Taxation (Cross-border Trade) Bill

Lord Fox Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 4th September 2018 Lords Chamber

[Lord Fox (LD)]

My Lords, as we have heard, this Bill sets out an alternative customs regime—an alternative to a customs union that has served us well. The Bill is so clearly inadequate that the Government have had to hide behind the designation of a supply Bill, which is obviously designed to thwart sensible democratic scrutiny. We are lucky to have a Minister who has outside experience and sees things from beyond the hall of mirrors here. A lot of his experience is based in the north-east of England, so I am sure that he knows that the Bill sets out a significant downgrade for the United Kingdom—a degradation of our future, not an enhancement.

We currently have a customs and trade relationship with our biggest trading partners that works. Goods move seamlessly, paperwork has been minimised and duty gets paid. Even if everything in the Bill works as the Government expect—which of course it will not—the Minister knows that the nation’s customs regime will be substantially worse than what we have today. Goods will be held up at the border; paperwork will be increased; duty will be dodged; and supply chains will slow, and ultimately bypass the United Kingdom altogether. In the Government’s parlance, we will not have a frictionless system; we will have a great deal of friction. But there is still time for the Minister to renounce the briefs in front of him and submit to what he and others on his Benches know to be true: the customs union and the single market offer so much more to the people of Britain than what is before us today.

Elsewhere, the Government have trumpeted their industrial strategy, highlighting the need to tackle disappointing productivity numbers, which is a Treasury priority. Yet everything that this Bill stands for will reduce productivity. Efficient activity such as just-in-time manufacturing will be totally disrupted. For example, suppliers are already being asked to increase their inventories, massively reducing cash flow in small businesses and adding to costs and to complication. The Government have claimed to be planning for the future, so what does their analysis say that the Bill will deliver in practice? How much will it cost? How many extra people will be needed in both the public sector and in business to administer the red tape? Big business can probably afford it, but small businesses most certainly cannot, as my noble friend Lady Kramer said.

What is the lost opportunity—something that cannot be accounted for—of using our talented people on this activity rather than on something that is actually productive? Does the Minister not agree that we should be using the energy and intellectual resource of our people to address the real challenges facing the country? There are huge global changes going on, never mind the ones we are trying to effect. The march of the digital revolution is going to change everything, and the demographic time bomb stands already as a significant change. Would the Government not rather that the talents of our people were employed on those things rather than on this useless, non-productive activity?

Meanwhile, in the ports and the Channel Tunnel, roll-on roll-off will be replaced by “hang around a minute while we have a look”. What is the contingency plan here? What is the estimated holding capacity that will be required at our ports? What advice will the Government be giving regarding the checking and segregation of loads? People and businesses need to know how to restructure their supply chains to meet these challenges.

We know that the Bill makes us worse off compared to the customs union and the single market. By how much will the customs regime reduce productivity in the United Kingdom? How much further behind France will it take us? How much GDP growth are the Government prepared to surrender in order to push the policy through—1% per year, 2% per year? The compounded effect of that reduction in growth in GDP will be disastrous—but of course this Government will be long gone before the real effects are felt.

There is more, not least—as we heard so eloquently just now from the noble Lord, Lord Hain—to do with Ireland and the border. Brexiteers have huffed and puffed and say that the issue is exaggerated. Then they posit some solution that has not been invented yet and clearly is not practical. The Bill creates two discrete customs systems on the island of Ireland. Nothing in the Bill facilitates a border solution that maintains the Good Friday agreement. That is because the two conditions of having two customs regimes and the Good Friday agreement are mutually exclusive. This Bill is anathema to the Good Friday agreement.

Much else needs the proper scrutiny of this House—scrutiny that is being denied. For example, we have heard a lot already about the facilitated customs agreement. We should thank the noble Viscount, Lord Trenchard, for explaining just how simple it will be to operate. In fact, it is impractical. How do the Government expect it to work? What plumbing will go together to make it work? How will the Bill enable the maintenance of non-tariff trade in both directions? As we heard from previous speakers, it seems clear that this will be extremely difficult. Who will maintain and track the rules of origin, and how? What are the details behind the rules for outward processing and repair? Is that a loophole? If not, how will we make sure that it works properly? How will the provisions to offer preferential access to developing countries change from what we have, and who will benefit? That is just a short list of all the missing details that we need—as set out by the noble Lord, Lord Kerr—to understand the plumbing of the customs agreement. These details will be left hanging as the Tory party continues to squabble among itself.

The Bill represents a proposal to make things worse for the citizens of the United Kingdom—not just slightly worse but very seriously so. The Government know that; the Minister knows that. I echo the mention of history: perhaps the Minister could cast his mind back, or get his officials to, and give us an example of where any Government have made changes that they know will downgrade the living conditions of their citizens. What other Government in history have knowingly made such a self-harming decision?

The Liberal Democrats oppose the Bill. Leaving the customs union and the single market will cost the people of the United Kingdom dearly. That individual cost should be explained, and voted on in a people’s vote. The Bill establishes a separate customs regime from that of the European 27, so there can never be a friction-free border between the Republic and Northern Ireland. That means that the Good Friday agreement cannot be honoured. The hiding of the Bill behind the false status of a supply Bill shows the Government at their weakest, and the grabbing of so many Henry VIII powers for the Executive is tantamount to unconstitutional. That is why I will support my noble friend’s amendment to the Motion.