Taxation (Post-transition Period) Bill

Debate between Kemi Badenoch and Pat McFadden

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

[The Exchequer Secretary to the Treasury (Kemi Badenoch)]

It is a privilege to close this debate on behalf of the Government, and I thank Members from all parts of the House for their thoughtful and varied contributions.

At the end of this month, the transition period will end. As my right hon. Friend the Financial Secretary pointed out at the beginning of today’s debate, we have a great responsibility to be ready for this event. The measures contained in the Taxation (Post-transition Period) Bill will play an important part in the preparations.

Let me take this opportunity to thank Opposition Members for their constructive and collegiate approach throughout the passage of this Bill, despite their evident reservations, and in that same spirit I will address some of the points raised in today’s debate.

The Bill is an essential part of our preparations for the end of the transition period. It takes forward important changes to our tax system to support the smooth continuation of business across the UK. It contains six measures. Three relate to the implementation of the Northern Ireland protocol and three implement wider changes to the tax system, which are needed before 1 January. Most importantly, it will ensure that we meet our commitments to Northern Ireland, including on unfettered access and those commitments as set out in the Northern Ireland protocol. Taken together, the measures form an important part of our preparations as we resume our place as a fully sovereign trading nation.

Now that we have further clarity on the outcome of the Joint Committee negotiations, it is vital that the provisions are in place before the end of the transition period to provide that certainty. The Bill’s passage is necessarily rapid, but it will allow for these important changes to be implemented on time. The right hon. Member for Wolverhampton South East (Mr McFadden) asked if we believed it can be done, and my answer is yes, of course. The UK Government will take forward a pragmatic approach that draws upon available flexibilities to implement the protocol without causing undue disruption to lives and livelihoods.

The Government are committed to supporting business. At the centre of the package is the free-to-use trader support service, which will support business when moving goods into Northern Ireland, educating traders on what the protocol means for them and completing customs safety and security declarations on their behalf. That is working. Since the launch of the registration portal in September, more than 18,000 businesses have signed up for support from the trader support service.

Turning to Members’ comments, the hon. Member for North Down (Stephen Farry) requested confirmation that the UK meets its obligations. The powers in the Bill allow us to implement the Northern Ireland protocol in a way that is consistent with our obligations, and I appreciate his broader supportive statements. My hon. Friends the Members for South Ribble (Katherine Fletcher) and for Harrogate and Knaresborough (Andrew Jones), among others, rightly referred to our closing of the VAT loophole in clause 7 and schedule 3. Low-value consignment relief is subject to widespread abuse and contributes to trade distortion. It disadvantages UK high street businesses that are required to charge VAT where overseas businesses are not, either for legitimate reasons or through abuse, and removing the relief will bring overseas sellers on to an equal footing with UK businesses.

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) asked why the clause applied just to low-value goods and whether there was an opportunity for it to apply to high-value goods as well. The reason is that the £135 threshold aligns with the threshold for customs duty liability. Imports of goods greater than £135 in value are subject to enhanced customs requirements, which would negate the benefit of moving VAT away from the border. Therefore, imports of goods greater than that amount will remain subject to the current model for goods arriving from non-EU countries, where VAT is collected at the point of importation.

My hon. Friend also asked what revenue we expected from this change. The Office for Budget Responsibility has forecast that these changes will raise over £300 million a year over the next five years, and £1.6 billion over the scorecard period. Approximately two thirds of that will come from improving collection and tackling non-compliance through the new VAT treatment of cross-border goods, and the final third of the revenue will come from the removal of low-value consignment relief, which will end widespread abuse of this relief.

My right hon. Friend the Member for Wokingham (John Redwood) asked whether the ECJ would be the ultimate arbiter for VAT and excise. The ECJ will continue to have a role where EU directives apply in Northern Ireland—for example, where there are disputes on how the EU rules should be interpreted. However, the rules will continue to be policed by HMRC, which will continue to be the tax authority for the whole of the UK. He also mentioned Northern Ireland being subject to two regulatory systems. Northern Ireland is and will remain part of the UK and its VAT system. It is correct that the Northern Ireland protocol means that NI will continue to align with the EU VAT rules in respect of goods, but not services. That is to ensure that trade is not disrupted on the island of Ireland, and to allow us to meet our commitments under the Belfast/Good Friday agreement. But, as I said, HMRC will continue to be the tax authority for the whole of the UK. Businesses will continue to have a single UK VAT number, issued by HMRC, and they will submit only one UK VAT return to account for VAT on all supplies of goods and services.

My hon. Friend the Member for Stone (Sir William Cash) asked about the current negotiations. Just to remind him and reiterate to the House, the UK Government set out on 17 September that Parliament would be asked to support the use of provisions such as clause 45 of the United Kingdom Internal Market Bill and any similar subsequent provisions in a Finance Bill. These clauses were introduced as reasonable steps to create a safety net, so that the Government would always be able to deliver on their commitments to the people of Northern Ireland in the event that a negotiated outcome could not be reached in the Joint Committee. However, as we all now know, following intensive and constructive work over the past weeks by the UK and EU, we now have an agreement in principle on all issues in relation to the protocol on Ireland and Northern Ireland. As we have mutually agreed solutions, the UK can now withdraw clauses 44, 45 and 47 of the UKIM Bill and not introduce any similar provisions in this taxation Bill.

[Mr McFadden]

On that point about the “notwithstanding” clauses, can the Minister guarantee, given that neither the United Kingdom Internal Market Bill nor this Bill has finished its passage in the House, that the Government will not reintroduce them at any further stage?

[Kemi Badenoch]

As I have just said, I am not in a position to be talking about what is happening in the future. We have been negotiating in good faith and we have an agreement in principle. I do not believe that those clauses will be coming back, but as the right hon. Gentleman knows very well, the negotiations are still ongoing and we need to wait and see what the outcomes of those negotiations are. It would be quite wrong for me or him to pre-empt anything else that will be taking place, and we must not bind the hands of our negotiators. It is absolutely right that we all speak with one voice in this House.

The hon. Member for Glasgow Central (Alison Thewliss) mentioned GB and NI parcels and asked how consumers would know whether there was a customs charge. The movement of parcels into Northern Ireland is another important part of how the protocol will work in practice for people in Northern Ireland. That is why the UK Government will take forward a pragmatic approach, just as we have elsewhere, that draws on available flexibilities to implement the protocol without causing undue disruption. In terms of schedule 3, she gave the example of the earrings from Slovenia that she had ordered. It is worth stressing that schedule 3 deals with imports to the UK and not exports. It will ensure that UK customers see the amount of VAT that needs to be paid at the point of sale on goods below £135. For goods between Northern Ireland and GB, VAT is already charged on supplies sold by a GB business to an NI customer. When the Northern Ireland protocol comes into effect, Northern Ireland businesses or consumers purchasing goods from VAT-registered businesses will see no significant difference in costs from a VAT perspective.

 

Let me conclude by saying that tonight, this House has the opportunity to give businesses in Northern Ireland and throughout the rest of the UK certainty about the arrangements that will apply from 1 January next year, to strengthen the precious bonds of union that tie this country together, and to prepare this country for an even brighter future as an independent sovereign trading nation. For all those reasons, I urge all Members to support the Bill.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).

Oral Answers to Questions

Debate between Kemi Badenoch and Pat McFadden

Tuesday 20th October 2020 Commons Chamber

[Kemi Badenoch]

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

[Kemi Badenoch]

Gypsies and Travellers and Local Communities

Debate between Kemi Badenoch and Pat McFadden

Monday 9th October 2017 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I want to make a few points about illegal Traveller encampments and the impact they have on constituencies such as mine.

I should say at the outset that I do not accuse the whole Traveller community of taking part in illegal encampments or in pitching caravans where they should not; I am sure that many do not do that and are frustrated with the reputational damage done when it happens. But that does happen, and it causes significant anger and frustration in the community when it does. In my constituency, illegal encampments are regularly set up on common land, waste ground, car parks and even public parks. The Travellers move on to a site. If they do not move when requested, the council can apply for a court order, which typically takes one to two weeks and also, of course, incurs legal costs for the local authority. When the Travellers eventually move on, there are usually significant clean-up costs.

Wolverhampton City Council tells me that it has to go through this process 10 to 20 times a year. Adding legal costs and clean-up costs together, it says that it typically costs £10,000 to £15,000 a time to deal with an illegal encampment—that is 10 to 20 times a year in just one local authority. There was recently an illegal encampment in land off Prouds Lane in Bilston in my constituency. In May this year, the small fence protecting the land was driven through for the caravans to get on; there were upwards of a dozen caravans there. Residents were understandably angry at this trespass on to the land. The council applied for the court order. When the Travellers eventually went after about 10 days, they left huge piles of rubbish around the site. The council moved very quickly to clear the rubbish, and I commend it for its swift and effective action. Although the council moved as quickly and effectively as it could, afterwards my constituents asked questions about the legal costs involved and why local council tax payers should have to pay them.

[Mrs Kemi Badenoch (Saffron Walden) (Con)]

Does the right hon. Gentleman agree that the costs are for not only local councils but many private residents and landowners, who have to spend their own money to clean up and deal with the issue of illegal encampments? One of my constituents has written to me about spending £3,000 a week on the problem.

[Mr McFadden]

The hon. Lady makes a good point: the costs are often private as well as public.

My constituents also asked about the costs of the clean-up and, again, why local council tax payers should have to pay them. They asked what could be done to secure the site from a repeat of the experience and who would pay for that.

When the Travellers eventually moved from Prouds Lane, they went to East Park—I mean right in the middle of the public park in the East Park area. My constituents watched their public asset being abused by an illegal encampment. That pattern repeats itself over and again in many parts of the black country and, as we have heard, many other parts of the country, too. As we speak, another illegal encampment has been set up on the Bilston Urban Village site in my constituency. The council is wearily going through the same legal process of trying to get it removed.

Given the repeated pattern of what is happening, it is clear that the current system is not working properly: it is too cumbersome, it takes too long and it is too costly. I would like the Minister to consider two questions. I welcome the consultation, but it cannot just be about current powers. First, will it address what legal changes can be made to give councils and the police the power to move these encampments much more quickly than at present?

Secondly, what more can be done to ensure that those responsible for the clean-up bill actually pay it, rather than it being left to local residents to pay? We should remember that the costs involved are not only the legal and clean-up costs, but the ongoing costs—for example, of taking preventive measures such as the installation of bollards and fences all around the black country. Local residents will argue, with some justification, that if they parked their car in the wrong place, they would be fined, and that if they did not pay the fine, it would escalate along with the legal process. Yet that does not seem to happen in these cases.

The law dealing with these matters is not fit for purpose. It takes too long and imposes costs on the law abiding public, not those who have broken the law. There appears to be little or no disincentive to setting up illegal encampments. Those who do so know that there will be a delay before the council gets its court order and they are rarely forced to pay for the costs arising from their dumped rubbish. The law gives them no incentive to stop the behaviour.

Allowing the situation to continue is resulting in costs piling up for local authorities and local taxpayers. It also corrodes public trust in law enforcement. Most importantly, it is not working because the pattern of illegal encampments is continuing. Although we do not have a vote on a substantive motion tonight, I hope the Minister does not just listen and forget what has been said. I hope the Government will come forward soon with proposals to strengthen the law to make enforcement faster and easier for councils and the police.