Customs and Borders

Kevin Hollinrake Excerpts

Thursday 26th April 2018 Commons Chamber

[Yvette Cooper]

My hon. Friend is right: there are so many unanswered questions and the clock really is ticking. We secured this debate to try to tease out those questions and get some answers, and to put forward some proposals for this debate. I also put on record apologies from the Chair of the Exiting the European Union Committee, my right hon. Friend the Member for Leeds Central (Hilary Benn), but that Committee is taking evidence in Berlin today.

Why put forward an effective customs union as part of the proposals? It means no tariffs on the goods we buy and sell with the European Union. It means no customs checks at the border. It is a crucial part of delivering the frictionless border for trade that the Government have rightly promised. It clearly does not solve all the problems and meet all the challenges that we face, but it is an important part—

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Does the right hon. Lady accept, though, that even with a customs union there would still be a need for checks at the border for things like product standards?

[Yvette Cooper]

The hon. Gentleman is exactly right. There are wider regulatory issues that need to be addressed. There is a wider debate about regulatory alignment. That is obviously particularly important as it affects Northern Ireland, but it will affect ports across the country as well. The focus of today’s debate is specifically around a customs union. There are a lot of other aspects to Brexit that we will need to continue to debate in this place.

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[Yvette Cooper]

I do, and I think this is also particularly about our manufacturing communities, and many of our towns across the country, where those jobs are so important.

[Kevin Hollinrake]

rose—

[Yvette Cooper]

I will give way to the hon. Gentleman, and then I want to make progress, as a lot of Members want to speak.

[Kevin Hollinrake]

I am grateful. The right hon. Lady has been very generous in taking interventions. Earlier, she referred to the potential for tailbacks as a result of checks. What I was trying to get across in my earlier question was that if we were still in the customs union but not the single market, checks would still be needed for product standards, so is she actually proposing membership of both the single market and the customs union, and if she is, is there any point in leaving the European Union at all?

[Yvette Cooper]

Look, there will be some for whom this debate is partly about what happened in the referendum. Others will want to have nothing to do with anything that is linked to the European Union in any way. I am looking to see where the consensus can be in this House, and I think there is a possibility of a consensus around a customs union. We can have a separate debate another time on the wider regulatory alignment—on which the hon. Gentleman and I have particular views—and on what other aspects of regulatory alignment, or of a single market, we may each care about. For now, the focus should be on a customs union, which does not prejudge the conclusions of some of the wider questions.

I want to say something about the common external tariff, because I think this bit gets lost too often. If we are in a customs union, we have the common external tariff, the consequence of which is that not only all those products, but all the components and agreements of the products can spin back and forth across different borders within the EU and not have to face rules of origin checks. Many businesses are particularly concerned about the rules of origin checks, because that means that they have to account for where the different ingredients come from. If they suddenly change the mix of ingredients in a product or if they suddenly change the source of their supply, they might also suddenly have to change their evaluation of the rules of origin and fill in different forms. That is a huge ongoing burden for businesses, employers and particularly for manufacturers. It is not just a one-off cost or an easy thing about ticking an online box.

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[Kate Hoey]

The hon. Gentleman might remember that not a single person who has spoken so far has even mentioned this, so I urge a little patience.

[Kevin Hollinrake]

We spend a lot of time in this Chamber developing new regulations and rules that put costs on business. They might be environmental regulations, workplace regulations or animal welfare regulations. If the hon. Lady is talking about doing a free trade deal with nations that do not have such high standards, would she not be putting UK businesses at a significant disadvantage?

[Kate Hoey]

There is an issue there, but it is something that we can solve through negotiation and discussion. We do not solve it by putting up an immediate barrier to countries that desperately want to benefit from trading with us but are currently prevented from doing so.

The public’s expectation when they voted to leave, or even when they voted to remain, was that if we chose to leave, we would regain our trade policy. I do not think that we can do that other than outside the regressive customs union.

I will move on to Northern Ireland in a moment, but let me respond to a number of points that have been made in various ways. Why should we not want to trade with the rest of the world? Why are we being weak? Why can we not get our own trade deals? The EU takes so long to get a trade deal. We have seen how long it has taken, and we can do so much better.

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[Anna Soubry]

The hon. Gentleman speaks with authority because he knows the reality. He will also know that pharmaceutical batches must be checked to ensure that the quality and ingredients are right. That work has to be done in a European Union country in order for those products to be sold within the European Union, so this pharmaceutical company it is going to replicate exactly the same brilliant labs that it has in Broxtowe and in Nottingham over in Amsterdam. This is the stuff of madness. The company is looking at flying qualified, high-skilled technicians out to Amsterdam on a weekly, if not daily basis, to do the work there. Replication adds to costs, and I have no doubt that it will not be long before the senior managers simply say, “Why on earth are we doing it in the UK, facing the end of the customs union and the single markets, when we could simply go into another country in the European Union and replicate our manufacturing process there?”

[Kevin Hollinrake]

Is my right hon. Friend therefore proposing that we stay members not just of the customs union, but also of the single market?

[Anna Soubry]

I absolutely am. I made it very clear to my constituents when I stood for re-election in Broxtowe last June that I would continue to make the case for the single market and the customs union—oh, and by the way, for the positive benefits of immigration—and they were good enough to give me and our party their vote. As my right hon. Friend the Member for Loughborough said, each and every one of us must look deep into our hearts when deciding the future relationship that we will have with the European Union. It is imperative that we put our country and the best interests of our constituents first and foremost—and, in particular, over and above any ideological drive that too many people have—in this most critical of debates.

The final thing I want to say is this: I get rather agitated at the notion that we are about to be global Britain. Why? Because we are already global Britain. I had the great pleasure of going to the far east with David Cameron, and I went to China with George Osborne. Why did we go to these countries? To do trade. In fact, to do more trade; we already trade all around the world. That ability to trade should not be diminished in any way, and it will not be by our membership of the customs union. We have struck up well over 40 deals, and at the heart of those deals we made the case for free trade in a way in which no other European Union member state has done. We are recognised for our strong belief in free trade and we have achieved that by virtue of our membership of the customs union.

I am old enough to remember when we were described as the sick man of Europe, and we were. The reasons that we became such a hugely successful economy was because of our membership of the single market and the customs union. Other Members—especially my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who was undoubtedly around at the time— have referred to Margaret Thatcher’s great speech, when she not only described the single market, but was the finest exponent of it. She believed in the single market. As many of us now know, she promised the Prime Minister of Japan that our country would never leave the single market, and that is why the Japanese invested in our country on the scale that they did.

I hope that the House does not have to divide tonight; nobody wants that. But we all want the best deal for our country, and that is in the customs union—and, by the way, the single market.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

I voted remain and campaigned heavily to remain. I held eight debates during that campaign, alongside a gentleman from the UK Independence party, to help voters to decide what was the right or wrong thing to do. I said repeatedly that if we left, the negotiations would be difficult, and for two reasons.

First, given that we had been members of the European Union for 44 years, the complexity of the relationship was almost inconceivable. Today, hon. Members on both sides of the House have spoken about the complexity of supply chains, and that is obviously why people support remaining in a customs union. My second reason for saying that the negotiations would be difficult was that the UK and the EU had different priorities and imperatives.

For starters, our exports to the EU account for 12% of our economy—to anyone listening to today’s debate, it would almost sound as though we were talking about the whole economy—but that represents only 3% or 4% of the EU economy, so there is clearly a disparity there. Then there is the fact that the EU’s principal priority would be to ensure that the EU did not fall apart as a result of other people walking out that door. For that reason, it is very difficult for the EU to give us a good deal, despite the fact that the Prime Minister has been very reasonable on exit terms and on proposals for a future relationship regarding things such as the highly streamlined customs border, which seems the preferable option of the two on the table. Such a border arrangement works in north America, and in Norway and Sweden, so it makes sense.

Nevertheless, the negotiations will be difficult. That is why people on both sides of the House are concerned, and it is why people are talking about a customs union. I think that that is the wrong thing. Yes, being in a customs union would remove the need for checks on tariffs, but unless we were also going to stay in the single market, we would still need checks to ensure regulatory alignment, so the queues at Dover would continue.

In addition, if we were in the single market and customs union, we might as well be in the European Union. In fact, that would be much worse than being in the European Union, because we would have no say whatever over the rules—no say in the trade agreements and no say in the new rules. The worst of all options would be to be in those two without being a member of the European Union.

Another option would be to stay in the single market only. That is my preference; if I had to choose the single market or a customs union, I would stay in the single market, through the European Free Trade Association and the European economic area. That has benefits. For example, there would be no need for checks on product standards. Other than that, however, I support the Prime Minister in her negotiations and wish her well.

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[Peter Dowd (Bootle) (Lab)]

The debate has been enlightening and I have welcomed the chance to listen to all the Members across the Chamber. I should like to thank the 12 cross-party Chairs of the Committees and the Liaison Committee for enabling us to explore this motion today, particularly my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), who set the scene. I would also like to thank the right hon. and learned Member for Rushcliffe (Mr Clarke), who said that we needed a proper debate. To some extent, we have had that debate today. The motion and the debate have set out in stark terms the overwhelming case for the UK to negotiate a new customs union with the European Union on our exit.

I would like to share a quote with the House. Forty years ago, almost to the day, a former Leader of the Opposition wrote this in a German newspaper:

“It is no small thing to have completed and preserved a customs union covering a market of nearly 300 million people.”

That was Mrs Thatcher, then the Leader of the Opposition. The current Leader of the Opposition takes the same view—that a customs union involving Britain and the European Union is a project worth preserving. However, bound by the whims of the misguided or the ideologues in her party, the Prime Minister is unable to serve the national interest and commit the Government to negotiate a customs union with the EU beyond the transition period. As the right hon. Member for Loughborough (Nicky Morgan) asked, what are the plans? There do not appear to be any at all.

We are calling for an outcome that will protect the UK economy—a “jobs first” Brexit in the context of the six tests set by the shadow Brexit Secretary, my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer). So, while the Prime Minister talked about leaving under no deal, we have tried to work with the manufacturing industry and other business sectors to examine how we might best protect the interests of both producers and consumers, as have other Members across the Chamber. The Prime Minister explicitly ruled out a customs union with the EU in her Mansion House speech in January, yet at the Press Gallery lunch today the Home Secretary apparently cast some doubt over that, but she has since tweeted to say that we are now back on track and that there will not be a customs union. It is the lack of continuity and the confusion that creates problems.

By direct contrast, my right hon. Friend the Leader of the Opposition made it clear that Labour is committed to such an arrangement, saying that

“Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland.”

As on many other issues, a cursory glance at Labour’s position shows that that is the line that we have been taking for a considerable period. Whether we like it or not, the Prime Minister has caused confusion. As far as we are concerned, we are campaigning for a customs union, and we are determined to follow that. We are not in the business of keeping Britain in the EU through the backdoor, nor would we countenance a deal that left Britain as a passive recipient of rules decided by others elsewhere. However, many in the Chamber have acknowledged the huge risks and uncertainties that leaving the customs union presents for jobs, manufacturing, business supply chains and, importantly, continued peace in Northern Ireland. A comprehensive and effective UK-EU customs union is possible and would ensure that there are no tariffs with Europe and avoid the need for a hard border in Northern Ireland.

In entering a new customs arrangement with the EU, we would ensure that our hard-won workers’ rights, standards and protections are maintained and protected, blocking attempts by the more ardent Brexiteers to create a bonfire of such rights and the weakening of environmental protections. The new customs arrangement needs to ensure that Britain can have a say in future trade deals. A new customs union would ensure that the UK maintains close and progressive co-operation with the whole of Europe after Brexit, rather than creating the risk of growing isolation, which would see us further apart from our European neighbours on regulation, rights and standards. As has been identified today, even the Government’s leaked impact assessment, among other reports, shows that their highly streamed customs proposal will lead to non-tariff barriers and some tariffs, and it reaches the same conclusion as we have: a customs union is the only way to guarantee frictionless trade between the UK and the EU.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Peter Dowd]

I would like to, but I do not have the time.

Clause 31 of the Taxation (Cross-border Trade) Bill, which gives the Government the power to enter into a customs union, was published in November 2017, as was mentioned by the hon. Member for Aberdeen North (Kirsty Blackman). However, within weeks, the PM was ruling out a customs union, but it remained in the Bill on First and Second Readings and in Committee. Has anyone bothered to mention that clause to the Prime Minister? Is she even aware of it? Should she not commit to clause 31?

Today’s debate will send a clear warning to this Government that they cannot simply steamroll over the wishes of Members. It is time for the Prime Minister to act like one and to challenge those in her party and her Cabinet who continue to hold the country and the negotiations hostage. The road ahead is clear, and Labour’s position has been consistent, as many have said today. It is time for the Government to listen to the consensus and adopt a position that seeks to negotiate a new UK-EU customs union. It is the only practical way to ensure frictionless trade and to protect jobs and the hard-won peace in Northern Ireland. As many Members have said, we owe that to our constituents and to our country.