Taxation (Post-transition Period) (Ways and Means)

Baroness Winterton of Doncaster Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 8th December 2020 Commons Chamber

[Anthony Browne (South Cambridgeshire) (Con)]

You talked about the notwithstanding clauses as irresponsible and said that the damage may have been done, but would you like to join me in welcoming the Government reaching an agreement in the Joint Committee, as was announced just a couple of hours ago, on the issues that those clauses were intended to address?

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Just a gentle reminder not to use the word “you” to the shadow Minister, because “you” means me.

[Bridget Phillipson]

In fact, I had just indicated that very point. Everyone on the Opposition Benches is delighted that the Government have in recent days managed to conclude a trade deal with North Macedonia, but what message does it send to our friends in the USA, who have made their position on this point very clear, that the Government no longer regard it as at all times non-negotiable that they will uphold the rule of law? It is because of our concerns on that point that we have tabled the selected amendment to the first resolution. We wish to append the text of the first resolution, at the end, with a clear limitation that provisions under that resolution may not place this country in breach of its obligations under law. The amendment would insert new text at the end of the current text of the first resolution to ensure that

“any such provision must not place the United Kingdom in breach of its obligations under the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community…and specifically its obligations under the Protocol on Ireland/Northern Ireland of that Agreement.”

Obviously, in the last two hours the Government have announced that they have reached an agreement in principle with the European Union on that protocol and will therefore resile from their expressed intention to enact legislation that would have breached those agreements. Of course, Opposition Members welcome that news, even as we find it astonishing that it should ever have been delivered and shambolic that it arrives so late. We would not, until this autumn, have ever imagined it necessary to make it clear in a resolution of the House that the Government, in exercising their powers, must obey international agreements into which they freely entered. Yet, as a result of the deep irresponsibility of the Government, that is precisely where we find ourselves today. We will not oppose the substantive resolutions, and we shall wait to see what further reassurances the Minister can provide before deciding whether to press our amendment to a vote.

We recognise that there needs to be a lawful basis for the collection of VAT, customs duties, aviation fuel duty and insurance premium tax, even while we do not yet know what the Government propose to table by way of a Bill. Let me repeat that: we do not yet know what the Government propose to table by way of a Bill—less than 24 hours before its Second Reading and Committee of the Whole House. Less than a month before we leave the European Union, we simply do not know with any certainty what measures the Government intend to set out. This extraordinary state of affairs undermines the ability of Members to give such important legislation the scrutiny it rightly deserves, not to mention the ability of businesses to plan. Is the Minister really telling us that it was not possible before today to set out the Government’s proposals on aviation fuel duty or insurance premium tax? Of course it was. These clauses were held back—they still are—so that the Government could, until a few hours ago, continue to brandish the threat of breaking international law as part of their negotiating tactics with the European Union, believing they have an ace up their sleeves, when in fact the whole world sees the Government as a pack of jokers.

Although we will not oppose these resolutions, we cannot and will not vote for any measures that the Government introduce that would breach agreements into which this country has entered with her friends and allies, because the consequences of such unlawful acts have been made clear to us. The Speaker of the United States House of Representatives said:

“The U.K. must respect the Northern Ireland Protocol as signed with the EU to ensure the free flow of goods across the border. If the U.K. violates that international treaty and Brexit undermines the Good Friday accord, there will be absolutely no chance of a U.S.-U.K. trade agreement passing the Congress.”

Taxation (Post-transition Period) Bill

Baroness Winterton of Doncaster Excerpts

Committee stage & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Wednesday 9th December 2020 Commons Chamber

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Before I ask the Clerk to read the title of the Bill, I should explain that in these exceptional circumstances, although the Chair of the Committee would normally sit in the Clerk’s chair during Committee, I will remain in the Speaker’s Chair in order to comply with social distancing requirements, although I will be carrying out the role not of Deputy Speaker but of Chairman of the Committee. Chairs of the Committee should be addressed as such, rather than as Deputy Speakers.

I must also modify the call list slightly in the light of the selection and grouping of amendments by the Chairman of Ways and Means. I will call the right hon. Member for Wolverhampton South East (Mr McFadden) to open the debate by moving amendment 2; we will then follow the rest of the call list as published, starting with the hon. Member for Stone (Sir William Cash). I will call the Minister at the end to respond to the debate.

Clause 1

Duty on goods removed to Northern Ireland

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I beg to move amendment 2, page 2, line 43, at end insert—

“(4A) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (3)(b) within four working days of this section coming into force.”

[The First Deputy Chairman]

With this it will be convenient to discuss the following:

Clause stand part.

Amendment 3, in clause 2, page 4, line 24, at end insert—

“(5) The Treasury must publish guidance setting out its proposed approach to the reliefs, repayments and remissions referred to in subsection (4)(a) within four working days of this section coming into force.”

Clause 2 stand part.

Clauses 3 to 4 stand part.

Amendment 1, in clause 5, page 7, line 44, leave out subsection (3).

This amendment is connected with NC1, which would make all substantive regulations under the Bill subject to the affirmative procedure.

Clause 5 stand part.

Clauses 6 to 12 stand part.

New clause 1—Regulations—

“Notwithstanding any other enactment, a statutory instrument containing regulations made under this Act, other than regulations made under section 11, may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.”

This new clause would make regulations made under the Bill (other than the commencement regulations in clause 11) subject to House of Commons affirmative procedure.

New clause 2—Treasury use of powers—

“(1) The Treasury must, within four working days of the day on which this Act is passed, publish a report setting out the timeframe within which it will use the powers to make regulations conferred by—

(a) section 40A(2) of TCTA 2018;

(b) section 40B(1) and (2) of TCTA 2018;

(c) section 30A(4) of TCTA 2018;

(d) section 30B(1) and (3) of TCTA 2018;

(e) section 30C(5) of TCTA 2018, and

(f) section 5(2) of this Act.

(2) The Treasury must publish an annual report setting out how it has made use of the powers referred to in subsection (1).

(3) Each report under subsection (2) must include an assessment of—

(a) what considerations the Treasury made when deciding to use its powers, and

(b) the impact of the regulations on individuals and businesses throughout the UK, and specifically in Northern Ireland.”

That schedule 1 be the First schedule to the Bill.

That schedule 2 be the Second schedule to the Bill.

That schedule 3 be the Third schedule to the Bill.

That schedule 4 be the Fourth schedule to the Bill.

[Mr McFadden]

As well as speaking to amendment 2, I will speak to amendment 3, which makes the same points, and say a word about new clause 2. All three have been tabled in the name of the Leader of the Opposition and those of my right hon. and hon. Friends.

Clause 1 sets out the new customs regime that will apply to goods moving between Great Britain and Northern Ireland—specifically those that are deemed to be at risk of entering the EU single market. The Northern Ireland protocol that the Government have signed up to requires such a regime as a result of their decision to leave the single market and the customs union. It will mean a system of paying customs duties for those who move such goods.

As yet, none of us knows whether a deal will be agreed, although we know that an important dinner is taking place in Brussels tonight. However, we welcome the announcement of a trusted trader scheme today, although it comes very late in the day. That scheme will remove some of the possible tariffs on goods that move from Great Britain to Northern Ireland in the event of a no-deal Brexit, but for other goods we are clear that we do not want to see additional costs for businesses and communities in Northern Ireland.

The House should note that Northern Ireland consumers have, on average, about half the discretionary income of consumers in the rest of the United Kingdom; the long and the short of it is that they simply cannot afford such additional trade tariffs on goods. There therefore needs to be a system for at-risk goods that do not leave Northern Ireland, in line with the agreement that Northern Ireland remains part of the UK’s customs territory and that customs duties should not apply to goods that travel between Great Britain and Northern Ireland if Northern Ireland is their end destination.

The protocol and the arrangements agreed yesterday by the Chancellor of the Duchy of Lancaster and his counterpart create new requirements for businesses to be set out in regulations. Clause 1 is specific about that, for example in new section 40B of the Taxation (Cross-border Trade) Act 2018, which states that the Treasury

“may by regulations provide”

for which goods the new duties will apply to, and make

“provision about reliefs, repayment and remission…checks, controls or administrative processes”

and other matters.

My broad point is that that is obviously a description of new arrangements that are not in place right now; that is why they are being introduced in the Bill. As I said on Second Reading, it would be better for the Government to acknowledge that this is a new regime with new requirements, instead of the pretence that everything will carry on exactly as it is.

As I also said on Second Reading, we only have three weeks to go. Businesses in Northern Ireland and those that do a lot of trade with Northern Ireland will be asking, “What does this mean for me? What processes do I have to go through? What do I have to pay? If the goods remain in Northern Ireland, will I be entitled to a rebate if I have paid? How will I claim that rebate? How will this system work?” Those are all legitimate questions about the new regime being introduced by the Bill and the regulations enabled by it. Amendment 2 asks the Treasury to reach conclusions and to publish answers on these matters in the coming days. Frankly, it is already too late to expect businesses to absorb more than 100 pages of legislation within a few weeks. But even if it is too late, we cannot afford more delay, which is why our amendment calls for the publication of guidance on this within a few days of the Bill coming into force.

I should stress that nothing in this amendment alters the regime that the Government are trying to bring in. Everything in the amendment is fully in line with the Northern Ireland protocol and with the commitments that the Government have made as part of that. We want to provide clarity for businesses as soon as possible, rather than leaving open-ended the time for these regulations to be published.

In response to my question at the end of the Second Reading debate, the Exchequer Secretary to the Treasury said with confidence that she was sure this could all be done by 1 January. I hope she is right and that any scepticism that all these arrangements will be completed in the three weeks between now and 1 January is unfounded. Let us hope that she is right. The amendment asks for the Government to outline precisely how these duties and tariffs, if they are necessary, will be rebated. Businesses will be asking that question and, quite reasonably, they will want an answer.

Will businesses be required to pay up front and then be reimbursed by HMRC, as envisaged in the Northern Ireland protocol? Is that what the Government have in mind? If so, the Minister should know that there are fears that such a rebate system could be hugely complex. Indeed, some fear that it is not fully built, but we are told that it will all be ready for 1 January. These are vital questions. As it stands, the Bill does not fully answer them, nor does it set out a timeframe in which they will be answered, which is why we have tabled amendments 2 and 3 to the Bill.

Finally, new clause 2 is an attempt to give both Parliament and the public some timetable—some road map—for the blizzard of regulations that are enabled by the Bill and to secure a report on their impact in the future. As I said, this is a new regime. The Bill legislates for something that we have not had to do before in the United Kingdom, and we should at least have the courtesy of reporting on how it is operating in the future. New clause 2 asks for both a timetable of the regulations and a report on how the new regime has operated. These are completely reasonable amendments. I hope that, in a spirit of generosity, the Government will find it within themselves to accept them, and I look forward to hearing the Financial Secretary to the Treasury wind up the debate.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Sir William Cash is not here, so we go to Alison Thewliss.

[Alison Thewliss (Glasgow Central) (SNP)]

I am very sorry to hear that the hon. Member for Stone (Sir William Cash) is not here, because I am sure that there is so much more that he could have added to this debate that he has not already said.

[The First Deputy Chairman]

He may have withdrawn but I have not been told, so that may explain it.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

Dame Rosie, what a delight it is to see you in the Chair, metaphorically if not actually.

It is a measure of the wide gulf between the House’s professed intentions and its actual activities that we are about to wind up within a very few minutes, and nothing like to time, the scrutiny of the Bill in Committee. I thank those who have spoken. Let me do service on my part by keeping my remarks brief, although I will say that nothing could have surprised me more than that my hon. Friend the Member for Stone (Sir William Cash) will not be taking the opportunity to make a trivial two-hour speech.

The right hon. Member for Wolverhampton South East (Mr McFadden) said that somehow the Government were pretending there was no change. Of course, he then went on to say that nothing has changed. We are not pretending anything. We acknowledge that there is change and that is specifically why we have used the language we have of making the changes as easy and as frictionless as possible for all parties concerned.

The right hon. Gentleman raises concerns and questions about Northern Ireland. I remind him that the Trader Support Service, which was launched on 28 September, has 18,000 subscribers already. He asks us to publish guidance. I can tell him that guidance has been published already, on 26 October.

The hon. Member for Glasgow Central (Alison Thewliss) saw Brexit—rather helpfully—as an opportunity to return powers to Parliament. How right she was. That is why I am a supporter of the United Kingdom of Great Britain and Northern Ireland, and of the Parliament that stands at its centre. My hon. Friend the Member for Arundel and South Downs (Andrew Griffith) rightly said that it should be for the Bill to make matters as easy as possible. I agree with that. He pointed to the absolute game-changer in clause 7. I agree with that too.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I believe the right hon. Member for Wolverhampton South East may wish to withdraw his amendment.

[Mr McFadden]

I point out to the Minister that he said guidance was published in October; he cannot be referring to the guidance referred to in clauses 1 and 2, which talks about the regulations under the Bill. However, on the basis of the whole debate, we will not press the amendment to a vote tonight, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

Amendment proposed: 1, in clause 5, page 7, line 44, leave out subsection (3).—(Alison Thewliss.)

This amendment is connected with NC1, which would make all substantive regulations under the Bill subject to the affirmative procedure.

Question put, That the amendment be made.