Ireland trade that will be and the volume and value that will be subject to tariffs.

That is why these amendments are important. They are aimed at injecting urgency, with just 16 days until the transition period ends. Businesses want clarity and certainty, and they need it urgently. The intention of new clause 3 and amendments 1 and 2 is simply to demand that the Government make clear when they will propose the secondary legislation flowing from the Bill, to help those businesses. The Food and Drink Federation has said that the guidance is being published too late, and 43% of its members that supply Northern Ireland have said that they will not be able to do so in the first three months of next year. Our amendments are very similar to those proposed and, sadly, voted down in Committee. They are vital to assist our businesses and are business-friendly, as the Opposition are.

I cite the disruption that we are in danger of allowing. We have seen what happened with Honda—one of the most efficient companies on the planet. That should be the canary in the mine. If Honda is not able to get parts from its supply chain here to the UK, what hope is there for small and medium-sized businesses across the UK? Whether they are a clothes retailer or a car manufacturer, they just want clarity and certainty. They want an uninterrupted supply of goods into the first quarter of next year. Given the damage already done by the pandemic, we cannot afford further economic disruption. The Government need to move swiftly. That is why new clause 3 and amendments 1 and 2 are so important, and that is why I am supporting them.

--- Later in debate ---

[Jesse Norman]

I beg to move, That the Bill be now read the Third time.

We have had some good debates in the course of the Bill. I thank right hon. and hon. Members for their contributions, but there are two in particular whom I would like to thank. First, the right hon. Member for Wolverhampton South East (Mr McFadden) has truly been the workhorse of the shadow Front Bench throughout the Bill. For a shadow Economic Secretary, as he is supposedly designated—he should of course be much higher—he has done a wonderful job, and I salute him for it. Secondly, I thank my hon. Friend the Member for Stone (Sir William Cash), who is sadly no longer in his place. I think he should be referred to as the ancient mariner of Brexit. As you may recall, Mr Deputy Speaker, Coleridge says:

“It is an ancient Mariner,

And he stoppeth one of three.

‘By thy long grey beard and glittering eye,

Now wherefore stopp’st thou me?”

Although my hon. Friend does not, tragically, present us with a long grey beard, he has something of a glittering eye where matters of Brexit are concerned. We can only salute the energy and indefatigability with which he has attacked the topic over many years, while perhaps devoutly hoping that this may be the moment at which, at the end of this year, a hiatus or pause may be reached.

In just over two weeks’ time, the transition period will end. The UK and its tax system must be ready to support the smooth continuation of business across this country. In that regard, the Bill is a cornerstone of those preparations. In addition, it will play an important part in helping to implement the Northern Ireland protocol and to safeguard the Belfast/Good Friday agreement. It introduces a framework for charges on goods arriving in Northern Ireland and enables the Government to put in place decisions made by the Joint Committee for goods deemed to be at risk of moving into the EU. It also includes mechanisms to ensure that, in so far as is possible, VAT will be accounted for in the same way as it is today in Northern Ireland.

Let me once again assure the House that HMRC will remain the tax authority for the whole of the UK, and let me remind hon. and right hon. Members that businesses will continue to submit only one UK VAT return to account for VAT on all supplies of goods and services. The Bill also amends current legislation for excise duty to be charged when excise goods are removed to Northern Ireland from Great Britain, as required by the protocol. However, that does not mean additional costs for Northern Ireland businesses and consumers, because the Government will be introducing a mechanism to offset any excise duty already paid on those goods in Great Britain.

The Bill introduces a small increase in the rate of duty on aviation gasoline, which will apply across the UK to ensure consistency between Great Britain and Northern Ireland. Finally, the Bill includes a small number of other taxation measures, including measures to ensure the Government retain their ability to prevent insurance premium tax evasion.

[John Redwood]

I think the Minister needs to be a little more forthcoming. What is the EU’s enforcement mechanism if it thinks UK authorities have not fulfilled the remit? What percentage of trade are we expecting to be caught up in this double jurisdiction?

[Jesse Norman]

As I have already said to my right hon. Friend, without venturing a percentage, the test for at-risk goods is those where there is a “genuine and substantial risk”, and therefore those are expected to be a smaller proportion of goods, but trade of course is a flexible and ever-changing thing, so whatever numbers there are may change over time.

My right hon. Friend also asked a question about the EU. I am not going to speculate on what the EU does, but I can assure him that there will be no EU customs, embassy or the like and no joint control over customs in Northern Ireland. HMRC will remain the tax authority for Northern Ireland, as it is for the whole of the UK.

The Bill also includes new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period 2013 to 2018. Lastly, to help level the playing field for UK businesses, the Bill also moves VAT collection on certain imported goods away from the border and removes VAT relief on low-value consignments to clamp down on VAT abuse and to protect our high streets.

The Bill gives businesses throughout the UK certainty about the arrangements that will apply from 1 January of next year. Above all, it helps the Government to safeguard what we all prize and desire, or should all prize and desire: the unity and integrity of the United Kingdom. I commend the Bill to the House.

--- Later in debate ---

[John Redwood]

I have declared my business interests in the Register of Members’ Financial Interests.

The Bill is a great missed opportunity. It should have been the Bill in which we started to cut and reorganise the taxes, celebrating our new freedoms as we leave the European Union. There is so much good we could do by remodelling and reducing the incidence of VAT, for example, or by having excise duties and tariffs that make sense for British business and for British importers, because we need to balance the two. Instead, it is a rather technical Bill.

I think it is a pity that this House has not been given a detailed account of what the Chancellor of the Duchy of Lancaster has agreed so far, and a detailed account of what still remains to be agreed, because I believe that there were outstanding issues. On behalf of Northern Ireland within the United Kingdom, we need to know the extent of this possible dual jurisdiction and how it actually works.

The Minister has kindly assured me on more than one occasion that the VAT regime in Northern Ireland will be the UK VAT regime and will be enforced by normal UK enforcement. That is very good, but cannot be the whole story, because we know that there is this overlapping jurisdiction for certain types of goods. We are still not privy to how big an issue that is. I presume it is a small proportion of trade, but we have not been given any indication of that, and we have not been told—perhaps the Joint Committee has not yet agreed it, or does not want to share it with us yet—exactly how that might work. It is a pity that we do not have more of that detail.

I am also concerned that we should not get drawn into the state aid issue, which is clearly part of the wider discussion between our Ministers and negotiators, and those in the European Union. We know that the European Union takes a very wide definition of state aids. State aids definitely include all taxation, which is the subject of this piece of legislation, and grants, subsidies, the competition framework and general industrial policy. It is very wide ranging, and there is no way we can say we have Brexit if the EU will have powers over our state aid policies, because that would be tentacles stretching into this Bill and the powers of the Treasury, Customs and Excise, and the Business Department and its competition and industrial policies, as well as into energy and practically every other major area one can imagine. I therefore hope my right hon. Friends and the UK negotiators are firm on that in their discussions.

We must have control of taxation and state aids as a fundamental part of our Brexit departure. We would have taken more confidence from the Government if they had used this Bill to show just how much better a UK-based taxation policy could be. We need a taxation policy that promotes more fishing and farming at home, promotes more industry and manufacturing at home, and promotes that green revolution they want by stripping the VAT off the green products that the EU has imposed on them—a policy that allows small businesses to flourish and does not overburden them with compliance and red tape. That is what we wanted from Brexit, and the sooner Ministers bring it forward, the better.

Taxation (Post-transition Period) Bill

Lord Redwood Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

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

I beg to move, That the Bill be now read a Second time.

It is a delight to speak under your chairmanship, Madam Deputy Speaker.

In three weeks’ time, the transition period will end and this country will take its place as a fully sovereign trading nation once more. It is a very important moment in our nation’s history, one that will undoubtedly provide us with great opportunity in the years ahead, but the Government are acutely aware that at this time they also have a great responsibility to provide certainty to people and businesses and to preserve this nation’s unity, and the fundamental purpose of this Bill is to achieve those goals. It seeks to ensure that businesses in every part of the UK can continue to trade smoothly after the end of the transition period, but its particular focus is on businesses based in Northern Ireland or those that work with Northern Ireland companies.

The Government have always been clear that we must deliver on our pledge to provide unfettered access for Northern Ireland’s businesses to the rest of the UK internal market, and we have been equally unstinting in our determination to uphold our commitments to the people of Northern Ireland under the Northern Ireland protocol and to protect the progress made under the Belfast Good Friday agreement. This Bill will help us support those commitments by providing legal certainty for the customs, VAT and excise systems in Northern Ireland after the end of the transition period.

If I may, I will start with the customs elements of the Bill. The House will know that the UK is a single customs territory, with article 4 of the Northern Ireland protocol giving a clear legal commitment to this. However, the protocol also requires a new and unique set of arrangements to be put in place for goods moving from Great Britain to Northern Ireland. Under these arrangements, the only circumstance in which there should be charges on goods moving between Great Britain and Northern Ireland is if those goods are destined for the EU single market or there is a clear and substantial risk that they may be.

[John Redwood (Wokingham) (Con)]

I am grateful to the Minister for giving way in this Second Reading debate before we get to Committee. Will he confirm that under the proposals in this last legislation the European Court of Justice will be the ultimate arbiter of excise and VAT arrangements within Northern Ireland, and that the European Union will be placing staff in our country to supervise this?

[Jesse Norman]

VAT in Northern Ireland will be subject to the EU principal VAT directive, and for that purpose the ECJ will be the judicial body. I cannot comment as to whether or not there will be anything more than staff, except to say that excise processes in Northern Ireland will be carried out by Her Majesty’s Revenue and Customs.

--- Later in debate ---

[Jesse Norman]

I thank the hon. Gentleman for his question and, yes, the legal basis on which VAT is charged will change. I will spare him the details of the difference between import VAT and acquisition VAT, but it will change. The experience of those who pay VAT will be very similar, if not identical, to the system we have in place at the moment. HMRC and the Government have identified flexibilities, which allow that to be put in place. Of course, there will continue to be the normal processes of enforcement that one would expect to see from HMRC in order to make sure that VAT is properly paid in the usual way.

[John Redwood]

These are urgent and important issues. We heard earlier from the Chancellor of the Duchy of Lancaster that there are various delays to the full implementation of trade arrangements into and out of Northern Ireland as a result of his negotiations. Will they be incorporated into this legislation, and do they provide a brake on the immediate introduction of these complex double-taxation arrangements?

[Jesse Norman]

I have no doubt that the Chancellor of the Duchy of Lancaster will be updating the House over time as the different provisions he has negotiated come into force but, from our point of view, the position remains as stated, that is to say that VAT will become chargeable by a slightly different legal means, but in substantially the same way in Northern Ireland as it is at the moment. The mechanisms we have put in place are designed to ensure that, as far as possible, VAT will be accounted for in the same way as it is today.

Existing rules in relation to movements of goods between Northern Ireland in the EU, including the rules relating to acquisitions and distance selling, will continue to apply. Goods entering Great Britain from Northern Ireland will be subject to VAT as though they were imports under the relevant UK legislation. Similarly, goods entering Northern Ireland from Great Britain will also be subject to VAT as though they were imports and relevant EU or UK legislation will apply, but let me add that the Government are adopting an approach that minimises any changes for goods moving between Northern Ireland and Great Britain.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

I have declared my business interests in the Register of Members’ Financial Interests.

The origins of this legislation lie in the negotiations under the previous Prime Minister that introduced the whole idea of a Northern Ireland protocol. I regretted those negotiations very much. I opposed them at the time and did not vote for the deals that my right hon. Friend the Member for Maidenhead (Mrs May) came forward with, because I thought they were designed by the EU as a lever to try to delay, dilute or damage Brexit.

When the current Government asked me to support their version of the withdrawal agreement, I still had considerable reservations about the Northern Ireland protocol. I put those to Ministers, who reassured me and said, “This is only an outline operation in the withdrawal agreement as currently drafted. None of the detail has been done. We will negotiate very strongly. We will get rid of the offensive features that you don’t like.” They said that they shared some of my concerns and that they would come back with something much better. I am always trusting of colleagues, so I said that that was very good to know but that I did not have the same confidence in the EU.

I thought it was unlikely that the EU would want to facilitate that in the way that I and the Government would like. so with some friends, I backed my hon. Friend the Member for Stone (Sir William Cash) in saying that the way through this was to put clause 38 into the European Union (Withdrawal Agreement) Bill. Under that clause, were the EU to act in bad faith and not come up with a workable solution for Northern Ireland and the other problems, we would have asserted UK sovereignty in our version of the treaty, and so in good law we could use clause 38 to legislate in Britain for what we intend to do, overriding the agreement.

It was quite clear from the drafting of that Bill that we wanted that override, and I would not have dreamt of voting for the thing without the override. The Government were saying that they did not think we would need to use it, but we could use if we had to, which is why I was pleased to support them earlier this week in a very modest override. It is entirely legal; it is the assertion of British sovereignty. We need to keep that in reserve, because without seeing all the detail from the Chancellor of the Duchy of Lancaster, I am not satisfied yet that we have a working operation for the Northern Ireland border and the matters that we are discussing today—more precisely, who controls the taxation.

What I do not like about these proposals is that it is extremely difficult for individuals and businesses to have to respond to two legal jurisdictions on tax in the same place, yet we seem to have both an EU VAT system and a UK VAT system. I hope that the UK VAT system will deviate rather more from the EU one and be friendlier, lower and apply to different things, but the more that that happens, the more difficult it will be if we are trying to enforce two different VAT systems in one part of the United Kingdom.

I am also concerned about the enforcement mechanisms. We are led to believe that it will be handled by HMRC, but we are also told that the ultimate authority on the EU part of VAT and excise will be the European Court, and therefore there are likely to be inspectors and invigilators—electronic or in person—interfering in the process within what should be sovereign United Kingdom territory. I hope the Government will think again and push back again.

We need more of the detail that the Chancellor of the Duchy of Lancaster has so far withheld from the House. It may be that he does not yet know it all or that his agreement is high level, in principle, but there are details that we need to know—indeed, details that it would be better to know before we legislate today. For example, the Chancellor of the Duchy of Lancaster says that delay periods for adjustment will be necessary for supermarkets and some meat products and so forth. Does that not require some kind of recognition in this legislation? Does it not mean that these jurisdictions do not kick in during the period of grace that we are told will be available?

We need to have more detail from the Government on what exactly happens at the border. I have always explained to the House and others who are not very interested that VAT and excise take place electronically across the borders at the moment, so we are talking largely about an electronic border. We need to know how this electronic border will be programmed to deal with the competing jurisdictions and competing incidences of taxation, and how the product codes and shipment codes will correctly identify the products by category that will be suborned by the EU jurisdiction as well as, properly, by the UK jurisdiction, which ideally would be handling the whole thing.

We do not have nearly enough time to discuss the fundamentally big issues of principle that the Bill brings before us and we have had precious little time to go into the detail. It is all very sad that this rush job is being done like this, but I hope before the Government finish the debate today they will have done a better job of explaining to someone like me why we need to have this dual jurisdiction; how the EU control is going to be limited; how it is going to operate; how, in the early days, the “transitional arrangements”, which we are told about, are going to apply; and why they are not reflected in the current text of this rather unfortunate piece of legislation.

Taxation (Post-transition Period) (Ways and Means)

Lord Redwood Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 8th December 2020 Commons Chamber

[Jesse Norman]

I think the hon. Gentleman knows that the work that we are doing in terms of legislation very much has as its counterpart a great effort to put in place all the procedures that may be required. Significant work has been done. He will be aware that there is a trader support service that works directly with people who will be importing into Northern Ireland to make it as close to a one-stop-shop arrangement as possible. What we are discussing today is the framework for the law under which those movements will operate.

[John Redwood (Wokingham) (Con)]

The Minister has not yet reassured me about the sovereignty issue. Is it not the case that when any good in commercial quantity comes into the UK across any border—Northern Ireland or one of our marine borders—there are usually VAT and excise adjustments to be made and those take place by computer, not actually at the port of entry? Why do we need special arrangements here?

[Jesse Norman]

My right hon. Friend will be aware that under the terms of the Northern Ireland protocol, we have agreed arrangements for Northern Ireland with the European Union. The goal of the legislation is to make sure that, as far as possible, it is a completely seamless and straightforward process for those who are trading and that it is unfettered in regards to trade from Northern Ireland into Great Britain. That seems to me to be a very important technical fact.

--- Later in debate ---

[Bridget Phillipson]

Time is ticking. We want to get a deal. We are frustrated that at this point, we still do not have a clear understanding about our future relationship. If the hon. Member shares those concerns, I suggest that he raises them with his own Prime Minister.

People in this country—especially those who live near our 300-mile border with the European Union, or those who live in or near our port towns and port cities —could be forgiven for expecting that trading relationships and rules on the movement of goods would long since have been finalised. Such reasonable assumptions would not have been partisan. After all, we have the Prime Minister’s own word for it: to leave with no deal would be a “failure of statecraft”.

One thousand six hundred and twenty-nine days is a very long time in which Ministers have chosen not to address the issues that leaving the European Union raises. It is 1,421 days since the Government announced that we would be leaving the single market. It is 1,350 days since the Government notified the EU of the United Kingdom’s decision to trigger article 50. It is 1,240 days since the Brexit talks began and 886 days since the Chequers plan was announced to the current Prime Minister by the previous Prime Minister. It is a little over 500 days since the Prime Minister took office. It is 320 days since the European Union (Withdrawal Agreement) Act 2020 became law. They have had ample time.

[John Redwood]

Up to this point, Labour has always backed the EU position and not the UK position. Will the hon. Lady now use the Opposition’s voice to say that we should not give away our fish and our independent lawmaking?

--- Later in debate ---

[Sir William Cash (Stone) (Con)]

I have already made a number of comments to the Minister in charge of this motion, also in respect of the Bill that we have not yet seen. It seems quite extraordinary, if I may say so, that we are being asked to give such blanket agreement to the Ways and Means resolution, which is the manner in which the money is raised to deal with the questions that arise in respect of the Bill, when we have not actually seen a copy of the Bill itself and therefore do not know what the provisions refer to.

I see, for example, that the motion includes reference to amending section 9A of the Value Added Tax Act 1994, part 3 of the Value Added Tax (Place of Supply of Goods) Order 2004, schedule 4B to that Act, which relates to call-off stock arrangements, section 18A of that Act, which affects fiscal warehousing, and paragraph 114(2) of schedule 8 to the Taxation (Cross-border Trade) Act 2018. It also includes proposals relating to the rate of fuel duty on aviation gasoline, amending section 6(1A)(aa) of the Hydrocarbon Oil Duties Act 1979. It also deals with value added tax questions relating to such matters, and makes provision regarding value added tax in cases involving

“supplies of goods by persons established outside the United Kingdom that are facilitated by online marketplaces”,

or

“the importation into the United Kingdom of goods of a low value.”

There are also provisions relating to the insurance premium tax in respect of the liability of the insured, amending section 65 of the Finance Act 1994, and matters relating to the recovery of unlawful state aid in respect of controlled foreign companies, in particular dealing with the Commission decision of 2019 relating to state aid

“concerning the CFC Group Financing Exemption.”

That gives some indication of the breadth, and also the depth, of these matters. It is very difficult, to put it bluntly, to dissect, comment on and make what I would describe as a full analysis of a provision that we have not yet seen, and as I had not actually seen these—nor did I know that they were going to be included until I got notice of them just now—I am not in a position to be able to do more than to say that I regard the whole question of these provisions as something that will obviously have to be dealt with when we actually see the Bill. What we have not seen, we cannot really comment on. It is really almost Alice in Wonderland, isn’t it? The fact remains that there are important issues of principle in relation to all this, and the notes that I have received raise some interesting questions. I do not know whether those notes have been made generally available.

[John Redwood]

Will my hon. Friend comment on the sovereignty issue, which is at the heart of all this? I was not satisfied by the Minister’s reply, when my hon. Friend was asking very good questions. Does he share my worry that we have not solved the sovereignty issue over Northern Ireland in this provision, and that we are making it worse?

[Sir William Cash]

My right hon. Friend might have anticipated that I would raise this very question with the Minister, as I did when he was in mid-flow at the beginning of these proceedings. That was the question I asked, and my right hon. Friend has now referred to it. I am extremely supportive of the Government in relation to Brexit and to the statements that have repeatedly been made not only by the Prime Minister but by other members of the Cabinet, including the Paymaster General in the statement that she made yesterday, in which the word “sovereignty” was completely reaffirmed and stated over and over again, and I take the Government at their word. But of course issues of the kind that we are dealing with do get somewhat obscured sometimes by provisions of legislation, particularly when we have not seen the legislation but are asked to comment on it. That makes life quite difficult in being able to identify with precision exactly what effect this would have on the sovereignty of the United Kingdom, save only to say that yesterday the House of Commons, by a majority of something like 90, passed provisions in the United Kingdom Internal Market Bill, and one would therefore have expected the Bill that is under consideration now—which must have been prepared yesterday when we were debating the other one, because otherwise it could not have been printed—to have contained similar provisions.

I am left in a bit of quandary until we can see that this Bill does not contain the notwithstanding provisions that were put in yesterday, which the House decided on, in principle, in the interests of sovereignty. I know a bit about that. I was also responsible for section 38 of the European Union (Withdrawal Agreement) Act 2020, which was passed by a majority of 120 with notwithstanding provisions in it at the beginning of the year. So for practical purposes, the principle of whether notwithstanding provisions are needed has already been established.

I repeat that I am very supportive of the Government and very supportive of the Prime Minister, and I make that absolutely crystal clear, but that makes it absolutely essential for us to have a very clear understanding about the reasons for withdrawing the provisions that were passed in respect of this Bill and were passed in respect of the other Bill yesterday, on the same principles of sovereignty as would need to be put forward under section 38 of the EU (Withdrawal Agreement) Act, which, by the way, is still in statute and can still be used —and will be, I hope, as we move forward.

The Government are withdrawing these provisions of the Bill, which is presumably done for some reason that I cannot quite get but is to do with managing to assuage some of the hostility in the House of the Lords and the hostility that has led the European Union and the Commission to threaten legal proceedings unless we withdraw them. No doubt all this is being done in an attempt to arrive at some sensible or other kind of conclusion and settlement.

[John Redwood]

rose—

[Sir William Cash]

But I reserve judgment on that until I have heard what my right hon. Friend says.

[John Redwood]

Is it not up to Parliament to withdraw the provisions that we were asked to support, and did support, yesterday? Was there not a long debate in which my hon. Friend made a contribution, while I was arguing the case elsewhere? Were we wasting our time? It seems to me that Parliament needs to be asked again if Ministers have changed their minds.

[Sir William Cash]

Indeed.

It is extremely important to point out that these notwithstanding provisions are directly related to the issue of sovereignty, but also related to the substance of our leaving the European Union. Not until we see a copy of the Bill will we be able to make the judgment about the extent to which they would impair or affect that sovereignty. We will have to wait until tomorrow to see exactly what the Chancellor of the Duchy of Lancaster presents to the House. We have an outline, but no more than that. The question of sovereignty will no doubt be much discussed tomorrow during his statement.

I heard the Opposition spokesman declaiming, in line with the amendment that they have tabled, that this is all about breaches of international law. I have to say to the hon. Lady that in the context of the continuous provisions on a whole range of matters, including Finance Bills that the Labour party was responsible for bringing in when it was in government, there are stacks—hosts—of treaty overrides. As I said in my contribution yesterday, such overrides have been passed as Labour party proposals when it was in government, by the coalition in 2010 and the years following that when the Liberal Democrats were involved, and also in some Conservative measures that have been passed that are overrides of international law. I pointed out yesterday that it has been done in the past for very good reasons of national interest, including economic national interests, as they clearly have been in the past. Some of them were hugely important constitutional issues—for example, affecting the independence of India and Pakistan—and there were other provisions that I will not go into in detail now, but I have put them all out there on the record.

The extraordinary thing is putting down this amendment based on so-called breach of international law, when actually the Labour party itself has done exactly the same in consistency with—not inconsistent with, but in consistency with—international law. Article 46 makes this abundantly clear. I was very glad that my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) conceded that point on the Floor of the House yesterday when he said, at last, that he was going to support the Government on this question. Lord Judge, a very distinguished judge in the House of Lords—the ex-Lord Chief Justice—who has been leading the argument on the question of international law, has said, in effect, that in principle he knew there was a moment at which there were circumstances whereby a given Government would be entitled to take such steps as were necessary in order to protect the national interest.

Nothing could be more important than protecting our sovereignty. That is what this whole Brexit is about. It is about being able to ensure our having left the European Union lawfully by having passed all the Acts of Parliament—and the House of Lords having passed all those Acts of Parliament as well—and in addition to that, having had a referendum on the votes of the people of this country, which itself was based on the authorisation by Parliament that the referendum should be allowed to take place. That was passed in the House of Lords and the House of Commons—in the House of Commons, incidentally, by six to one—and it was followed, as I have said, by a series of other enactments.

The European Union (Notification of Withdrawal) Act 2017 was passed by 499 to 120, including by the Labour party, so there should not be any question about that, and I do not believe that the Labour party has anything to gain by trying to argue that somehow or other we have unlawfully left the European Union, which is what it seems to be implying in its amendment. Then we move on to the European Union (Withdrawal Agreement) Act 2020, which, as I pointed out in an intervention, was passed by 120 in this House on Second Reading. It contained the notwithstanding provisions, in section 38, that I had proposed to the Government on 17 October last year. For all these reasons, we have not only lawfully left, but lawfully left on the basis of our sovereignty, which has been endorsed not only by the referendum and by the voters of this country, but by their representatives in this House as the House of Commons. They are elected, unlike the House of Lords, and in the House of Commons they have endorsed these provisions by massive majorities. So what on earth would be the purpose of removing provisions that ensure that our sovereignty can be maintained?

I can almost hear somebody on the Government Benches perhaps thinking to themselves, “Well, they’re not needed because, actually, the situation has now been firmly dealt with in the Joint Committee”. Of that we know nothing, more or less, because I have asked the Chancellor of the Duchy of Lancaster three times to appear in front of our European Scrutiny Committee, and thus far he has not come on these matters. He knows that, and I have had some very diligent, shall we say, correspondence with him on his not attending, although he did allow the Paymaster General to come and she did appear before us a few weeks ago.

The point I am making is that this is a critical time in our history. This is the moment when we regain our sovereignty. It is not just a philosophical statement or a constitutional theory; it is actually about the practicality of how this country is governed. It is as simple as that. We are governed by a constitutional arrangement under which, through parliamentary government, the Members of Parliament who are who are elected by the voters pass laws that are imposed upon the people by the consent of those representatives. It is as simple as that.

[John Redwood]

Will my hon. Friend confirm that when his admirable clause 38 was tried on the previous Prime Minister, she rejected it on the grounds that it would mean that Parliament could unilaterally override the withdrawal agreement if it wished, and she did not want that?

[Sir William Cash]

Absolutely, which was precisely why I brought it forward. It solved a lot of problems.

I must say that the reasons for the notwithstanding provisions in the United Kingdom Internal Market Bill were based on the same principle of sovereignty, and the same applies to the taxation Bill, in which it was understood that the notwithstanding provisions would be included. I have not seen the Bill yet—I wait to see it with interest—but I am assuming that the adjustment will not appear. Therefore, I reserve my position with respect to the question of the notwithstanding arrangements, because I need to be satisfied that there is no impugnment of our sovereignty by virtue of the removal of those provisions in this Bill. It is as simple as that. I could say much more, but I do not think it will be strictly speaking necessary for me to do so, because I have dealt with all the matters of principle that arise.

I am not quite sure how authoritative the material I have been supplied with is, only because it was given to me by somebody associated with the Government and I am not at all sure whether it is in the Library of the House of Commons; all I can say that it is quite extensive and that it deals with a lot of matters that the Minister has already dealt with and that no doubt will be further examined when we get to see the Bill itself. However, I notice that it does include such matters as the fact that, whatever the outcome of the FTA and joint committee negotiations,

“we have an obligation to the people of Northern Ireland to make sure that they continue to have unfettered access to the UK under all circumstances, to ensure that there are no tariffs on goods remaining within the UK customs territory and to ensure that there is no legal confusion about the fact that, while Northern Ireland will remain subject to EU state aid rules for the duration of the protocol, Great Britain will not be subject to EU rules in this area. That is the Government’s overriding priority.”

I have heard that said before, in one form or another, but I think we need to note that that is what this Bill does. There are other provisions relating to Northern Ireland customs and Northern Ireland VAT and excise on goods, and a provision that says:

“VAT will be accounted for the same way as it is today, with Northern Ireland remaining part of the UK’s VAT and excise system”—

we will check that when we see the Bill.

“HMRC will continue to be responsible for the operation and collection of the revenues, which will not be passed on to the EU”—

a-ha!—

“while Parliament will remain responsible for setting VAT and excise rates across the UK.”

I am not going to be entirely negative about all this; I never am. I rely with confidence on what the Government have said with respect to sovereignty and with respect to tax.

These are important questions. I have confidence in the Prime Minister. I have confidence in the fact that we have had a general election and that the manifesto made the whole of the Brexit question quite clear to the people who voted, giving us a majority of around 80 and, in my own case, as much as 63% of the vote in my constituency, for which I am deeply grateful to my constituents. All I can say is that we will be watching all these matters with great diligence and with a constructive approach, because we hope and trust that, when we have been through the full proceedings on this Bill and, indeed, finalised the United Kingdom Internal Market Bill, that confidence will be entirely justified and there will be no impairment of our sovereignty as the United Kingdom, which is what this is all about.

I will conclude simply by saying this. Not since 1688 have we been faced with a situation of such historic importance, other than when we went into the European Union under the false pretences of a White Paper that turned out, unfortunately, to be misleading the British people. There have been two world wars where people have tried to take over this country by force of arms—in particular Germany—and I simply say this: this is the most important moment in our history in the last 250 years, whereby we have regained the sovereignty that was embedded in the arrangements after 1688-89.

By gradual evolution, we developed parliamentary government and representative government. We are described as the mother of Parliaments, as John Bright put it. This is our sovereignty, and we have absolute, total determination—as I understand it, so does the Prime Minister—to maintain that. It is about democracy; it is about freedom. It is what Churchill was proud of; it is what Margaret Thatcher was proud of; it is what we are proud of. I simply make this final point: we will maintain our sovereignty at any price.

--- Later in debate ---

[Alison Thewliss]

The EU has done everything it can because it knows it is everybody’s interest to have a deal.

[John Redwood]

Will the hon. Lady give way?

[Alison Thewliss]

I will make some progress and bring the right hon. Gentleman in later on. It is interesting that Tony Connelly from RTE said that the EU nations are watching closely to ensure that the relevant clauses are effectively withdrawn from the Bill. If I were them, I would be looking very dubiously at the UK Government on that issue, because we do not know what is going to happen.

It is quite surreal to prepare for a Bill that we have not yet seen, and from which clauses that do not yet exist could still be removed or added, after being rubber-stamped by the House. The six ways and means resolutions on one side of A4 paper represent a significant volume of very detailed VAT resolutions. Resolution 6 alone refers to a Commission decision that runs to some 39 pages on the treatment of CFC group financing exemptions to state aid, and there is still no detail on specifically how the Government wish to amend the substantial pieces of taxation legislation.

We would have advance notice of a Finance Bill, for example. We would have Second Reading, Committee, and Report over an extended period. That time would allow evidence and engagement with stakeholders, but that is not so with these resolutions. To take an example, the Finance Bill earlier this year contained a solid five and a half pages on the detail of call-off stock arrangements. We debated them in the Bill Committee at great length, and it was tremendously exciting.

[John Redwood]

Will the hon. Lady give way?

[Alison Thewliss]

If the right hon. Gentleman can tell me something about call-off stock arrangements and what the Government are proposing, I will let him in.

--- Later in debate ---

[John Redwood]

I would like to know why the hon. Lady supports the EU position on everything. On the question of fish, does she support the general EU smash-and-grab raid for most of the fish, or does she prefer the French version, which is to take practically the whole lot?

[Alison Thewliss]

I would prefer it if the Government would listen to the concerns of west coast fisheries in Scotland that do not want their fish to die and rot in lorries at Dover because the Government have not sorted out the trading customs.

Members of the House are expected to scrutinise the new tax regime in a fast-tracked timetable with no time for debate or consultation with businesses. There are a host of details in the VAT resolutions. I went through them this morning. I copied them and pasted them, and took them from the VAT regulations that currently exist. That runs to some 20 pages of detail on those VAT resolutions. [Interruption.] I can see the hon. Member for Thirsk and Malton waiting for me to read through those 20 pages, but I am not going to do that. I will send him a copy if he would like to read it over later. We will certainly be further forward than we are with the Government concluding anything.

There is a lot of detail in the resolutions and we need to know what exactly is going to happen with them.  There are issues on penalties relating to VAT in the Taxation (Cross-border Trade) Act 2018. There are issues to do with the importing of goods as well, and how that is going to work. The guidance on the resolution

“Value added tax (online sales by overseas persons and low value importations)

That provision may be made for the purposes of value added tax in cases involving—

(a) supplies of goods by persons established outside the United Kingdom that are facilitated by online marketplaces, or

(b) the importation into the United Kingdom of goods of a low value.”

runs to 11 pages on the UK Government’s website. There are 11 pages of detail, but we do not know what the Government are proposing to change here. We do not know what the Government are proposing to do here and that is very unfortunate. The issue really does follow on from that: we do not know what the Government are going to do and we do not have adequate time to scrutinise all the papers and see what is in them. We do not know whether the Government’s drafting will actually work, when it has been done in such haste.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

I declare my business interests in the register.

I came to this debate expecting to hear the Minister set out a vision of post-Brexit Britain, how the taxation system will be transformed and how VAT will be changed to encourage our businesses and give our consumers a better time. Instead, we have six resolutions that are mainly about trying to make sure that the Government can get even more VAT out of people after we have left than before. The Government could have done that at any time. Where is the vision that we will have a much better tax system after Brexit?

We are taking back control of VAT, which was almost entirely under EU control. The Government say, for example, they wish to be a green Government, but these measures will not even take VAT off a whole series of green products, which should not have VAT on them if the Government are trying to encourage people to insulate their homes, change their boiler controls or put in more fuel-efficient ways of heating their homes. The Minister has failed this very simple test.

We have six resolutions about a piece of legislation which we are not allowed to see until after the debate. It is a piece of legislation that will be very complex, because it is mainly about the techniques of raising revenue and making sure that no revenue escapes. However, the Brexit voters out there—the majority in the country—have had to vote three times now for Brexit to make it clear to the House of Commons that they want even this House of Commons to be in charge, even though there are still too many MPs on the Opposition Benches who hate the idea of this country legislating for and governing itself and think that every law that comes from Europe is wise and necessary and every law that is made here is somehow inappropriate.

We want our Ministers to say, “No, we are the people’s representatives. We had the majority in the election and we are going to transform our country’s economy, recover the economy from covid-19 and level up the country.” That requires bold and visionary leadership and it certainly requires pretty fundamental tax changes. VAT rates on some things are too high. VAT should not be imposed on some things at all. We need to remodel that tax. We need to look again at our corporate taxes, where a series of judgments by the European Court of Justice prevented this country levying all the corporate taxes that it wished to raise.

[Patrick Grady]

I probably should not rise to the bait, but does the right hon. Gentleman honestly think that the way the Government are treating the House tonight is an expression of parliamentary sovereignty? Is this what he really campaigned for over all these years, so that the Government could fast-track major financial legislation, bounce it through the House of Commons, not give us the information we are looking for and not subject it to proper debate? Is that what he campaigned for for all these years?

[John Redwood]

The answer is that I campaigned for this Parliament to take control and use it in the interests of the people, which is why I am making the speech that I am making. Why does the hon. Gentleman not listen to it instead of planning an intervention for a speech I am not making? I am urging the Government to take back control and use it in the way that the public would like to see them use it.

I must take up the point of sovereignty. My hon. Friend the Member for Stone (Sir William Cash) is quite right to go back to that. The simple truth about Brexit is that Brexit voters knew exactly what we were voting for. We understood the slogan “Take back control”, and we think control—the right of self-government, the right to trust people in these Houses of Parliament to make decisions for us or the right to throw them out if they are useless—is fundamental to our freedoms and living in a democracy. You do not bargain those away in some kind of dispute about tariffs. You do not argue about those in the context of making compromises.

This is the fundamental truth of Brexit. Like practically every other country in the world that is not a member of the EU, we just want to be free to make those decisions and laws that we can make and have representative institutions—a great Parliament—in order to do that. We clearly need to train some of the parliamentarians in the idea that we can make better laws here than people can make for us abroad and that we can modify European laws that we currently have so that they work in our interests better.

[Alison Thewliss]

Does making better laws not start with letting MPs see a Bill before it exists?

[John Redwood]

I do not disagree with the hon. Lady. I have said that I want to debate a real Bill. I am giving ideas to the Minister because I do not think what he has in mind for this Bill is going to quite suit me. I want to pep it up. I want to make it more exciting so that we can go out to the public and say, “This is the party that is going to level up. This is the party that knows how to recover an economy that has been damaged by covid”, and that requires lower taxes and different taxes and requires that we use the powers that only the House of Commons has. The House of Lords has very limited abilities to intervene, and on this occasion I am very pleased about that, because it nearly always wants to take the European answer, and the European answer is the high unemployment answer, the high taxation answer and the very complicated taxation answer.

VAT is an extremely complicated tax. We had to adopt its complications and we are now trying to add to those complications to try to avoid items slipping through. We are trying in these proposals to deal with small transactions that sometimes escape the net. They try to find ways of making online organisations, for example, responsible for levying tax between two people trading with each other.

[Alan Brown]

The right hon. Gentleman referred to the levelling-up agenda. On rough figures, we have had 50 years of the EU, 20 years of devolution and over 300 years of the Union. Why are devolution and the EU to blame for the requirement to level up when, quite clearly, the Union is at the heart of the problem?

[John Redwood]

I do not agree, and nor did Scottish voters when they were asked this question. We do have a great democratic country and I was a great enthusiast for the people of Scotland deciding whether they liked our Union or not. They said, yes, they liked our Union. Then the people of the United Kingdom were asked whether they liked the European Union and they said they did not. So I found myself in the happy position of agreeing in two big referendums with the winning side. It is such a pity that the Scottish National party lost both and has never understood the democratic principle that it then has to accept the verdict. I was on the losing side in a former referendum; like my whole party, I was against the principle of Scottish devolution, and we got that wrong. We lost that referendum and from the day after that we did not fight it, delay it or dilute it. We said, “Yes, devolution is the wish of the Scottish people.” We got on and implemented it.

[Sir William Cash]

I do not know whether my right hon. Friend can recall this, but when that Bill was introduced by the late Donald Dewar in 1997 I put forward a proposal that the devolution settlement should be decided by a referendum of the entire UK. Perhaps it is some encouragement for him to know that despite a three-line Whip half the Conservative Back Benchers went through the Lobby behind me on that question of having a referendum for the whole UK on this devolution issue, about which he is being so extremely articulate.

[John Redwood]

We are probably straying a little away from the resolutions before us, Madam Deputy Speaker, so I will not try your patience any more. I have made my two main points, but just to summarise: we need more vision from the Government to use our power to tax in our own way, because our current tax system is ill fitting and not yet geared to promoting that recovery we want —we need greater simplicity, lower taxes and a lower incidence of taxes to get that recovery going; and we need reassurances from the Government that sovereignty is not something one can bargain away or compromise over, but is fundamental. We either have a free trade agreement between an independent UK and the EU, which is our preferred model, or we have no deal. It is as simple as that. The choice is theirs.

--- Later in debate ---

[Sammy Wilson]

No, I am not, and the reason for that is that from the day that the people of the United Kingdom voted to leave the EU, the cheerleaders for the EU have been those sitting on the Opposition Benches—apart from the Members from my own party. At every stage, it has almost been as if the EU had its representatives sitting in this Parliament. The Labour party in particular suffered from that, because many of its patriotic supporters asked, “What kind of representation are we getting, where these people are seeking to undermine our country, rather than uphold our sovereignty and the result of the free vote that the people of the United Kingdom undertook in the referendum?”

[John Redwood]

Did the right hon. Gentleman note that when I intervened on Labour and SNP Members to invite them to support just something in the current UK negotiating position, they could not bring themselves to support a single thing that this country wants from the negotiations?

[Sammy Wilson]

Again, that does not surprise me, because most Members on the Opposition Benches wish, first, that the referendum had never happened; secondly, that the result had not been as it was; and thirdly, that they could find some Machiavellian way to undermine it, as they have been doing for the last number of years. It is unfortunate that we are in the position that we are partly because the EU knows that there are people in this Parliament who will undermine the Government’s negotiating position. That, of course, makes it more difficult for the Government to negotiate. I do not give that as a justification for some of the things that the Government have agreed to in the withdrawal agreement, whether they relate to Northern Ireland or to the impact on the rest of the United Kingdom; to me, the withdrawal agreement is poison that will infect any future trade arrangements that we might get with the EU.

The point that I am making is that protections are needed because the EU has taken the withdrawal agreement. Even where the agreement does give some latitude to allow the internal market of the United Kingdom not to be disrupted and the economy of Northern Ireland not to be undermined, the EU has refused to give that interpretation. In fact, it has done the exact opposite and looked for the most draconian interpretation of the agreement. Only last Friday, the EU insisted that anyone travelling from GB to Northern Ireland would have to have their personal baggage searched to ensure that they were not taking any contraband into Northern Ireland, despite the fact that article 5 of the Northern Ireland protocol states that the “nature and value” of the goods should be considered.

I hope that the hon. Member for Houghton and Sunderland South (Bridget Phillipson) can understand that when she and the Labour party table amendments such as the one she moved today, saying that the withdrawal agreement must be guarded and protected at all costs, she is in effect saying, “We put the value of this piece of paper above the interests of the people of Northern Ireland.” This is putting that piece of paper above the interests of the people of Northern Ireland to have the range of goods that they want and at the best prices, and above the interests of businesses that export from Northern Ireland to GB. In effect, that is what her amendment says.

I am even more amazed that any representative from Northern Ireland dares to put their name to that amendment. I wonder what the consumers and businesses in their constituency think about somebody who values protection of the EU, and an agreement that the EU has with the UK, above the interests of their constituents.

Lockdown: Economic Support

Lord Redwood Excerpts

Tuesday 3rd November 2020 Commons Chamber

[Steve Barclay]

At the risk of repeating myself, I refer the hon. Lady to the reply I gave earlier, but she did make a specific point about those who may have recently been made redundant. [Interruption.] Again, the hon. Member for Glasgow Central (Alison Thewliss) chunters from a sedentary position. The hon. Member for Edinburgh West (Christine Jardine) made a specific point about those recently made redundant and I was just coming on to answer that precise point. Employees notified by real-time information submission to HMRC on or before 30 October are eligible for the furlough extension, but employees employed as of 23 September, which is the day of the job support scheme announcement, and notified to HMRC by RTI on or before that date who have since been made redundant can be re-hired. In answer to the hon. Lady’s question, the timing is important, but the point is that people can be re-hired as part of the furlough extension.

[John Redwood (Wokingham) (Con)]

I am glad that the Government agree that where, by law, they stop people working and earning a living, they should compensate them. Will the Government look again at the terms of the scheme for the self-employed—there are restrictions on several categories of self-employed who have no other means of earning their living and no large company support—and be more generous? Does my right hon. Friend agree that we need all those self-employed people to be ready to return to work to get some kind of recovery going soon, because the economy is in deep trouble?

[Steve Barclay]

I agree with my right hon. Friend that we need to ensure that the economy is able to bounce back quickly. That is why we have provided over £13 billion of support to the self-employed, which by international comparisons—I know my right hon. Friend looks at international comparisons—he will see is extremely generous. I have set out previously in the House part of the operational difficulties, for example with owner-directors in terms of what is dividend income and what is not. The point is that we have set out a generous self-employment income support scheme, but we need to deliver that operationally in a way that meets the tests set by, for example, the Public Accounts Committee, which has asked whether we have the right level of controls in place, given the speed at which these schemes were deployed.

The Economy

Lord Redwood Excerpts

Wednesday 8th July 2020 Commons Chamber

[Steve Barclay]

As the hon. Gentleman knows, the Chancellor addressed that issue in his statement earlier. Indeed, he wrote to the industry in March setting out the terms on which Government support would be offered, including the requirement for firms first to look at what support they could receive from their own commercial backers and shareholders. On individual firms, what discussions take place is a matter of commercial confidentiality, but the Chancellor indicated both his engagement in that issue and that of the Secretary of State for Transport.

All in all, the United Kingdom’s economic response to covid is one of the most comprehensive and generous of any Government’s in the world. The past few months have been hard for everyone, particularly the many families whose loved ones have lost their lives. But thanks to our collective grit and determination, the tide was turned and the infection rates fell, and we are now in a position to reopen our economy in a way that is safe to do.

[John Redwood (Wokingham) (Con)]

As one who thinks it is exactly right, as a one-off cost, to spend and cut taxes at the moment to promote economic recovery, I accept that we have to borrow to do that. When will we be getting some revised numbers on what the borrowing might amount to?

[Steve Barclay]

There are two issues within that. First, there are the revised numbers from the Office for Budget Responsibility, which has set a timescale for when it will set those out. Then there is the more substantive issue, as the Chancellor set out in his statement, of seeing the plan for jobs in the context of three phases. The medium-term recovery that we need will be set out in the autumn with the Budget and the comprehensive spending review. Again, that will be an important milestone in this three-phase approach.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

I have declared my business interests in the Register.

We need a job-rich recovery. I therefore strongly welcome the measures that the Chancellor has announced today. Some of those measures will save jobs. Some of those measures will create or stimulate new jobs. The Government are right to worry that we have lost too many jobs already over the closures and they are right to worry that we might lose more in the days ahead. They are right to make the changes they are making to the furlough scheme, to encourage as many of those jobs as possible to return, and they are also right to say that we cannot carry on with a furlough scheme indefinitely; there has to be a test of whether there is still a job there. If we roll it on for too long, there will be no real job left, and it becomes just a different kind of benefit, delaying the time when that person can retrain or find a better prospect for their work.

What do we need to extend this jobs recovery? First, we need plenty of money and credit around, so that it is available for the business to pick up and the incomes to rise. The new Governor is a welcome breath of fresh air. As I have mentioned before, the previous Governor went in for extreme austerity, which slowed the economy needlessly. The new Governor has corrected for that and made a very big boost at the beginning of this crisis, which has been extremely helpful. I see no need for the Bank to go to negative interest rates. I do not think the Swedish experiment with them was particularly helpful, and the Swiss experiment is specific to the pressure on the Swiss franc, which we do not have on the pound. I do not think we need to go to negative interest rates, but I would say that the Bank is in danger now of going rather slowly on the quantitative easing and loosening. We see that in some of the figures coming out.

If we compare our figures with those of the United States of America and the Fed, we see that the Fed is doing twice as much or more than the Bank of England, proportionate to the size of the economy. Some might think that perhaps the Fed is doing a little bit too much and the US might end up with some inflation, but we are in danger of not doing enough again, and I hope that progress will be made in getting the right adjustments.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

Does the right hon. Gentleman agree that while it is right that the Bank of England is doing quantitative easing, how that money is spent ought to have more democratic input? That money could be used for the sorts of investment we need now for jobs and tackling climate change.

[John Redwood]

The money is used to maintain the price of Government bonds so that the Government can borrow on very low interest rates as much money as they want. Investments are therefore determined by this House and the Government, so I cannot quite understand what point the right hon. Gentleman is making.

The Government are right to borrow a lot of money for six months or so, to get us through the crisis and to speed the recovery, but it has to be a one-off. We cannot live like that. One needs to earn a living, but this is a one-off crisis. The markets are such and the Bank of England’s intervention is such that the Government can borrow a lot of money very cheaply and quite long term. That is the best we can do, and it is the right thing to do to try to save jobs and create new jobs.

This week, we have had the summer forecasts from the European Union for the economies of the European Union, and it has still done a UK forecast. It is worrying, because the forecasts say that the French, Italian and Spanish economies will lose more than 11% of their economic output and income this year. They say Britain will be in high single figures—a bit better than those three—although not as good as Germany, which has come through it the best so far. However, the figures are not acceptable, and most people feel that the United States figures will be considerably better, because the US response to this crisis has been on a far bigger scale, both fiscally and in terms of monetary policy, than the European response. The UK needs to be closer to the American example in this case, because this very severe hit to major economies requires something very big to try to carry them through and rescue those jobs.

I hope that the Government will look at the opportunities for sourcing more in the United Kingdom through its purchasing programmes as we leave the European Union. I am all in favour of strong competition, value for money and good pricing, but I think we have had examples of our not having enough national resilience. We found that we could not buy the things abroad that we needed for our health service, because we were relying on others’ goodwill and they needed it for themselves. We are finding that buying things from China comes with all kinds of difficulties. We will find, if we go down the route of importing more and more electricity, that we have strategic weakness in depending on Russian gas, which is the main source of continental energy. I urge the Government to use their purchasing intelligently to give us resilience and more British jobs. Value for money and competition are good, but let us make sure that the purchasing goes to home purposes, just as they do in other countries abroad, where they look after themselves first.

Economic Update

Lord Redwood Excerpts

Wednesday 8th July 2020 Commons Chamber

[Rishi Sunak]

I am very happy to look at the proposal from the hon. Gentleman, and I am sure that the Transport Secretary is fully abreast of it. I will pick it up with him as well.

[John Redwood (Wokingham) (Con)]

The focus on jobs, and the measures, are excellent, so will the Government now review the taxes, subsidies and public procurement regulations so that they can be amended to allow us to grow more of our own food, land and process more of our own fish, generate more of our own power, and supply more of the things that our health service and Ministry of Defence require, because it can be better made in Britain, and better made with British jobs?

[Rishi Sunak]

I thank my right hon. Friend for his support, and he is absolutely right: leaving the EU provides us with a unique opportunity to re-examine all our procurement rules and many of our regulations. I share his passion to ensure that, as much as possible, we support our local economy and create jobs, which has never been more vital than it is today.

Finance Bill

Lord Redwood Excerpts

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

[Mr McFadden]

The matter of what is voted on is of course, a consideration for the Speaker. I do not always get to decide what is voted on in this House.

New clause 26, standing in my name and those of my hon. Friends, focuses on the issue of jobs and does so for the very good reason that that is the principal economic challenge facing us right now. If there was any doubt about that, we need only look at the news over the past 24 hours—1,700 jobs lost at Airbus, up to 5,000 job losses announced by the owners of Upper Crust, 4,500 at easyJet a couple of days ago, another 4,500 at Swissport, and many more around the country that do not make the front page of the national news. These are not just numbers. Every one of them is a human story of a livelihood taken away and a family wondering how they will pay the bills and what the future will hold for them.

Across the country, the claimant count measure of unemployment is up by 1.5 million since the start of the year. In addition to those out of work and the estimated 9 million on furlough schemes, it is estimated that up to 8 million employees are working fewer hours than usual. These stark figures show us that we are facing the jobs challenge of a generation. It is decades since young people leaving school, college or university graduated into a labour market such as this.

Giving my age away, I remember, as a young teenager growing up in Glasgow, attending the people’s march for jobs. Unemployment back then was around 3 million. The vocabulary of it infused the times—“signing on”; “the Girocheque”. It even gave birth to the great band UB40, named after the unemployment card that people got for signing on. The damage caused by that mass unemployment affected not just the city where I grew up, but the Black Country that I now represent, and many similar communities across the country. Long-term social and economic pain was caused by far too many people facing a life on the dole, and we must never go back to those days. If we have learned anything from that experience of the 1980s, it is that the cost of not acting is greater than the cost of acting, and we must do everything we can now to prevent mass unemployment. That is the challenge facing us.

At the start of this crisis we called for wage support to help people through. The furlough scheme and the self-employed furlough scheme were the right and necessary things to do, but as lockdown is eased, and support from those schemes starts to be withdrawn from next month, we can see the danger facing the economy. The danger is that businesses that have been just about hanging on start to let people go, caught between having no income and facing rising employment costs. This is the moment that the Government need to act to preserve jobs, jobs, jobs.

[John Redwood (Wokingham) (Con)]

I agree with the right hon. Gentleman about the importance of jobs. Is he worried that the reform the Government have in mind might mean that a self-employed person working on their own in one of our constituencies could lose a contract to a foreign company, because the big company undertaking the contract might think that was safer?

[Mr McFadden]

I am not sure about the part of the right hon. Gentleman’s intervention that referred to foreign companies, but the turbulence of the labour market right now does pose a danger to contractors. The Government have already recognised that to some degree in the delay announced for this measure.

Withdrawing support schemes at the same pace for all sectors does not recognise that some sectors are in far more difficulty than others, and that is particularly true for any sector based on the idea of people gathering closely together. Many sectors such as transport, aviation, sport, theatre, music, and others, are global British strengths, but right now they are on their knees. Dropping the social distancing rule from two metres to one metre is not enough when, in some cases, any kind of social distancing is impossible. Let us take live music, for example, which is based on the very opposite of social distancing. The break-even point for many venues and events is often being 80% to 90% full, and the change to one metre will not make that much difference to them. We need an approach that takes into account the different impact on different sectors.

If there was already a sectoral problem in withdrawing employment support, there is also now a geographical one, because Leicester is entering its second period of lockdown. Our thoughts go out to the people and businesses there who, like the rest of the country, have made great sacrifices over the past few months. We cannot yet know how long that second period of lockdown in Leicester will last. It could be a few weeks, but equally, it might be longer. Neither can we know whether Leicester will be the only place to go into another lockdown. Other cities may follow, and there has already been speculation about where those might be. How can it be right to withdraw employment support on a national basis when we are no longer in a single national position on the easing of lockdown?

We are asking people and businesses in Leicester today, and possibly other cities in the days and weeks to come, to shut down for a second time, and they should not be penalised for doing so. Will the Minister consider as a matter of urgency flexibility in the unwinding of the furlough and other support schemes, to take account of the new development of at least one, but possibly more, local lockdowns? Let me now turn to the future, and the jobs that might be created. The Government announced their back-to-work plan yesterday.

Finance Bill

Lord Redwood Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution
Monday 27th April 2020 Commons Chamber

[John Redwood (Wokingham) (Con) [V]]

I have declared my interests in the Register of Members’ Financial Interests.

At the time of the Budget it was a very different world. The Government were forecasting a little bit of growth and recommended a modest stimulus. I remember that I was able to welcome that stimulus in the Budget debate—I thought it was right that we boosted public spending a bit and borrowed a bit more—but with masterly understatement I said that I was a bit surprised by the magnitude of the stimulus: I thought that perhaps something more was needed. In the six weeks that have elapsed since then, we have seen a blizzard of announcements that have made it clear that the Government recognise the magnitude of the downturn that now besets us and the world economy and are rightly moving swiftly to try to provide some compensation to the many businesses that cannot trade and the many people whose jobs are under threat or whose income is disappearing because of the lack of work. The response is correct, so the Government should look again at the Finance Bill in the light of the fact that the events that led to its formation  have been completely overtaken by the magnitude of this crisis, and because we will need quite soon a Finance Act that does everything in its power to promote recovery.

Tax rises are not a good idea at all. The Government, in this period of response to the crisis, have offered tax holidays, tax reductions and tax deferrals, which is the right response as the private sector and individuals cannot afford those taxes at the moment with their incomes so rudely interrupted. The Government must also look at the groups of people they are targeting. I urge the Minister to think again about changing the rules on IR35. There are about 5 million self-employed people in this country who have been doing a magnificent job for us. They provide flexibility, service and products that we need and they are very competitive. A number of them have been living under the shadow of those tax changes; some have lost contracts and work to overseas companies and competitors simply from that threat. I therefore urge the Minister to think again and recognise that we need to reward and encourage those people, not threaten them with a new tax. Above all they will offer a lot of the flexibility, hard work and energy that the recovery will need.

The Government are right to provide as much compensation as they can and the Bank of England is right to buy a lot of bonds and create money, but we all know that that is not a sustainable model for the economy in the medium to longer term. I echo the comments of colleagues who rightly said that we need a way back to safe working as quickly as possible. The only way we can afford to pay for the NHS is to have more people at work paying taxes and earning decent incomes, and more companies generating turnover who can then afford company taxation.

Through the Finance Bill and all the other measures the Government can undertake, we must together ensure that we have as early a return to work, and as safe a return to work, as possible, and that means working away with business on better safety so that people have the clothing and equipment they need, automating where necessary and allowing proper social segregation while people are working in warehouses, offices and shops. We need to develop those new business models, and the Government can provide a lead by showing how they can continue to administer their great services while looking after the safety of their employees to the best possible effect. That requires reshaping the Finance Bill. I am delighted that the Minister is thinking of making amendments to the Bill during its passage through the House. I ask him above all to look at measures that could reward companies that go in for a new model, and reward employees and the self-employed who go that extra mile to work safely and create some restoration of service and activity in our economy.

No one in this House has seen anything on this scale or magnitude before. Never have we got to the point where a quarter or more of the companies in the country are not allowed to trade and millions of people are banned from doing their job because of public health and safety considerations. In this situation, we need to offer them a Finance Bill with hope, a Finance Bill that will help them finance the recovery and a Finance Bill that will make it worthwhile for them to lead that recovery as soon as the time comes.