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

Kevin Hollinrake Excerpts

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

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I beg to move amendment (a), at end add

“; but any such provision must not place the United Kingdom in breach of its obligations under the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community which entered into force on 1 February 2020, and specifically its obligations under the Protocol on Ireland/Northern Ireland of that Agreement.”

It is 1,629 days since the UK voted to leave the European Union. In that time, our country has managed two general elections, and we are now on to our third Conservative Prime Minister. It is just 23 days until the United Kingdom’s transition period following its exit from the European Union comes to an end, yet this afternoon, we still have little clarity on the Bill that the Government tell us they will present tomorrow to set the legal framework for future taxation in Northern Ireland, for value added tax, for aviation fuel duty, for insurance-premium tax and for state aid rules.

With less than four weeks to go, the single sheet of A4 in front of us is almost all the detail that the Government have shared with Parliament about their new tax plans for next month. The only other information we have is that, just over two hours ago, the Government confirmed that they would withdraw clauses 44, 45 and 47 of the United Kingdom Internal Market Bill and that the provisions of the Taxation (Post-transition Period) Bill would reflect the same approach. The Minister recently tabled a written ministerial statement to that effect, although he offered little more this afternoon by way of further clarity.

The clock has been ticking ever more loudly. People in this country might reasonably have assumed that by this late date, it would already be clear what the Government’s plans for Britain’s future were. They might have assumed that by this late date, there would be a clear agreement on our future relationship with the European Union.

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

The hon. Member makes an interesting point about the late stage of these negotiations. Who is she blaming for that—the United Kingdom Government or the European Union negotiators?

[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.

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[Alison Thewliss]

It is very difficult to understand anything that the Prime Minister says because he swivels around on just about everything that he has ever said. He had two positions on whether we should leave the EU, so who knows whether he has an oven-ready deal, an oven or even a microwave? Who can really tell? It is quite difficult to establish that. Perhaps, Madam Deputy Speaker, we could have a TV mounted in the Chamber somewhere showing BBC live news so that we can keep track of what is happening in the negotiations, as the new Brexit countdown calculator they have in the corner ticks away.

It is no secret that these negotiations have been difficult and that the UK Government have not helped themselves as we have gone through them. The UK’s leaving the EU, because of the attitude that the UK has taken, was always going to be the messiest of messy divorces, but the Government have done absolutely no favours in the way they have approached things.

The hon. Member for Stone talked for 21 minutes, I think, about things that he could not see in terms of the Bill that is supposed to be being brought forward tomorrow. The Minister said from the Dispatch Box that he was no better sighted on where things are at with the negotiations than the hon. Member for Stone, who also regards this whole situation as extraordinary. The Minister says that this is going to be debated in the normal way, but there is nothing normal about this situation here today. We go to the Public Bill Office and ask it for advice on what is in the Bill and it does not know; we ask the Library what is in the Bill and it does not know. None of this is their fault; it is the Government’s fault that we do not know what is in this Bill. It is an absolute farce.

These six resolutions and this phantom Bill are a prime example of the procedural chaos that has dominated the Government’s handling of Brexit. Before the taxation Bill has even been published, the Chancellor of the Duchy of Lancaster says he

“will keep under review the content”

relating to the Northern Ireland protocol. Yesterday, a statement from 10 Downing Street stated:

“Good progress continues to be made regarding the decision as to which goods are ‘at risk’ of entering the EU market. Talks continue this afternoon. In the light of those discussions, the government will keep under review the content of the forthcoming Taxation Bill.”

At 1.16 this afternoon, we had a tweet from Maroš Šefčovič, one of the negotiators, but we still do not know the implications of today’s announcement and it is very difficult to see exactly what is going to happen. The joint statement talks about determining the criteria for goods to be considered not “at risk” of entering the EU, but we do not know what that means. It mentions an agreement in principle, but the Government have not been very principled in the way they have approached anything. How the EU can trust them I do not know.

[Kevin Hollinrake]

Every business person would ideally like to have seen the deal done and dusted some months before, but on the basis that the European Union made a commitment to an ambitious free trade agreement, are there no words of criticism that the hon. Lady is willing to use regarding its part in these negotiations that are taking so long?

[Alison Thewliss]

I think the EU has been more than patient for some time, to try to get some kind of agreement and something sorted out. The UK Government have held two general elections in that time, and we have had several different Prime Ministers. The Government have been an absolute shambles from start to end, and that is where we are today.

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[Sammy Wilson (East Antrim) (DUP)]

I note that the hon. Member for South Cambridgeshire (Anthony Browne) talked of being part French, part Norwegian and part Irish—he had other bits as well that I did not quite pick up. Can I assure him that I am 100% British and want to remain 100% British? I have taken the stance I have against the withdrawal agreement, and the approach that people have taken to it, because it diminishes my Britishness.

I am not quite clear what is in the legislation that the Minister is introducing today, and I am even less clear now, because, according to the statement issued by the Chancellor of the Duchy of Lancaster at lunch time, whatever is in the Bill today, some of it will not be in it tomorrow. As far as I am concerned, the parts that are important seek to manage the parts of the withdrawal agreement that are damaging to the Northern Ireland economy and to the internal market of the United Kingdom, which are underpinned by the Act of Union. Those are the important parts for me. It seems that they might well be removed from the Bill before it even gets to the Floor, or certainly they will not be exercised.

Why do I believe that protections are needed? The withdrawal agreement intervenes and undermines many parts of the Northern Ireland economy. It also damages the Northern Ireland economy’s relationship with the biggest market for Northern Ireland businesses, which is the market in Great Britain. It interrupts the supply of goods from the main source of the supplies that we receive in Northern Ireland, right down to basic foodstuffs, the equipment required by manufacturers and the parts required by producers in Northern Ireland who then export their goods across the world. The withdrawal agreement seriously undermines that and the interpretation of the withdrawal agreement by the EU even goes beyond what the agreement said and what the Government expected from the agreement.

Let me give just one example: goods at risk. According to article 5 of the protocol, exemptions could be made, determined on the basis of

“the final destination and use of the good; the nature and the value of the good; the nature of the movement; and the incentive for undeclared onward-movement into the Union, in particular incentives resulting from duties payable pursuant to paragraph 1.”

Yet despite the fact that some goods clearly do not present a risk under any of those criteria, the EU was insisting up until this week—I do not know what has happened at the Joint Committee; we will hear from the Minister tomorrow—that even supermarket goods brought from GB to Northern Ireland for shops that did not even have outlets in the Republic would be regarded as goods at risk. Goods that had been freely consumed across the EU for the last 40 years, made in GB, from which nobody died of poisoning or had their health affected, were no longer acceptable.

[Kevin Hollinrake]

The right hon. Gentleman is making some very good points. He is clearly saying that the European Union is being difficult in these negotiations. Is he therefore surprised that there was not one word of criticism for the EU’s role in the negotiations from the SNP or the official Opposition?

[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?”

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

I add my comments to those of my hon. Friend the Member for West Bromwich West (Shaun Bailey), with his optimistic tone. I, too, am optimistic about the future; despite the fact that I have never looked at Brexit through rose-tinted spectacles, I have never argued that this country cannot succeed economically outside the European Union. I welcome some of the measures in this proposed Bill, particularly on creating a fairer and more level playing field for our small and medium-sized enterprises—I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

Before talking about that, however, I would like to talk about the national interest. I think it was Churchill who said that in our parliamentary duties we should put country first, constituency second and party third, yet all I have heard from the Opposition and the SNP today is putting their party interests first.

[Alison Thewliss]

What the hon. Gentleman is missing is that we have a different definition of nation, and our interpretation of Scotland’s national interest is quite different from the UK’s national interest that he sees.

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[Kevin Hollinrake]

I have heard quite a lot the argument that Scotland did not vote to leave the European Union, but that is not how the votes were added up. This was a national, United Kingdom vote. Those were the terms of the referendum, which were voted for in this House. That is how the entire nation voted, and we are leaving the European Union. Some of us will be less happy about that than others, but nevertheless, that is what we are instructed to do and what we should do.

For the Opposition, the hon. Member for Houghton and Sunderland South (Bridget Phillipson) said time and again that the Government were irresponsible in these negotiations. Can I just remind her that there are two sides to this negotiation? There are two sides, and I would ask which side she is on, because she is not representing the national interests in the way she is discussing these matters and blaming the Government for being in this position at this stage. Of course—and I am in business today—every business in this land would have liked the situation to be done and dusted last June, as we had hoped. However, there are two sides to this negotiation, and it has to be said that the European Union has been difficult in these negotiations.

If the hon. Lady does not believe my words about that, she should listen to one of the most reliable commentators on her Benches, the right hon. Member for Leeds Central (Hilary Benn), in his speech on 14 September. He was talking about the United Kingdom Internal Market Bill, and he said that

“I have to say that I have some sympathy with the Government’s argument: exit summary declarations should not be required for goods moving from Northern Ireland to GB. When Wrightbus sells one of its wonderful buses to a transport operator in the UK, why is the form needed and what is the EU going to do with the form?”

On goods at risk, he said that

“surely it is possible to reach a pragmatic solution, because a lorry load of goods destined for a supermarket in Belfast can hardly be described as being at risk of entering the European Union.”—[Official Report, 14 September 2020; Vol. 680, c. 64.]

Yet those are some of the matters that the European Union was negotiating on or on which it was trying to negotiate hardball.

I ask again: who does the hon. Lady think, and who does the hon. Member for Glasgow Central (Alison Thewliss) for the SNP think, is being difficult in this negotiation? Is it purely the United Kingdom? Of course it is not. Why are there no words of criticism for the European Union’s position and for leaving it this late before agreeing what should be a simple trade deal to arrange and negotiate? It has negotiated similar trade deals with many other countries around the world, and we start from a similar position with our regulations and customs duties.

[James Cartlidge (South Suffolk) (Con)]

Identical.

[Kevin Hollinrake]

From an identical position. This should have been an easy trade negotiation, but of course it is not, for the reasons that we know. Of course, there is politics behind this negotiation, and the politics in this place should be united on one side, in the UK’s national interests, but they are not. Too often, Opposition Members have represented the European Union’s negotiating position in these negotiations.

[Stephen Flynn (Aberdeen South) (SNP)]

Of course, it was the United Kingdom Government who were threatening to break international law. Does he have any similar examples from the European Union, or is it simply a one-way street as far as he is concerned?

[Kevin Hollinrake]

The hon. Member makes a fair point, but I would point him back to the political declaration, which sat alongside the withdrawal agreement, within which there were clear commitments from the European Union to agree an ambitious free trade agreement. He must accept, as commentators on that side of the fence—on the Opposition Benches—have also said, that it is clear the European Union has been difficult in these negotiations, and more difficult than perhaps many had anticipated. It is clearly in the European Union’s interests and their constituents’ interests to agree a free trade deal without this kind of last-minute drama.

[Shaun Bailey]

On that point, I am sure my hon. Friend will, like me, have seen in the press German car manufacturers begging the German Government and saying, “We’ve got to get this done. The European Union has got to get it done.” Equally, French fishermen have been doing the same with President Macron. Surely our European cousins and partners get this—that it is a bilateral thing that the European Union needs to do—but why do the Opposition seem not to get that? Perhaps he could enlighten me.

[Kevin Hollinrake]

Of course, the European Union is negotiating in its interests and is obviously trying to protect its interests in that negotiation, but one thing the European Union has done much better than we have on this side of the channel is negotiate with one voice. In this place, we have not—we absolutely have not—and that has undermined the UK’s negotiating position. If the Opposition think that the European Union does not hear what this place says, that is clearly a naive position. If the Opposition think that the European Union does not hear what this place says, that is clearly a naive position. I would argue, at this very late stage, that we work together, cross-party, to try to bring about a situation where we can get the free trade agreement that we all know is possible and can be delivered within the timescale we have left.

[Alison Thewliss]

The hon. Gentleman is making an interesting point about working cross-party. We entered into this in the spirit of cross-party working. The Scottish Government put forward constructive proposals on cross-party working that the UK Government rejected. For a long time during this process, it has been his own party that has been undermining his Government’s negotiating position. Does he not accept that that has been part of the problem?

[Kevin Hollinrake]

No, I do not. The UK Government have to take a number of matters into consideration. They have a collective position. Clearly, we cannot always get exactly what we want in terms of negotiation. My point is that we could have done better in these negotiations and there could have been less drama around them. The fact that these negotiations are concluding so close to the deadline for businesses has been brought about partly because of the divided nature of this Parliament. The hon. Lady and the Opposition should take responsibility for that position.

My point about a fair and level playing field is about the fact that many of our small businesses in the UK compete with online platforms—online marketplaces, as they are called—such as Amazon and eBay. How can it be right that for so long many of those small businesses have been competing at a 20% disadvantage? Many retailers selling into the UK are not paying VAT on those sales. I am pleased that the Government have acted on this and closed the loophole. They have closed a number of loopholes in recent years through measures such as the digital services tax and the diverted profits tax. This creates the fairer and more level playing field for the rest that I very much welcome. There is one more loophole that we could close, not in this legislation, but in the Financial Services Bill, which is going through Parliament at the same time.

Country-by-country reporting would also have a profound effect in closing loopholes that some companies are using to divert profits out of this country.

[Jerome Mayhew (Broadland) (Con)]

The Government are making an important point in this Bill in starting to look at online retailers facilitating the sale and that is making a difference, particularly with international trade. Does my hon. Friend agree that this should be expanded beyond just VAT into things like the extent of producer responsibility and other aspects of international trade?

[Kevin Hollinrake]

Yes, I do. We all know that the best way of driving down prices and driving service for our consumers—our citizens—is through a free, competitive marketplace. Our job, wherever we can, is to let that marketplace do its work. Our job is also to make sure that it sits on a fair and level playing field. My hon. Friend, in talking about regulation for some of the retailers—some of the UK businesses but not businesses abroad—makes a very sound point that the Government should consider.

Going back to country-by-country reporting, let me give an example. Google’s turnover in the UK is about £10 billion. We can work that out by extrapolating certain figures from a couple of years ago. Internationally, it declared a 22% profit margin, which means a £2.2 billion profit in the UK. Based on corporation tax at 19%, it should pay £420 million in tax on that. Last year it actually paid £67 million in tax. That cannot be a fair and level playing field for other UK retailers or other UK companies that compete against Google, particularly in terms of advertising space—many of our regional papers, for example. I would like the Government to bring forward legislation, in some vehicle or other, to tackle that issue.

I am very pleased that this loophole is being closed and I very much commend the principles and the outline of the legislation that we will see tomorrow.