Customs Legislation and Amendments: Impact Analysis
Debate between Lord Bethell and Lord Purvis of Tweed
Lord Bethell
I completely endorse the noble Lord’s sentiment. It is very much the Government’s policy to strike a deal and I, like others in the Government, very much hope that will be successful. The Government’s efforts are very much focused on that objective.
Let me strike at the heart of the question. The noble Lord started by saying that this report articulates what will happen, but actually it articulates what may happen under very strict circumstances. I pay tribute to the officials who prepared such a detailed report for its transparency and integrity. The report in no way dodges or mitigates for several areas in which performance may be considerably better than the headline figures.
First, there are areas in which easement by British government policy will help improve performance. There are three of those easements: the delay in the submission of customs declarations, which we discussed last night; a period of grace to get a guarantee in place to cover additional duties; and the phasing-in of pre-arrival requirements for the entry summary declarations. Secondly, we do not know what the EU will do to improve the situation and, thirdly, the behaviour of importers may introduce new efficiencies. With those in mind, I am hopeful that the headline figures may prove higher than those if a no-deal Brexit were ever to occur.
Lord Purvis of Tweed (LD)
My Lords, I am grateful to the Minister for speaking to me before Questions; I welcome that courtesy.
In its impact assessment, HMRC itself suggests that many of its assessments are cautious. This is an impact assessment just on the export of goods to the EU for UK bureaucracy; the £15 billion a year is on UK bureaucracy. As indicated, it does not cover exports of services or the likely reduced revenue to the UK Treasury from those extra business costs. It does not include any estimate of the additional bureaucracy costs to the recipient market in the EU. All those must together be marginally more than £15 billion, but—even if it were just the cautious £15 billion—that is massively more than any estimate the Prime Minister has made of the financial benefit to the UK of leaving the European Union with no deal at all.
As we heard from the noble Lord, Lord Callanan, after being pressed by me and others, the Government are working on a package of assistance to benefit the agricultural sector and for the new tariff regime that we will put in place. Indeed, as the readiness report said, there will have to be mechanisms for off-setting new VAT procedures for services and new procedures for VAT processes on parcels—not included in the impact assessment. What are the mitigation measures and what is their value? What is the emergency package that would be necessary for the agricultural sector and small businesses? The Government have not published any information in global sums about what those mitigation factors might have to be. Finally, what is the global cost to British businesses of the increase in tariff prices, in addition to this bureaucracy that HMRC is indicating?
Lord Bethell
The noble Lord makes very thoughtful points, but I remind him that the estimates in this report are a responsible, thoughtful and transparent effort to calculate the kind of costs that a no-deal Brexit might bring about. They cannot anticipate how the EU might respond, how tariffs might be negotiated or how a trade deal with the EU might affect those costs. With so many imponderables, it would be extremely difficult to tot up a large total of the kind he asks about. I am happy to ask officials whether there is some kind of arithmetic that can be done and to write to him with whatever they can come up with.
Customs Safety and Security Procedures (EU Exit) (No. 2) Regulations 2019
Debate between Lord Bethell and Lord Purvis of Tweed
Lord Bethell
The sheer scale is enormous, but the feedback from the haulage industry and HMRC is that they are putting in place the measures necessary for the highest level of declarations. Most of the measures put in place to tackle crime and smuggling are intelligence and data-led; they do not involve inspection of vehicles on a mass scale. The noble Lord, Lord Purvis, referred to 46 million crossings of the Northern Irish border. Quite clearly, only a very tiny proportion of those could possibly involve any kind of inspection. So, in answer to my noble friend’s question, the same intelligence and data-led measures will be in place, even during this deferment.
The noble Lord, Lord Purvis, asked whether the 12-month waiver could be extended by Regulation 3(3). I reassure him that Regulation 3 is for exit summary declarations only. A 12-month waiver for any entry summary declaration is in Regulation 4 and I reassure the noble Lord that this cannot be extended under the SI. Let me clear up some confusion about the impact assessment. The HMRC impact assessment was republished this morning. I would be happy to share a link to it and a copy of it. It was widely distributed and makes important reading.
Lord Purvis of Tweed
Does the Minister think, in all honesty, that for a measure laid before Parliament on 5 September the publication of an impact assessment only on the morning that it is debated in this House is in any way appropriate, whether or not it is urgent? Is it not really rather an abuse?
Lord Bethell
The noble Lord makes a very fair point, but I reassure him that this impact assessment is not solely on this SI and is not an effort to try to mislead the Chamber. It is the overall HMRC impact assessment that covers, I believe, duties and the impact of all these measures. Its publication today is an effort to get it out as quickly as possible, and it is coincidental to the fact that we are discussing this specific SI. It is the updating of a previous impact assessment which is, I believe, more than six months old and has been available on the website for some time. If I can provide some clarification on where it can be found, I would be happy to share it. It refers to all the measures contained in this SI.
Lastly, the noble Lord, Lord Purvis, asked why we are using the urgent procedure under the EU withdrawal Act after giving assurances that we would not do so. The truth is that the number of times we have used the urgent procedure is very low indeed—minimal, even. I pay tribute to officials at HMRC and the Treasury for getting through a huge amount of work to get the legislative frameworks in place to prepare for a potential no-deal Brexit. On the eve of prorogation, when certain clocks on SIs that were laid before the House are ticking down, it made sense to use the urgent procedure to make sure that the request of industry and HMRC could be reassuringly executed so in this instance we decided to do that. This has been a really valuable debate—
Lord Purvis of Tweed
That is very illuminating and I am glad that the noble Lord, Lord Tunnicliffe, reminded the Minister of that point. I hope that this information on the impact on British business will be considered in any form of impact assessment. If the wavier is not part of a reciprocal agreement, what is the benefit of export for British exporters? Clearly, the waiver will be a benefit for those who are receiving the goods and for exporters to the United Kingdom. What is the benefit of no waiver from our European export markets?
Lord Bethell
The noble Lord puts it very well. The truth is that, in order to execute the SI before us, we do not require EU permission, which I think was the substance of the noble Lord’s initial question.