EU Exit: End of Transition Period

Rachel Reeves Excerpts

Monday 13th July 2020 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I thank the Minister for advance sight of his statement. I associate myself with his comments about Dave Prentis, a great trade union leader who is always fighting for a better deal for public sector workers.

It is vital that businesses and jobs are supported and that the oven-ready deal that the country was promised is delivered on this year, yet frankly many of us are worried about whether the oven was even turned on. Alarm bells have been ringing in the Cabinet this past week, expressed by the Secretary of State for International Trade in her extraordinary letter to the Minister and the Chancellor of the Exchequer written on 8 July. The letter presents a picture of chaos, complacency and confusion right at the top of government. Let me highlight to the House those concerns.

First, the Trade Secretary expresses concern that the UK will be vulnerable to a World Trade Organisation challenge. Will the Government publish their advice and analysis of risk and cost to the Government of such a challenge?

Secondly, the Trade Secretary highlights that there are EU-facing ports where the infrastructure to implement controls does not currently exist. Will the Minister give the country and, indeed, his Cabinet colleague reassurance by publishing all relevant delivery plans, land purchases and rental agreements, with timescales and risks—and not just for the port of Dover? The Labour party wants to see British firms exporting. We do not want to see their goods stuck at ports or, indeed, in lorry parks.

Thirdly, the Trade Secretary is concerned in her letter that traders from the rest of the world could export their goods to the UK through the EU and, in her words,

“undermine the effective operation of our trade policy”

and undermine the collection of tariffs due. How will the Government prevent smugglers from exploiting the phased-in approach to the border? What is the estimated loss to tariffs as a result of the six-month delay to UK border checks on imports travelling through the European Union?

Fourthly, on Northern Ireland, the Trade Secretary said that the digital delivery of the dual tariff system in Northern Ireland is a high risk and that HMRC is planning to apply the EU tariff as a default from 1 January. She adds:

“This is very concerning as this may call into question NI’s place in the UK’s customs territory.”

Those are her words. What risk do the Government attach to that? What reassurance can the Minister provide that the commitments made in the Government’s command paper on Northern Ireland will be fully honoured, and why do we have to wait until the end of this month for the details on Northern Ireland to be published? It is all very well announcing a multi-million pound advertising campaign, but if the right hon. Gentleman cannot persuade his bestest friend in Cabinet that everything is going according to plan, it is hardly surprising that the country is anxious and confused.

A month ago, the Prime Minister said that there was “no reason” that a deal could not be reached by the end of this month. Will the Minister update us on where we are in terms of being on track to meet that deadline, with a deal agreed in the next fortnight? The Government have previously estimated that there will be up to 400 million customs declarations per year. HMRC said that they would cost £32 each, adding up to a staggering £12.8 billion bill for business. Does the Minister have any updated assessment of those numbers and the cost to UK firms?

It is also reported that HMRC is not planning to test the systems until November—a handful of weeks before they are needed. Will the Minister explain why those checks are not taking place sooner, and will he outline what recent engagement the Government have had with Scottish and Welsh Governments on state aid policy prior to the announcements today? More than half of UK trade will experience greater delays, costs and barriers, so what percentage of UK trade will enjoy easier trading terms on 1 January next year?

The best way to help all businesses to prepare is, of course, to agree a deal with the European Union on the terms that we were told to expect. That means no fees, charges, tariffs or quantitative restrictions across all sectors. It does not mean, as we heard in the statement today, customs, physical checks, export declarations, a commodity code, and economic operator restrictions and identification, and it certainly does not mean a living document with guidance that changes day by day.

I am sure the Minister will agree that we should never make promises that we cannot keep, so will he guarantee that the promises made to UK businesses and workers in the Conservative party manifesto in December last year will be honoured, because they are not consistent with the statement that he has delivered this afternoon? Last week, the Chancellor of the Exchequer stood at that Dispatch Box and said that he will do all he can to support British business. Today, the Chancellor of the Duchy of Lancaster stands at the same Dispatch Box and is wrapping those businesses in red tape and sending them to a super-sized lorry park in Dover. For the sake of all workers worried about their jobs and all business owners anxious about their future, we need the Government to get this right. I am not convinced that today’s statement does that.

[Michael Gove]

May I thank the hon. Lady for her questions and also for her commitment to working collaboratively to ensure that we get the best possible deal in our negotiations with the European Union. Progress has been made, but there are still significant differences between ourselves and the European Union. None the less, I did think it was significant and welcome that, for example, in the Joint Committee, Vice-President Maroš Šefčovič conceded that it would be no longer appropriate for the EU to have an office in Northern Ireland. That is an example of the flexibility that I know Michel Barnier and others are applying in the broader negotiations, and I will seek to update the House on progress in those negotiations at an appropriate time.

The hon. Lady asks about the compliance of our approach with our legal obligations under the WTO. We are absolutely certain that, having taken legal advice, we are compliant. Indeed, Lars Karlsson, a customs expert who appeared before the Committee on the Future Relationship with the European Union recently, said that the issue raised was “not a problem” and that there was no

“violation of international customs principles and the international legislation that the UK is part of under the WTO.”

Of course, it will be removed—the correct process we are taking—on 1 July.

The hon. Lady asks about infrastructure at EU-facing ports. I stress that there are no plans to build a new lorry park at Dover. Indeed, the chief executive of the port of Dover, Tim Reardon, said—again, to the Select Committee chaired by the right hon. Member for Leeds Central (Hilary Benn)—that it is

“fair to say”

that traders are

“likely to be ready for the paperwork required to get into and out of France, because those requirements have been set out very clearly for some time now.”

The hon. Lady asks about the danger of lost tariffs. There is no danger of lost tariffs. Every importer will have to pay tariffs; we are simply making sure that the process is staged. It is also important to stress, as a number of those involved in the haulage and freight industries have emphasised, that this phased approach is a sensible and pragmatic way to ensure that we can be in a stronger position.

On the situation in Northern Ireland, the hon. Lady asks whether the EU tariff is the default. No, it is not. She also asks about state aid. State aid subsidy control support for businesses is important, but it is also a reserved matter.

Finally, I quote again from the chief executive of the port of Dover, because the hon. Lady is understandably anxious to ensure that business has all the opportunities we would want to see in the covid recovery. He said that

“being outside the European Union customs code puts the UK in a position where it can develop processes that suit the UK in the 21st century. We do not need to stick with a legacy customs process whose origin can be found in the Anglo-Saxon Chronicle in the year 789.”

It is time that we modernised our border and time that we took back control, and that is what today’s announcement will do.