Duties of Customs

Kirsty Blackman Excerpts

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

[Kirsty Blackman (Aberdeen North) (SNP)]

I am pleased that the Government have finally brought forward something that is at least a bit more solid than things were previously, albeit not yet very solid.

The customs White Paper says that we should refer to the future partnership agreement and to the Northern Ireland position paper, and the Northern Ireland position paper says that we should refer to the customs White Paper—this is a complete guddle! Having read all these things, not only am I still not clear about how customs will look after the UK leaves the EU, but I am not clear about how the UK Government want customs to look. The only thing that I am even vaguely clear about is that they want the process to be as close to frictionless as possible, yet they have not made any clear commitments about exactly how they expect that to work. Let us look at some of the things they have said in their various papers. With regard to Northern Ireland, for example, they want to agree

“at an early stage a time-limited interim period, linked to the speed at which implementation of the new arrangements could take place, that allows for a smooth and orderly transition.”

I might be wrong, but I think that now is an early stage. In fact, before now would have been a good time at which to make decisions and commitments, and to be clear to business about at least what the direction of travel is, but we are not there yet. We are very close to Brexit day. Brexit day is coming in March 2019—who knows at what time?—and the Government have not been clear with businesses about even their aspirations for how customs will look.

It is undoubtedly the case that we benefit from being members of the EU single market and members of the customs union. Even those who are most vociferously in favour of Brexit agree that we benefit from those things. The lower estimate of the effect on GDP due to leaving the customs union and the single market is that we will lose 3.8%. The upper estimate of the effect of the trade deals that we will strike with Japan, the USA, the Association of Southeast Asian Nations, Canada, Australia, New Zealand and India all added together is a gain of 2.37 percentage points. That is significantly less than the 3.8% that we are going to lose, so even on the best estimates, we are going to be down. The EU is pretty close to striking a trade deal with some of those countries anyway, so the benefits to us are notional rather than actual.

The single market and the customs union continue to benefit us. We are told by the independent and respected Fraser of Allander Institute that a hard Brexit could cost Scotland 5% in GDP growth. A really interesting paper by the National Institute of Economic and Social Research told us last year that if we have these free trade arrangements instead of being a member of the single market and customs union, Scotland will lose £5 billion of exports in services alone. That is very significant. Analysis by the Scottish Government states that Scottish GDP could be around £11 billion a year lower by 2030 than would be the case if Brexit did not occur.

For those reasons and many others, we in the SNP have been clear from the beginning that we are against Brexit. We are against driving off this cliff, and we are against the incredibly hard landing that will happen when the Brexit bus hits the bottom. Despite our opposition to all these things, we are trying in this House to mitigate the impacts of Brexit. If the Government are determined to drive us off this cliff, we will try to make sure that there are fewer spiky things at the bottom for us to be impaled on.

I do not know how many Members have read the Government’s White Paper on customs, but it refers to the Government’s two proposed scenarios for the working of the future customs relationship. It also talks about contingency options for if the Government do not achieve their aspirational, bespoke deal—nobody has ever managed to get such a deal, and the Government do not really know what it is—and I think that people at home will be really interested to hear what it says. In a contingency situation, there would not be a £15 VAT-free threshold on parcels posted to people by family members, businesses and organisations in the EU. The Ways and Means motions that we are supposed to be agreeing today would allow the Government to charge VAT on gifts sent to people from the EU, which is ridiculous. If somebody gets a parcel worth less than £15 from a person in America, no VAT is payable on it, but the Government propose that such an exemption would not apply to things that came from the EU in a contingency situation. A lot of people would be pretty unhappy to discover that they will have to pay a customs charge on presents or other items that have come from the EU. Such things have not been spelled out to people or fully discussed.

I have referred to the various papers—I think we are up to four—that the Government have published on this matter. They have been pretty comprehensively savaged not just by experts, but by businesses, which are the real experts in this area. The Minister talked about roll-on/roll-off ports and the speed at which things have to come through ports. The Government have tried and failed to solve the problems with Operation Stack at Dover. Only last week, the Under-Secretary of State for Transport, the hon. Member for Hereford and South Herefordshire (Jesse Norman), put out a statement to say, “Our plans for sorting out Operation Stack are, basically, dead in the water, and we’re going to have to start again. But don’t worry: we’ll definitely have something done by March 2019 when the UK leaves the customs union and the single market.”

[Colin Clark (Gordon) (Con)]

The hon. Lady will agree that the oil and gas industry, which is important to both our constituencies, largely trades internationally outside the EU. It does not fear international trade. Is it wrong?

[Kirsty Blackman]

I am not saying that anybody should fear international trade. International trade is a very good thing, particularly for productivity, for example, which the oil and gas industry has been quite good at bringing up. The more international trade a country has, the better its productivity growth, but Brexit is not going to result in more international trade—[Interruption.] Brexit is going to result in the UK having more say over the terms of some trade deals with third countries. It will not result in more international trade, because the EU is international—it is made up of a number of other countries—and there is going to be a reduction in frictionless trade to the EU as a result of the changes. [Interruption.]

[Peter Grant (Glenrothes) (SNP)]

My hon. Friend will have noticed that Conservative Members are expressing a fair degree of anger. Clearly some of them do not believe her when she says that Brexit will not lead to an increase in international trade. The Government have carried out assessments, so is it not the case that if they wanted to demonstrate that Brexit would lead to an increase in international trade, they could quite easily publish those assessments and we could find out for ourselves?

[Kirsty Blackman]

I absolutely agree.

Monique Ebell from the National Institute of Economic and Social Research has written a report that compares participation in very comprehensive free trade agreements with membership of an organisation such as the single market, which is pretty much unparalleled in its encouragement of cross-border trade. Being part of a very close free trade arrangement does not give the same access to trade in services or goods as membership of the single market. Even if we had a comprehensive free trade agreement with every country in the world, we would still lose out as a result of Brexit.

[Dr Murrison]

I am listening with a great deal of interest to what the hon. Lady has to say. The amendments she tabled express commendable encouragement to the European Union, which does her great credit. However, in the interests of being balanced and fair, is she also concerned for much of Africa and South America? At the moment, they suffer the whip end of the customs union, as it makes the export of raw food products to Europe virtually impossible for many of them. Would she like to comment on that, since I am sure that the SNP is very concerned to promote the wellbeing of people in those countries?

[Kirsty Blackman]

The hon. Gentleman raises an interesting case. I have not looked into all the impacts, but the WTO gives developing countries tariff protection, for example. It is likely that some of these things balance out, but I have not looked into the exact details. I am aware that some Brexit supporters are suddenly concerned about how developing countries will cope with international trade, although they were not particularly worried about that before.

I want to move on to talk specifically about some of the impacts of the proposed changes. I have mentioned the problems that people sending and receiving parcels might face. The Government’s “Future customs” paper states:

“Trade is a key driver of growth and prosperity. It stimulates greater business efficiency and higher productivity, sharing knowledge and innovation across the globe.”

It goes on to say that trade

“provides a foundation for stronger and more prosperous communities. It ensures more people can access a wider choice of goods at lower cost”.

Those are all arguments for staying in the customs union, not leaving it.

All the Government’s papers refer to consulting businesses. In all our conversations, the Government have said that they have spoken to businesses. The problem is that although businesses are lobbying the Government as loudly as they possibly can about the impacts of Brexit, the Government are not listening. The Government have an aspirational picture of how wonderful Brexit is going to be and no matter how much evidence to the contrary they are provided with, they continue to push on. Even Conservative Members who supported remain are suggesting, in the main, that we will have benefits from Brexit. In my eyes, that is not right.

The customs declaration service was mentioned by the hon. Member for Yeovil (Mr Fysh). The Minister is generally very good at explaining such things. He has said that he hopes to have pilots soon, with the service up and running by January 2019, but three months is not enough to test a customs declaration service fully. It is not enough to allow businesses to iron out all the problems that might arise or to get used to the red tape.

I want to go back to the issues raised by some of the Government’s aspirations and ideas that are, honestly, unworkable. One of the nine principles they have set out for what they expect to do to deal with trade between Northern Ireland and Ireland is:

“Consider how best to protect the integrity of both the EU Customs Union, Single Market and trade policy, and the new independent UK customs regime, internal market and trade policy, in the context of finding flexible and imaginative solutions, while recognising that the solution will need to go beyond any previous precedents.”

That is an aspiration without a solution. They are not putting forward a potential solution. They cannot even think of anything to square this circle, fix this problem or dig themselves out of the hole into which they have fallen.

This is an unmitigated disaster. The changes that the Government propose, particularly the customs duties that will be put on goods coming from the EU, or leaving the UK to go to the EU, are a disaster for businesses and for people at home. Some of those goods cross the border several times. For organisations such as car manufacturers or aerospace companies, sometimes the widgets—for want of a better word—cross from the UK to the EU and back many times before there is a finished product. If there has to be a customs declaration each time, and if there is an increase of even a few minutes in the time taken on each occasion, real problems will be caused to a huge number of businesses.

Businesses are speaking to the Government and raising concerns, but the Government are not listening. They now need to give businesses a clear direction. They need to make it absolutely clear today that their intention is that we will not have customs duties between the UK and the EU, so they should support the amendments.

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[Ruth Cadbury]

Will the hon. Gentleman give way?

[Kirsty Blackman]

Will the hon. Gentleman give way?

[Ross Thomson]

No. I want to make more progress.

Furthermore, striking new trade deals will unlock the potential of many more Scottish businesses, helping them to make their mark around the world and boosting our economy at home, too. If we are to seize these opportunities and make the greatest possible success of them, Britain needs to be ready on day one of our exit from the EU for new trade relationships. On this point, the clock is now ticking.

[Ross Thomson]

No.

That is why this customs Bill is so important. Irrespective of any agreements reached between the UK and the EU as part of the negotiation and exit process, the UK will need primary legislation to create its own stand-alone customs regime, and to amend the VAT and excise regimes so that they can function effectively after the UK has left the EU.

The Bill will create a framework that lasts for a new UK customs regime. It will lay before us the necessary foundations to allow new arrangements on customs to be put in place depending on whatever the outcomes of the Brexit negotiations are, such as the implementation of a negotiated settlement with the EU, or leaving the EU without an agreement on customs.

I am sure that all Members of this House want our withdrawal from the EU to provide as much certainty and continuity as is possible for our businesses, employees and consumers. Currently, as the majority of rules governing customs in the UK are contained in directly applicable EU law, such as the Union customs code, it is important at this stage that new domestic legislation is brought forward and put in place for when we leave the EU in March 2019.

In the longer term, depending on the outcome of the negotiations with the EU, the Government will want to consult on possible changes to this law to help UK businesses, but now is the time to help businesses in all of our constituencies by providing the continuity of the existing rules, wherever possible.

[Kirsty Blackman]

Will the hon. Gentleman give way?

[Ross Thomson]

No.

Furthermore, the Government will ensure, as they do at present, that their future customs regime is consistent with internationally agreed rules and arrangements. What does this mean in practice? As we all know, trade is not just about the trade deals that we strike or where the growing markets are in the world; it is also about the tariffs, regulatory barriers and terms of trade that we decide to set as part of a new UK policy. The Bill therefore enables the UK to establish a new UK tariff, charge customs duty on goods, set and vary rates of customs duty, and suspend or relieve duty at import in certain circumstances. The UK will be able to set preferential duties and additional duties—for example, to implement a preferential tariff applicable to developing countries.

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[Kirsty Blackman]

I am loth to interrupt the hon. Gentleman’s excellent speech, but I am slightly concerned that he keeps talking about the views of experts. We know that Government Members are not keen on the view of experts. Does he think they might listen this time?

[Ian Murray]

I can answer the hon. Lady’s intervention in one word: no. They clearly are not going to listen to the experts on these issues. In fact, they have sown the seed of doubt that none of us should listen to experts, and the country will be much diminished as a result.

I want to touch on two more sectors. The chemicals sector is another key driver of the UK economy. We have a great chemicals sector—one of the key chemicals sectors across the EU—and it has said that

“the best way to guarantee no adverse disruption to business and trade…and to guarantee only one adjustment before reaching a final agreement with the EU, is to seek to retain our existing membership of the Single Market and Customs Union”.

So we have the automotive industry body—the one we all trust—and the pharmaceuticals sector, and we now have the chemicals sector, yet the Minister has come to the Dispatch Box and said, “Don’t worry. We’ll put more people in place to help all this along”. I suggest that the customs union might be an answer to this particular question.

I will finish with the shipping sector—the very sector that takes the goods from these islands to the continent. The UK shipping sector has warned that the UK is facing an “absolute catastrophe” if it does not sort out a “frictionless and seamless” border at Dover and other ports. The Government keep talking about a frictionless and seamless border but cannot tell us what it means. I suggest that the best way to maintain or enhance the border—to make it frictionless and seamless and operate as a single market—is to maintain our status in the customs union.

If we were starting from scratch—with a blank sheet of paper—and seeking to determine the best way for an island nation to trade with other nations, it would be to have a customs union with those nations. Under such an agreement, we would not need to use the word “frictionless”, because there would be absolutely no friction at all, and it would be completely seamless. The best way to highlight how seamlessly and how frictionlessly a single market and a customs union can operate is to look at the markets between Scotland, Wales and England. They have a completely seamless border: they are completely free market, completely single market, completely customs-free.

I am delighted to see that the Secretary of State for Environment, Food and Rural Affairs has joined us. At the time of the referendum, he claimed, along with me—and I have said this to his colleague the hon. Member for Aberdeen South—that one of the key arguments against an independent Scotland was the lack of a border at Berwick. Now he is arguing the opposite in the context of Northern Ireland and the island of Ireland. That is completely contradictory, and he cannot tell us how it will be resolved. How could it not have been resolved in the Scottish context?

As a member of the customs union, the UK is party to preferential trade agreements. We want to walk away from those agreements, and make our own. It is likely that, outside the customs union, the UK would need to renegotiate many, if not all, of those agreements with those who would become third parties. It is not as easy as just rolling over those agreements, which is what the Government seem to want to do.

I am conscious of time, Mr Deputy Speaker, so let me move on a little. I want to talk about Northern Ireland and the Republic. [Interruption.] I know that the Government do not like to hear these arguments, because they have no answers to them, but I think it important for them to be highlighted in the House. If the Government can provide only limited time for the European Union (Withdrawal) Bill, they may as well rehearse some of the arguments today. We have until 10 pm, after all, and if the hon. Member for Gainsborough (Sir Edward Leigh) wants to intervene and waste time, he is more than welcome to do so.

We have already talked about the massive queues at our ports, airports and rail terminals. Now, as I have said, I want to say a little about Northern Ireland and the Republic. The Foreign Affairs Committee visited Dublin and the border on Thursday and Friday last week to consider the consequences of our leaving the European Union. Let me say again to the Minister that if he wants to name any organisation in either Northern Ireland or the Republic which thinks that Brexit will be good for the isles of Ireland, let him please do so, because I have not heard of any, and am unlikely to hear of any. In fact, the only two people I heard supporting our withdrawal from the customs union and the single market in the context of the isles of Ireland were the two Brexiteers on the Foreign Affairs Committee. Some of the words used were “catastrophic”, “irreconcilable” and “unsolvable”.

I simply cannot understand how the Minister can table motions such as this to pave the way for major Bills without having the basic answers to these questions, while using meaningless phrases such as “frictionless” and “seamless”. I am very concerned about the Belfast agreement, or Good Friday agreement, which is underpinned by the European Union, underpinned by a seamless border, and underpinned by a single market in the island of Ireland. It is almost impossible for the Government to reconcile wanting no borders, and frictionless and seamless trade, with the route that they are taking with a non-deal Brexit.

I have another suggestion, which the Minister may recognise. The way to have a seamless and frictionless border between Northern Ireland and the Republic is the customs union. That would mean that trade in goods could go across the border, unfettered, seamless, and I may even push it to frictionless, which is what the Government have been saying all along.

Our Committee travelled from Cavan—Cavan County Council hosted us on Thursday evening—to drive on to the motorway back to Dublin. It is a distance of about four and a half miles, and we were in a minibus. We crossed the border seven times just to travel a short distance. That is irreconcilable. Many people in Northern Ireland and the Republic who spoke to the Committee—and I am sure that the Minister will be pleased to read its conclusions when they are published—said that it was intellectually incoherent to argue that it was possible to have no border while requiring a border. It is not possible to have frictionless and seamless trade while having to check goods, and it is not possible to have a border at sea level while trying to ensure that the Good Friday agreement is maintained.

Former president Mary McAleese spoke to us in great depth about the passion for the Good Friday agreement. Let me say to the Minister and the Government, in all seriousness, that they ruin that agreement at their peril. It is something of which everyone should be incredibly proud. The way in which the Government are going about the Brexit negotiations, the way in which they are treating the border between Northern Ireland and the Republic, the way in which they are fooling the public that it is possible to have everything and not have everything, is indeed wrong. Michel Barnier, the chief negotiator whom we all know so well now, has said to the Government, particularly in relation to the issue of Ireland, that they cannot have their cake and eat it. Something will have to give, and that is why I tabled the amendments. The Minister must think very seriously about that physical border.

Let me end by saying a little about the Labour party’s position. I think that we are right on this issue, and our position is written into the documents that we have here. We want to stay in the customs union, if possible. I agree with my hon. Friend the Member for Bootle, who tabled the amendments about parliamentary scrutiny. We should always press such amendments, because the Government, who talk of taking back control, are not giving control to Parliament.

All the issues relating to Ireland, to trade, to tariffs and what will happen in the future, to jobs, to borders and to tailbacks at customs can be resolved if the United Kingdom at least leaves on the table—regardless of whether we agree—the possibility of remaining members of the single market and the customs union. That would take away all these concerns. When we reach the end of the process, whether or not there is a meaningful vote in this place, the Minister and his Government will know when the jobs start leaving this country, when borders start being erected, when customs becomes more difficult, when trade becomes much more difficult, when public services become much more difficult to fund, when debt rises and deficit rises, that his Government have let the people down by not telling them the truth about the consequences of leaving the single market and the customs union.

That is why I tabled my amendments, and I hope that many of my right hon. and hon. Friends will join me in the Lobbies.