Brexit: The Customs Challenge (European Union Committee Report)

Lord Kilclooney Excerpts

Monday 1st April 2019 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I begin with one or two points on which we can all agree. The noble Lord, Lord Stevenson, mentioned the work of the committees in your Lordships’ House, how outstanding it is and thorough they are. Nowhere is that more the case than in the European Union Committee, its six sub-committees and the External Affairs Sub-Committee—chaired by my noble friend Lady Verma—whose report we are discussing today. They do an incredible amount of work. I commend Appendix 2 to anyone who has not had the opportunity to study the full report, where they will see the list of people who gave oral evidence. The quality and range of people from whom evidence was taken have contributed significantly to the strength of the report, if not also to the difficulty of the Government being able to respond—a theme to which I will return shortly.

It has been good to have this debate. Although narrowly focused, it has managed to touch on all the key points that needed to be raised, in a systematic way. My noble friend Lady Verma, began the debate with an excellent speech, in which she set out the terms and focused particularly on tariff policy. My noble friend Lord Horam spoke about the challenges of Northern Ireland; the noble Baroness, Lady Suttie, about the implications and risks of no deal; the noble Lord, Lord Triesman, about the impact on business; the noble Lord, Lord Dykes, about standards; the noble Baroness, Lady Randerson, about technology at the border; the noble Lord, Lord Bilimoria, about the importance of supply chains; the noble Lord, Lord Kerr, about the common customs policy; and the noble Lord, Lord Stevenson, about the facilitated customs arrangement.

Rather than using the set response that I have, I will zero in with a short update on where Her Majesty’s Government are at present with a statement of policy. Then I will respond to as many of the questions that have been asked as possible. I also give notice that it would be good for the committee and the House to have a written response to this high-quality debate, and I will ensure that that happens in a timely way.

The Government always seek to provide the committee with the latest and most comprehensive information possible. The ongoing negotiations with the EU and recent developments within Parliament can sometimes make providing the most up-to-date information difficult. My colleagues in the Department for Exiting the European Union regret the lengthy delay in responding to this report, but I assure noble Lords that a response will be sent to the committee as quickly as possible.

Before discussing the detail of this report, I will touch briefly on the broader context for this debate. The Government’s clear preference is to leave the EU with a deal and we remain committed to doing so. We were disappointed at the result of last week’s vote on the withdrawal agreement. Nevertheless, our priority is to press the case for an orderly Brexit that delivers on the result of the referendum.

In addition, while a no-deal scenario, mentioned several times in the report, is not the Government’s preferred outcome, preparations are continuing for such an outcome. Indeed, in relation to the report, leaving the EU without a negotiated deal would result in customs controls at the UK’s borders and tariffs on our exports to the EU. This is why the Government have been focused on putting a deal in place.

I turn now to questions that were raised and I start with further explanation of the delay in responding. The report, as has been said, was published in September. A response would therefore, in the normal routine, be due sometime in December. Noble Lords will recall that December was a pretty fast-moving time, with discussions taking place, and it was not possible to get clearance between the different departments for the release of the response at that time. We thought that that might ease in January but it did not: it is a story of that nature but I emphasise that this is not normal. I have responded in debates in your Lordships’ House to a number of reports from committees, so this is not normal government practice: we take reports very seriously and this is merely a reflection of the times. I convey again my apologies to my noble friends Lady Verma and Lord Horam, the noble Lord, Lord Triesman, and the noble Baroness, Lady Suttie, who were members of the committee, and to all members of the committee.

My noble friend Lady Verma asked about the impact assessment and tariffs. The impact is summarised in the tax information and impact note published alongside the temporary tariff. Tariffs are a tax and therefore a tax information and impact note is, we believe, the most appropriate document for communicating tax changes. The noble Baroness, Lady Suttie, and others asked about the implications for roll-on roll-off ports. Although it was mentioned in the context of Dover, and I know the committee visited Dover, I take on board the point raised by the noble Lord, Lord Wigley, in an intervention, about the importance of Holyhead. The Government recognise that roll-on roll-off locations depend on a fast flow of traffic, which could be significantly affected if customs controls and regulatory checks were reintroduced for EU trade. Maintaining frictionless trade is therefore a priority for the Government.

In a no-deal scenario the Government have been clear that we will prioritise trade flows at the border, but not at the expense of security. HMRC has continued to carry out targeted checks on goods entering the country, as we do now. In the event of no deal, the Government’s day one roll-on roll-off model aims to move customs formalities away from the border, easing the pressure at the ports and at Eurotunnel, helping to avoid delays. We have published roll-on roll-off bridging guidance, last updated in March, to support businesses to understand fully how to comply with the new model. We will continue to update business on these matters.

My noble friend Lady Verma asked about the facilitated customs agreement. It is still the preferred outcome. The political declaration on the framework for the future relationship between the UK and the EU, agreed with the EU, set out a plan for a free-trade area for goods, including no tariffs or quotas, with ambitious customs arrangements. The Government recognise the need to discuss the future customs model in detail with the EU in the next phase of discussions, in line with the commitment set out in the political declaration. The Government are aware that there is currently a live debate in the House over the future relationship and we will contribute to that ongoing debate.

My noble friend Lady Verma and the noble Baroness, Lady Randerson, talked about the need for technology and asked whether such technology is currently available. The Government will continue to consider the potential application of technological solutions to streamline customs processes. There is a range of technologies that could help facilitate trade over the Northern Ireland/Ireland border—for example, by streamlining any requirements that may emerge after the UK leaves the EU.

[Lord Kilclooney (CB)]

As one living near the Irish border, I realise that it has two sides. Sometimes I get the impression that people in London do not realise this. Can the Minister confirm that Her Majesty’s Government have decided that there will not be any infrastructure on the United Kingdom side of the border? On the Irish side, it is a matter for the European Commission. Has the Commission yet confirmed that it will have no infrastructure on the Irish side of the border?

[Lord Bates]

The noble Lord will be aware that this is a fast-moving situation. There have been some statements by the Taoiseach on this in relation to the Republic of Ireland. The Good Friday/Belfast agreement states that there will be no hard border on the island of Ireland. I know that that does not answer the noble Lord’s question; he asked in particular about the differences in how tariffs might be collected between Northern Ireland and the rest of the United Kingdom. We have made some statements on that; given that it is such a delicate matter, I will cover that point in my written response at the end of the debate. The Government continue to be committed to developing alternative relations to replace the backstop, and we have agreed a specific negotiating track with the EU which will form part of the next phase of negotiations.

The noble Lord, Lord Dykes, asked whether the Government’s estimate that 96% of UK goods will be able to pay the correct tariff up front has been challenged. The Government published further detail on this calculation on 21 December 2018 in response to the request of the UK Statistics Authority. The publication set out:

“Up to 96% of UK goods trade would be likely to be able to pay the correct or no tariff upfront under the FCA”.


These goods would be:

“Trade (imports and exports) with the EU or exports to non-EU countries”.


I think the question put by the noble Lord, Lord Stevenson, was discussed during one of the regulations on the EORI registrations. At that point it was 52,000; I can report that it had risen to 67,000 as of the week ending 22 March—so we are making some progress.

This has been an excellent debate, in response to a very thorough report with some 31 recommendations. I reiterate to the committee and to those Members who have been party to the report’s production that our delay in response is due to what are the hopefully understandable challenges of the present time, and in no way takes away from how valued this is.

Finally, I will respond to two comments from the noble Baroness, Lady Suttie, and the noble Lord, Lord Triesman. The noble Baroness said that our discussion on this topic resembled a fundamentalist debate, with no ground being given and an absence of facts. The noble Lord, Lord Triesman, was fair-minded in recognising that none of us can say that we have distinguished ourselves in this very difficult situation in which the nation finds itself. I am sure that I speak for the whole House in saying that past performance does not necessarily guarantee future performance. I remember that my father often used to say to me as I left the house, “Remember, this is the first day of the rest of your life. Treat it as such”.

This is an opportunity for us to look forward and do something different. This debate on Brexit has descended into a bitter courtroom divorce battle in which the parents’ hatred of each other has meant that they have forgotten their shared love and responsibility for their children. We hope that now is the time to seek selfless solutions that will put the well-being of all the people of this great country at the centre of our deliberations. We hope that that starts today, and continues tomorrow. I thank my noble friend for her debate.