Northern Ireland Protocol Bill

Debate between Lucy Frazer and Stephen Farry

Committee stage
Tuesday 19th July 2022 Commons Chamber

[The Financial Secretary to the Treasury (Lucy Frazer)]

I thank my right hon. and learned Friend the Minister for the Cabinet Office and Paymaster General for opening the debate this afternoon, and I thank hon. Members across the Committee who have contributed to it.

There has been a lot of talk this afternoon about negotiation. The Government have consistently said that it is our preference to resolve the issues through negotiation. Our door remains open, but the EU has so far not been willing to make changes to the protocol that deliver the solutions Northern Ireland needs. In that context, the Government are acting now to provide the solutions, to be implemented through this legislation, including for fiscal policy.

The reality is that businesses and consumers in Northern Ireland are not currently afforded the same UK tax breaks as those in the rest of the United Kingdom. That is preventing them from reaping the full benefits of this Government’s policies, and this simply cannot continue to be the case. The clauses we are discussing today will enable us to remedy these discrepancies, by paving the way for Northern Ireland to benefit from VAT, excise and subsidy control regimes consistent with those in place in Great Britain.

Let me begin by addressing clause 12. The hon. Member for Hove (Peter Kyle) said that the clause was complicated. It provides the basis for a single UK-wide subsidy control policy rather than the two separate regimes currently existing under the Northern Ireland protocol. The clause will provide legal certainty, and therefore confidence, about the extent to which businesses will be able to receive subsidies. It will provide clarity in domestic law that article 10 is disapplied, meaning that any subsidies that would previously have been notifiable to the EU under article 10 will no longer need to be notified. The clause will also amend section 48(3) of the Subsidy Control Act 2022 so that UK subsidy control requirements will apply to all UK subsidies, including those in Northern Ireland. Clause 12(3) provides powers for a Minister to make appropriate provision regarding any part of the Northern Ireland protocol to which the clause relates.

The protocol creates a two-tier system in the UK under which people and businesses in Northern Ireland are at risk of losing out in comparison with the rest of the UK. EU state aid rules have limited the level of support that may be granted in Northern Ireland without approval from the EU. With the covid-19 recovery loan scheme, for example, there were more limitations on who was eligible for the loans in Northern Ireland than in Great Britain. The Bill will remove that uncertainty for businesses and bring about parity between Northern Ireland and the rest of the UK.

Clause 17 provides Ministers with the ability to ensure that VAT, excise and other relevant tax policy is consistent across the whole UK, including Northern Ireland. That means that people in Northern Ireland will benefit from the same policies as people in Great Britain where it is beneficial for them to do so—as, of course, they should. I would like to explain why that is important. The EU has set rigid limits on VAT and excise rates and reliefs in Northern Ireland, meaning that even if UK policy changes would have no impact at all on the EU, they may not currently apply in Northern Ireland. That is why, as hon. Members across the Committee have mentioned, we still have not been able to introduce the new temporary zero rate for energy saving materials in Northern Ireland, as we have done in Great Britain.

[Stephen Farry]

Will the Financial Secretary clarify whether the Treasury has made any approach to the European Commission to seek the flexibility to have the same rate? Whenever she wrote to me at the end of April, she said that no discussions whatever had taken place since the Chancellor’s spring statement.

[Lucy Frazer]

As the hon. Member will know, because the point has been raised across the Committee over the past few days, negotiations have been taking place for almost two years. There have been 300 hours of negotiations with our EU counterparts, UK officials have shared 17 further non-papers with the European Commission, and we have been attempting to find common ground across these areas. Since the date that the hon. Member mentioned, the Foreign Secretary invited Vice-President Šefčovič to a joint committee meeting, where she announced our intention to table legislation. We would like to resolve the issue through negotiation, but it simply has not been possible.

In future, businesses in Northern Ireland will be subject to new EU VAT, excise and energy tax directives even where they are inappropriate and burdensome for Northern Ireland. That includes forthcoming changes to the application of the EU VAT registration thresholds, which could have a significant administrative impact on businesses in Northern Ireland. Under the Bill, however, we will be able to introduce targeted reliefs to support individuals with the cost of living crisis and achieve net zero, in addition to being able to reform our complicated alcohol duty system, bringing our tax system into the modern era and benefiting the entire UK.

It is not right that there should be unnecessary tax discrepancies between Northern Ireland and the rest of the UK. Clause 17 will enable the Government to lessen or eliminate those discrepancies.

Oral Answers to Questions

Debate between Lucy Frazer and Stephen Farry

Tuesday 28th June 2022 Commons Chamber

[Lucy Frazer]

The Government are very much committed to trade agreements across the globe and would welcome a trade agreement with India.

[Stephen Farry (North Down) (Alliance)]

3. What fiscal steps he is taking to help reduce the impact of rises in the cost of living in Northern Ireland.

Oral Answers to Questions

Debate between Lucy Frazer and Stephen Farry

Tuesday 15th March 2022 Commons Chamber

[Stephen Farry (North Down) (Alliance)]

5. What discussions he has had with Cabinet colleagues on the potential merits of reviewing the inflationary uplift in universal credit in response to the increase in the cost of living.

[The Financial Secretary to the Treasury (Lucy Frazer)]

Details of ministerial discussions are not normally disclosed. Treasury Ministers have meetings with a wide variety of organisations in the public and private sectors as part of the process of policy development. From April, universal credit and many other benefits will be uprated by 3.1%, the rate of the consumer prices index in September 2021. In addition, the Government are providing support worth over £20 billion across this financial year and next to help families with the cost of living.

[Stephen Farry]

Millions of families across the UK, both in and out of work, depend on universal credit and other benefits. As the Minister knows, the 3.1% uprate was set in September. We are now seeing inflation of over 7%. The Joseph Rowntree Foundation, the Trussell Trust and many other organisations highlight the real jeopardy that families are now facing. They have no plan B. Indeed, families are facing cuts in real terms of over £500 over the course of the year. Surely that decision has to be reassessed in the light of changing circumstances.

[Lucy Frazer]

CPI has been the default inflation measure for the Government’s statutory annual review of benefits since 2011, as the hon. Gentleman knows, but we are fully aware of the impact on households of the cost of living. That is why we are providing £20 billion of support, whether that is through £9 billion of support to help with rising energy bills or through universal credit. As he also knows, we have cut the taper rate so that families can keep an additional £1,000 annually in their pockets.