Draft Customs Safety and Security Procedures (EU Exit) Regulations 2019

Jonathan Reynolds Excerpts

Monday 25th March 2019 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is always a pleasure to serve under your chairmanship, Sir Henry. Once again, we are here to discuss a statutory instrument that makes provision for a regulatory framework after Brexit in the event that we crash out without a deal. On each occasion, I and my Front-Bench colleagues have spelled out our objections to the Government’s approach to using secondary legislation to enable the process.

An issue raised repeatedly by Opposition Members is the impact of a no-deal exit on our ports system. I thank the Minister for his introductory explanation of the SI. My understanding is that, in the event of a no-deal Brexit, goods coming into the UK from the EU, Norway and Switzerland would be able to enter without having to submit safety and security information for a period of six months. I assume that the measure is designed to prevent gridlock at the ports, but the Opposition are troubled by the potential chaos that could occur if we do not get some resolution by the end of this week.

Paragraph 3.4 of the explanatory memorandum to the SI effectively admits that ports, hauliers and ferry operators are not ready. There has been unbelievably poor planning by the Government and it is something we have warned about since the passage of the customs Bill a year ago. The explanatory memorandum explicitly states:

“There is a strong possibility that businesses, such as hauliers and ferry operators, will suffer immediate hardship if the UK leaves the EU without a negotiated deal. They do not have the systems in place in readiness for exit day.”

How have the Minister and the Government allowed that to happen? How is it that restitution of a temporary way forward is being proposed only four days away from our proposed exit date?

The Opposition are concerned about how the exemption could increase the level of smuggled goods and undermine security, particularly at a time when threats to national security are rising. What safeguards do the Government propose to protect against both those risks? Furthermore, what are the implications for the collection of taxation if we are to forgo collecting taxes at the border simply because we do not have the capacity to do so? That is the Government’s stated approach, and the Financial Secretary to the Treasury himself gave evidence to the Treasury Committee last summer, admitting that keeping the ports open would take priority over collecting tax. But how long is such chaos expected to be justified? What assessment has the Treasury made of the potential loss to taxation?

Her Majesty’s Revenue and Customs is already struggling against the weight of the cuts already sustained and the new burdens placed upon it as we leave the EU. We seem to be contemplating potential chaos at our borders. As the Opposition have previously warned, it will be worsened by the serious issues concerning the roll-out of the customs declaration service. The Office for Budget Responsibility stated in its economic and fiscal outlook, published at the spring statement, that the Government’s new customs declaration service has processed just 500 declarations from four traders in seven months, since its launch last August. Yet it was built to handle 300 million import and export declarations. That is extremely worrying. One way to prevent the short-term chaos that we seem to be talking about is to consider staying in a customs union with the EU, as Labour has consistently argued.

I also want to ask the Minister what checks and balances will be placed on the powers. What is to stop us reaching the end of the six-month period and simply extending the process once again by statutory instrument? We would therefore effectively be in a de facto customs union, but without the wider scrutiny of Parliament and the wider benefits that such an active decision would bring. A sunset clause on the extension of the powers would have been an important component in preventing that.

To conclude, this seems an extraordinary statutory instrument to be discussing this week. I have huge concerns about whether this is the right way forward, and I very much want to hear the Minister’s further justification of these measures.

--- Later in debate ---

[Jonathan Reynolds]

I am grateful to the Minister for, as ever, batting solidly for the Government about the proposed measures. I was struck by two things he said. First, a no-deal situation is the purest form of Brexit, in the sense that it is the minimum level of co-ordination with our European colleagues and the strongest articulation of sovereignty over prosperity available of the options. Even under that scenario, what the Government are offering is essentially our being a supplicant to the European Union. For the reasons of keeping the country open, we would be forced to forgo the checks and balances that we could wish to impose, while not having any assurances from the European side that that would be reciprocated.

Secondly, it is a year since we had the customs Bill. The one thing we knew about Brexit was that it would increase friction at the ports; it would make the need for more capacity in the UK more evident. To be in this position in the final week of March is extraordinary. It is extraordinary to have an explanatory memorandum for a key statutory instrument that tells us we are not ready for the one thing that we knew was a distinct possibility. On that basis, I recommend that we divide the Committee.