Customs Safety and Security Procedures (EU Exit) (No. 2) Regulations 2019

Peter Dowd Excerpts

Monday 7th October 2019 General Committees

[Peter Dowd (Bootle) (Lab)]

As always, it is a pleasure to see you in the Chair, Mr Hanson. I was confused at the beginning of this Committee when the right hon. Member for Central Devon came into the room; I thought he was going to sit in the Minister’s place again, and that there had been a coup d’état, but alas, there has not.

The Minister spoke about the readiness of business. Well, business is not ready to exit the European Union; that is why we are considering these provisions. The Government have not prepared as they should have done. Instead, they have extended the time for business to prepare. Why? Because businesses are not ready. He said that there will be no safety and security declarations. He gallantly kept a straight face when he said that, but then he went on to talk about introducing this measure in order to avoid checks. The only thing it is avoiding is reality.

I hope that Government Members will not take this personally, but it is not the same pleasure to see them as it is to see you, Mr Hanson, because of the out-of-kilter numbers on this Committee and their dominating effect. The Government have no majority, no authority and no hope, but they have stitched up and stashed out this Committee. The Government majority is fewer than 43, but the proportion of Members on this Committee is still out of kilter. When I was a councillor in local government in 1986, the Conservatives introduced legislation that made it illegal to have a committee on which the numbers were completely out of kilter, but this Committee is out of kilter. I must make that protest today.

[The Chair]

The hon. Gentleman has put that point on the record, but it is not actually within the scope of the Customs Safety and Security Procedures (EU Exit) (No. 2) Regulations 2019.

[Peter Dowd]

You have been completely indulgent in that regard, Mr Hanson. Notwithstanding that point about the nature of the Committee, I start by saying that this statutory instrument follows on from the broad powers that the Executive accumulated through the Taxation (Cross-border Trade) Act 2018 of fond memory, the Trade Bill and the European Union (Withdrawal) Act 2018, which allowed them to make shifts in policy via secondary regulations—powers that make Henry VIII look like a wilting flower. That method seemed designed specifically to undermine proper scrutiny. We are trying to undertake proper scrutiny today, but that is undermined by the lack of balance on the Committee that I referred to. We see the processes subverted time after time.

In recent weeks, there has been an excellent article that the Minister might find useful by Alexandra Sinclair and Joe Tomlinson of the UK Constitutional Law Association. It is called, “Eliminating Effective Scrutiny: Prorogation, No Deal Brexit, and Statutory Instruments”. There are several articles in the series.

As hon. Members are aware, these regulations relate to the Union customs code and Commission Delegated Regulation (EU) 2015/2446. I turn to regulation 2, as you will be pleased to hear, Mr Hanson. It is on the modification of the regulation laying down the Union customs code, and appears to smooth the seams between the Union customs code and the more recent customs Act, the Taxation (Cross-border Trade) Act 2018, which introduced far-reaching powers to amend the UK customs procedure that I mentioned. If I am right, regulation 2 seems to be a tidying-up measure to align UK legislation with the Union customs code. Specifically, it seeks to ensure that an export declaration, as defined by the 2018 Act, is included under the Union customs code definition of a customs declaration, and as we speak, there is an urgent question in the Chamber on the schedule of tariffs in the event of a no-deal Brexit.

Regulation 3, headed “Modification of Commission Delegated Regulation (EU) 2015/2446 supplementing certain provisions of the Union Customs Code”, perhaps provides more interest. Its first part, which inserts a new article 104(6) in the Commission delegated regulation, appears to gives broad powers enabling us to override EU legislation and apply import duty to pallets, which the Minister mentioned, spare parts, containers and means of transport. Can the Minister explain why that waiver is necessary, and in what circumstances he could see import duty needing to be applied to those goods?

Regulation 3(3) inserts a new paragraph after article 244(4) of the Commission delegated regulation. That paragraph proposes that the time limits that apply to pre-departure declarations on travelling by different means of transport should continue to apply until November 2020, as the Minister said. If I have got this right, 1 November 2020 will fall slightly before the end of the proposed transition period. Can the Minister explain why?

Regulation 3(4) inserts a paragraph after article 245(2) that extends the power to waive pre-departure declaration in certain circumstances. That paragraph creates a new class of goods for which a pre-departure declaration would not have to be lodged. Unfortunately, though, the class of goods created is

“goods that would benefit from the waiver”

and

“goods that would so benefit if Article 104(1)(e) applied to goods carried under a transport contract.”

That does not clarify matters. This appears to be a rather circular piece of legislation, allowing a waiver to be applied to any good that would benefit from it. I am afraid that that will provide little certainty for businesses that are trying to understand how the regulations will affect them. Where is the Government guidance on this proposal?

Perhaps the Government are too busy using taxpayers’ money to advertise the point that the UK is leaving on 31 October to do what they should be doing, namely pulling their finger out and giving useful or credible guidance that might, God forbid, actually be of some help to businesses. Perhaps the Minister could clarify how a business will know what is waived under proposed new article 245(3). Can he give examples of goods that would qualify for the waiver?

The final regulation, regulation 4, amends the date set out in earlier regulations. I am afraid that the Government appear to have bungled this. The original Commission delegated regulation said:

“Until 1 October 2019, the lodging of an entry summary declaration shall be waived in respect of goods which before then are in transit to or are brought into the customs territory of the Union from a place where, in relation to that territory, such a declaration was not required before exit day.”

As hon. Members will note, it is 7 October—6 days after the end date set out in the above passage. Perhaps the Minister can enlighten us. Has the waiver been dropped since last Tuesday, only to be re-introduced should these regulations be agreed to? What are the implications for this gap in the law for business? Could businesses be legally liable for not lodging an entry summary declaration over the last 6 days? Is this competent on the part of the Government? It is a wonder that they want to centralise all these powers when they get things wrong in doing so. With these regulations, the Government have sown more confusion in an environment where exactly the opposite is needed.

In conclusion, today’s process, aligned with the illegal prorogation of Parliament, the stifling of Opposition day debates in the Chamber, the unprecedented use of “no amendment to the law” clauses in, I think, the last four Finance Bills, the stitched-up Committee membership, the use of unbridled secondary legislation and a Prime Minister who, with the connivance of Conservative Members, cannot even have a veracious discussion with a 93-year-old woman—namely the Queen—is deeply worrying.

--- Later in debate ---

[Kirsty Blackman]

I absolutely agree with the hon. Lady. In reality, the legislation does not provide more clarity to businesses. In fact, it provides less, because they do not know whether HMRC will be able to grant them the waiver using this discretionary power. Businesses will still have to prepare to put in safety and security declarations because there is no clarity from the Government on whether they definitely will or will not be included in the new regime. It would have been sensible of the UK Government to lift the clauses from the Union customs code and use them to make the customs Act work, but they chose not to.

[Peter Dowd]

On readiness, as the hon. Lady points out, we are less than a month away from leaving the EU, which we have been told will happen come what may, ditches included. It says on Gov.uk:

“Contact your vehicle insurance provider 1 month before you travel to get green cards for your vehicle, caravan or trailer.”

How many of those who know that they are going away in less than a month have their documentation ready?

[Kirsty Blackman]

Certainly too few. In fact, I discovered relatively recently that France and Spain, for example, have different regulations for those taking caravans, trailers or cars abroad. If someone were planning to do some kind of tour around those countries—that is perfectly feasible, given that they have much warmer weather than us at this time of year—they would need different permissions, depending on the country that they are going to. I am particularly concerned that many individuals will not have contacted their insurer in good time.

More specifically on businesses and the waiver, we know that businesses are not prepared for Brexit. If the Government are setting out to try to make things easier for businesses, they are abjectly failing to do so. In reality, the Government chose not to lift and shift the Union customs code. Had they chosen to lift and shift from the code, they would have had to take out certain parts because of the way that it works, but when the customs Act was written—I made this point at the time—the Government chose to bodge some parts of it and do them completely differently, with no rhyme or reason about the way to take it forward. For businesses, that has made things much more complicated than they needed to be. The Government have chosen that route and made the nuts and bolts and red tape much more complicated for businesses.

In circumstances where HMRC does not decide to grant the discretionary waiver to businesses and requires them to submit two separate declarations of security and safety work, how much additional money will that cost businesses? I understand from the explanatory memorandum that an analysis of the cost to businesses has to be done if it is likely to pass a certain threshold. The explanatory memorandum does not state the amount that it would cost businesses to submit those two separate declarations if HMRC decides that it will not use its discretionary power.

The hon. Member for Feltham and Heston mentioned the “greater than anticipated” wording. What level of unreadiness is anticipated? Do the Government anticipate that 50% of businesses making declarations will fail to do so adequately? Does the power kick in only if 51% of businesses fail to do so adequately? What is the anticipated failure rate by businesses before the legislation kicks in for HMRC? I feel that this has been put together in a shoddy way, and that it could have been done much better. Better scrutiny could have been applied if the Government had chosen the better processes that the House agreed for the sifting Committee. The reason we are in this mess today—aside from Brexit in general—is that the Taxation (Cross-border Trade) Act 2018 was not good enough and did not give enough certainty to businesses. That is why we have had to amend it a number of times before exit day.

--- Later in debate ---

[Jesse Norman]

HMRC has published some guidance already, and plans to publish more in time for the moment when declarations may come into force.

The hon. Member for Bootle asked whether these powers have the effect of undermining scrutiny. He should be aware that of course Border Force will continue to run checks on goods in the way it does at the moment, and these declarations are independent of customs declarations that might be made.

[Peter Dowd]

I wanted clarity about the declarations because one has to be prepared in advance of the potential for a declaration. Rather than having the guidance only when one gets to the declaration, would it not be much more appropriate to have that guidance laid out clearly and unambiguously much earlier, in advance of the need to make the declaration?

[Jesse Norman]

I think the hon. Gentleman is making my point for me. The instrument introduces a 12-month transitional period until 1 November 2020, during which there is no requirement for entry summary declarations for goods imported from territories where the UK does not currently require them. That is precisely in order to allow people to adopt guidance as necessary.