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

Kevin Hollinrake Excerpts

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

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I beg to move amendment (a), at end add

“; but any such provision must not place the United Kingdom in breach of its obligations under the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community which entered into force on 1 February 2020, and specifically its obligations under the Protocol on Ireland/Northern Ireland of that Agreement.”

It is 1,629 days since the UK voted to leave the European Union. In that time, our country has managed two general elections, and we are now on to our third Conservative Prime Minister. It is just 23 days until the United Kingdom’s transition period following its exit from the European Union comes to an end, yet this afternoon, we still have little clarity on the Bill that the Government tell us they will present tomorrow to set the legal framework for future taxation in Northern Ireland, for value added tax, for aviation fuel duty, for insurance-premium tax and for state aid rules.

With less than four weeks to go, the single sheet of A4 in front of us is almost all the detail that the Government have shared with Parliament about their new tax plans for next month. The only other information we have is that, just over two hours ago, the Government confirmed that they would withdraw clauses 44, 45 and 47 of the United Kingdom Internal Market Bill and that the provisions of the Taxation (Post-transition Period) Bill would reflect the same approach. The Minister recently tabled a written ministerial statement to that effect, although he offered little more this afternoon by way of further clarity.

The clock has been ticking ever more loudly. People in this country might reasonably have assumed that by this late date, it would already be clear what the Government’s plans for Britain’s future were. They might have assumed that by this late date, there would be a clear agreement on our future relationship with the European Union.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Member makes an interesting point about the late stage of these negotiations. Who is she blaming for that—the United Kingdom Government or the European Union negotiators?

[Bridget Phillipson]

Time is ticking. We want to get a deal. We are frustrated that at this point, we still do not have a clear understanding about our future relationship. If the hon. Member shares those concerns, I suggest that he raises them with his own Prime Minister.

People in this country—especially those who live near our 300-mile border with the European Union, or those who live in or near our port towns and port cities —could be forgiven for expecting that trading relationships and rules on the movement of goods would long since have been finalised. Such reasonable assumptions would not have been partisan. After all, we have the Prime Minister’s own word for it: to leave with no deal would be a “failure of statecraft”.

One thousand six hundred and twenty-nine days is a very long time in which Ministers have chosen not to address the issues that leaving the European Union raises. It is 1,421 days since the Government announced that we would be leaving the single market. It is 1,350 days since the Government notified the EU of the United Kingdom’s decision to trigger article 50. It is 1,240 days since the Brexit talks began and 886 days since the Chequers plan was announced to the current Prime Minister by the previous Prime Minister. It is a little over 500 days since the Prime Minister took office. It is 320 days since the European Union (Withdrawal Agreement) Act 2020 became law. They have had ample time.

--- Later in debate ---

[Alison Thewliss]

It is very difficult to understand anything that the Prime Minister says because he swivels around on just about everything that he has ever said. He had two positions on whether we should leave the EU, so who knows whether he has an oven-ready deal, an oven or even a microwave? Who can really tell? It is quite difficult to establish that. Perhaps, Madam Deputy Speaker, we could have a TV mounted in the Chamber somewhere showing BBC live news so that we can keep track of what is happening in the negotiations, as the new Brexit countdown calculator they have in the corner ticks away.

It is no secret that these negotiations have been difficult and that the UK Government have not helped themselves as we have gone through them. The UK’s leaving the EU, because of the attitude that the UK has taken, was always going to be the messiest of messy divorces, but the Government have done absolutely no favours in the way they have approached things.

The hon. Member for Stone talked for 21 minutes, I think, about things that he could not see in terms of the Bill that is supposed to be being brought forward tomorrow. The Minister said from the Dispatch Box that he was no better sighted on where things are at with the negotiations than the hon. Member for Stone, who also regards this whole situation as extraordinary. The Minister says that this is going to be debated in the normal way, but there is nothing normal about this situation here today. We go to the Public Bill Office and ask it for advice on what is in the Bill and it does not know; we ask the Library what is in the Bill and it does not know. None of this is their fault; it is the Government’s fault that we do not know what is in this Bill. It is an absolute farce.

These six resolutions and this phantom Bill are a prime example of the procedural chaos that has dominated the Government’s handling of Brexit. Before the taxation Bill has even been published, the Chancellor of the Duchy of Lancaster says he

“will keep under review the content”

relating to the Northern Ireland protocol. Yesterday, a statement from 10 Downing Street stated:

“Good progress continues to be made regarding the decision as to which goods are ‘at risk’ of entering the EU market. Talks continue this afternoon. In the light of those discussions, the government will keep under review the content of the forthcoming Taxation Bill.”

At 1.16 this afternoon, we had a tweet from Maroš Šefčovič, one of the negotiators, but we still do not know the implications of today’s announcement and it is very difficult to see exactly what is going to happen. The joint statement talks about determining the criteria for goods to be considered not “at risk” of entering the EU, but we do not know what that means. It mentions an agreement in principle, but the Government have not been very principled in the way they have approached anything. How the EU can trust them I do not know.

[Kevin Hollinrake]

Every business person would ideally like to have seen the deal done and dusted some months before, but on the basis that the European Union made a commitment to an ambitious free trade agreement, are there no words of criticism that the hon. Lady is willing to use regarding its part in these negotiations that are taking so long?

[Alison Thewliss]

I think the EU has been more than patient for some time, to try to get some kind of agreement and something sorted out. The UK Government have held two general elections in that time, and we have had several different Prime Ministers. The Government have been an absolute shambles from start to end, and that is where we are today.

--- Later in debate ---

[Sammy Wilson (East Antrim) (DUP)]

I note that the hon. Member for South Cambridgeshire (Anthony Browne) talked of being part French, part Norwegian and part Irish—he had other bits as well that I did not quite pick up. Can I assure him that I am 100% British and want to remain 100% British? I have taken the stance I have against the withdrawal agreement, and the approach that people have taken to it, because it diminishes my Britishness.

I am not quite clear what is in the legislation that the Minister is introducing today, and I am even less clear now, because, according to the statement issued by the Chancellor of the Duchy of Lancaster at lunch time, whatever is in the Bill today, some of it will not be in it tomorrow. As far as I am concerned, the parts that are important seek to manage the parts of the withdrawal agreement that are damaging to the Northern Ireland economy and to the internal market of the United Kingdom, which are underpinned by the Act of Union. Those are the important parts for me. It seems that they might well be removed from the Bill before it even gets to the Floor, or certainly they will not be exercised.

Why do I believe that protections are needed? The withdrawal agreement intervenes and undermines many parts of the Northern Ireland economy. It also damages the Northern Ireland economy’s relationship with the biggest market for Northern Ireland businesses, which is the market in Great Britain. It interrupts the supply of goods from the main source of the supplies that we receive in Northern Ireland, right down to basic foodstuffs, the equipment required by manufacturers and the parts required by producers in Northern Ireland who then export their goods across the world. The withdrawal agreement seriously undermines that and the interpretation of the withdrawal agreement by the EU even goes beyond what the agreement said and what the Government expected from the agreement.

Let me give just one example: goods at risk. According to article 5 of the protocol, exemptions could be made, determined on the basis of

“the final destination and use of the good; the nature and the value of the good; the nature of the movement; and the incentive for undeclared onward-movement into the Union, in particular incentives resulting from duties payable pursuant to paragraph 1.”

Yet despite the fact that some goods clearly do not present a risk under any of those criteria, the EU was insisting up until this week—I do not know what has happened at the Joint Committee; we will hear from the Minister tomorrow—that even supermarket goods brought from GB to Northern Ireland for shops that did not even have outlets in the Republic would be regarded as goods at risk. Goods that had been freely consumed across the EU for the last 40 years, made in GB, from which nobody died of poisoning or had their health affected, were no longer acceptable.

[Kevin Hollinrake]

The right hon. Gentleman is making some very good points. He is clearly saying that the European Union is being difficult in these negotiations. Is he therefore surprised that there was not one word of criticism for the EU’s role in the negotiations from the SNP or the official Opposition?

[Sammy Wilson]

No, I am not, and the reason for that is that from the day that the people of the United Kingdom voted to leave the EU, the cheerleaders for the EU have been those sitting on the Opposition Benches—apart from the Members from my own party. At every stage, it has almost been as if the EU had its representatives sitting in this Parliament. The Labour party in particular suffered from that, because many of its patriotic supporters asked, “What kind of representation are we getting, where these people are seeking to undermine our country, rather than uphold our sovereignty and the result of the free vote that the people of the United Kingdom undertook in the referendum?”

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I add my comments to those of my hon. Friend the Member for West Bromwich West (Shaun Bailey), with his optimistic tone. I, too, am optimistic about the future; despite the fact that I have never looked at Brexit through rose-tinted spectacles, I have never argued that this country cannot succeed economically outside the European Union. I welcome some of the measures in this proposed Bill, particularly on creating a fairer and more level playing field for our small and medium-sized enterprises—I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

Before talking about that, however, I would like to talk about the national interest. I think it was Churchill who said that in our parliamentary duties we should put country first, constituency second and party third, yet all I have heard from the Opposition and the SNP today is putting their party interests first.

[Alison Thewliss]

What the hon. Gentleman is missing is that we have a different definition of nation, and our interpretation of Scotland’s national interest is quite different from the UK’s national interest that he sees.

--- Later in debate ---

[Kevin Hollinrake]

I have heard quite a lot the argument that Scotland did not vote to leave the European Union, but that is not how the votes were added up. This was a national, United Kingdom vote. Those were the terms of the referendum, which were voted for in this House. That is how the entire nation voted, and we are leaving the European Union. Some of us will be less happy about that than others, but nevertheless, that is what we are instructed to do and what we should do.

For the Opposition, the hon. Member for Houghton and Sunderland South (Bridget Phillipson) said time and again that the Government were irresponsible in these negotiations. Can I just remind her that there are two sides to this negotiation? There are two sides, and I would ask which side she is on, because she is not representing the national interests in the way she is discussing these matters and blaming the Government for being in this position at this stage. Of course—and I am in business today—every business in this land would have liked the situation to be done and dusted last June, as we had hoped. However, there are two sides to this negotiation, and it has to be said that the European Union has been difficult in these negotiations.

If the hon. Lady does not believe my words about that, she should listen to one of the most reliable commentators on her Benches, the right hon. Member for Leeds Central (Hilary Benn), in his speech on 14 September. He was talking about the United Kingdom Internal Market Bill, and he said that

“I have to say that I have some sympathy with the Government’s argument: exit summary declarations should not be required for goods moving from Northern Ireland to GB. When Wrightbus sells one of its wonderful buses to a transport operator in the UK, why is the form needed and what is the EU going to do with the form?”

On goods at risk, he said that

“surely it is possible to reach a pragmatic solution, because a lorry load of goods destined for a supermarket in Belfast can hardly be described as being at risk of entering the European Union.”—[Official Report, 14 September 2020; Vol. 680, c. 64.]

Yet those are some of the matters that the European Union was negotiating on or on which it was trying to negotiate hardball.

I ask again: who does the hon. Lady think, and who does the hon. Member for Glasgow Central (Alison Thewliss) for the SNP think, is being difficult in this negotiation? Is it purely the United Kingdom? Of course it is not. Why are there no words of criticism for the European Union’s position and for leaving it this late before agreeing what should be a simple trade deal to arrange and negotiate? It has negotiated similar trade deals with many other countries around the world, and we start from a similar position with our regulations and customs duties.

[James Cartlidge (South Suffolk) (Con)]

Identical.

[Kevin Hollinrake]

From an identical position. This should have been an easy trade negotiation, but of course it is not, for the reasons that we know. Of course, there is politics behind this negotiation, and the politics in this place should be united on one side, in the UK’s national interests, but they are not. Too often, Opposition Members have represented the European Union’s negotiating position in these negotiations.

[Stephen Flynn (Aberdeen South) (SNP)]

Of course, it was the United Kingdom Government who were threatening to break international law. Does he have any similar examples from the European Union, or is it simply a one-way street as far as he is concerned?

[Kevin Hollinrake]

The hon. Member makes a fair point, but I would point him back to the political declaration, which sat alongside the withdrawal agreement, within which there were clear commitments from the European Union to agree an ambitious free trade agreement. He must accept, as commentators on that side of the fence—on the Opposition Benches—have also said, that it is clear the European Union has been difficult in these negotiations, and more difficult than perhaps many had anticipated. It is clearly in the European Union’s interests and their constituents’ interests to agree a free trade deal without this kind of last-minute drama.

[Shaun Bailey]

On that point, I am sure my hon. Friend will, like me, have seen in the press German car manufacturers begging the German Government and saying, “We’ve got to get this done. The European Union has got to get it done.” Equally, French fishermen have been doing the same with President Macron. Surely our European cousins and partners get this—that it is a bilateral thing that the European Union needs to do—but why do the Opposition seem not to get that? Perhaps he could enlighten me.

[Kevin Hollinrake]

Of course, the European Union is negotiating in its interests and is obviously trying to protect its interests in that negotiation, but one thing the European Union has done much better than we have on this side of the channel is negotiate with one voice. In this place, we have not—we absolutely have not—and that has undermined the UK’s negotiating position. If the Opposition think that the European Union does not hear what this place says, that is clearly a naive position. If the Opposition think that the European Union does not hear what this place says, that is clearly a naive position. I would argue, at this very late stage, that we work together, cross-party, to try to bring about a situation where we can get the free trade agreement that we all know is possible and can be delivered within the timescale we have left.

[Alison Thewliss]

The hon. Gentleman is making an interesting point about working cross-party. We entered into this in the spirit of cross-party working. The Scottish Government put forward constructive proposals on cross-party working that the UK Government rejected. For a long time during this process, it has been his own party that has been undermining his Government’s negotiating position. Does he not accept that that has been part of the problem?

[Kevin Hollinrake]

No, I do not. The UK Government have to take a number of matters into consideration. They have a collective position. Clearly, we cannot always get exactly what we want in terms of negotiation. My point is that we could have done better in these negotiations and there could have been less drama around them. The fact that these negotiations are concluding so close to the deadline for businesses has been brought about partly because of the divided nature of this Parliament. The hon. Lady and the Opposition should take responsibility for that position.

My point about a fair and level playing field is about the fact that many of our small businesses in the UK compete with online platforms—online marketplaces, as they are called—such as Amazon and eBay. How can it be right that for so long many of those small businesses have been competing at a 20% disadvantage? Many retailers selling into the UK are not paying VAT on those sales. I am pleased that the Government have acted on this and closed the loophole. They have closed a number of loopholes in recent years through measures such as the digital services tax and the diverted profits tax. This creates the fairer and more level playing field for the rest that I very much welcome. There is one more loophole that we could close, not in this legislation, but in the Financial Services Bill, which is going through Parliament at the same time.

Country-by-country reporting would also have a profound effect in closing loopholes that some companies are using to divert profits out of this country.

[Jerome Mayhew (Broadland) (Con)]

The Government are making an important point in this Bill in starting to look at online retailers facilitating the sale and that is making a difference, particularly with international trade. Does my hon. Friend agree that this should be expanded beyond just VAT into things like the extent of producer responsibility and other aspects of international trade?

[Kevin Hollinrake]

Yes, I do. We all know that the best way of driving down prices and driving service for our consumers—our citizens—is through a free, competitive marketplace. Our job, wherever we can, is to let that marketplace do its work. Our job is also to make sure that it sits on a fair and level playing field. My hon. Friend, in talking about regulation for some of the retailers—some of the UK businesses but not businesses abroad—makes a very sound point that the Government should consider.

Going back to country-by-country reporting, let me give an example. Google’s turnover in the UK is about £10 billion. We can work that out by extrapolating certain figures from a couple of years ago. Internationally, it declared a 22% profit margin, which means a £2.2 billion profit in the UK. Based on corporation tax at 19%, it should pay £420 million in tax on that. Last year it actually paid £67 million in tax. That cannot be a fair and level playing field for other UK retailers or other UK companies that compete against Google, particularly in terms of advertising space—many of our regional papers, for example. I would like the Government to bring forward legislation, in some vehicle or other, to tackle that issue.

I am very pleased that this loophole is being closed and I very much commend the principles and the outline of the legislation that we will see tomorrow.

Taxation (Post-transition Period) Bill

Kevin Hollinrake Excerpts

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

[Jesse Norman]

In addition, the Bill amends current legislation for excise duty to be charged when certain goods, such as alcohol and tobacco, are moved from Great Britain to Northern Ireland. The changes are necessary to ensure that there is a fully functioning VAT and excise regime in place in relation to Northern Ireland at the end of the transition period.

In line with the protocol, Northern Ireland will maintain alignment with existing EU excise rules. That means a change to excise duty is required when goods are moved to Northern Ireland from Great Britain, but the Government are adopting an approach using flexibilities and EU rules that minimises changes for excise goods moving between Great Britain and Northern Ireland.

A small number of other taxation measures also need to be in place before the end of the transition period. The Bill introduces a new system for collecting VAT on cross-border goods. That includes moving VAT collection on certain imported goods away from the border and involving operators of online marketplaces in the collection of VAT at the point of sale.

In addition, measures in the Bill will remove the VAT relief on imported low-value items so that VAT will be due on all consignments, irrespective of their value. The relief has been the subject of long-standing abuse and removing it will build on Government efforts to level the playing field for UK businesses still further by protecting high streets from VAT-free imports. Together, the changes will improve the effectiveness of VAT collection on imported goods, tackle non-compliance and protect the flow of goods at the border.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I very much support the measures that the Minister is talking about. Why is the measure just for low-value goods? There will be other goods where a similar loophole applies, such as watches or jewellery that have a value above £135. Is this not an opportunity to close that loophole as well?

[Jesse Norman]

I thank my hon. Friend for his question, and I will take that under review. We have put in place a set of measures designed to tidy up the position that particularly arises in relation to the Northern Ireland protocol, as he will be aware, and the end of the transition period, and that has meant a change to low-value consignment relief and the changes I have described. I am grateful to him for his contribution and suggestion.

The Bill also includes provision for an increase in the rate of duty on aviation gasoline, which will apply across the UK. Otherwise known as avgas, the fuel is a form of leaded petrol predominantly used in leisure flying. The change made by clause 6 of the Bill will increase the avgas rate by half of a penny to 38.2p a litre from 1 January next year. By way of explanation, the Northern Ireland protocol requires that Northern Ireland continues to comply with the EU’s energy taxation directive following the end of the transition period. It sets a minimum level of duty in euros on unleaded petrol used for propulsion. After some careful consideration, the Government have chosen to apply the change to the whole of the UK to ensure consistency between Great Britain and Northern Ireland, avoid burdens on business and reduce compliance risks for HMRC.

The Bill also includes a clause to ensure HMRC has access to the same or similar tools to prevent insurance premium tax evasion as it does at present, regardless of whether an insurer is based in an EU member state. Overseas insurers are liable to pay insurance premium tax when they supply general insurance for UK-located risks. Occasionally, overseas insurers do not pay the insurance premium tax they owe, so it is important that HMRC has access to tools that deter and tackle that form of evasion. Up to now, it has been using EU provisions to prevent evasion by insurers based in EU member states.

Separately, HMRC can issue liability notices in cases involving insurers based in any country outside the EU with which the UK does not have a mutual assistance agreement. Given that the EU provisions expire at the end of the transition period, this clause will enable HMRC to issue liability notices in evasion cases involving insurers based in any country with which the UK does not have a mutual assistance agreement, including EU member states.

Finally, the Bill introduces new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period from 1 January 2013 to 31 December 2018. This is a technical provision that will deal efficiently with the legacy state aid decision relating to the period before the UK left the European Union.

This Bill will give people and businesses throughout the UK certainty about the arrangements that will apply from 1 January next year. It will play a part in further safeguarding the unity and integrity of this country, both in the months ahead and long into the future. I commend the Bill to the House.

--- Later in debate ---

[Anneliese Dodds]

My hon. Friend is absolutely right. There is potentially a very, very severe impact from no deal, but, as I will go on to explain, there is already a concrete and very acute impact on our economy. I am particularly concerned about the situation for many businesses based in Northern Ireland.

This damage will be long lasting, likely to outlive even the impact of the current covid crisis. Our country cannot afford this. We have already experienced the steepest economic downturn in the G7 due to the covid crisis, and are predicted by the OECD to experience the slowest recovery in the G7. Just the prospect of a potential no-deal outcome is already leading to chaos in the midst of a pandemic. Stockpiling by companies, caused by the threat of no deal, is exacerbating supply blockages at our ports.

[Kevin Hollinrake]

The economic damage that the hon. Member is talking about should a deal not be agreed would also be inflicted on the European Union, particularly certain parts of the European Union, such as the Republic of Ireland. She criticised the UK Government for the way that they have negotiated. Does she have no words of criticism for the EU negotiators in this two-way negotiation?

[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.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

At least I and the hon. Member for Aberdeen South (Stephen Flynn) agree on a level playing field for business, and I want to concentrate my comments on that area. There is no question, for the best deal for consumers on prices and service, but that we need a fair and level playing field for businesses. That makes the market more competitive, which drives down prices and drives up service. It is absolutely where this Government should focus, and I am pleased to see that they are doing so in this legislation.

I am a big fan of VAT’s part in the collection of taxation. It is much more difficult to avoid than other taxes and much easier to collect. It is not a regressive tax, and I think we should try to focus on indirect taxes as we reform taxes in the future and simplify the tax system. As this closes a loophole, there is actually another area where we lose such a fair and level playing field, and that is the threshold for VAT registration. Some businesses are slightly below that and gain an advantage over others that are slightly above it. That is perhaps a conversation we should have another day.

On part 1 of schedule 3 to the Bill, I very much welcome the changed emphasis on online marketplaces in the collection of VAT duty. I understand from reports that when the changes were made in 2016, we collected about £500 million, although I am not sure what period that accounted for. I would be interested to hear from the Exchequer Secretary how much she thinks these changes will actually bring in for the Exchequer. I am pleased to see that we are closing another loophole in this way, after things like the digital services tax and the diverted profits tax. I do not think any Government in history have done more to clamp down on tax avoidance than this Government, quite rightly.

I would like to ask a couple of questions about these provisions. As I asked in my intervention, why is the figure £135? I realise this is to do with the changes in Northern Ireland to do with our leaving the European Union and the provisions in EU law for this, but why is it £135? Many products sold on the internet are also sold by UK domestic sellers who have to charge VAT, but above £135 overseas sellers may not have to, so this is another loophole that needs closing. I am not sure why, for example, someone could buy a watch from abroad that might be £500 or £1,000 and the same loophole would apply.

Similarly, this applies only to goods, not services. Many services are now sold online from abroad, such as legal services, accountancy services, IT developer services—for example, people can recruit developers from abroad through platforms such as Elance—and UK providers would have to charge VAT, but overseas providers potentially would not, so I wonder whether we can look at that. However, in the round, I am very supportive of these changes. I welcome them, and I certainly will be voting for them, if it comes to that, later today.

Taxation (Post-transition Period) Bill

Kevin Hollinrake Excerpts

3rd reading & 3rd reading: House of Commons
Tuesday 15th December 2020 Commons Chamber

[Sir William Cash]

Yes, indeed. I sometimes find that Lewis Carroll has some very useful ways of putting things. There was the famous exchange between Alice and Humpty Dumpty, in which Humpty Dumpty says: “Words mean what you choose them to mean. The question is who is to be master, that is all.” Words can be used in all kinds of different ways to try to justify propositions that are unsustainable.

I say with respect, but none the less very firmly, that in this particular case it is absolutely clear that when the decision has been taken by the British people—the voters—in the referendum and has then been endorsed by an Act of Parliament and a whole series of other Acts of Parliament, including section 38, it really is not down to the unelected House of Lords to resist it on the scale that they have, and to claim that they can override the House of Commons. We have just had a whole series of agreements and disagreements going backwards and forwards on the UKIM Bill alone.

As Lord Bingham made absolutely and abundantly clear in chapter 12 of his magisterial book “The Rule of Law”, it is for Parliament to make law and pass Acts of Parliament; it is not for the judges to intervene, to seek to make law and to impugn the sovereignty of Parliament. Anyone who wants to get the full flavour of it should read chapter 12 of “The Rule of Law”, because it is the most explicit and clear statement that one could possibly imagine.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

If section 38 of the European Union (Withdrawal Agreement) Act 2020 has such overarching reach, why are new clauses 1 and 2 necessary in this Bill?

[Sir William Cash]

Because what section 38 does is reaffirm the capacity of Parliament to be able to make such provisions in other enactments should it be necessary to do so. Because of the complexity of the United Kingdom Internal Market Bill and the issues it raises—for example, as I have said in a previous speech this afternoon, with respect to the Northern Ireland protocol itself—there remain a number of matters that are still subject not only to the negotiation over in Brussels going on right now, but to the operation of the internal market of this country. I support that Bill, but I still believe it was a mistake to withdraw the “notwithstanding” clauses, because I think we are going to find that we will need them and we may yet need to reintroduce them on a future occasion. However, it will be section 38, which is explicit with regard to the withdrawal agreement, that will give us the authority and the statutory basis for doing that, and the same applies to the provisions I am referring to here. With regard to this Bill, we had expected that the “notwithstanding” clauses would be included in it and they were not, so I have taken the opportunity—in, one might say, my usual manner—to ensure that we have an opportunity to debate this issue today.

I now turn to the reasons why I am so clear in what I have said about state sovereignty in the context of international law. The United Kingdom as a state retains its sovereign right, and it was always capable of doing this, to withdraw from the EU. The EU is an international organisation; it is not a sovereign state. On the basis of state sovereignty, it would actually be contrary to the legal position under international law that the UK would require EU consent or agreement to leave the EU, but we do have article 50 and we did implement that in the European Union (Notification of Withdrawal) Act 2017.

State sovereignty is paramount to international law. As has been said:

“If States were not sovereign, no international law would be possible”.

It is quite an interesting idea. International law would be impossible if states were not sovereign, because they combine together to create the circumstances in which it applies. Each state has internal supremacy over how governmental functions are run and is shielded from external interference without consent. The UK as a sovereign state has a right to withdraw from an international organisation, and this right is recognised by the EU treaties themselves. This is evident from the words of article 50:

“Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.”

It could not be clearer from what I have said and from what everybody knows, as they have been through this passage or on this journey, that we have been through enactment after enactment. Nobody could possibly say that we have not done it lawfully. It has been done completely in the sight of the world, and I am astonished that anyone would even consider that we had not done it in the proper manner—we have done so, lawfully and in accordance not only with our constitutional law but with international law. In short, the UK’s right to withdraw from the EU is approved and agreed by international law, and only limited by UK constitutional law and thus by our own discretion, which we have exercised.

Following the Brexit referendum, the United Kingdom exercised its sovereign right to leave the EU and, as far as I am concerned, I believe this cannot be disputed. It is quite clear that we have done what was required under our own constitutional requirements and also, in my judgment, with regard to the question of international law itself. That was confirmed, for example, by the German federal constitutional court in the Maastricht treaty constitutionality case—I am now speaking about the Germans’ view of this, but it is interesting to observe—in which it said:

“Because the German citizen entitled to vote exercises his right to participate in conferring democratic legitimacy on the institutions and bodies entrusted with the exercise of sovereign authority principally through the election of the German Bundestag,”—

this is the same point I was making about our voters being represented by our Members of Parliament who passed the enactments in question—

“that parliament must also decide what is to be done about Germany’s membership of the European Union, its continuance and development”.

In other words, the principle is a common one between us and the German constitutional court.

That is of great importance in our understanding the context in which we must have the right to legislate ourselves in accordance with what our voters expect of us. We are entitled to do that in relation to the UKIM Bill or the Taxation (Post-transition Period) Bill, and we are entitled also to have a “notwithstanding” clause if we so decide. It is not for unelected persons—whether they are distinguished or otherwise, and whether they are numerous in the House of Lords or otherwise—to interfere with that.

The UK Parliament, being the supreme body in the British constitution, has the right to enact legislation inconsistent with the withdrawal agreement—I have already dealt with section 38—thereby explicitly reversing the direct effect option under article 4 of the withdrawal agreement. That is crucial, because article 4 says that, but for the fact that we are entitled to do that, it would have direct effect. That position has been set out on the UKIM Bill, which was published in September, and it was specifically stated that we would ensure that we had a “notwithstanding” clause. That has been unwisely removed, but we may come back to that on a future occasion.

The next question is, what is the position regarding the EU’s own attitude towards international law? I am afraid to say that it is guilty of recurring double standards. Article 3(5) of the treaty on European Union states:

“In its relations with the wider world, the Union shall…contribute to peace, security…and the protection of human rights…as well as to the strict observance and the development of international law, including respect for the principles of the United Nations Charter.”

But in the Kadi case, it was held that EU law is an autonomous legal order, meaning that in order for an international agreement to form part of EU law, it must not call into question the constitutional structure and values on which the EU is founded.

In the second Kadi case, the European Court of Justice, confirming its previous findings in the first case, ruled that the EU Courts

“must…ensure the review, in principle the full review, of the lawfulness of all Union acts in the light of the fundamental rights forming an integral part of the European Union legal order, including review of such measures as are designed to give effect to resolutions adopted by the Security Council under Chapter VII of the Charter of the United Nations.”

It is worth pointing out that the Security Council resolutions in question were adopted under chapter VII, which meant that those resolutions were adopted for the purposes of maintaining international peace and security and had to be carried out by members of the United Nations directly. Article 103 of the charter states:

“In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail.”

It is clear that our capacity as a sovereign nation is endorsed by the United Nations charter as well.

What is the position regarding the necessity of these “notwithstanding” clauses in principle? I have already explained the general power to override treaties,  particularly by reference to the European Union (Withdrawal Agreement) Act 2020. In the Miller case, a majority in the Supreme Court said that Parliament, in the exercise of its sovereignty, is free to legislate in any way it sees fit, including contrary to the UK’s international obligations, thus

“the sovereign power of the Queen in Parliament extends to breaking treaties”.

That was confirmed in a series of other cases, such as in Salomon, in EN (Serbia) and in the Attorney-General of Ontario v. Attorney-General of Canada. The Supreme Court has unambiguously stated that this power is a corollary of parliamentary sovereignty. I have already referred to what Lord Bingham said in chapter 12 of “The Rule of Law”, so I do not need to repeat that.

[Kevin Hollinrake]

My hon. Friend said a few moments ago that Parliament has a general power to override treaties. How would that work in the case of the free trade agreements that we have negotiated with other nations? Can we simply override those treaties at will if we do not like the findings of an investor-state dispute service?

[Sir William Cash]

Interestingly, I made some reference to the principles that are under discussion in the current negotiations. Of course, we do not know the outcome of those negotiations as we speak—as I said in the previous debate, I wish them well—but it has to be made clear that, certainly as far as I and those of my friends who agree with me are concerned, one of the most crucial questions is that of state aid, because that issue is right at the heart of the discussions and negotiations this week. I asked the Secretary of State for Business, Energy and Industrial Strategy to assure the House that nothing in any treaty text or subsequent Act of Parliament will prevent the UK from having its own sovereign state aid rules, including on energy, so that we are not subjugated to EU state aid rules, nor to the European Court, given that the EU intends, as it has stated over the past week or two—in very bad faith, in my opinion—to impose and enforce its rules against us. Ultimately, of course, that would be done by a majority vote in the Council of Ministers, behind closed doors, without our even being at the table after 31 December. The fact is that we have to assert our sovereignty in the negotiations so that any treaty that emerges from them—if one does—must comply with the assertion of the sovereignty of this House, this country and this Parliament, and must at the same time apply whether in respect of direct or indirect effect.

--- Later in debate ---

[Kevin Hollinrake]

I am interested in my hon. Friend’s point about sovereignty over free trade agreements. In 2009, an American firm called Cargill was awarded around $90 million because Mexico had broken a free trade agreement with the United States by, in effect, banning soft drinks that were made with high-fructose corn syrup, putting Mexican producers at an advantage. Mexico acted unilaterally, with sovereignty; is my hon. Friend saying that Mexico was allowed to do that? That is not what the dispute-settlement service determined.

[Sir William Cash]

I cannot speak for that dispute-settlement service and nor can I speak for the Joint Committee that is currently considering some of these matters. We do not really know exactly what is being decided in that Joint Committee, which is why I was concerned earlier to point out that I have asked the Chancellor of the Duchy of Lancaster to appear before my European Scrutiny Committee, of which I have the honour to be Chairman and on which I have served for 35 years, so I have a little experience of how it operates. Under our Standing Orders, it is our task—our duty—irrespective of party politics, to examine matters of legal and political importance and report to the House, and we are doing that. Of course, we need evidence, and we need to have people to appear before us and give evidence, and sad to say, despite the fact that I have written four letters to the Chancellor of the Duchy of Lancaster, he has declined to appear in front of the Committee, although he seems to be happy to see the House of Lords equivalent Committee and also the Committee chaired by the right hon. Member for Leeds Central (Hilary Benn).

--- Later in debate ---

[Wendy Chamberlain (North East Fife) (LD)]

It is a shame that the Bill has been rushed through the House so rapidly. Members have had a short amount of time in which to get to grips with a rather technical and lengthy piece of legislation. The small number of amendments tabled today speaks to the incredibly tight time limits that have been put in place. Given the impact of the legislation on businesses operating across Northern Ireland and Great Britain, that concerns me, and it should concern us all.

For me, the Bill speaks to the heart of the many contradictions of Brexit—between what was promised in 2016 and what is being delivered today. We were told that Parliament will take back control, but this Executive, peopled by the same individuals who made those promises, have arguably more contempt for the legislature than any before them. That is summed up by an incredibly depressing piece of legislation, presented a couple of weeks ago, to repeal the Fixed-term Parliaments Act 2011, which attempts to engineer the first ever return of powers from the legislature to the Executive in our history.

However, the contradictions do not end there. A case in point is clause 6 of this Bill on the uprating of fuel duty for aviation gasoline, which, for me, is a microcosm of the whole Brexit process. The whole point of Brexit was to get our sovereignty back—was it not?—so that we could finally write our own laws rather than follow bureaucratic regulations from Brussels, the sort of stiflingly dull directives with boring names such as EU energy tax directive (Council Directive 2003/96/EC). We might have thought that directive was exactly the sort of red tape we would finally cut through in Brexit Britain, and yet the Bill proves that the reality is far removed from the rhetoric, because EU energy tax directive (Council Directive 2003/96/EC), which ensures that across the EU a minimum level of tax is applied on a whole type of aircraft fuel, is in this Bill being applied across the whole of the UK.

The explanatory notes rather patriotically inform us that,

“the UK is not bound to comply with the Directive in respect of Great Britain (GB) from 1 January 2021,”

but none the less Great Britain is complying with it anyway. Does that not say a lot about Brexit and the current trade negotiations, where effectively the Government have been toying with the idea of taking maximum tariff pain now in order to allow regulatory divergence that, in all likelihood, is not going to take place?

Turning now to the amendments, I agree with amendments 1 and 2 and new clause 3, tabled in the name of the Leader of the Opposition. Economic assessments have been conspicuously lacking over the past few months, covid notwithstanding: not only a lack of assessments of the impact of any potential deal with the EU, but the refusal of the Secretary of State for International Trade to tell us whether any of the trade deals she has struck will actually leave us any better off than our current trading relationships. The other conspicuous absentee when it comes to the economic impact of all this is the Chancellor. I find it very surprising that he has said very little about the threat of no deal, during a time when the UK finds itself in the midst of its worst economic crisis.

It is entirely right that we carry out proper economic assessments of all that, not least for Northern Ireland. I remember during the election campaign last year the Prime Minister was caught on camera telling Northern Ireland businesses that,

“Northern Ireland has got a great deal. You keep free movement, you keep access to the single market”.

In the words of the Foreign Secretary, Northern Ireland has “a cracking deal” because it has access to the EU market. Meanwhile, as we teeter on the edge of no deal, we are told by the Culture Secretary that things “will be choppy”, but that “we can survive”. I am sure those words will be a comfort to many of my constituents.

Finally, I turn to new clause 1 and new clause 2. During the debate on the United Kingdom Internal Market Bill earlier, I spoke about what a disaster the notwithstanding clauses in that legislation were for the future of the UK and elsewhere. I will not repeat myself, because exactly the same applies here; all I ask is for the Minister to give a guarantee that, if there is no deal with the EU, international lawbreaking clauses will not be introduced in this or any future business. We cannot afford to let a no-deal scenario be a proxy for further actions that are hugely damaging to our international reputation. For that to be the UK’s first action once it left the EU would be a truly regrettable matter indeed.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to be called to speak in this debate. I will speak particularly to new clause 1 and new clause 2 because, as my hon. Friend the Member for Stone (Sir William Cash) said, this is a matter of sovereignty. I am very keen to explore where sovereignty ends and international law starts, and that is right at the heart of those new clauses, I guess.

We have made reference several times in these debates to section 38 of the European Union (Withdrawal) Act 2020, where it says that,

“the Parliament of the United Kingdom is sovereign.”

If that is the case, and I accept that it is the case in areas of our jurisdiction, is there a need to reiterate it in every piece of legislation, or is it simply a fact that Parliament is sovereign?

My hon. Friend has rightly stated quite clearly that the UK Parliament has a general power to override treaties, but I am very keen to understand how that works in the sphere of international treaties, particularly in terms of trade agreements. As I quoted in my intervention earlier, there was a case between Mexico and the US, settled in 2009, where a US company, Cargill, took the Mexican Government to court on the basis that they had breached the general agreement on tariffs and trade regulations of 1994. The Mexican Government had applied some punitive tariffs on soft drinks coming from the US, produced by Cargill and other companies, which effectively blocked access to the Mexican market.

[Sir William Cash]

Let me respond briefly. This provision is really going to apply only where there is an impugnment —an infringement—of sovereignty itself. In this case, the entirety of our leaving the EU, as is well understood by the EU and provided for by article 50, and which we have done lawfully, demonstrates that when the EU and the remainers start prattling on about the idea that somehow or other we should do it on their terms, which is the basis on which the whole thing was constructed when the negotiations began, however many years ago it was—I cannot quite remember, as it seems so long ago—we see that the bottom line is that they have acted in bad faith. That is the problem. If it were not for that —we had reasonable negotiations—we probably would not be having to discuss these matters now. Most recently, we have seen that over the state aid rules, with their saying, “We’re going to punish you if you don’t do what we want.”

[Kevin Hollinrake]

I am grateful for my hon. Friend’s intervention. I have great sympathy with his points. The difficulty is that when we are in an international agreement, there is a judgment as to whether they are “acting in bad faith” or “prattling on”, and they are subjective judgments he makes. All international trade agreements need an independent body to decide who is breaching the agreement. If Parliament is simply sovereign and is able to say, “In our judgment, you are breaking the agreement”, all trade agreements would fall apart. We saw that in the case of the Mexican Government and the breaching of the terms of GATT, where that judgment was made unilaterally. The independent body, which was the arbitration council of the North American free trade agreement, settled the dispute. That is an international body; it is not subject to one national jurisdiction or the other. There has to be someone who adjudicates; we cannot simply have national sovereignty making a judgment on these points. That is why we have these investor-state dispute settlement bodies.

[John Redwood]

All too often in international trade agreements it does come down to power and sovereignty. President Trump has regularly used national security as a good reason to impose tariffs and override World Trade Organisation rules. The EU, for years, ignored state aid rules to promote Airbus. I can perfectly understand what it was trying to do. It took a long time to catch up with it and in practice the damage, from the WTO point of view, was done.

[Kevin Hollinrake]

Therein lies the difficulty, does it not? As soon as a nation, however powerful, is allowed to make a subjective judgment, it leads to international chaos. We can have international agreements that people sign and adhere to, with independent resolution. My point is that as soon as we have done that, we have handed over the settlement of the issues and disputes to another body, and we are, in effect sharing some of our sovereignty. We do not have total sovereignty at that point. We have sovereignty to sign the agreement and to exit the agreement, but I cannot see how using sovereignty to override an agreement works. I think it would result in chaos.

[Sir William Cash]

This is about when the issue of the override is to do with sovereignty itself—that is the point. That is why this matter is essential. That is why international law actually recognises it, in article 46. My hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) accepted that, as, indirectly, did Lord Judge, on this Bill. So, for practical purposes, I have quite a lot of support, even from those who originally opposed my proposals.

[Kevin Hollinrake]

The trouble with new clause 1 is that it says the provisions have effect

“notwithstanding any relevant international or domestic law”.

Subsection 2(g) states that that means “any other legislation”. This Parliament’s decision would affect any other legislation, and so this is an overarching amendment. The key thing is that we would all agree that international agreements and free trade are important, and we need to make sure they are fair on all parties subject to those agreements. We must not forget that this is a two-way street. We want the other signatories to these trade agreements—be it Canada, Japan, the EU or whatever—to adhere to these agreements as well. It is not just about the UK heading into these agreements. We partly do that through the agreement itself, of course, but also through the soft power that the UK holds and the respect that people have for the United Kingdom.

There are some special circumstances regarding the withdrawal agreement, because there were two sides to the coin. Yes, there were the commitments that we made under the withdrawal agreement and the Northern Ireland protocol, but there was also the EU’s commitment to use its best endeavours to deliver an ambitious free trade agreement. As Members on both sides of this Chamber have said, there is no doubt that some of the things that the EU has done over the past few months have indicated that it was not using its best endeavours and that it was acting in bad faith, particularly on things such as requiring exit summary declarations for products manufactured in Northern Ireland and then shipped to the rest of the UK. That is simply unacceptable. As the right hon. Member for Leeds Central (Hilary Benn) said, what on earth would the EU do with these things if we exported them from Northern Ireland to the rest of the UK? Describing all goods that went from Great Britain to Northern Ireland as “at risk” would also be simply unacceptable. I was very pleased that those key issues were resolved last week. It largely went by without notice or recognition from many Opposition Members and some parts of the media. New clauses 1 and 2 are interesting. I will not be supporting them, but I will be supporting the Bill.

[Stephen Flynn (Aberdeen South) (SNP)]

It is a pleasure to see you in the Chair again, Mr Deputy Speaker.

When I put my name down to speak in this debate, I guess I did so more out of intrigue than expectation, given the shenanigans and the boorach of last week. We all saw what unfolded over the Ways and Means resolutions, the Bill coming 24 hours later and then off to Committee of the whole House, where nothing changed whatever. A week later, here we are on Report, with, as far as I can see, a very clear likelihood that the Government’s Bill will move forward without a single change, despite the best valiant efforts of the hon. Member for Stone (Sir William Cash) and his desire again to get the Government to break international law.

In that regard, I must pause and reflect; I find it utterly fascinating that, despite getting what they appear to want, Members of this Parliament who have—from what I have heard—seemingly spent their entire lives working towards the political cause of leaving the European Union still seem thoroughly unhappy. I take a little bit of joy in knowing that they are so bitterly disappointed that even their friends in the Government still refuse to do just what they want. Now, I cannot be the only one who has looked at Twitter, and it appears that there may well be a breakthrough in terms of an EU trade deal. I do not know whether the Minister is sighted on the developments on this occasion, because I do not think he was last week, but I do not think that I am overreaching or overstepping in any way, shape or form to suggest that, although that may be the case, the hon. Member for Stone may still be unhappy.