Customs Legislation and Amendments: Impact Analysis

Lord Davies of Oldham Excerpts

Tuesday 8th October 2019 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, I am grateful to the noble Lord for repeating the Statement. We have had a significant debate on Brexit under a number of headings this afternoon, and perhaps this one, the most precise of the lot, is likely to cause the most pessimism. This is HMRC indicating what will be the costs to business, and it has made it quite clear that the costs will be very significant.

Large companies importing and exporting in high volumes will face a cost of £28 for filling in the forms for each load imported, and this will take an employee on average one hour and 45 minutes. If the work is outsourced, HMRC estimates that the cost will rise to £56 for each consignment, based on the average charges of freight forwarders. This is HMRC getting down to nuts and bolts and being as accurate as it can—and it can only fill all involved in the health of our economy with considerable anxiety.

This of course is based on a no-deal Brexit. However, from the tenor of the discussions this afternoon in the House, it seems that there is a growing opinion that we are heading somewhat remorselessly towards no deal—or, to put it more accurately, none of us can see that any progress is being made towards an agreement with the European Union.

Left out of the analysis was any reference to the financial services industry. We cannot overestimate the significance of that industry to the overall health of our economy. So, although this is parlous as far as industrial goods and manufactures are concerned, we do not know the picture for a very significant part of our economy—and can only, therefore, I am afraid, be anxious about it.

What we are witnessing now is a process that reflects the failure of the Government, ever since they established their notorious red lines and made up their mind that they were going to set objectives that the European Union was unlikely to meet.

There is one additional feature on which the noble Lord did not make any comment. I do not blame him for that, because it is not directly related. Another aspect of a no-deal Brexit is that it is estimated by the Institute for Fiscal Studies that government debt will rise to its highest level for half a century. Bearing in mind that this takes into account the inevitable debt we ran into during the financial crash of 2008 to 2010, if this will be worse as a consequence of no deal, we can only yet again, I am afraid, tremble at the prospect, and at the same time redouble our efforts to ensure that the Government, even at this very late stage, strike a deal that is better than no deal.

[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.