Taxation (Post-transition Period) Bill

William Cash Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

[Jesse Norman]

Yes, I was simply paraphrasing the point that my right hon. Friend made.

Under the terms of the protocol, we need to treat goods at risk of such onward movement into the EU differently from those groups that are not at risk. On the specific details of what will be defined as at risk or not at risk, the House will be aware of the EU-UK joint agreement made this week setting out that an agreement has been reached in principle regarding the implementation of the Northern Ireland protocol. In accordance with that statement, the draft texts will now be subject to further consideration in both the EU and the UK. Once that is complete, a joint committee will be convened to adopt them formally. Further details will be set out in due course, and before the end of the year.

[Sir William Cash (Stone) (Con)]

In reply to my right hon. Friend the Member for Wokingham (John Redwood) and the right hon. Member for Orkney and Shetland (Mr Carmichael), the question of jurisdiction was raised, and perhaps it is best to use the right expression, rather than paraphrasing. The fact remains that EU officials will be there for the purposes of enforcing the jurisdiction of the European legal arrangements, which will be enforced subject to the European Court. In those circumstances, will the Minister now accept that actually there is an infringement of sovereignty in that respect? As the “notwithstanding” clauses are being taken out, there is therefore a further complication, and if I may say so respectfully, that is slightly in contradiction of his allegation that we would now take over as a sovereign, fully independent power.

[Jesse Norman]

I thank my hon. Friend for the question. He is right that it is expected that there will be EU officials. The checks will be levied and done by HMRC inspectors, and the system that we are putting in place gives effect to the Northern Ireland protocol, which, as he will recognise, already recognises the balance that is being struck in Northern Ireland between its status under the Union customs code and its status within the UK customs system.

If I may proceed, the Bill will allow the Government to put in place decisions made by the Joint Committee on goods that are not at risk of entering the EU, ensuring that they do not have to pay the EU tariff. However, if I may underline the point, this Bill does not itself seek to specify the classes or categories of goods or movements that are at risk or not at risk. Instead, that will be set out by regulations that the Bill permits us to make once legal texts have been formally adopted. The “at risk” or “not at risk” definitions will also determine whether the UK or EU tariff applies when goods arrive in Northern Ireland from rest-of-the-world countries, again in line with the Northern Ireland protocol.

In relation to the so-called “notwithstanding” clauses, as part of yesterday’s EU-UK joint statement, the Government have agreed not to introduce these provisions into this Bill, and we have also committed to remove the three “notwithstanding” clauses from the United Kingdom Internal Market Bill.

[Sir William Cash]

Will my right hon. Friend give way?

[Jesse Norman]

I suspect we are going to go around this many times, but I am happy to give way again.

[Sir William Cash]

Could I simply say to my right hon. Friend that this does raise a question? I am not going to go into it in an intervention on him, but I will in my speech. I believe that those provisions may well be needed, because we do not know the outcome of the negotiations yet. I will leave it at that for the moment. We do not know, but we have been told that the clauses are going to come out. The question of whether they should have been put in is a separate question, which I dealt with yesterday.

[Jesse Norman]

I am not quite sure where that was heading, but we have the Bill in front of us and the Government have made it clear that the so-called “notwithstanding” clauses will not be introduced.

The legislation follows from commitments made in the Government’s Command Paper on the implementation of the protocol, which was published in May. The Bill will ensure that EU goods moving into Northern Ireland remain free from customs duties or processes. Although we recognise and are addressing the challenges relating to the movement of goods from Great Britain to Northern Ireland, we should not lose sight of the benefits to Northern Ireland of having continuing access to the EU market.

In addition, this legislation will ensure that the UK customs regime applies to goods moved from Northern Ireland to Great Britain if they do not qualify for unfettered access. The Bill will also introduce anti-avoidance rules to prevent goods from being rerouted through Northern Ireland to avoid UK customs duties or associated obligations, and its measures will ensure that customs enforcement and penalties, along with review and appeal processes, are in place in relation to duty and that they continue to work alongside EU legislation in Northern Ireland and can be applied, where required, to movements of goods between Northern Ireland and Great Britain.

--- Later in debate ---

[Anneliese Dodds]

Of course we need application and a determination to conclude a deal on both sides; that surely is obvious. But the fact remains, as I will go on to describe, that it was the UK Government that, rather than tabling this Bill many weeks ago, which they could have done, decided to effectively retain provisions that threaten to break international law. That is on the Government’s head, and it is something that the Government must surely be responsible for.

The irresponsible approach that we have seen recently speaks to a wider pattern over the last 12 months of recklessness with public finances, broken promises to the British people and short-term thinking that is doing long-term damage to our country. The Prime Minister promised the British people that he would get Brexit done. He said he had an “oven-ready” agreement. Whatever he has got cooking ahead of his dinner with von der Leyen tonight, my message to him is to get on and deliver what was promised.

[Sir William Cash]

I would just like to point out to the hon. Lady that Labour Governments, not to mention Conservative Governments or the coalition Government after 2010—there is a host of examples by a number of Governments—have passed treaty overrides, on exactly the same principles relating to Finance Bills, in the past. If she wants to construe that as breaking international law, she can, but the reality is that it is consistent with article 46 of the Vienna convention.

[Anneliese Dodds]

I am pleased that the hon. Gentleman mentions that situation, because it has been referred to by those who favoured the Government’s approach previously. However, I gently state to him that if he is referring in particular to provisions against tax avoidance—the example of a general anti-avoidance rule—then, sadly, I believe he is mistaken. In that case, that commitment and the ability to apply such rules was actually a fundamental principle agreed to by this country as part of a multilateral agreement that it concluded with the OECD, so I fear that that example is not as telling as he may wish it to be.

With just three weeks to go until the end of the transition period, the Government published late yesterday afternoon the 116-page Bill that we are discussing now, setting out detailed new rules for tax and customs duties. Members of this House have been given less than 24 hours to scrutinise a major piece of post-Brexit legislation that will impact businesses and individuals across the country, especially in Northern Ireland. Many of the clauses in the Bill, particularly those covering customs and excise duties, require the Treasury to make regulations that will set out the actual detail of its proposals at a later date, so even with the publication of the Bill, businesses and individuals still do not have the information they need to prepare for the end of the transition period.

Earlier today, the Chancellor of the Duchy of Lancaster said there would be “further clarity” forthcoming on these matters, but again without saying when. In fact, the Minister talked a few moments ago about those details coming in due course. His letter to Members spoke about the fact that there would be information on this later; “in the coming days” was the formulation at that time. How can he really expect businesses to plan on that basis—on the never-never up to 1 January?

This last-minute approach was not necessary. It is no use pointing to the complexity of the ongoing negotiations. We know that this Bill could have been published a long time ago because the Government have been floating a Finance Bill for months, so why yet another last- minute scramble? My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) set it out very clearly: because the Conservatives had a not-so-cunning plan to use this Bill as negotiations reached a critical point by threatening to override the withdrawal agreement. At a time when we are seeking to negotiate new trading relationships across the international community, and when the Government are trying to project an image of global Britain to the world, this tactic certainly sent a clear message, albeit not the message the Government intended.

It is welcome that the Government finally saw sense yesterday, although we have already seen damage being done. Both in relation to the provisions in the Bill and more generally, the time is running out to ready our country for the challenges ahead. The Public Accounts Committee was clear last week that:

“Government is not doing enough to ensure businesses and citizens will be ready for the end of the transition period”.

It expressed concern at reports from industry bodies that the Government had not provided the key information needed for businesses to prepare. Indeed, the Committee indicated that more than a third of small and medium-sized enterprises still believed that the transition period would be extended.

The Cabinet Office has admitted that it is well behind in recruiting the customs agents desperately needed for 1 January, despite more than £80 million having been spent so far. Yet again, earlier today, the Chancellor of the Duchy of Lancaster refused to specify exactly how many additional customs agents had been recruited. Overall, £4.4 billion has been spent by the Government on preparations for Brexit and the end of the transition period, yet we are still not ready.

--- Later in debate ---

[Sir William Cash (Stone) (Con)]

I simply would like to put on record it on Second Reading the fact that, as I made clear in a point of order earlier, consideration on Report will take place next week and a lot will happen between now and then. The UKIM Bill at the moment has the “notwithstanding” provisions in it; they have not yet been taken out. We do not yet know what will transpire this evening or at any point between now and the Report stage of this Bill next week. Therefore, I have given instructions for the tabling of amendments to reinsert the “notwithstanding” provisions for the purposes of this Bill, which would have appeared but for the fact that the decision had already been made yesterday, before a statement was made to the House of Commons. That was dealt with today in principle, although not the question of what actually is going to be done. Therefore, for practical purposes, all I need say on Second Reading is that there are relevant provisions within the scope of this Bill, in clause 9, which is entitled “Recovery of unlawful state aid”.

Earlier this afternoon, I chaired, as I always do on Wednesdays, the European Scrutiny Committee. We have a 10 or 15-page paper on this question. The report, which will be signed off today and then published, covers reform of state aid rules and potential implications for the UK and includes a full description of what the state aid rules would mean; what the evaluation is at the moment by the European Commission; what it intends to do with respect to state aid in relation to enforcement proceedings; matters of sovereignty regarding the United Kingdom; the timetable for amendments to the EU state aid rule book; and the continued relevance of EU state aid law to the UK.

I am reading out some headline points, which also include infringement proceedings for state aid granted before 31 December; state aid law under the protocol on Ireland and Northern Ireland; state aid commitments—this is of course highly relevant to what the Minister said at the beginning, and I strongly advise him to read the report carefully—and state aid commitments in the EU-UK trade agreement, which the Prime Minister is going to be discussing today, and we do not know the outcome of that; the impact of EU subsidy controls on the competitors to UK businesses; and article 10 of the protocol on Ireland and Northern Ireland, which my right hon. Friend the Member for Wokingham (John Redwood) referred to. Indeed, I did too this afternoon, when my right hon. Friend the Chancellor of the Duchy of Lancaster made his statement and I pointed out that not only do I agree 100% with what the Prime Minister said at Prime Minister’s questions on all those relevant matters, wishing him well for this evening, but that what the Chancellor of the Duchy of Lancaster announced yesterday, in principle, and then reaffirmed today must not be allowed to undermine the unfettered sovereignty of the United Kingdom Parliament. That sovereignty is based on the referendum, the votes, the Acts of Parliament that everybody in this House on the Government Benches and the House of Lords agreed to, and, for that matter, section 38 of the European Union (Withdrawal Agreement) Act 2020, which was passed by a majority of 120 in this House—not a word of dissent from the House of Lords and not a word of dissent from any Member of this House.

In conclusion, I intend to table these amendments to examine the question when we get to the Report stage next week.

[Mr Carmichael]

Will the hon. Gentleman give way?

[Sir William Cash]

It is always a pleasure to give way to the right hon. Gentleman, with whom I have been jousting on these questions for the best part of 20 years.

[Mr Carmichael]

I hate to think it is the best part, but certainly it has been almost 20 years. The hon. Gentleman gives an interesting list of topics that his Committee has considered. The actual, practical application of these matters will be very different if the ratio decidendi in the Factortame case continues to have application in Northern Ireland post 31 December. Is that a matter he has considered, and what impact does he think it has on these things?

[Sir William Cash]

As somebody who has taken a great interest in Irish matters since I came into this House, I can only say the answer to that is yes. However, I also know that there is an enormous amount of malicious rubbish talked about the implications for the hard border. We are not going to impose a hard border. If anybody does, it will be the EU. If the EU gets its way on these matters, believe me, we are going to end up with difficulties that will have been created by the EU, not by us. I remember Martin Selmayr saying that the price the United Kingdom would have to pay would be the loss of Northern Ireland. I mean, it is as bad as that. I therefore say that I do take a great interest in it, because I want the Union to survive and to prosper. I believe it can, but it will not be able to if we end up with provisions that undermine the sovereignty of the United Kingdom Parliament.

On the specific question of state aid, that is a matter within the scope of the Bill. I therefore expect our amendment to be able to be called. Precisely what I do about it at that time will depend on the outcome of the negotiations, but I am not going to buy a pig in a poke and accept the idea that it is all over and done with because somebody who happens to be a Government Minister made a statement yesterday from Brussels and then came to the House to put forward his case today. We have not seen the details, so I want to reserve my position until I know exactly what the outcome of the negotiations is. I would warrant that the 70% of the British people would agree with me.