Draft Crown Dependencies Customs Union (Guernsey) (Eu exit) Order 2018 Draft Crown Dependencies Customs Union (Isle of Man) (Eu exit) Order 2018 Draft Crown Dependencies Customs Union (Jersey) (Eu exit) Order 2018

Peter Dowd Excerpts

Monday 21st January 2019 General Committees

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to see you in the Chair, Mr Stringer. The Crown dependencies are not members of the EU but form part of the EU customs union by virtue of protocol 3 of the UK’s Act of Accession to the EU, which says:

“The Community rules on customs matters and quantitative restrictions, in particular those of the Act of Accession, shall apply to the Channel Islands and the Isle of Man under the same conditions as they apply to the United Kingdom.”

That is a bit of the context, but it begs the question why we are actually here today.

A press release was sent out on 26 November— I think the Minister referred to it—which said:

“The government has…signed new arrangements with…the Crown Dependencies…to maintain and reaffirm our close customs relationships.”

It seems that yet again the Government have gone off, without recourse to Parliament, signing deals. In effect, we are ratifying something today that, to all intents and purposes, has already been agreed. That is typical of this whole process in relation to leaving the EU. There’s the old point about asking questions first and taking action later; the Government have taken the action and then asked the questions.

That brings me nicely to a series of questions that the Minister might be able to answer. The Government’s position in the press release is ambiguous. At the top, the press release says that new arrangements with the Crown dependencies will be necessary when the UK leaves the EU customs union, but later it says that the new arrangements will be compatible with any form of relationship with the EU. There is a certain ambiguity there.

I will ask a series of questions, if the Minister would be kind enough to answer them. Can he clarify something? Although the regulations are not labelled as no-deal regulations, they seem to be drafted in preparation for the UK not being in the EU and not being in the customs union—or any customs union for that matter? Would it be correct to say that, although, technically, there might be another form of Brexit that does not involve a customs union or a no-deal Brexit, it seems that the instruments are being prepared for a hard Brexit? Would the provisions still be necessary if we were in a customs union with the EU? How could the orders be affected by a customs union or a no-deal Brexit?

Why were separate statutory instruments drafted for Jersey, Guernsey and the Isle of Man, given the common features of the instruments? The fact that we are considering them as a whole prompts the question of why they were not drafted as a whole. Would it not be preferable in terms of simplicity, clarity and consistency to have one piece of coherent regulation to govern the position of the Crown dependencies?

Given the constitutional significance of the UK’s relationship to the Crown dependencies, why were these matters not dealt with in legislation that could have received fuller public and parliamentary attention? Does the Minister not agree that, consistent with the broad thrust of the Supreme Court decision in the Miller case, quasi-constitutional changes ought to be carried out by the legislature via proper processes, rather than via a truncated SI process, which seems to have been truncated even further, given the statement at the end of November?

The press release indicates that there must have been discussions with the dependencies, as they have signed up to this, so perhaps the Minister could tell us what consultation has been undertaken with relevant individuals and bodies in Jersey, Guernsey and the Isle of Man on the content of the orders?

Finally, could the Minister clarify why the proviso that the UK could still charge VAT on items coming into the country is included, from what I can gather? Those are my questions, and if we could get some clarity on them from the Minister, I would be more than happy.

--- Later in debate ---

[Peter Dowd]

The Minister referred to section 31 of the Taxation (Cross-border Trade) Act. We tried to press the Government on it time after time, but what does it actually refer to? It does not restrict a customs union to just the overseas territories. In fact, I think that is why the Government have left it completely unamended: because it is a backstop—another backstop—to the potential for a customs union. If they were that persistent about not having a customs union, they would have made it clear that clause 31 did not apply to territories in relation to the European Union.

There is an important question that we never resolved during the passage of the Act, although we spent a fair amount of time discussing it. The EU customs union is worth the best part of £15 trillion or £16 trillion, but we are now going down the path of having a customs union with the four territories named in the orders, and possibly with 10 other Crown dependencies and territories. The total GDP of all those territories is not £17 trillion; I do not think it even comes to £17 billion—it is more like £15 billion. We are in the bizarre scenario of going from a customs union of £15 trillion to a customs union of an infinitesimal percentage of that. That is a real shame.

The other aspect of the matter is that most of the people affected by the arrangement did not have a vote in the referendum. They did not vote to come out of the customs union; effectively, it is being forced on them. The Government often say that they do not like forcing Crown dependencies and overseas territories to do anything, but in this case they are forcing them out of a customs union of £16 trillion.

There is a huge amount of ambiguity in this measure, both in the technical sense and the political sense. Given that ambiguity, the answers I have had from the Minister today do not convince us that we should support these proposals.