European Union (Withdrawal) Bill

Stephen Timms Excerpts

Committee: 5th sitting: House of Commons
Wednesday 6th December 2017 Commons Chamber

[Kirsty Blackman]

I thank the right hon. Gentleman for his comments. I have heard that pretty insubstantial information has been provided, particularly on the numbers.

I was concerned to note that the UK Government have made a call for evidence on trade remedies. They want information from companies, organisations and sectors about which trade remedies are important to their sector. The UK Government do not know which remedies are important, because they have not done the work. They do not have a good enough understanding of the sectoral impact of Brexit.

I shall highlight a few things in relation to that. The Bank of England recently asked what would happen to cross-border derivative contracts and insurance policies after Brexit. The UK Government have not answered the question. I asked them what would happen to rules of origin and what would happen to companies that, for example, made cars in the UK. What would happen to free trade arrangements that call for cars to have 55% or 60% UK content? Currently, it is EU content, but in the event of Brexit we would seek 55% or 60% UK content. Our cars do not have that much UK content, so I asked the UK Government for their position on rules of origin and what they were doing about that. Basically, the answer was “We don’t really know.”

There has been a complete lack of understanding. An awful lot of companies and organisations are going to the Government and saying, “This is our problem. You need to fix it—and you can do it this way.” Most of them have come up with solutions and have suggested ways to fix things. Insurance organisations, for example, have a huge problem. If they sell insurance to someone in an EU country, after exit date they will no longer be able to collect premiums or pay out in the event that someone makes a claim, and they will not be allowed to write to those people to tell them that they cannot do those things, because that is how the rules work.

The UK Government could attempt to give certainty now on a number of such issues, including customs. The economic impacts of this are unbelievable, and the regulatory impacts are baffling even the Government. The impacts are going to be too big for anyone to comprehend. Most of the stuff that we will look at in future, according to how the Bill is drawn up, will be dealt with in SI Committees. It is totally inadequate to discuss incredibly important regulatory regimes, levies and taxes in such Committees. That is not how the Government should proceed. They should change their mind on that and look at the amendments that have been tabled, particularly by the hon. Member for Nottingham East (Mr Leslie). The SNP is willing to endorse them, and we thank him for introducing them.

[Stephen Timms (East Ham) (Lab)]

I am pleased to follow the hon. Member for Aberdeen North (Kirsty Blackman). I share her bemusement at where we have got to on the impact assessments, which we have now been told do not exist. Like her, I would have thought that that work would have been done—it certainly should be done. If it has not been done—we have been told that it has not been done—it urgently needs to be done so that the Government and the House can take an informed view about where we are heading.

I wish to speak briefly to my amendments 152 and 153 to schedule 4, which touch on the matter raised by my hon. Friend the Member for Darlington (Jenny Chapman). She pointed out that while it was a good thing that Ministers could assure us that no new taxes would be introduced as a result of the sweeping powers that the Bill gives to Ministers—I am glad that new taxes are not going to be imposed on us through the use of these powers—nevertheless the Bill gives them the powers to impose charges. My hon. Friend is absolutely right to make the point, which was also made by the hon. Member for Aberdeen North, that there is frankly precious little difference between taxes and charges. There are wide powers in the Bill to impose new charges, so my amendments 152 and 153 are intended to constrain the power of Ministers to impose charges, which could be almost limitless in scope. I hope that the Minister, in winding up the debate, will be able to give assurances to the Committee that these powers will not be used in ways that none of us would want. I hope that by probing the Minister’s intentions through my amendments I will receive the assurances I seek.

Amendment 152 would amend line 35 of schedule 4, on page 32. The schedule is slightly alarmingly worded, and the amendment is to part 1, which deals with the power to provide for fees or charges. Paragraph 1(3) lists various things that Ministers can introduce regulations to do: to prescribe fees or charges; to provide for recovery of any sums payable; and to confer power on public authorities to do rather similar things. The sub-paragraph explicitly allows Ministers to introduce regulations on those three things, but its first line also reads:

“Regulations under this paragraph may (among other things)”.

Apart from the three specific things, which, frankly, sound rather alarming, it seems that there are some other, non-specified things that the schedule would empower Ministers to do. Amendment 152 simply proposes the deletion of the words “among other things”, so that at least Ministers can do only three things to demand money from taxpayers or charge payers.

[Helen Goodman]

I just want to make sure that I have understood what my right hon. Friend is saying. Surely what is being proposed here is that Ministers’ ability to use secondary legislation to impose taxes should be constrained, and they will be allowed to impose charges—not that if the Brexit bill is ginormous and the public finances are in a mess, Ministers will have stood at the Dispatch Box now and committed never to increase income tax. That is the correct understanding, is it not?

[Stephen Timms]

My hon. Friend is absolutely right. The amendment simply constrains Ministers’ ability to introduce new charges—she calls them taxes, and she has every right to do so—under the secondary legislation envisaged in schedule 4. What I hope the Minister will do is assure us that by “among other things” he is not envisaging some great long list of new money-raising powers.

[Helen Goodman]

Before my right hon. Friend moves on, is it not worth considering those EU agencies, such as the European Medicines Agency, that are financed by charges on the industry, not by the taxpayer? We should really be hearing from the Minister how the Government propose to fund such agencies in future.

[Stephen Timms]

My hon. Friend is absolutely right. We come directly to that point in amendment 153, in which we propose to add to schedule 4 the words set out on the amendment paper, which I shall read out. We propose to constrain Ministers’ powers by saying, first, that regulations

“may not be made for the purposes of…creating a fee or charge that does not replicate a fee or charge levied by an EU entity on exit day”.

That is exactly the point my hon. Friend has just raised. We of course recognise that a lot of charges are imposed at the moment by EU bodies of one sort or another—she mentioned a very important one—and that, in future, comparable fees or charges may well need to be levied by UK entities, but the aim of the first paragraph of amendment 153 is to make it clear that Ministers cannot impose new fees or charges for which there is not already a counterpart from the EU entity.

[Sir Oliver Letwin]

The right hon. Gentleman is doing exactly what needs to be done in Committee, and I have considerable sympathy with his ambitions. Has he considered whether the reference to remedying deficiencies as the basis for secondary legislation powers under the Bill would in any case have the effect he is describing?

[Stephen Timms]

I had not considered that, and the right hon. Gentleman may well have a point. I would be interested to know whether that is indeed the case. That interesting point is certainly worth pursuing, and I would welcome it if he expanded on that later.

Secondly, amendment 153 states that Ministers cannot bring forward regulations for the purpose of

“increasing a fee or charge to an amount larger than an amount charged by an EU entity for the performance of the relevant function on exit day.”

Let me take the example my hon. Friend the Member for Bishop Auckland (Helen Goodman) mentioned. The European Medicines Agency does very important work, and it charges the industry for that work. I am suggesting that the secondary legislation powers in schedule 4 should not be used to introduce a charge for the same function that is higher than the one currently charged by the European Medicines Agency. There may well be a loss of economies of scale in leaving the European Medicines Agency, and it may well be that undertaking that function purely for the UK will be a less efficient process than doing it EU-wide, as the European Medicines Agency does, but I do not think the secondary legislation powers in the schedule should be used to impose on industry or any charge payer a fee that is higher than the one currently charged by the EU entity.

I accept that there may well in due course need to be some higher fees or charges than those currently levied by EU entities, because the process may well be less efficient when carried out at a UK-only level, but I do not think the secondary legislation powers should be used for that purpose. If Ministers want to bring forward a proposal to impose a higher fee or charge, they should do so through the proper parliamentary process, with scrutiny by this House, not through secondary legislation powers.

[Helen Goodman]

One of the points made to me by those in the industry is that if these fees and charges shoot up, that will have an impact on their competitiveness, which is the last thing we want. Does that not reinforce my right hon. Friend’s point?

[Stephen Timms]

Once again, my hon. Friend is absolutely right. Indeed, my amendments arise specifically from the discussions I have had with those in the tech sector who are worried about the prospect of being hit by substantially larger fees and charges in the future, which is exactly what the powers in the schedule would allow Ministers to do.

I very much hope that the Minister will give us an assurance that these powers will not be used in that way, and that we will not find that industry and charge payers of other kinds are hit by fees or charges that are not being charged at the moment or are higher than those currently being charged. I very much look forward to the Minister’s response.

--- Later in debate ---

Schedule 4 will mitigate the burden of taking on new functions on the general taxpayer. It ensures that fees and charges that are currently made in relation to retained EU law, such as the cost of Kimberley process diamond certificates, can continue to be modified as costs rise and fall, and that new fees and charges can be made, for example to replace those being made by the EU, such as for the regulation of chemicals. That will ensure that those who benefit from the functions transferred from the EU to the UK pay for them and that taxpayers, both corporate and individual, do not end up paying for services provided to others.

[Stephen Timms]

Does the Minister accept that we should hope that those fees and charges will be lower than those that have been paid until now to EU institutions?

[Mr Baker]

I am happy to tell the right hon. Gentleman that, as a good Conservative, I certainly hope to reduce the costs on businesses and individuals. I will come to his amendments in a moment.

New clause 17 and amendment 54 show an understandable desire to protect the role of this House, but they are not necessary. The Government have always been clear that the negotiated financial settlement will be part of our withdrawal agreement and that the House will be given a vote on that agreement. My right hon. Friend the Secretary of State for Exiting the European Union was very clear on 13 November when he announced the withdrawal agreement and implementation Bill. He said that, as one of the principal elements of our agreement with the EU, we expect that legislation to include authorisation to pay any financial settlement that is negotiated with the EU. The Bill we are debating today is about ensuring that the statute book is operational on exit day, not about paying any settlement. The same argument applies to new clause 80.

[Mr Baker]

I am confused by the hon. Gentleman, because he is such a diligent Member of the House. I explained moments ago that we will bring forward the withdrawal agreement and implementation Bill, which will cover any financial settlement, among other withdrawal issues. I would of course expect that Bill to go through the normal legislative processes, during which he and other right hon. and hon. Gentlemen will have a full opportunity to scrutinise those provisions.

I turn to the amendments tabled by the right hon. Member for East Ham (Stephen Timms). The power in part 1 of schedule 4 can be used to create fees and charges of the type that amendment 153 is concerned with. That power can be used to establish new fees only in relation to functions being transferred to UK entities under the powers in this Bill. In most cases, one might expect that it will be replacing a fee set at EU level, but in some cases it may be right that it will be better value for the taxpayer and for users of the services to create a new fee to pay for functions that the UK previously funded through the EU budget.

Amendment 152 does not recognise the need for adjustments to other, peripheral aspects of the fees regime in connection with charging fees or other charges—for example, arrangements for refunds, which I think all Members can agree should be possible so as not to leave ordinary hard-working fee payers unfairly out of pocket. Furthermore, future Governments, in the fullness of time, may wish to simplify charges, amalgamate them, or charge less for one function or another.

[Stephen Timms]

In future it may be necessary to do all sorts of things, but surely the powers in this Bill should not be used to impose new charges on businesses that are not being paid at the moment.

[Mr Baker]

This Bill, first and foremost, is about exiting the European Union successfully, with certainty, continuity and control, as the right hon. Gentleman will know. I draw his attention to schedule 2(7), which makes it very clear that in the event that a provision imposed a fee or charge, or conferred a power to sub-delegate, it would go to the affirmative procedure and this House would have the opportunity to vote on it.

I turn to amendment 339 on sub-delegation. It is right that this House keeps strict control over all financial matters, but this Bill is about ensuring continuity. I remind the Committee that this power is available only if the public authority is taking on a new—[Interruption.]