Duties of Customs

Tom Brake Excerpts

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

[Mel Stride]

In exercising article 50, the Government’s consideration was the decision taken by the British people in June last year to leave the European Union. On the hon. Gentleman’s specific point about the Northern Ireland-Ireland border, we are of the same mind as the European Union and the Irish Republic that there should be no return to the hard borders of the past. We are committed to as frictionless a solution as possible for the border between Northern Ireland and the Irish Republic.

[Tom Brake (Carshalton and Wallington) (LD)]

The Minister will be aware that the Irish Prime Minister has called on the UK Government to give a written guarantee that there will be no controls on the border. Is the Minister able to give that guarantee?

[Mel Stride]

We have made it clear on numerous occasions that we have no intention of reverting to the hard borders of the past, and that we will ensure that we fully take into account the unique political and cultural circumstances of Northern Ireland and the Irish Republic.

In addition, the Bill will modify elements of our VAT and excise legislation to ensure that it functions effectively upon our EU exit. In doing so, the Bill will give the UK the power to implement new arrangements that will ensure that trade is as frictionless as possible.

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[Mel Stride]

If I may, I will finish the point. As to my hon. Friend’s specific question about whether I believe we are ready, let me say that I believe we will be ready. I believe that the customs declaration system—the IT system that is coming into place—will be ready by January 2019, that we will start seeing businesses and traders migrating to that system around August next year, and that we will be in the position we want to be in come day one.

[Tom Brake]

In his meeting with the Port of Dover—I have also met its representatives—what did the chief executive say about how much the extra average processing time per vehicle would need to be for the port to stop functioning?

[Mel Stride]

As the right hon. Gentleman will know, the figure is very low. I think it is a matter of a couple of minutes—if the whole system stopped for more than a couple of minutes we would start to see major problems, which is why we are placing such an extremely high priority on making sure that our ro-ro ports continue to move as effectively as they should.

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[Ian Murray]

Absolutely. My hon. Friend tempts me to go down a road you may not want me to take, Mr Deputy Speaker, but let me at least tiptoe to the start of that road. Not only does the EU give Scotch whisky solid legal protection, but Scotch whisky has to be made in Scotland, and as my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) has highlighted, the supply chain extends across the United Kingdom. We will be competing with markets where bottling and packaging are much cheaper, not only for Scotch whisky but for a host of other manufactured items that this country makes so much money from—money that pays for our public services and creates employment for our people.

While I am on that point, can the Minister tell us what representations he will make in the talks to leave the EU with regard to defending big industries such as aerospace, automotive, and food and drink, which in Scotland is underpinned by the Scotch whisky industry? In the 20 minutes or so in which he spoke and in answer to a lot of questions from my right hon. and hon. Friends, it was clear that HMRC, customs and so on will need more resources. The Government cannot tell us how much more they will require, why they will require them, when they will get them and whether that will be enough. It is very easy for Ministers to talk in platitudes, but we need solid answers on how many people are required and what the consequences will be for the public purse.

[Tom Brake]

Is the hon. Gentleman surprised, as I am, that Government Members seem quite content to recruit 3,000 to 5,000 more people for HMRC, and, as I understand it, 1,200 more people to work for the Home Office—many, incidentally, from the EU, because of a shortage of staff? Was this not about getting rid of red tape? It seems the Government are willing to invest huge amounts in creating more red tape.

[Ian Murray]

That is a key secondary argument to the one I have been making. They say they want everything to be as close as possible: they want it to be frictionless and as close to the customs union as we currently are. My hon. Friend the Member for Walthamstow (Stella Creasy) said that if it walks like a duck and sounds like a duck, it probably is a duck. I do not understand, and have never understood, the Government’s position in taking the single market and the customs union off the table. Regardless of whether we want to argue that they are positive or negative, good for the country or bad, they immediately took them both off the table, so right from the very start the negotiating position was diminished, for all the reasons my hon. Friend has just mentioned.

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[Ian Murray]

Absolutely. Illegal dumping is something that the House will have to come back to and debate at length, because it is one of the key issues around what might happen when we leave the EU and do not have that bloc to defend us. On my hon. Friend’s point about free trade, I have a great idea for how to advance free trade in this country: we could have a customs union and a single market, and that would certainly advance free trade, would it not? Or we could come out, as the hon. Member for Gainsborough wants, and end up with no free trade agreements, rather than 57.

I wanted to mention a whole list of sectors, but I will not in the interests of time. I will briefly mention two or three of the very big ones that have raised concerns. Pharmaceuticals is a key area bringing a lot of tax and corporation tax into the public purse. The Association of the British Pharmaceutical Industry has called for free trade with the EU on terms

“equivalent to those of a full member of the Customs Union”.

I would rather believe the pharmaceuticals industry, an industry that has brought so much economically—in terms of jobs and growth—than the Minister, and it says it wants free trade on terms equivalent to those of a full member of the customs union. Well, the Government will be ruling that out tonight when they pass the motion, so what will he say to the pharmaceuticals industry, which says it needs it to trade as it does now?

[Tom Brake]

Would the hon. Gentleman like to speculate on what contribution today’s departure of the European Medicines Agency to Amsterdam has made to our pharmaceuticals industry?

[Ian Murray]

Well, it is jobs, isn’t it? [Hon. Members: “Nine hundred jobs.”] Yes, 900 jobs, and maybe even more, if we include the knock-on effect. So the Government have just given up 900 jobs; that is the start—the tip of the iceberg. If the pharmaceuticals industry cannot get equivalence with the current customs union, how many more jobs will go in that industry? Before everybody says, “Oh, you’re just a remoaner”—

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[Tom Brake (Carshalton and Wallington) (LD)]

It is a pleasure to follow the hon. Member for Gloucester (Richard Graham), a fellow remainer, and I hope that remainers on the Conservative Benches will be a little more outspoken about their concerns.

[Richard Graham]

For clarification, I point out to the right hon. Gentleman that he is following a pragmatist.

[Tom Brake]

If I am indeed following a pragmatist, I hope that the hon. Gentleman will listen to what is being said by many economic sectors, and perhaps read carefully the 58 sectoral reports once they are published, and come to the very pragmatic conclusion that he, as a pragmatist, will want to start to be more outspoken about the Government’s agenda of taking us over the cliff.

Members have suggested that the UK needs to leave the EU to be able to trade, but that is clearly not true. Many European countries are just much more successful than us at trading with other countries, including Germany, France and Italy. They do so within the EU, so there is no reason why we could not do so more effectively than at present. If we are unable to trade while we are part of the EU, I wonder why previous Prime Ministers, particularly David Cameron, spent so much time and effort sending trade delegations to various countries around the world to drum up trade. Was that a completely pointless exercise? Was that just about having 10-course banquets in Beijing, or was it because we can do a lot to boost trade while we are in the European Union? I think it was the latter, rather than a desire to have big dinners courtesy of foreign Governments. Of course the UK is in a position to trade—and, perhaps, to do so more effectively—with other countries while we are members of the EU.

It is nice, as a Liberal Democrat, to be able to make a speech that is longer than three minutes, so I might take full advantage of that in the couple of hours that remain for me to make a contribution, before the Front Benchers make their response. First, I want to focus on the issue of Ireland and Northern Ireland. Frankly, Opposition Members have had enough of listening to Ministers’ platitudes about how they will sort out the problem that is the border between Ireland and Northern Ireland. We do not want to hear about “frictionless” any more, or about blue-skies solutions that do not yet exist. What we want to hear from Ministers is the solution to this problem, because if the Irish Prime Minister was asking on Friday for a written guarantee from the UK Government that there would be no border controls, that was because he is worried and because he has heard nothing from our Government to explain how we will be able to leave the customs union, yet have no border and no border controls between Ireland and Northern Ireland.

[Peter Grant]

Does the right hon. Gentleman also agree that if the Government were to have a change of heart and agreed to ask to remain in the single market, that would take out two of the three stumbling-blocks? The rights of EU and UK citizens would be solved immediately, and the Irish question, although not completely answered, would be made a lot more soluble. We would then be left with the financial settlement as the only stumbling block to getting on to talk about trade deals, which is what we want to do.

[Tom Brake]

I entirely agree. Like other hon. Members, I am perplexed as to why the Government ruled out several obvious solutions to the dilemmas they face from the outset.

I am sure that a number of Members in the Chamber will have visited Northern Ireland. When I did so, which was about five weeks ago, one of the communities I visited was Forkhill in South Armagh, which was very badly affected during the troubles. A garrison of 3,000 soldiers in that town was responsible for the safety of approximately 24,000 people. The people of Forkhill reckon that when the garrison was there, it was the most militarised place in western Europe, and they are worried about returning to the troubles they experienced there in the ’70s, ’80s and so on. People were placing improvised explosive devices in culverts, under roads and on the approach roads to the border, and the residents of Forkhill are worried that there will be no means to control safely the 275 border points between Ireland and Northern Ireland. If the proposal is that part of the solution will be to conduct ad hoc checks at separate border points, or at some distance from the border, those people are worried that the British customs officer, the British police officer, or perhaps the British soldier will become a target.

All we have heard from a succession of Ministers is dismissive comments. The Secretary of State for Exiting the European Union dismisses any concerns expressed about the difficulties that could arise at the border. We need reassurances from Ministers, not the dismissive comments they are making.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

As far as I can gather, the Government’s policy is that they are definitely not going to have a hard border and they are definitely leaving the customs union. That could be very good for the community that the right hon. Gentleman visited, because smuggling was a very profitable source of income in the past for a large number of inhabitants on both sides of the Irish border. It seems to me that so long as the Government maintain their totally contradictory pose, smuggling will once more come back to the border in a big way.

[Tom Brake]

Indeed, and it might be a growth industry. When I was in Northern Ireland, the people who were taking me around pointed out a number of large homes and suggested that they might have been acquired through not entirely legitimate means. The Government might be reopening that way of doing business. We also know what has happened with regard to common agricultural policy payments, and with cattle or fuel being transferred from one side of the border to the other within a shed. That long-standing problem has the potential to become an even greater one, courtesy of what the Government propose.

[Graham P. Jones (Hyndburn) (Lab)]

If we are outside the customs union, it suggests that there will be a hard border, but if we follow the Government’s logic that that will somehow be mitigated and we will have an open, frictionless border, surely the border will simply have to be around Great Britain—it will have to be at the Scottish and Welsh ports. Does the right hon. Gentleman agree that if Northern Ireland is treated separately, that will cause a constitutional problem?

[Tom Brake]

Absolutely, and that is why I believe that the question of Ireland and Northern Ireland is the most challenging of the three. The Government could and should have resolved the question of EU citizens 15 months ago by simply saying to them, “You have the right to remain.” The settlement bill is clearly very difficult politically for the Conservative party, because many of its Members are on record as saying, “We won’t give the EU a single penny; in fact, they owe us loads of money,” so they now have a difficult political position to adopt if they say that they support a payment. We do not know how much that will be, but one figure that has been mentioned is £40 billion, and an interesting article in The Sunday Times a couple of weeks ago, which seemed to be flying a kite, referred to £53 billion. Although that question could be resolved at the cost of some political pain, no one has put forward any solution to the issue of Ireland and Northern Ireland that does not involve some sort of control. That might be ad hoc control, and it might not be directly at the border, but some sort of control will be required.

[Richard Graham]

The right hon. Gentleman has touched briefly on citizens’ rights. Given that both sides have said that that is their absolute top priority, can he explain why the European Union turned down our proposal to treat citizens’ rights first, on their own, so that the matter could have been agreed in perpetuity, regardless of what happened to anything else?

[Tom Brake]

That might be an issue on which we agree. If we are moving towards a no-deal scenario, there is an overwhelming case for parking the issue of EU and UK citizens’ rights and resolving it, because it is a question of humanity and giving safety and security to the 3 million EU citizens here and the 1.2 million UK citizens in the EU.

The border between Ireland and Northern Ireland has 275 crossings. If there is to be some sort of control, will it be at each and every one of those crossings? Presumably not; otherwise, the number of people that HMRC is going to have to recruit would be much greater than the 3,000 to 5,000 it already needs.

[Alison Thewliss (Glasgow Central) (SNP)]

The right hon. Gentleman is making a good point about border crossings. I have spoken to someone who has the border going through their kitchen. Does he agree that that would pose a practical difficulty for them, should they wish to get to their cake and eat it?

[Tom Brake]

Presumably they would have no difficulty in smuggling their cake from one side of the border to the other.

If some of those 275 border posts were closed down, many issues would ensue. I have heard examples of graveyards with entrances on both sides of the border, and of children going to school and people going to work across the border from where they live. If border crossings were closed, as happened during the troubles, that would be a major issue for Ireland and Northern Ireland. If I were to speak for the next couple of hours, that might give the Minister time to work out what the solution is. Clearly there is not one yet, but perhaps that would enable him to go away and find one.

[Ian Murray]

I am delighted that the right hon. Gentleman is making these arguments about the Irish border. This is not just about a physical border; it is about what this says symbolically. There has been no border on the island of Ireland since the troubles, and the symbolism of reinstating one should be avoided at all costs.

[Tom Brake]

The hon. Gentleman is right, and I thank him for pointing me in that direction. Clearly, there would be substantial economic problems associated with a border, but the fundamental problem would be the message that would be sent out to those who want to cause trouble, if there were to be a British presence on the border. That would be a step in the wrong direction in terms of a united Ireland and it could give such people a reason to resume the troubles. That is the major risk, which is probably why the Government and the European Union are both saying that progress is being made. No one wants to admit that this remains a problem without a solution, because of its potential to generate trouble.

I have referred in interventions to the port of Dover. Many Members will have visited it, as I have done, and I certainly recommend it. The first thing to know about the port of Dover is that it is not really a port. The port authorities clearly state that it is in fact a bridge. I have stood in the control tower and watched the trucks flowing virtually seamlessly—that is an interesting word; perhaps the Government could look at how things operate there—on to the ferries. They slow down and go into channels and if they are lucky they can drive straight on to the ferry while the trucks coming into the UK are being unloaded from the lower deck. There is nothing to stop those trucks getting on to those ferries. They are not booked on to a specific ferry; they just turn up and drive on to whichever one is there. The only checks that the UK is carrying out on trucks coming into this country are related to smuggling, and they are done on the basis of intelligence, rather than, for example, on the basis of checking one truck in every 100. That is why the system flows smoothly.

[Martin Whitfield (East Lothian) (Lab)]

The right hon. Gentleman is making an excellent speech. Has he heard the often-quoted statistic that if each truck were held back by just two minutes, we would have a 17-mile tailback? Is he as pessimistic as I am in thinking that two minutes is a remarkably short period of time to stop each truck, even simply to ask where it is going?

[Tom Brake]

Absolutely; I do have those concerns. It is worth knowing that when the 17-mile tailback occurred two years ago, it was the result of just two French border officers not turning up for their shift. The 20 sq km lorry park—whose construction has now been kicked into the long grass because of the judicial review—would accommodate 3,500 lorries. However, 10,000 lorries go through that port each day, so a lorry park that would accommodate 3,500 lorries will not do very much if there is severe disruption at the port. That is why one of the options the port is considering is to create lorry parks all over the country. In the event of a delay, the port could text drivers in, for example, Leeds or Edinburgh to say, “Sorry, we’ve got a bit of a problem at Dover. Don’t bother coming, because if you do, the town will collapse. Just stay in that lorry park and we’ll tell you when it’s safe to come down.”

[Richard Graham]

We have heard much of what the right hon. Gentleman is saying before. No doubt he will have heard the mayor of Calais and the head of the port there saying that no deal would be a catastrophe for them as well. Does that not encourage him to believe that good sense should prevail, and that we can arrive at an arrangement that suits those on both sides of the channel equally well?

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[Tom Brake]

Like the hon. Gentleman, I would like good sense to prevail. However, when the Government seem to be planning for no deal, there does not seem to be much good sense available. I shall say a bit more about Calais in a moment.

As I was saying, Dover has what is effectively a bridge between Dover and Calais. The Minister was very frank when I intervened on him earlier, saying that any level of disruption and delay in the processing would have a significant impact. That is true, and that is what he will have heard from the port of Dover. Unfortunately, nothing that the Government have come forward with as a solution is likely to provide the answer.

I want to touch briefly on the issue of Calais. We have said a great deal about the need for the UK to be prepared in terms of our customs systems, of what we are going to do on the border and the approaches to the border, and of how we are going to put in place the 3,000 to 5,000 members of staff needed at HMRC and the 1,000-plus at the Home Office. The same will be true at Calais, and at the ports in Belgium and Holland. We could have fine-tuned everything at our end, but if they do not do the work on their side, there could still be a problem with ferries getting to Calais, for example, and having nowhere to discharge their trucks. So unless everyone else is just as prepared as we are, we could still be in an almighty jam. Before I was elected, I used to work in the IT industry. If anyone thinks that we can have an IT solution in place that will cope with a no-deal scenario in March 2019, they really need to have their head examined, because achieving that is an impossibility.

Madam Deputy Speaker, you will be pleased to hear that I am not going to take full advantage of the two hours available to me, and I would like to conclude by commenting on the Government’s apparent solutions to these customs problems. We know that they are preparing a contingency plan for no deal. I have not seen anyone on the Government Benches nodding their head and saying, “No deal is a fantastic thing and we really need to press for that”, so this is their opportunity to intervene and say that no deal would in fact be fantastic for the UK. No one is doing that, however, so I have to assume that nobody on that side wants that, even though the Government are apparently planning for it.

We are therefore left with two options. The first is a highly streamlined customs arrangement. Now, reading between the lines, I am absolutely certain that a “highly streamlined customs arrangement” means a border between Ireland and Northern Ireland. It does not mean “frictionless” or some high-tech, blue-sky-thinking solution that does away with the need to check the contents of trucks. One of the Government’s solutions therefore involves a border between Ireland and Northern Ireland and all the associated complications.

The other solution is a new customs partnership. I must say that the customs Bill paper makes for entertaining reading, and I am sure that Members on both sides of the House will have read what it means. It will be

“an innovative and untested approach”—

that reassures me—

“that would need to be discussed further with the EU and businesses”.

The customs Bill paper was published in October, so there is not much time left to discuss that arrangement with the EU and businesses. The paper also states that

“the Customs Bill could not be drafted to specifically provide for the implementation of this outcome. Should negotiations conclude that future customs arrangements with the EU should follow this model, further domestic primary legislation may be required.”

As for how many times a statement can be caveated in one paragraph, I think that is probably five or six, so good luck to the Government if they plan to roll out that particular solution—the blue-sky solution that no one has thought of, has programmed for or has any hope of implementing any time soon.

It will be to the relief of Government Members that I will conclude at this point. Nothing we have heard so far from Ministers gives me or anyone on the Opposition Benches any reassurance that in March 2019—or even at the end of a two-year transition period—the Government will be in a position to have a smooth customs arrangement that prevails on the border between Ireland and Northern Ireland or a smooth, seamless, frictionless border, or bridge, at Dover and Calais.

[Vicky Ford (Chelmsford) (Con)]

The Taxation (Cross-border Trade) Bill is important, because customs matters have been governed by EU law for many decades, and Britain needs its own primary legislation on customs. A good Government need to be prepared for all eventualities, but while the Bill would provide customs legislation in a no-deal scenario, I am glad that the UK is instead looking for more bespoke solutions. We should not just cut and paste the customs procedures that we use for products from far-flung parts of the globe on to our trade with Europe. Goods that travel long distances can have their customs paperwork cleared while they are on the sea or in the air, which would be much more challenging for our cross-channel activities, let alone those between Ireland and Northern Ireland.

[Tom Brake]

Will the hon. Lady give way?

[Vicky Ford]

No.

Furthermore, EU-UK trade covers vast quantities of goods. Honda estimates that it alone transports 2 million parts across the channel every day. Additional paperwork or delays add costs and hit competitiveness, and companies—both UK and EU companies—need time to adjust to new procedures. We need a specific deal. We need a transitional period.

The legislation covers customs matters, but it does not cover many other activities that happen at our ports and airports, such as tackling counterfeit goods, detecting firearms or plant and animal health checks. The latter—the so-called sanitary and phytosanitary checks—will be a particularly sensitive element of any future trade deal, and we here should not underestimate how seriously our counterparts in Europe take the issue of counterfeit goods, not just fake handbags, but dangerous electrical goods, fake chemicals and fake medicines. Britain and Europe are stronger when we face those sorts of challenges together. Our trading partners will want to ensure not only that we have custom laws and processes, but other procedures and the ability and commitment to police them properly.

Mr Barnier said today that if the UK wants an ambitious partnership, we must also find common ground on food standards and product standards and on many other areas. I say back to Mr Barnier that the vast majority of people in this country want that amicable partnership and a close trading relationship, so please—I know that this is difficult as there is no Government in Germany—let us move on to the detailed negotiations, so that we can find that common ground together.

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[Mr Leslie]

That, of course, is exactly why the amendments tabled by my hon. Friend the Member for Edinburgh South should be accepted and embraced by Ministers and by Labour party Front Benchers. I am sure my hon. Friend the Member for Oxford East (Anneliese Dodds) will reflect on that. We should fear such tariffs, because they might not just be one-offs. Products can sometimes cross a border multiple times and accumulate tariffs.

There would be an 11% tariff on footwear, 20% on beverages, potentially 45% on cereals and 50% on meat products. Those are serious impediments to some major industries in the United Kingdom. We can prepare for a tariff regime, but as stated in the amendments tabled by my hon. Friend the Member for Edinburgh South, we do not wish to impose tariffs on goods traded with our nearest neighbours in the European Union. In essence, we want to replicate the customs union arrangement we currently have.

I am delighted with the amendments, and I want to ensure the House has the opportunity to voice support for them this evening. It is a shame that, in Committee on the European Union (Withdrawal) Bill, the amendments on the customs union have not been selected, so we will not get a chance to vote on customs union issues in Committee. In many ways, we now have an opportunity to do so.

[Tom Brake]

I also want the House to have the opportunity to vote on the amendments today, and I look forward to it. Has the hon. Gentleman been following the question of local content in cars? The UK could, of course, be in a very difficult position whereby the local content of the cars we manufacture would not be high enough to allow us to sell any of them abroad.

[Mr Leslie]

The question of rules of origin, of course, is the other factor in the debate about the customs union, because it is not just a question of tariffs; it is about what proportion of these products originates from within the United Kingdom and what proportion relates to components or other parts that may have come from the inventory or warehouse of the whole European Union. Currently, under just-in-time arrangements for warehousing, a car manufacturer located in the UK can avoid the need to stack up expensive inventory. It can assume that goods and parts are able to be transmitted within a matter of hours or days, which is what we risk losing if we end up with such tariffs and impediments at our borders.

[Tom Brake]

Is the hon. Gentleman aware that, apparently, the solution the UK Government are proposing to rules of origin might be to ask the European Union to allow its content to be included as part of our local content?

[Mr Leslie]

Some solutions have to be forthcoming. I have high hopes for the Minister’s winding-up speech. I do not know whether he is able to say anything about that suggestion, or about any other part of the negotiation.

Let us remember that the customs union currently allows a vehicle manufacturer to sell a car in Berlin as easily as in Birmingham or Bradford. That is the nature of the market we currently have, but it could end if we impose tariffs at the levels to which the motion paves the way.

Earlier, the right hon. Member for Carshalton and Wallington (Tom Brake) raised the border with Northern Ireland, and my hon. Friend the Member for Edinburgh South talked about how the Belfast agreement is one area where that question is crystallised most of all. I cannot think of any hon. Member who would say that there should be a hard border between Britain and Northern Ireland. If we are not to have such a border, there should not be a hard border between Northern Ireland and the Republic of Ireland. Of course there cannot be a hard border between the Republic of Ireland and the European Union, but, somehow, we are talking about instituting a hard border between the European Union and the United Kingdom. The logic of that, as the right hon. and learned Member for Rushcliffe (Mr Clarke) said earlier, completely falls to pieces. We are still waiting for that blue-sky solution, the kite flown in the recent trade White Paper. The Irish Government are now asking for written proposals from UK Ministers on those points.

These are serious questions, and a lot of it roots back to whether we will find ourselves voluntarily opting for circumstances in which we want tariffs, hard borders and rules of origin checks to be put in place. By supporting the amendments tabled by my hon. Friend the Member for Edinburgh South, the House has a way to signify that, actually, we choose a different course by choosing to retain as much as possible of the frictionless free trade and tariff-free area that we currently enjoy in the customs union.

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[Anna Soubry (Broxtowe) (Con)]

I rise not only to support those excellent amendments, but to make it clear that I shall be voting for them. That is because I made it clear in the run-up to the general election in June that I would continue to make the case for the customs union, the single market and the positive benefits of immigration to everybody in Broxtowe. Having been returned to this place, admittedly with a diminished majority but with an extra 1,800 votes, I take the firm view that to be true to the words I have said and to my conscience, I am going to vote for these amendments. It is an absolute pleasure to follow some of the excellent contributions we have heard tonight, notably those of the hon. Members for Nottingham East (Mr Leslie) and for Edinburgh South (Ian Murray), and the right hon. Member for Carshalton and somewhere equally pleasant—

[Tom Brake]

Wallington.

[Anna Soubry]

Exactly—somewhere equally pleasant.

The pleasure I have in speaking in this debate is primarily this: the fact that we are actually having a debate and, moreover, we are actually having a vote. We are providing this House and this place at last with an opportunity to have a real and meaningful say in the future of our country, which has been denied within this place ever since 23 June 2016. If only the Government had at that time—I can understand why in many ways they could not—looked to build a consensus and to find what elements united us far more than had divided us during the EU referendum debate, we would not be in the unholy mess we are undoubtedly in today. As this Brexit reality or nightmare begins to dawn increasingly on the people of this country, we see that this scenario of either deal or no deal is not the real option facing the British people. We are being painted the idea of the hard Brexit as something that we should prepare for, and although it is right of the Government to be responsible and examine that, the reality is that we are more likely than not to not get a deal.

Not only are all the things the Prime Minister promised and said she did not want—no deal—likely, but in quarters of this place some people are positively urging and welcoming that. I find it utterly perverse and bizarre that my party, the party that has always been so proud to be the party of business, is increasingly being seen as the party that no longer represents business in this country. Let us be absolutely clear: the overwhelming majority of businesses, not just in Broxtowe, but the length and breadth of this country, do not want a hard Brexit. This is not just a choice between a hard Brexit—that no deal—or a bad deal, because there is a third option, one that has not even been debated and until tonight has certainly not been voted on. I refer to this third way; tonight we are talking about the customs union, but in my view this also includes the single market.

I am not going to repeat the excellent arguments advanced by the hon. Member for Edinburgh South, but I absolutely endorse all the arguments he made and the interventions that he took from other hon. Members who also see the value of the customs union. It delivers what I think the British people want. Overwhelmingly the majority of people in this country are thoroughly cheesed off with the whole darned thing; they are fed up with Brexit. They are fed up with the arguments and the squabbling. I am going to be blunt about it: they are getting fed up with a Government who have still not worked out what their policy is for the transitional deal or for the final deal. Some might say that that is shameful, given all the time that has progressed since we jumped, as I fear we did, into triggering article 50. Some of us—my goodness, we know how we got all the attacks for having said this— did caution the Government, saying, “Please don’t trigger article 50 until at least the Germans have had their elections and that stable Government have been put in place.” I get no pleasure in saying how right we were to put that caution forward. The British people are looking at all of this, they are fed up to the back teeth with it and they want us to get on with it. I do not demur from it—we should get on with it—but not in the way that a small ideological group of people, mainly in my own party, I am sorry to say, are now urging the Government to do: by leaping off the cliff and getting no deal.

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[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

It is a pleasure to follow the right hon. Member for Broxtowe (Anna Soubry), who spoke with her trademark passion in this debate on one of the most important issues to arise from the Brexit referendum vote. I admire the ingenuity of the hon. Member for Edinburgh South (Ian Murray) in tabling the amendments that have been selected. If he presses them to a Division, my colleagues and I will support him.

The British Government are intent on pursuing a Brexit strategy that does not put the economy first. In her Lancaster House speech at the beginning of the year, the Prime Minister stated clearly that the British Government intend to leave both the single market and the customs union. Like many Members who have spoken today, I could not understand for a second why the British Government decided at that stage to close off both those options, which was why I could not bring myself to vote subsequently for the triggering of article 50. No outline was given of what the British Government were going to put in place to replace two key cornerstones of our economic policy framework that have existed over the past 40 years.

[Tom Brake]

Has the hon. Gentleman, like me, spent the debate waiting for a Conservative Member to give a ringing endorsement of our leaving the single market and customs union? That has not happened, has it?

[Jonathan Edwards]

That is a valid point. When we begin to consider the customs Bill and the Trade Bill, answers will have to be forthcoming, because the House and people throughout the UK are becoming increasingly restless. We need answers from the Government about what they propose to put in place instead of those frameworks, rather than the empty platitudes we have heard since the referendum result.

The customs union is of course the largest and most lucrative trading bloc in the world. It gives us unhindered access to nearly half a billion of the wealthiest consumers in the world. It also acts as a protective measure against cheaper and lower-standard goods, thereby safeguarding our domestic producers, especially food producers, who are a vital part of the Welsh economy. Of course, the UK Government have not negotiated a trade deal since the UK joined the customs union because doing so has been a European competence. There is little expertise in the British civil service to deal with the task at hand.

In the previous Parliament, I visited Washington DC with a parliamentary delegation to scrutinise the Transatlantic Trade and Investment Partnership deal between the EU and the US. When, over a pint one evening, I asked a British Government official there how many people were on his team, he said, “Well, it’s just me.” That indicates the difficulty of getting the British civil service ready to deal with the challenges we will face with respect to our trade policy. Recent press reports about the staff and expertise required in the Department for International Trade do not give me much grounds for confidence. A huge amount of work needs to be done to get the British state ready for the shark-infested waters of modern international trade negotiations, because they are hugely complex.

I do not profess to be an international trade expert in any shape or form, but it seems clear to me that large trading blocs have far more power in negotiations than smaller ones. As I said earlier, the EU customs union is the world’s most powerful trading bloc, and it obviously helps to promote and protect our interests and those of its producers during negotiations. As we move forward, there are big questions as to whether the UK will, as an insular trading bloc, be able to perform the same tasks to the same ability.

During the aforementioned visit to Washington, we had several difficult meetings with representatives from US sectors, who all bemoaned EU intransigence. Nevertheless, the reality was that they had no option but to accept it, because the EU customs union was such a large trading bloc. I remember vividly one meeting with people from the food sector who were impressing on us the need to open up EU markets to the chlorinated chicken and hormone beef that they have in the US, as well as, of course, genetically modified products, but they knew that there was no way they would get that past EU negotiators. I wonder whether UK negotiators will be able to withstand such pressure when they start trade negotiations with the US—I doubt it very much.

[Tom Brake]

The hon. Gentleman may be interested to know that a couple of weeks ago I tabled a parliamentary question to ask how many people in the Department for International Trade had successfully completed a trade negotiation. The answer I got was the newly appointed Crawford Falconer, so there is apparently one person in the Department who has completed a trade negotiation.

[Jonathan Edwards]

That is grounds for huge concern, because these trade negotiators will be up against expert teams that have been carrying out such negotiations for many years, and this is not just about the EU deal. If it is the British Government’s intention, as one of their first options, to take on the United States in trade negotiations, I would advise them to take the advice of the experts who told the Exiting the European Union Committee in the previous Parliament that the UK should perhaps look to smaller countries for their initial trade negotiations, rather than something as powerful as the US trade lobby.

The EU customs union’s numerous existing international trade deals have already have been mentioned. Those deals cover more than 50 countries, and several other trade negotiations are ongoing. A third of all EU members’ trade outside the EU is with those countries. When the Department for International Trade was set up and the Secretary of State for International Trade answered oral questions for the first time, the first question I asked him was what would happen to all the trade deals that we already enjoy around the world. His view was that they were going to be renegotiated, seamlessly, but I fear that that showed extreme naivety on his part. Why would those countries agree to the same terms and conditions with a far smaller trading bloc, which is what the UK will be, as they agreed with the EU customs union? Surely they will want to renegotiate so that they look after and promote their own interests, rather than just accept what is on the table.

The British Government’s intended policy of leaving the single market and customs union is already having a huge impact on Welsh people’s standard of living. The Centre for Economic Performance has calculated that Brexit has already cost the average worker in Wales £448 annually, with its effect on wages and the higher cost of living disproportionately affecting people in Wales—and that is before we actually leave the EU.

With 90% of Welsh food exports destined for the EU customs union, a reckless Brexit could be disastrous for the communities I serve in rural Carmarthenshire. In a recent meeting with sheep farmers, I was amazed to find out that 50% of their produce was sold domestically, with 50% sold in Europe. Domestic markets will not be able to fill those gaps if we lose unfettered access to European markets.

It is also worth concentrating on some of the tariffs associated with food products. The average tariff on dairy products is 38%. For meat products, we are talking in the region of 58% to 70%. That would clearly make our food products destined for the EU completely uncompetitive. Farmers are preparing for 2019-20 at the moment, so they need answers now. They cannot wait for a protracted trade negotiation.

I also want to concentrate on the impact of leaving the customs union on the border between the British state and the Republic of Ireland. Much has already been said on this matter tonight and it has also had considerable media coverage, not least because the border on the island of Ireland is one of the three sticking points that need to be resolved before we reach first base in our negotiations with the European Union. Despite the fact that both sides have focused on this matter since the beginning of the negotiations, we are no nearer a solution. Indeed, press reports over the weekend seemed to indicate that things are getting even more difficult.

The British Government have miscalculated the resolve of the European Union. The EU’s overriding priority in these negotiations is maintaining the integrity of the single market and the customs union. Therefore, in choosing to leave those frameworks, the UK will become a third country—in other words, a competitor. In those circumstances, we will not get a “have your cake and eat it” solution. As the right hon. Member for Broxtowe said, the British Government are living in fantasy land. There will be no such thing as a special partnership. If we are not part of the single market or the customs union, the best thing that we can hope for is a free trade agreement similar to that of Canada. A welcome development in recent months is the fact that both Labour and the Government have agreed that a transition is a good idea, but the key question is what happens at the end of the two years.

Taxation (Cross-border Trade) Bill

Tom Brake Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Mel Stride]

Clause 31 makes provision for this country to enter into a customs union with another territory. That territory could be the existing customs union of the European Union after we have left the European Union, or it could be another territory separate from it. As he will know, such a move would be subject to a treaty and would not be entered into until a draft statutory instrument had been laid before the House and approved under the affirmative procedure, and then subsequently approved by Her Majesty as an Order in Council.

[Tom Brake (Carshalton and Wallington) (LD)]

The right hon. Gentleman says that he wants to do what is of “the greatest economic advantage to the United Kingdom”. Has he assessed whether staying in the customs union would be precisely that?

[Mel Stride]

I say gently to the right hon. Gentleman that we are going down a rather well-worn path. The answer is quite simple: in June 2016, the British people took a decision—people may have ended up on different sides of the argument, but they took a clear decision—that we would exit the European Union. As a consequence of that, we will be leaving the customs union.

--- Later in debate ---

[Tom Brake (Carshalton and Wallington) (LD)]

Let me start where the Minister started. He spoke of wanting to secure the greatest possible economic advantage for the United Kingdom, but I am afraid that what we have is a series of Ministers who are wilfully proceeding with Tory Brexit decisions that they know are damaging to the UK’s economic interests.

Some Conservative Members—although not Ministers —state openly that they realise that what the Government are pursuing is damaging to our economic interests. Some are embarrassed by that, and I shall not embarrass them by naming names; they are keeping their heads down and staying quiet. Some think that this is a price worth paying. Some believe that it will benefit the United Kingdom, although sometimes the advice that they give to others is the complete opposite of their claims to that effect.

All those who follow this debate, whether they are leave or remain supporters, ought to be aware that Ministers are advocating a move that they know is damaging to the UK’s interests and that they are doing so because on 23 June 2016, on one day of the electoral cycle, people voted to leave the European Union. People need to remember that Conservative Members who were overwhelmingly in favour of our remaining in the EU know that this will cause us damage, but are proceeding with it nevertheless. The Government will not admit that, and they will not release the information that would enable us to know it. We have already had the rather circular argument about sectoral analysis, impact assessments and so on. The one thing that the Government are not willing to do is share the information about what the economic impact of Brexit will be.

The hon. Member for Folkestone and Hythe (Damian Collins), who is no longer in the Chamber, made a very sensible point. He understands perfectly well the impact that leaving the EU and the customs union would have on the port of Dover. He rightly pointed out that countries trade more effectively with countries that are close to them. That is why the idea that there is a trade deal out there with Australia or New Zealand that will replace the trade deals that we have with the European Union is a fiction.

There have been many references to frictionless, seamless trade. That is fine; everyone wants to achieve that. The only problem is that, so far, no one has actually identified how it will work. It is great to have the aspiration, but in practice no solution is available. The same is true of the border between Ireland and Northern Ireland. The hon. Member for Nottingham East (Mr Leslie) confirmed that that can has been kicked down the road. No solution has been identified in phase 1 of the negotiations. It has been accepted that there is a huge problem, but also that the can will be kicked a little further down the road.

[Mr Simon Clarke]

The whole point is that the Irish border issue cannot be resolved until we know the wider context of the trade agreement that has been established. The right hon. Gentleman is getting the logic back to front.

[Tom Brake]

We will wait and see whether I have got the logic back to front. I suggest to the hon. Gentleman, however, that the idea that it is possible to have on one hand a completely seamless border and on the other hand a United Kingdom that is outside the European Union does not work. There must be one of two solutions. The first, relating to where that border sits, would be very unpopular with members of the Democratic Unionist party, while the second goes against everything that the party in power is advocating. I do not think that there is a simple solution, and that is why I think that the issue has been kicked down the road. I suppose people are hoping that, perhaps as a result of phase 2 of the negotiations, there will be a miracle solution that will make possible a frictionless, seamless border between Ireland and Northern Ireland, but given that no one has identified it so far in the 18 months or so that have elapsed since the referendum, I am not confident that anyone will come up with it in the time that remains.

I believe that the Bill is unnecessary and, indeed, highly damaging. It was required only because the Government have set themselves against the solution that is our staying in the customs union. The hon. Member for Gloucester (Richard Graham) tried to highlight the differences between Labour Front Benchers and some of his hon. Friends, which is easy enough to do, but he could equally have chosen to highlight the differences on the Tory Benches. At least one Tory Member, the right hon. Member for Broxtowe (Anna Soubry), considers the solution that the Government are trying to identify in all their fudges and workarounds to be staying in the customs union, and I agree with her. If there are differences of opinion, they exist on both sides of the House, not just between Labour Front and Back Benchers.

We will oppose the Bill’s Second Reading, not for—I was going to say mealy-mouthed reasons, but that might be unfair. I do not know the hon. Member for Bootle (Peter Dowd) terribly well, but I have no reason to believe that he is, in fact, mealy-mouthed. I must say, however, that Labour Members are trying to sit on the fence for as long as is physically possible, in spite of repeated interventions from their own side. At some point, they will have to jump in one direction or the other. It must be getting very uncomfortable for them, sitting on that fence. The longer they sit on it, the sharper and more uncomfortable for their backsides it will become. At some point, they are going to have to jump. I hope that they will jump in the direction that they are being encouraged to do by some of their Back Benchers and by the Liberal Democrats, the Scottish National party, Plaid Cymru and the Green party—namely, in favour of staying in the customs union and the single market long term, not just as a means of massaging support over the next few months but in the long-term interests of the United Kingdom.

As I have said, I do not want to describe Labour Front Benchers as mealy-mouthed, but there is clearly some difficulty with the position that the Labour party is trying to adopt, and I would like some clarity on this. Labour Members say that they are interested in preserving jobs, for instance, and I wonder what work they have done to assess the impact of a substantial number of job losses in the transport industry. A lot of goods are transported from the Republic of Ireland to Dover through Northern Ireland and the United Kingdom. Those involved are thinking of simply cutting out the rather complicated business of crossing the UK border altogether and instead shipping the stuff straight from Ireland to, say, Cherbourg. That would result in the loss of many jobs in Britain along the way.

We have heard many references to the VAT change, which could affect between 100,000 and 150,000 businesses. Concern was expressed earlier that some larger businesses can be quite aggressive towards small suppliers, but a lot of the businesses affected will be small businesses that suddenly find themselves in difficulties with their cash flow. I wonder what analysis the Government have carried out on that. I am afraid that, as in so many areas relating to Brexit, the answer is that there has been no impact analysis and that the Government are simply proceeding with these changes.

One of the key claims by the leave campaign was that leaving the EU was about cutting red tape. I would love the Minister to confirm that the measures in the Bill will cut red tape for businesses, but frankly I cannot see how businesses will benefit from a reduction in red tape in any shape or form as a result of this legislation. Instead, businesses that are not subject to red tape at the moment will have to take on red tape that they have never previously had to deal with. The Minister must at least try to address that point, given that one of the main claims made by leave campaigners was that leaving the EU would cut red tape for businesses.

We could talk at length about the delegated powers, as we have done on many other Bills relating to Brexit, but there is no point in rehearsing the arguments that have been made on those Bills, because the Government are clearly intent on taking advantage of the situation and cutting Parliament out of the loop as much as possible.

If the Government want to proceed in the way that they are doing at the moment, trade remedies will be essential. Members will be aware that trade remedies are currently implemented by the EU, which has more than 100 such measures in place against imports from 25 countries. To what extent does the Minister expect those measures to be replicated? Also, does he believe that it will be possible for the UK, operating alone, to have more effective trade remedies than those currently implemented by the EU with its 28 member states? Again, we need clarity, honesty and accountability. We need to hear from the Minister whether he thinks that the trade remedies available to the United Kingdom on its own will be weaker and less effective than what is currently available to us as a member of the European Union.

I welcome the fact that the Government will legislate to ensure that we can maintain a system of trade preferences for developing countries. I have already referred to the VAT issue and to the impact on red tape. I hope that the Minister can confirm that the Bill will have no red tape implications, although it is hard to see how he could possibly do so. [Interruption.] Would my hon. Friend the Member for Edinburgh West (Christine Jardine) like to intervene on me?

[Christine Jardine (Edinburgh West) (LD)]

indicated dissent.

[Tom Brake]

No. Okay. I thought my hon. Friend was poised to come in with a trenchant point. I am sure that she has one, and that she is saving it up till later.

The Government have brought forward a Bill that is needed simply because they have chosen to adopt one of the more extreme Brexit options open to them: settling for no deal whatsoever or coming out of the customs union. In those circumstances, it is clear that they will need to provide the legislation that is set out in this Bill and that trade remedies will need to be in place. I have put to the Minister some specific questions about whether he can demonstrate that the Bill will not impose an additional red tape burden on businesses and whether the trade remedies that he is advocating in the Bill are likely to be more effective for the United Kingdom than the ones currently available to us through the European Union. With that, I will happily sit down.

Taxation (Cross-border Trade) Bill

Tom Brake Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Mr Speaker]

Indeed, and we are immensely grateful.

[Tom Brake (Carshalton and Wallington) (LD)]

I hope that the penny is now dropping among those who inflicted the EU referendum and the subsequent chaos on the country as to precisely what damage this Tory farce is doing to our standing in the world and to our economy. We are two years on, yet no real progress has been made. Tory rivalries, leadership ambitions and factionalism are making this country a laughing stock, and Tory Members should be ashamed. I am sorry to say that Labour Front Benchers also often contribute to the farce.

I want to speak in favour of accepting new clauses 1 and 12 if they are pushed to a vote, and to speak against new clause 36, which is clearly a wrecking amendment. I hope that, when the Minister responds, he is able to explain why new clause 36 does not drive a coach and horses through the Chequers agreement. Everyone in the House knows that it does, but Ministers appear to be pretending that it does not. I commend the right hon. Member for Broxtowe (Anna Soubry), who is no longer in her place, for the anger and passion that she brought to the debate, and for starting to set out the consequences of Brexit. So far, the debate has been rather short on consequences. There has been a lot about aspirations, ambition, ideology and speculation, but rather little about the consequences of Brexit. Some Government Members pretend that Brexit will have no impact on the UK economy. Others are more honest, including the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), who has just left his place—

[Sir Bernard Jenkin]

I am here.

[Tom Brake]

I am sorry—the hon. Gentleman is present. He was more honest. I hope that he does not feel that I am misinterpreting him, but I listened carefully to him, as I hope others did, when he spoke on the “Today” programme on Radio 4 this morning, and I think that what he was doing, perhaps paraphrasing our outgoing Foreign Secretary, was to say, “F*** business”. He was saying that all businesses care about are profits, but I think they care about whether they are able to do the job they are required to do and provide the jobs in this country.

[Sir Bernard Jenkin]

Unlike probably the vast majority of right hon. and hon. Members, I actually used to work in manufacturing industry. I worked for the Ford Motor Company, and I also used to invest in manufacturing businesses. It really is a bit rich when people who know next to nothing about manufacturing lecture those of us who have been in business on the things we know about. Does the right hon. Gentleman dismiss the views of people such as Sir James Dyson and J. C. Bamford and the many other manufacturers who wanted to leave the European Union when we had the referendum?

[Tom Brake]

The hon. Gentleman might be surprised to hear that I also worked in business before I came into Parliament. I worked for manufacturing businesses, among others. He mentions the two businesses which he in fact can mention because they are in favour of coming out of the European Union. We have heard rather a lot about those two businesses. One has of course relocated most of its production to China, so I am not sure it is particularly well positioned to talk about these things—

[Wera Hobhouse]

Malaysia.

[Tom Brake]

Malaysia, not China.