All 4 Mel Stride contributions to the Taxation (Cross-border Trade) Act 2018

Read Bill Ministerial Extracts

Mon 20th Nov 2017
Duties of Customs
Commons Chamber

Ways and Means resolution: House of Commons
Mon 8th Jan 2018
Thu 25th Jan 2018
Taxation (Cross-border Trade) Bill (Third sitting)
Public Bill Committees

Committee Debate: 3rd sitting: House of Commons
Mon 16th Jul 2018
Taxation (Cross-border Trade) Bill
Commons Chamber

3rd reading: House of Commons & Report stage: House of Commons

Duties of Customs Debate

Full Debate: Read Full Debate
Department: HM Treasury

Duties of Customs

Mel Stride Excerpts
Ways and Means resolution: House of Commons
Monday 20th November 2017

(6 years, 4 months ago)

Commons Chamber
Read Full debate Taxation (Cross-border Trade) Act 2018 Read Hansard Text Read Debate Ministerial Extracts
Mel Stride Portrait The Financial Secretary to the Treasury (Mel Stride)
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I beg to move,

That—

(a) provision may be made imposing and regulating a duty of customs chargeable by reference to the importation of goods into the United Kingdom,

(b) provision may be made conferring power to impose and regulate a duty of customs chargeable by reference to the export of goods from the United Kingdom,

(c) other provision may be made in relation to any duty of customs in connection with the withdrawal of the United Kingdom from the European Union, and

(d) provision may be made dealing with subordinate matters incidental to any provision within any of paragraphs (a) to (c).

Since the British people took the decision to leave the European Union in June last year, the Government have taken a number of significant steps to put that decision into action, including triggering article 50, taking forward the European Union (Withdrawal) Bill and, of course, undertaking the extensive consultation and planning that inform our negotiation objectives. The motions before us today represent another essential step in that process. We are here to debate legislation that will allow a new customs regime to be in place by the time the UK leaves the EU and its customs union and, in doing so, allow the UK to respond to the outcome of the negotiations. I do not need to tell the House how important that is.

The Taxation (Cross-border Trade) Bill will pave the way for new domestic legislation that will enable the UK to establish a stand-alone customs regime. It will allow the UK to charge customs duty on goods, including those imported from the EU. It will allow the Government to set out how and in what form customs declarations should be made. It will also give the UK the freedom to vary rates of import duty as necessary, in particular in the case of trade remedies investigations and for developing countries.

Mike Gapes Portrait Mike Gapes (Ilford South) (Lab/Co-op)
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The Minister talks about the decisions that the Government have already made. Before they decided to trigger article 50 and begin the process, did they give any consideration to the complications that would be caused in the relationship between Northern Ireland and the Republic of Ireland, which were explained to the Foreign Affairs Committee when we were in Dublin last week?

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

Tom Brake Portrait Tom Brake (Carshalton and Wallington) (LD)
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The Minister will be aware that the Irish Prime Minister has called on the UK Government to give a written guarantee that there will be no controls on the border. Is the Minister able to give that guarantee?

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

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

Louise Ellman Portrait Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
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Has the Minister heard the judgment of the UK Chamber of Shipping, which talks of an “absolute catastrophe” unless issues relating to transport through the ports are resolved? Are the Government taking that seriously?

Mel Stride Portrait Mel Stride
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The hon. Lady raises an extremely important point, particularly in relation to roll-on/roll-off ports. I have been to Dover to meet the port’s chief executive and other staff, and Her Majesty’s Revenue and Customs is closely engaged through various roundtable exercises with all the UK’s ports. We recognise the paramount importance of ensuring that we have fluid trade flows through those ports. The hon. Lady will know that the White Paper set out clearly the sorts of approaches that we will be taking, if necessary, to ensure that those flows are rapid and effective, and that trade is kept moving.

Stella Creasy Portrait Stella Creasy (Walthamstow) (Lab/Co-op)
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Following our time together in Committee considering the Bill that became the Finance (No.2) Act 2017, the Minister will know my concern that small businesses in Britain will be saddled with the 13th VAT directive. He has set out that the Government’s intention is that a new directive will come into place before we leave the European Union, so will he clarify whether he expects British businesses to have to deal with all the vagaries of the 13th VAT directive?

Mel Stride Portrait Mel Stride
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As the hon. Lady knows, at the point at which we leave the European Union, we will gain further control over VAT, although that depends on the precise nature of the deal that is negotiated. It might be that we move from acquisition VAT to import VAT depending on where that negotiation lands, which remains to be seen. The general principle is that the Government are entirely committed to ensuring that burdens on businesses are kept to an absolute minimum and that trade flows are maintained.

Gareth Snell Portrait Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
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The Minister will be aware that there were many responses by manufacturing organisations to the White Paper on the Trade Bill. The British Ceramic Confederation, which is based in my constituency, is genuinely concerned about the market and trade remedies that will exist post-exit, particularly for dumped goods such as tiles and tableware, which could undermine the indigenous manufacturing base. Will he clarify what those remedies might look like once we leave the EU? The time between the closure of the consultation on the White Paper and the publication of the Trade Bill was very short, so we cannot really be sure whether those representations were considered.

Mel Stride Portrait Mel Stride
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The bulk of the measures to which the hon. Gentleman refers will be in the Taxation (Cross-border Trade) Bill, including trade remedy measures on dumping, excessive subsidy and safeguarding. He will know that we take those issues extremely seriously. In the event that there is evidence of dumping or the other things to which I have referred, there will be a trade remedies authority, the details of which have already been disclosed to the House in the Trade Bill. That body and the Secretary of State for International Trade will be able to work together to ensure that, when there are problems due to activities such as dumping, we will be able to take appropriate action in the normal manner.

John Howell Portrait John Howell (Henley) (Con)
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Will the Minister comment on the extent to which the Bill will allow the VAT and customs system to continue, whatever the outcome of the negotiations? Has enough flexibility been built in to the measure regardless of the outcome?

Mel Stride Portrait Mel Stride
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My hon. Friend raises an important point that goes to the heart of the Bill. This is a framework Bill, so it will allow us to make sure that we can deliver wherever the negotiations land. It does not presuppose any particular outcome from the negotiations; its purpose is to enable the outcome of the negotiations to be put into effect.

Anna Soubry Portrait Anna Soubry (Broxtowe) (Con)
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I have made it very clear to people in Broxtowe that I believe in our continuing membership of the customs union and the single market. Can the Minister help me with this? Will the measure be able to cope with all eventualities, including our staying de facto as a member of the customs union through a period of transition? Could we—if everything goes the way I would like—even stay a member of the customs union under this Bill, if that were the will of the Government and the House?

Mel Stride Portrait Mel Stride
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The Bill deals with our leaving the European Union, which means, as a simple matter of law, that we will be leaving the customs union. However, it does indeed allow for a transition period in which there could be a very close customs association with the European Union.

Mel Stride Portrait Mel Stride
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The Bill will be presented this evening. When the hon. Gentleman reads it tomorrow, he will be more enlightened as to how it can facilitate a period of transition.

Stephen Doughty Portrait Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
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The Minister referred to the Bill’s ability to deliver in all possible circumstances. Is he aware of the report by the Home Affairs Committee and of discussions with HMRC about concerns over its capacity to deal with various customs arrangements? The report says that the Home Office is providing only an extra 300 staff by 2019, yet HMRC says that it needs 5,000 additional staff to cope with a changed customs regime. What assessment has he made of how many new staff are required and what they will cost?

Mel Stride Portrait Mel Stride
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We will be guided by HMRC on the number of staff required, and we are working closely with it on this issue. As the hon. Gentleman will know, Jon Thompson, the head of HMRC, has suggested that between 3,000 and 5,000 staff will be needed in a day one contingency scenario, if that is where we end up, and he and HMRC are in discussions with us about both the timing of the pressing of the buttons on these issues and the costs involved. The hon. Gentleman can rest assured that HMRC will be provided with whatever resources it requires to ensure that we are ready on day one.

Chris Leslie Portrait Mr Leslie
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Will the Minister assure us that the Bill, which, of course we do not have but which he is saying we will be able to see—although not until we have debated this paving resolution—will contain arrangements for sanitary and phytosanitary regulatory checks at Dover and the channel tunnel entrance and exit? They are not there at present and if we were going to institute customs checks, we would similarly have to institute those regulatory checks. Has Her Majesty’s Revenue and Customs allowed for that in the budget as well?

Mel Stride Portrait Mel Stride
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The hon. Gentleman makes it sound as though the fact that we do not have the Bill available right now is in some way inappropriate or not right, but he will know that this Bill is a finance Bill—a taxation Bill—and it is coming in under Ways and Means. I will introduce the Bill at the end of this debate, having the opportunity to walk the Floor accordingly and to be admired by many Members on both sides of the House when I do so. He will also be aware that HMRC is involved in our ongoing negotiations on the issues he has raised, and these things will come out of those discussions in the normal manner.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
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Does the Minister agree that there is some faux misunderstanding of the situation going on here? There is a body of evidence of what life will be like outside the EU: our trade with the rest of the world. This is not a new thing we are doing; it is something we are replicating within the EU that exists in our trade with the rest of the world, which dwarfs what we do within the EU.

Mel Stride Portrait Mel Stride
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My hon. Friend raises an important point: our nation is quite capable of ensuring that wherever the negotiation lands, we will be able to have the resources, talents and wherewithal to go out and make a success of Brexit, getting out and engaging in our future trading arrangements. The important thing is that this Bill does not presuppose any particular outcome, but facilitates whatever outcome we finally arrive at.

Andrew Murrison Portrait Dr Andrew Murrison (South West Wiltshire) (Con)
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Does the Minister agree that it is wrong to say that phytosanitary checks do not happen—or could not happen—at the moment? We experienced such checks clearly in 2001, at the time of the bovine spongiform encephalopathy outbreak. These things are very real and they happen from time to time. It is right that member states should be able to protect public health and animal health, and they are perfectly capable of doing so within the European Union.

Mel Stride Portrait Mel Stride
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My hon. Friend has put the point very clearly and effectively, and nothing in this Bill acts counter to our ability to act in the way he has suggested.

Damian Collins Portrait Damian Collins (Folkestone and Hythe) (Con)
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As the Minister will know, more than 80% of the UK’s freight movement goes through the channel tunnel and the port of Dover. Anything that slows, let alone delays, that processing will cause massive backlogs, and the physical infrastructure is not yet in place to do this. Alongside the Bill he is presenting this evening, does he believe that we need to make sure the resources are there so that whatever is necessary is in place on day one to make sure the physical infrastructure can support cross-channel trade?

Mel Stride Portrait Mel Stride
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My hon. Friend raises a crucial point for ro-ro—roll on, roll off—ports, and these are just the kinds of issue that I discussed with the personnel and the chief executive at Dover when I visited. I have regular discussions with HMRC on these matters, and it in turn has regular roundtable events and a particularly close association with the port of Dover. He is absolutely right to say that we must ensure that trade is fluid and moves quickly across that border. He will have noted the suggestions set out in the White Paper of the pre-lodging of customs declarations away from the port—from Calais, in this instance—and making sure we have the right inventory software in the port so we can match up those goods coming in against those declarations to make sure we keep the flow going.

None Portrait Several hon. Members rose—
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Mel Stride Portrait Mel Stride
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If I may, I will finish the point. As to my hon. Friend’s specific question about whether I believe we are ready, let me say that I believe we will be ready. I believe that the customs declaration system—the IT system that is coming into place—will be ready by January 2019, that we will start seeing businesses and traders migrating to that system around August next year, and that we will be in the position we want to be in come day one.

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

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

Ruth Cadbury Portrait Ruth Cadbury (Brentford and Isleworth) (Lab)
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I thank the Minister for his full responses to the questions on ro-ro. I wish to ask similar questions about our biggest port by value: Heathrow airport. With respect to the IT systems and other processes, will Heathrow be ready for this process?

Mel Stride Portrait Mel Stride
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Yes, absolutely. In the case of Dover, most of the traffic is intra-EU trade, whereas a high proportion of the traffic going into Heathrow is more international than simply the EU, so there is already greater engagement with third-country trading. We are therefore confident that Heathrow will be ready.

Charlie Elphicke Portrait Charlie Elphicke (Dover) (Ind)
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My right hon. Friend is giving a typically powerful and effective exposition on this incredibly complex and detailed matter. Does he agree that it is really important for the channel ports that parking facilities and resilience are built in off the M20 so that whatever eventuality arrives with respect to needing to do checks—whether for animal health or customs purposes—we have the right kind of infrastructure and facilities in place on day one?

Mel Stride Portrait Mel Stride
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I thank my hon. Friend for his intervention and, before I address his specific question, I also thank him for his insights and the fairly powerful lobbying he has quite rightly done on behalf of the Port of Dover and his constituents. On his specific question about infrastructure being ready, we certainly recognise that we need to have infrastructure there and that the port itself would generally not be able to handle a large number of stoppages at any one time. As I say, I have been down to the port to inspect the facilities there, so I certainly appreciate that. That is an issue that is receiving ongoing consideration.

Louise Ellman Portrait Mrs Ellman
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Will the Minister tell us what financial provision is going to be made if Operation Stack has to be put into practice on the M20 every week, if not more regularly, when there is a blockage at the port?

Mel Stride Portrait Mel Stride
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Of course, Operation Stack arose not because of a general deficiency in the customs arrangements but because of the specifics of what occurred on the French side of the channel. If that situation occurred again, which I suppose it could do irrespective of the arrangements we have for customs, the Government would clearly make sure that we had sufficient resource to deal with that eventuality. As I have said, though, in terms of the customs arrangements themselves, the resourcing of the facilities and the arrangements that we need to put into place, we are confident that they will be there to keep the traffic moving on day one.

Damian Collins Portrait Damian Collins
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As the Minister will know, this is in the interests of my constituents, as well as those of my hon. Friend the Member for Dover (Charlie Elphicke). Will he confirm, if not from the Dispatch Box then in writing afterwards, that the £250 million allocated by the Government in the autumn statement two years ago for the provision of an Operation Stack relief lorry park on the M20 is still in place? The Department for Transport has unfortunately had to withdraw its plans for that lorry park because of a judicial review, but it intends to go back into the planning process with new plans. My constituents would benefit from knowing that the funds allocated to that project are still there.

--- Later in debate ---
Mel Stride Portrait Mel Stride
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I have taken a rather large number of interventions, so in the interests of making progress I shall do as my hon. Friend suggests and write to him on that specific point.

Working in tandem with the Trade Bill, which was introduced to Parliament earlier this month, this legislation will help to provide the continuity and smooth transition that everybody wishes to see.

Let me be clear to the House that, by virtue of leaving the EU, the UK will also leave its customs union—that is a legal fact. It is also a critical part of allowing the UK to forge a new relationship with new partners around the world. Leaving the EU customs union will allow the UK to negotiate its own trade agreements. Those trade agreements will be based solely around the UK’s national interests and needs. We will also want to ensure that we have an ambitious new customs arrangement with the EU that will allow us to keep trade between the UK and EU member states as free and as frictionless as possible. As the Prime Minister has made clear, although we are leaving the EU, we are not leaving Europe. Having mutually beneficial customs, VAT and excise arrangements is clearly in the interests of businesses on both sides—a resounding message that we have been hearing from the hundreds of businesses that we have consulted on this matter since the referendum.

Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. We welcome the recognition from our European partners that this is a point of absolute importance, by which I mean their commitment to the Good Friday agreement and their focus on flexible and creative solutions to avoid a hard border. We look forward to making progress on that issue.

To meet those core objectives—establishing an independent international trade policy, ensuring UK-EU trade that is as frictionless as possible and avoiding a hard border on the island of Ireland—the Government have set out two options for our future customs regime. One is a highly streamlined customs arrangement. That approach includes a number of measures to help minimise barriers to trade: negotiating continued access to some facilitations that our traders currently enjoy; introducing innovative new-technology-based solutions to reduce the risk of delays; and simplifying and streamlining the administrative demands on businesses. The other is a new customs partnership. It is an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world, removing a need for the formal customs border between the UK and the EU. Both of those options would take time to put in place. We are clear that “cliff-edge” changes are in no one’s interests. Businesses should have to adjust only once to a new customs relationship. It is for that reason that we are proposing an implementation period, during which businesses and Governments in both the UK and the European Union would have time to adapt. How long that period lasts and the form that it takes will be a matter for the negotiations, and it would of course cover issues beyond customs. However, as the Prime Minister has set out, the duration should be linked to the amount of time required to prepare for our future relationship with the EU. Current evidence points to the need for an implementation period of around two years.

Although the precise nature of the relationship that we will end up with on customs is a subject for the negotiations, there are sensible steps that we can take now to prepare for the future. This Bill is one of those steps, providing, as it does, a framework for a new customs regime. This will allow the Government to give effect to a range of outcomes from the negotiations, including an implementation period. Businesses have called for certainty and continuity, and this Bill will, as far as possible, allow us to replicate the effect of existing EU customs laws. It is only prudent that the Government should prepare for all eventualities, so this Bill will also allow the Government to operate effective customs, VAT and excise regimes even if a deal with the EU is not reached, although, as I have set out, a negotiated settlement is in the interest of all parties. That is exactly what the Government hope and expect to achieve.

Just as with the European Union (Withdrawal) Bill, this Bill is about laying the groundwork for our successful future outside the European Union. Trade is clearly going to be a key part of that. The UK has long been a great trading nation. Today, the UK’s trade with non-EU countries is equivalent to more than half of our exports by value, so getting our customs, VAT and excise arrangements right to support that—as well as continued trade with EU countries—is vital. We need to be able to pursue trade deals with partners across the world, while, at the same time, keeping our trade with the EU as frictionless as possible, and avoiding a hard border between Northern Ireland and Ireland. This Bill is a crucial stepping stone to the new arrangements that will allow us to meet those objectives.

--- Later in debate ---
Peter Dowd Portrait Peter Dowd
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My hon. Friend hits the nail on the head. That has been the line that this Government have taken. Power stops at Westminster and it does not go beyond. It is, quite frankly, a sham.

The Government cannot even bring themselves to include in this Ways and Means motion any reference whatever to parliamentary scrutiny; they do not like that. At every opportunity, even if the Government have contempt for this House, we will ensure that they will be forced to explain why they are so frightened of parliamentary scrutiny. At every corner, they will be required to explain in the cold light of day why they seem so reluctant to send Ministers to the Dispatch Box to explain the Government’s rationale.

Now, the Government, in their faux generosity, will claim that they have set aside eight days to debate the withdrawal Bill and other days to discuss Brexit. However, in the withdrawal Bill, they are institutionalising an accretion of powers to the Executive that is quite unheard of in the modern history of this country. [Interruption.] Ministers are huffing and puffing, but that is the reality: the accretion of power to Ministers is absolutely disgraceful.

We have to go back to the second world war to see powers of this magnitude and extent reserved to the Government, and those were dismantled as soon after the war as practical. At least our forebears had good reason in that situation, in so far as there was a national Government—a true coalition—united against one of the most odious regimes. The methods being used to sideline Parliament are quite shocking. History will treat this Government with the contempt they deserve for their feculent attempts to disenfranchise this House.

Mel Stride Portrait Mel Stride
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I have patiently listened to what the hon. Gentleman has had to say. He has referred to the powers in the European Union (Withdrawal) Bill and to the operation, setting-up and independence or otherwise of the TRA. Neither of those items is actually included in this Bill, so what is it in this Bill that he wants to make a point about?

Peter Dowd Portrait Peter Dowd
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The right hon. Gentleman misses the point. This is part of the whole pattern and process by which this Government accrue and accrue powers. Government Members do not seem to grasp that concept, but the fact is that the Government continue to pull powers to themselves and do not devolve them to any of the other nations.

--- Later in debate ---
Mel Stride Portrait Mel Stride
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We have had a full and good debate this evening on an extremely important matter. I do not think that anybody on either side of the House would suggest that these matters are not of the utmost importance. Perhaps I could run through some of the points raised.

My hon. Friend the Member for Yeovil (Mr Fysh) rightly raised with me, as he has done on many occasions, the importance of HMRC being appropriately resourced. He will know that to date we have provided more than £40 million to HMRC and that we will provide it with such funds and resources as it needs going forward. The hon. Member for Oxford East (Anneliese Dodds) bemoaned the fact that the Government would be able to change duties as a consequence of the Bill through secondary powers without parliamentary scrutiny. I urge her to wait until she sees the Bill and the opportunities in it for the Government to provide that scrutiny.

The hon. Member for Aberdeen North (Kirsty Blackman) said she was not clear what we wanted from these negotiations. We have in our White Paper made clear the direction of travel we foresee in these negotiations. She also raised a point about the customs declaration service computer system, suggesting that we had allowed just three months for testing—that being, I assume, the date between January 2019 and our exit from the European Union. In fact, the full system will be up and running in about August next year, and companies and traders will be migrating to it between August and January 2019.

The hon. Member for Edinburgh South (Ian Murray) says that he wants to stay in the customs union. That is a perfectly reasonable aspiration, but it overlooks the fact that we have voted to leave the European Union, and that we will therefore, of necessity, be leaving the customs union. We want to be able to go out and put together our own trade deals across the world.

My hon. Friend the Member for Gloucester (Richard Graham) said that the amendments closed off options. He is entirely right, but it is worse than that: they introduce options that are deeply unattractive. If we passed the amendments, we could find ourselves in a position whereby we unilaterally offered the same terms to European countries, but did not receive the same duty arrangements in return, which would be hugely to our disadvantage. Moreover, in the absence of a deal, if we offered those arrangements to European countries, we would find that, under the most favoured nation rules, we would have to offer the same duty arrangements to all the other countries with which we were trading, which would of course be an absurdity, and they would not necessarily have to reciprocate.

My right hon. Friend the Member for Broxtowe (Anna Soubry) talked of our jumping off a cliff into no deal. The Government have no intention of going anywhere near any cliffs or jumping off them. We are pushing for a good deal, we are negotiating hard, and I am confident that we will get a deal that is in our interests and also in those of the European Union.

The Bill is an enabling Bill that allows opportunities, whereas the amendment is disabling in the way I have described. I urge the House to reject both amendments, and I commend the motions to the House.

Question put, That the amendment be made.

Taxation (Cross-border Trade) Bill Debate

Full Debate: Read Full Debate
Department: HM Treasury

Taxation (Cross-border Trade) Bill

Mel Stride Excerpts
2nd reading: House of Commons
Monday 8th January 2018

(6 years, 2 months ago)

Commons Chamber
Read Full debate Taxation (Cross-border Trade) Act 2018 Read Hansard Text Read Debate Ministerial Extracts
Mel Stride Portrait The Financial Secretary to the Treasury (Mel Stride)
- Hansard - -

I beg to move, That the Bill be now read a Second time.

The Government have been clear that in leaving the European Union the UK will also leave its customs union, allowing us to establish and enhance our trading relationships with old allies and new friends around the world. Further to that, the Government have previously set out that in leaving the EU customs union and exercising the powers in this Bill, we will be guided by what delivers the greatest economic advantage to the United Kingdom and by three strategic objectives.

William Cash Portrait Sir William Cash (Stone) (Con)
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Before my right hon. Friend gets deep into his analysis, may I ask him about the expression “a customs union” in clause 31, which, according to the explanatory notes, clearly includes the EU itself? Will he be kind enough to tell me, either now or later in his speech, what the distinction is between the customs union and other kinds of customs union mentioned in clause 31?

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

Tom Brake Portrait Tom Brake (Carshalton and Wallington) (LD)
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The right hon. Gentleman says that he wants to do what is of “the greatest economic advantage to the United Kingdom”. Has he assessed whether staying in the customs union would be precisely that?

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

Lord Clarke of Nottingham Portrait Mr Kenneth Clarke (Rushcliffe) (Con)
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I was almost reassured by what my right hon. Friend said in response to my hon. Friend the Member for Stone (Sir William Cash). Would it not remain perfectly lawful under clause 31 for this country either to stay in the existing union, or to re-enter it quite quickly without any further change to the law, and while remaining party to all the EU agreements with about 70 other countries and participating in them as though we were still a member of the European Union? If that is strictly the effect of the Bill, may I tell my right hon. Friend that I would be considerably reassured?

Mel Stride Portrait Mel Stride
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As my right hon. and learned Friend will know, article 50 was invoked—the decision was taken to invoke that particular article—with the consequences that we will exit the European Union on 29 March 2019, and therefore leave the European Union customs union. However, clause 31 does indeed facilitate our future ability to enter into customs union arrangements with other customs unions or territories, subject to the express will of Parliament, as I detailed with reference to the affirmative resolution that would have to be passed by the House.

Alex Cunningham Portrait Alex Cunningham (Stockton North) (Lab)
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The Manufacturing Trade Remedies Alliance tells me that 7,000 manufacturing jobs, including 2,500 in the chemicals industry, will be at risk in my constituency if the UK does not establish effective trade remedies. If there is no customs union, how will the Government guarantee that manufacturing workers will not be negatively affected by unfairly priced or subsidised imports?

Mel Stride Portrait Mel Stride
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The hon. Gentleman raises the extremely important matter of protecting our UK producers from dumped goods in this country, goods that have been subject to excessive subsidy, and indeed import surges that arise for other reasons. That is why this Bill and the Trade Bill, which will have its Second Reading tomorrow, make provision to set up a Trade Remedies Authority with the ability and powers to investigate appropriately the kinds of issues to which the hon. Gentleman alludes, and to ensure that we are able to take remedial action, in terms of additional duties and so on, to ensure that we properly address those particular threats as and when they occur.

Stephen Kinnock Portrait Stephen Kinnock (Aberavon) (Lab)
- Hansard - - - Excerpts

The Financial Secretary of course knows how close we came to the collapse of the British steel industry, thanks to the dumping of Chinese steel, but even though schedules 4 and 5 of the Bill refer to incredibly onerous public interest and economic interest tests, there is absolutely no detail of how so many of the practical aspects will work. Why do the Government seem to be set on leaving our manufacturing sector completely exposed to the dumping of Chinese steel, for example?

Mel Stride Portrait Mel Stride
- Hansard - -

I am afraid that I have to disagree with the hon. Gentleman. The Bill takes a balanced approach to the issue of protecting our domestic producers including, very importantly, steel producers. By “balanced approach”, I mean that we should also take into account the interests of consumers of those imported goods and businesses that use them in their processes. If the hon. Gentleman looks closely at the measures—we will do that in Committee—he will see that they provide for compensation where dumping has occurred and for appropriate sanctions to be made.

The economic advantage to the UK is very important, and that means continued UK-EU trade that is as frictionless as possible. It also means avoiding a hard border on the island of Ireland and establishing an independent international trade policy. As we look forward to the next stage of our negotiations with the European Union, we see that the nature of our future customs relationship with the EU, and therefore the legislation that will allow the Government to give effect to any such relationship, become all the more significant.

Damian Collins Portrait Damian Collins (Folkestone and Hythe) (Con)
- Hansard - - - Excerpts

My hon. Friend mentions the need to avoid a hard border on the island of Ireland. I know that he will also agree that we need to avoid an effective hard border on the channel crossing points, particularly the channel tunnel and the port of Dover. That is our principal road freight route for goods back and forth across the continent of Europe. It is essential that we maintain frictionless trade.

Mel Stride Portrait Mel Stride
- Hansard - -

My hon. Friend is entirely right. That is why we have consulted ports so extensively, most importantly that of Dover, which I visited myself. I met the port authorities down there, and members of Her Majesty’s Revenue and Customs have been closely involved in consultations with the ports. Of course, the Bill allows the facilitations that we will require—both unilateral and bilateral—to ensure that the smooth flow of trade occurs at those vital ports. It is particularly essential that we do not have any delay to the processing of imports and exports that go through roll-on/roll-off ports.

Stephen Doughty Portrait Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
- Hansard - - - Excerpts

On the specific need to keep trade frictionless, HMRC, which is part of the Minister’s Department, said that we would need an additional 5,000 customs officials. The Home Office said that it was already recruiting 300 additional staff, although I understand that they will backfill places rather than taking on additional roles. How many new customs officers are currently in training to prepare for the new customs regime in March 2019?

Mel Stride Portrait Mel Stride
- Hansard - -

The important point is that we are in discussions with HMRC about its funding—[Interruption.] If I may, I will answer the hon. Gentleman’s question. We are discussing with HMRC the funding arrangements it will need in the 2018-19 financial year. As he suggested, Jon Thompson has said that between 3,000 and 5,000 staff will perhaps be required. Incidentally, they need not be new recruits; they may be people who are reallocated from other parts of HMRC as we change priorities, depending on how the negotiations pan out. I am very confident that an organisation of in excess of 50,000 people will be capable of recruiting sufficient individuals of the right calibre and with the right skills to ensure that the job is done.

John Redwood Portrait John Redwood (Wokingham) (Con)
- Hansard - - - Excerpts

Will the Minister confirm that on our current frontiers with the rest of the EU, excise, VAT, general taxation and currency are all different on the other side of the channel or the other side of the border with the Republic of Ireland, and that that all works very smoothly and mainly electronically today? Why do people think there would be a bigger problem if we needed to add another line to the electronic register because there was a customs charge as well?

Mel Stride Portrait Mel Stride
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My right hon. Friend makes a very important point. There is no doubt that we can foresee an end state in which a very frictionless process pertains on the borders between the EU27 and the United Kingdom as a separate customs territory. There are many examples around the world of technology in particular facilitating the free flow of goods across international boundaries.

Mike Gapes Portrait Mike Gapes (Ilford South) (Lab/Co-op)
- Hansard - - - Excerpts

The Minister referred to the EU’s borders. It is not only that we have a border with the Republic of Ireland, as the British overseas territories have borders. Gibraltar has a border with Spain, and Anguilla has a border with Saint Martin and Sint Maarten. Will he explain what the Bill will mean for British overseas territories?

Mel Stride Portrait Mel Stride
- Hansard - -

As the hon. Gentleman will know, the overseas territories are not part of the existing European customs union. However, they clearly need to be factored into our discussions and negotiations. We are, of course, close to our overseas territories and, indeed, our Crown dependencies, and we will ensure that the arrangements that would suit those overseas territories, as well as the United Kingdom, are taken into account when determining where we land this deal and the approach that we take.

Sammy Wilson Portrait Sammy Wilson (East Antrim) (DUP)
- Hansard - - - Excerpts

Does the Minister recognise the advice given by HMRC’s permanent secretary that it believes that all of what is required is doable, and indeed that it is confident that we can have the movement of trade without significant disruption? Does he accept that if we want a frictionless border not just between Northern Ireland and southern Ireland, but between southern Ireland and its main market in the United Kingdom, it is not just a matter of this Bill and the resources being in place, because there needs to be much more co-operation than has been demonstrated so far by the Irish Government?

Mel Stride Portrait Mel Stride
- Hansard - -

I thank my hon. Friend for his intervention, but I do not want to be tempted too far into the negotiations that pertain to matters between the United Kingdom and the Republic of Ireland. However, I will pick up on the point that he and other right hon. and hon. Members have made about readiness. The customs declaration services system that will need to be in place to handle around 300 million import and export transactions and declarations is well on target. It will start to go into use by this autumn and we firmly believe that it will be up and running by next January—well in time for the 29 March deadline.

Catherine West Portrait Catherine West (Hornsey and Wood Green) (Lab)
- Hansard - - - Excerpts

The Minister is being very generous in taking interventions. Will he tell the House the estimated impact on the beef and dairy sectors in Northern Ireland, following today’s article in the Financial Times that flags up the massive cost to the industry that a completely new customs union system would entail?

Mel Stride Portrait Mel Stride
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Any issues around impacts on the flow of goods or trade necessarily require an assessment of where exactly the deal with the EU and—specifically in the case of the hon. Lady’s question—the Republic of Ireland lands. Until we know exactly where that lands, it is not possible to start opining on those impacts. I come back to my central point: we are negotiating hard, and it is in our interests, and of course those of the EU, to make sure that we have the lowest duties possible between our trading blocs, and that trade flows as freely and effectively as possible.

Stella Creasy Portrait Stella Creasy (Walthamstow) (Lab/Co-op)
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I have been asking the Minister for many months now about the impact of the 13th directive and the ability of other countries, once we are outside the EU, to vary their own VAT requirements. How can he be so confident that by next January he will be able to implement a system that looks at import and export tariffs, given that it will still be dependent on all 27 countries determining their VAT relationship with us? Does he have an agreement with them for that deadline?

Mel Stride Portrait Mel Stride
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The 13th directive—as the hon. Lady will know, is principally used by countries and businesses outside the EU for the purposes of reclaiming VAT within the UK—will not necessarily be an issue, depending on where the negotiation between us and the EU lands. It is quite possible—indeed, the Bill facilitates this—that continued engagement with IT platforms will allow an easy and effective method of making the kind of reclaims to which the directive relates. She raises the question of whether we have to be ready by next January. If we have an implementation period, for example, we might have considerably longer to bring the process into effect.

Chris Leslie Portrait Mr Chris Leslie (Nottingham East) (Lab/Co-op)
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To clarify, is it the Government’s policy to try to remain a member of the EU VAT area? That issue matters massively to hundreds and thousands of businesses.

Mel Stride Portrait Mel Stride
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The purpose of the Bill is to ensure that on day one we are ready for whatever eventuality we are faced with. For example, the Bill moves us away from acquisition VAT to import VAT, as would be the case—[Interruption.] The hon. Member for Nottingham East (Mr Leslie) thinks that that is some extraordinary revelation—almost a divine revelation—but it is actually in the Bill, as he will find if he reads it. To get technical, if he really wants to find out where this will end up, I think it inserts new section 15 into the Value Added Tax Act 1994. All these possibilities will be facilitated, but it will depend on where the negotiation lands.

Baroness Morgan of Cotes Portrait Nicky Morgan (Loughborough) (Con)
- Hansard - - - Excerpts

I appreciate that the Minister did not even get on to the section of his speech about VAT before we started to ask him about it, but following on from the previous intervention, he will be aware that many small businesses in this country have not had to deal with import VAT, because they have been dealing with imports from the EU, and that finding upfront cash to pay for that would be a real problem for them. Will he assure the House that he is aware of that issue and the concerns of small businesses about cash flow, and that he hopes to return to this matter? As he knows, we have discussed this before, and as Chair of the Treasury Committee, I will be writing to HMRC to ensure that we understand its current thinking.

Mel Stride Portrait Mel Stride
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My right hon. Friend, who has been a doughty campaigner for the interests of business, is absolutely right to raise this issue, with which the Government and the Treasury have sympathy. We do not want over 100,000 businesses to be disadvantaged in cash terms in the way she describes, so this is certainly something that we will be looking at closely going forward. The Bill itself does not prescribe any particular end point in this context. It will be for the Government, after the passage of the Bill, to decide exactly where we wish to end up.

Nigel Mills Portrait Nigel Mills (Amber Valley) (Con)
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My right hon. Friend said that the Treasury might be inclined to be generous to businesses that had their cashflow disadvantaged by this change. Would he perhaps be less generous to large businesses that wholly disadvantage their small UK suppliers by forcing them to accept 120-day payment terms, thus effectively putting many out of business? It would be rather generous to let such businesses off earlier VAT payments on their purchases from within the EU if they were not paying their UK suppliers to a decent timetable.

Mel Stride Portrait Mel Stride
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The issues that my hon. Friend raises are probably slightly beyond the scope of the Bill, but they are none the less important. If he would care to write to me, I should be happy to consider them, and, indeed, to meet him if he so wishes.

Richard Graham Portrait Richard Graham (Gloucester) (Con)
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My right hon. Friend is being very generous. It would help us all if he could confirm that this is really an enabling Bill, and that it therefore should not alarm either those who wish to see the continuity of existing trading arrangements, or those who want significant differences. It paves the way for either scenario, depending on the negotiations in Europe.

Mel Stride Portrait Mel Stride
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As usual, my hon. Friend is eloquent and to the point. He makes an important point because, as he says, the Bill is intended to ensure that wherever the deal with the European Union lands, we will be in a position to be ready on day one to ensure that we keep trade flowing across our frontiers, to the benefit of our economy, our businesses and our consumers.

William Cash Portrait Sir William Cash
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I mention this only because of the very articulate response that my right hon. Friend gave to my hon. Friend the Member for Gloucester (Richard Graham). The Bill refers to Orders in Council, which the Financial Secretary has mentioned, and also includes the words “despite any enactment”. Could that include the European Union (Withdrawal) Bill, when it has been enacted? Could it also include any other transitional arrangements under a further enactment? The words “despite any enactment” are very dramatic.

Mel Stride Portrait Mel Stride
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I think it is clause 32 that sets out the basis on which the powers will be dealt with. The Bill is extremely clear that any treaty between ourselves, as a customs union, and another territory or customs union must be subject to a draft affirmative statutory instrument. Having been laid, such an instrument would not come into effect immediately, but only when Parliament—or, specifically, the House of Commons—had considered and passed it. At that point, and only at that point, would an Order in Council follow, which would effectively bring the will of the House into law.

John Howell Portrait John Howell (Henley) (Con)
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My right hon. Friend is being very generous in giving way. An important element of what he is talking about is the business community. What consultation has taken place with businesses, and what feedback has there been?

--- Later in debate ---
Mel Stride Portrait Mel Stride
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My hon. Friend raises an extremely important point. At the heart of the issues that we are discussing are British businesses of all sizes. Because we want to ensure that we have an environment that is as good as possible for those businesses, consultation has been at the heart of our approach. We produced a discussion paper last year, as well as a White Paper, to which we received responses. I know that my colleagues in Her Majesty’s Revenue and Customs have been actively engaged for many months in roundtable discussions with not just businesses, but representatives of ports and airports, and all the important actors in the process of importing and exporting into and out of the United Kingdom.

Perhaps I could now make a little progress—

Lord Clarke of Nottingham Portrait Mr Kenneth Clarke
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Will my right hon. Friend give way?

Mel Stride Portrait Mel Stride
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Before I do, I give way to my right hon. and learned Friend.

Lord Clarke of Nottingham Portrait Mr Clarke
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I am extremely grateful to my right hon. Friend for giving way so generously, and for giving way to me twice. Let me also congratulate him on the eloquent clarity that he is bringing to this whole subject. He confirmed to my hon. Friend the Member for Gloucester (Richard Graham) that this is essentially a contingency Bill in case things change, and that it covers everything from carrying on roughly as we are now to having quite different arrangements. However, does it remain the Government’s preference that things should stay the same if the negotiations are successful? Paragraph 10 of the explanatory notes states that

“it is the government’s intention that the UK’s Customs regime will continue to operate in much the same way as it does today following exit from the EU.”

Can my right hon. Friend confirm that that remains the Government’s policy intention in the context of the forthcoming negotiations?

Mel Stride Portrait Mel Stride
- Hansard - -

My right hon. and learned Friend raises an important point. The Government are indeed saying that we recognise the importance of ensuring that we have a smooth and frictionless trading situation between ourselves and the European Union once we have left it. Although we will have left the European Union, the Bill will facilitate our ability to have similarities in the way in which we trade. It will then be up to us to decide how we deviate from our starting point. We see the current position, under the European Union code—the customs code and the legislation in the European acquis—as a starting point to which we need to be reasonably aligned, even though we might diverge from it in the years ahead as a result of the negotiations, if that would be to the benefit of our country.

Yvette Cooper Portrait Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
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The Minister has clarified that it is the Government’s intention to continue with the existing customs arrangements, and that the Bill will allow for the possibility of a continued customs union. Can he also confirm that the content of any new customs arrangements or customs union will be decided only through secondary legislation, rather than through primary legislation? Would it not be better to have a proper vote on the Floor of the House on primary legislation on whether we should stay in a customs union?

--- Later in debate ---
Mel Stride Portrait Mel Stride
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The right hon. Lady poses an ingenious question. The simple answer is that the form of the arrangements with the European Union after our exit is the subject of the negotiations. The Government have committed to holding a meaningful vote on the deal. The focus will be on whether the deal is appropriate, not on secondary legislation within this legislation. This Bill is designed to facilitate whatever the will of Parliament ends up being. That is the important point.

The Government have been clear from the outset of the negotiations that, as we implement the decision of the British people to leave the EU at the end of March 2019, we want a deep and special partnership with the European Union and that, as we move towards any future relationship, we should seek to minimise disruption and maximise the opportunities that the process of withdrawal represents. That is in the interests of businesses and individuals in the UK and the EU.

Since triggering article 50, the Government have worked intensively with our European partners to settle the issues in the first phase of the negotiations—namely, a fair deal on citizens’ rights allowing UK and EU citizens to get on with their lives in the country in which they live; a financial settlement that honours the commitments that the UK has undertaken as a member of the European Union, just as we said we would; and an agreement on the island of Ireland that preserves the territorial integrity of the United Kingdom and the stability that has been brought about by the Belfast agreement. We have made great strides in each of those three areas, and I am sure that Members on both sides of the House will welcome the European Council’s agreement last month that sufficient progress had been made on phase 1 and that we should move on to talks about our future partnership.

This development in the negotiations means that we can now look forward to discussing our future customs relationship with the EU. As I reminded the House earlier, the Government have been upfront in setting out their objectives for any such arrangement. The Prime Minister has been clear that, although we are leaving the EU, and therefore its customs union, we are not leaving Europe. So just as the UK will establish an independent international trade policy and look to forge trading relationships with new partners around the world, it is also critical that our future customs arrangements allow us to keep trade between the UK and the EU member states as free and frictionless as possible.

Wes Streeting Portrait Wes Streeting (Ilford North) (Lab)
- Hansard - - - Excerpts

The Minister keeps on referring to the importance of free and frictionless trade with the European Union, but is it not time for the Government to be a bit clearer with the public that, through our membership of the customs union, we have preferential trade agreements with a further 65 countries right across the world? This is not just about protecting trade with the EU; we also need to protect those existing trading relationships. As far as any future trade deals are concerned, we must recognise that size matters, and that we are better and stronger as part of the European bloc.

Mel Stride Portrait Mel Stride
- Hansard - -

The hon. Gentleman raises an important point, and it is one that I largely agree with. It is important that we maintain the existing arrangements that we have been brought into by virtue of our membership of the European customs union, which is exactly why we are in discussions with those countries to ensure that we have appropriate arrangements in place once we leave the EU and its customs union. Over and above that, there will be opportunities to forge trading relationships with other countries around the world, which we are prohibited from doing at present because of our membership of the EU customs union.

Alison McGovern Portrait Alison McGovern (Wirral South) (Lab)
- Hansard - - - Excerpts

My constituents are today dealing with the news of yet more job losses at Vauxhall in Ellesmere Port. We are a place that manufactures, and we want to keep manufacturing, so can the Minister tell me and my constituents exactly what these opportunities are?

Mel Stride Portrait Mel Stride
- Hansard - -

The opportunities will be very significant indeed—[Interruption.] If the hon. Lady will allow me, I will attempt to answer her question. Of course our trading relationship with Europe is extremely important, which is why we are having negotiations with our European partners. It is important to us and to them to ensure that we maintain those relationships to the highest degree. However, a growing percentage of our trade is now taking place outside the European Union—certainly more than was the case five or 10 years ago—and the expanding markets of the future are not necessarily going to be the countries that constitute the membership of the European Union. To answer the hon. Lady’s question directly, the opportunities lie out there in China, India, the United States and other countries around the world with which we will be able to forge a freer set of trade agreements than we have been able to contemplate during our membership of the European Union.

Ian Murray Portrait Ian Murray (Edinburgh South) (Lab)
- Hansard - - - Excerpts

The Minister continually uses the word “frictionless” and talks about keeping things as they are now. Indeed, the Bill will facilitate our keeping the customs union regulations as they are at the moment, so what principle are the Government using to take participation in the customs union off the table?

Mel Stride Portrait Mel Stride
- Hansard - -

This comes back to the fundamental point that on leaving the European Union we will be leaving the customs union. Then it will simply become a question of what kind of relationship we negotiate with the EU and its customs union. The Government’s position is clear on this. We want these arrangements to be as frictionless as possible. We want to facilitate trade rather than putting barriers in the way of what will be a European customs union of 27 nations after Brexit.

Wera Hobhouse Portrait Wera Hobhouse (Bath) (LD)
- Hansard - - - Excerpts

The Minister seemed to say previously that it might not be a great thing for the UK to leave the customs union and the single market, but that we were doing it because that was the will of the people as expressed in the referendum result. Is that the only reason that we are doing this?

Mel Stride Portrait Mel Stride
- Hansard - -

I apologise to the hon. Lady if I said something that in any way misled her. I do not think that I actually said that. What I said was that, as a consequence of leaving the EU, we will of necessity be leaving the customs union. Now, in the negotiations, we need to strike the best possible deal for our country—a deal that is in our interests and those of the European Union and that maintains a close, frictionless, positive and mutually beneficial relationship between ourselves and a customs union of the remaining 27 members.

Kirsty Blackman Portrait Kirsty Blackman (Aberdeen North) (SNP)
- Hansard - - - Excerpts

On the subject of the negotiations that the UK is having with countries with which it currently has free trade arrangements because it is part of the EU, and on the rules of origin issue, what discussions has the Minister had about cumulation and about whether the EU will accept UK-EU cumulation, or whether we will be required to have parts made only in the UK?

Mel Stride Portrait Mel Stride
- Hansard - -

As the hon. Lady will probably know, those are matters of ongoing discussion within the Department for International Trade, but this Bill and the Trade Bill, which will have its Second Reading tomorrow, are about ensuring that country-of-origin issues can be determined by ourselves under our own laws, rather than having to depend upon on those of the European Union.

John Redwood Portrait John Redwood
- Hansard - - - Excerpts

Will the Minister confirm that the European Union made it clear to the United Kingdom that we cannot stay in the customs union and single market if we will not pay contributions or accept freedom of movement?

Mel Stride Portrait Mel Stride
- Hansard - -

It is entirely true that we cannot have our cake and eat it—[Interruption.] I am paraphrasing the EU, not the Government’s position. Our position has always been that we foresee a mutually advantageous trading relationship with the European Union’s customs union and, for the purposes of this afternoon’s debate, the important point is that this Bill provides and facilitates the ability to produce exactly that.

It is important to provide certainty and continuity to businesses, including the hundreds with which the Government have met and consulted since the referendum. Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. That commitment and progress on the issue were formally recognised at last month’s European Council, and it will continue to inform our approach in the future.

The Government set out in their future partnership paper last summer and in the White Paper for this Bill two options for our future customs arrangements—two options that most closely meet those objectives. One is a highly streamlined customs arrangement, which comprises a number of measures to help to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new, technology-based solutions. The other option is a new customs partnership: an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU. The Government look forward to discussing both those options with our European partners and with businesses in both the UK and the EU as the negotiations progress.

The Government have already taken a number of important steps to ensure readiness for EU exit, including most recently at the Budget when my right hon. Friend the Chancellor of the Exchequer announced £3 billion of funding for Departments and the devolved Administrations to support their preparations. HMRC is on course to deliver a functioning customs service on day one that enables trade to flow, HMRC to collect revenues and the UK to have a secure border. The Treasury has already effectively allocated over £40 million of additional funding to HMRC this year to prepare for Brexit and continues to work with HMRC to understand its ongoing Brexit requirements. The Taxation (Cross-border Trade) Bill represents a significant part of our preparations.

Chris Leslie Portrait Mr Leslie
- Hansard - - - Excerpts

I am grateful to the Minister for giving way. I sense that he is coming to a conclusion, so I wanted to get this particular question in. The programme motion specifies when he and the Government want the Bill to come back for Report and Third Reading, but how many sittings does the Minister intend the Bill to have in Committee? Many hon. Members would have expected a Committee of the whole House, but that does not appear to be the case and the Committee stage will happen upstairs. Will he guarantee that significant time will be available in Committee for those lucky Members to scrutinise this legislation properly?

Mel Stride Portrait Mel Stride
- Hansard - -

I will make two points. First, as the hon. Gentleman will know, such matters are for the usual channels, and his party is an important part of the usual channels. Secondly, the Bill will of course receive the normal high level of scrutiny as it passes through the House—line by line, clause by clause. Amendments can be tabled, debated and divided on if necessary. The Bill will then come back to the House on Report and for Third Reading. If he has any particular representations to make about the number of sittings in Committee, he should perhaps speak to his Whips, who can then speak to our Whips, and I am sure that we will all end up in a happy place on the issue he has raised.

Stephen Doughty Portrait Stephen Doughty
- Hansard - - - Excerpts

The Minister is being generous, as he always is. Having been opposing Whips at various points on various financial matters, I know that he always does these things in good faith, but I share the concern of my hon. Friend the Member for Nottingham East (Mr Leslie). Both Front-Bench teams are currently tied up with the Finance Bill that is going through—an important piece of legislation that we quite rightly oppose many parts of. Given that, we will not be able to start the scrutiny of this Bill in Committee for quite some time, and the Bill is due to be out of Committee by 1 February. The Bill will not receive full scrutiny in the House of Lords because this is a money Bill, so will the Minister tell us how many Committee sittings there will be to scrutinise a large, substantial and important Bill?

Mel Stride Portrait Mel Stride
- Hansard - -

The hon. Gentleman is being typically tenacious, but he asks the same question as the hon. Member for Nottingham East and he will have the same answer. I will spare the House my eloquence by not going through, once again, the same answer that I just gave.

Vicky Ford Portrait Vicky Ford (Chelmsford) (Con)
- Hansard - - - Excerpts

I thank the Minister for giving way and for drawing attention to the “Future customs arrangements” paper that came out in the summer and the two potential solutions: the highly streamlined option or the new customs partnership. Will he confirm that the Government are still open minded about both options and that this Government’s priority is to maximise stability and minimise uncertainty not only for British consumers buying products from the continent, but for continental suppliers trying to sell to us and vice versa?

--- Later in debate ---
Mel Stride Portrait Mel Stride
- Hansard - -

My hon. Friend is absolutely right that the Government’s position is that we are determined to explore both models actively. The new partnership model would be a creative and unique approach to a customs union with the European Union in which we would effectively have a common customs border and no customs border between ourselves and the other EU member states. Its very uniqueness and the creative thinking needed to reach any such agreement means that it would probably happen on a longer timeframe than some of the other approaches that we will be taking, but I can confirm that we want to continue to discuss both options with our European partners.

The Bill allows the UK to establish a new, standalone customs regime, ensuring that VAT and excise legislation operates as required upon EU exit. The Bill makes a number of provisions that are absolutely essential for any future customs regime to function effectively regardless of the outcome of the negotiations. Those provisions include allowing the UK to charge customs duty on goods, including those imported from the EU, allowing the Government to set out how and in what form customs declarations should be made, and giving the UK the freedom to vary the rates of import duty as necessary, particularly in the case of trade remedies investigations and for developing countries. Moreover, it will confer a number of necessary and appropriate powers to allow the UK to respond effectively to the outcome of the negotiations, and it will give the Government the ability to make subsequent changes to the customs, VAT and excise regimes, which may be required later but cannot be predicted as this stage.

As I have set out today, the Government recognise the importance of providing certainty and continuity to businesses, so this Bill will allow the Government to make good on their intention to replicate the effect of existing EU law wherever possible as the UK leaves the EU. I look forward to debating the provisions and the underlying issues as the Bill makes its way through this House. The Bill takes significant steps to ensure that the UK is ready for EU withdrawal by allowing our country to establish a standalone customs regime and by ensuring that our VAT and excise legislation operates as required upon exit day. As we begin discussions with the EU on our future partnership, the Bill ensures that we can do so with the utmost confidence, securing our ability to deliver a robust, efficient, effective customs regime whatever deal is struck with our European partners. As such, the Bill underpins our great country’s ability to pursue its own trade deals with partners from right across the world, and I commend it to the House.

Taxation (Cross-border Trade) Bill (Third sitting) Debate

Full Debate: Read Full Debate
Department: HM Treasury

Taxation (Cross-border Trade) Bill (Third sitting)

Mel Stride Excerpts
Committee Debate: 3rd sitting: House of Commons
Thursday 25th January 2018

(6 years, 2 months ago)

Public Bill Committees
Read Full debate Taxation (Cross-border Trade) Act 2018 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 25 January 2018 - (25 Jan 2018)
None Portrait The Chair
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With this it will be convenient to discuss clause 2 stand part.

Mel Stride Portrait The Financial Secretary to the Treasury (Mel Stride)
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Good morning, Ms Buck; it is a pleasure to serve under your chairmanship. It is also a pleasure to see some familiar faces on the Opposition Benches as we debate this important Bill.

Clause 1 provides that customs duty is to be charged with reference to the import of goods into the United Kingdom, in accordance with part 1 of this Bill; part 1, of course, deals with import duty. As members of the Committee will be aware, the UK’s current customs duty regime is set out in EU law. That legislation will cease to apply to the United Kingdom following our departure from the EU. This Bill makes provision for the establishment of a UK customs duty regime. The regime established by this Bill seeks as far as possible to replicate the effects of the existing EU provision. The aim of doing so is to ensure that on day one, operators who currently pay EU customs duty will see very little change in the process that is to apply following the establishment of the new UK regime. Clause 1 establishes the new charge to tax and provides that import duty is to be chargeable. Such a provision is a fundamental requirement of any tax regime.

Clause 2 provides the definition of chargeable goods, a term used throughout the provisions relating to import duty. The concept of goods being chargeable is fundamental to any import duty regime and therefore its meaning needs to be set out explicitly on the face of the Bill. As I explained, part 1 of the Bill sets out the UK’s new regime for import duty, which will be needed once we complete the process of withdrawal from the European Union. In doing so, it takes as its starting point the EU legislation, which currently provides the rules for import duty, and replicates them within domestic legislation. The virtue of doing so is that the majority of importers will see no change to the process by which they pay import duty. This principle applies to rules for determining which goods are liable for import duty or, to use the language of clause 2, to the way in which “chargeable goods” are defined.

Clause 2 is relatively straightforward. It sets out the basis upon which customs duty is to be charged. Clearly not all goods are liable for customs duty. The most obvious examples are goods that were made in the United Kingdom and have never left the country, or goods from abroad on which duty has already been paid. Clause 2 therefore uses the concept of domestic goods to define when goods are not to be treated as chargeable for the purposes of customs duty. It sets out that chargeable goods are any goods that are not domestic goods.

Domestic goods are defined in clause 33, and Members will have the opportunity to consider that definition in greater detail later in Committee. In essence, domestic goods are any goods on which no import duty is due, either because any duty has already been paid or because they were manufactured in, or originate in, the United Kingdom.

Clause 2 is straightforward. The concept of goods being chargeable forms a fundamental cornerstone of the UK’s import duty regime. I therefore recommend that both clauses stand part of the Bill.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3

Obligation to declare goods for a Customs procedure on import

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
- Hansard -

With this it will be convenient to discuss the following:

That schedule 1 be the First schedule to the Bill.

That schedule 2 be the Second schedule to the Bill.

Mel Stride Portrait Mel Stride
- Hansard - -

Clause 3 does two important things: first, it establishes an obligation to declare goods that are imported into the United Kingdom; and, secondly, it introduces the concept of declaring goods for a specific customs procedure. Those are the basic building blocks of the UK’s new import duty regime.

The need to declare goods for a customs procedure is fundamental to any import duty regime. The procedure for which goods are declared determines when liability to import duty arises. The clause goes on to introduce another fundamental part of a customs regime—the customs procedures for which chargeable goods may be declared.

The purpose of importing goods may be to make them available for use in the UK, in which case they can be declared for a procedure known as free circulation, at which point they incur a charge to import duty. However, it is not always the intention to make goods freely available when they are imported into the United Kingdom. Goods are often brought to the UK for different reasons, such as to put them into customs warehouses for the time being, or to transport them through the UK on the way to another destination outside the country. In situations such as those, a business may declare the goods for a special customs procedure.

Special procedures either defer when a liability to import duty is incurred, or reduce the rate of import duty applicable to goods, provided of course the relevant conditions have been satisfied. Without those procedures, a business would have no option but to declare imported goods for the free circulation procedure and incur any import duty up front.

UK businesses currently rely extensively on special procedures, which together provide reliefs worth hundreds of millions of pounds each month. The provision made by the clause is supplemented by the detailed rules set out in schedules 1 and 2, to which I shall now turn.

Schedule 1 sets out the obligations to present and declare goods to customs on import. Many of the matters covered are of an administrative nature, such as the information that a declaration must contain or the time limits for when it must be made. I am sure that the Committee would not wish me to explain all those matters in detail, but I should highlight one important matter in which I think the Committee will be interested.

Paragraph 3 of the schedule enables Her Majesty’s Revenue and Customs to specify when goods must be declared before they are imported into the UK. That is an important point. Steps might be needed to reduce the risk of disrupting the flow of traffic at locations where goods need to be cleared quickly through customs. An obvious case in point is a port such as Dover, where significant amounts of goods arrive on roll-on roll-off ferries. It would clearly be of great help, in a situation such as that, to require the goods in question to be declared before their arrival at the port. That situation is therefore addressed by the schedule.

Schedule 2 deals with special customs procedures. There are five in all, namely: storage, transit, inward processing, authorised use and temporary admission. I will briefly describe their purpose.

A storage procedure allows imported goods to be stored without incurring liability to import duty. The goods must be kept in an approved facility, such as a customs warehouse or a free zone. There are currently no free zones in the UK, but should an area be so designated, provision may be made under the Bill for its operation.

A transit procedure allows goods to move between two places in the UK without incurring import duty. For example, goods from another country can pass through the UK en route to another destination, or goods within the UK can move from a customs warehouse to a port for re-export without needing to be declared for free circulation.

An inward processing procedure allows goods to be imported into the UK with the purpose of undergoing a qualifying processing activity without incurring a charge to import duty at that point. Once the procedure is discharged, goods may be exported without any import duty being due. Alternatively, a business may decide to declare the processed goods for free circulation in the UK and incur duty at that point.

An authorised use procedure is designed to assist certain industries by allowing a zero or reduced rate of import duty to apply to goods brought to the UK for a specific use. Finally, a temporary admission procedure allows for a relief from import duty for goods that enter the UK temporarily and for a particular reason. For example, that procedure applies when artworks situated overseas are brought to the UK on loan for display in a public gallery.

Taken together, the special procedures I have outlined exist to support trade fluidity and facilitate the movement of goods into the UK. Provision made by and under schedule 2 will allow HMRC to operate these special procedures. The obligation to declare imported goods is essential to an effective customs regime, and an effective customs regime must include special procedures that offer businesses in the UK the simplifications and reliefs that they rely on.

Kirsty Blackman Portrait Kirsty Blackman (Aberdeen North) (SNP)
- Hansard - - - Excerpts

It is a pleasure to serve on the Committee, and to take part in the scrutiny of this important piece of legislation.

The Minister is right to talk about the administrative nature of the clause and its associated schedules. It appears to be the Government’s position that the UK will choose to leave the customs union. We are not yet clear whether they will pursue another form of customs union with the EU, but if they do not, or if they do not manage to get a customs union with the EU, it is likely that significantly more customs declarations will be required because we will not have those coming from the EU.

My concern about the clause arises from Tuesday’s oral evidence sessions, and it would be useful for the Minister to provide an update on that. Various organisations expressed concerns about the resourcing of HMRC and Border Force. Border Force is the first line for many imports, ensuring that customs declarations are made appropriately and that all appropriate processes are followed.

On HMRC, the concern was that no customs officers will be based north of Glasgow or Edinburgh. If goods are coming in to places such as Inverness, it is a three-hour drive for people to get there and look at those goods. What assessment has the Minister made of the extra resourcing that HMRC will need to fulfil the obligations in the clause and the schedules? Reasonable concerns have been expressed by businesses and organisations.

Mel Stride Portrait Mel Stride
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I welcome the hon. Lady to the Committee and thank her for that initial contribution.

In terms of where the final deal with the European Union lands, whether we have a form of customs union with the remaining 27 members is subject to negotiation. The Government have made it clear that we wish the end point to be the facilitation of trade between ourselves and the remaining 27 members of the customs union. The Bill provides for that end point to be as close as possible to the existing rules and regulations around the Union customs code; that is very much what the Bill seeks to achieve. At the same time, the Bill retains the flexibility to ensure that we can put into effect the necessary and appropriate measures no matter where the deal lands—or, indeed, if there were to be no deal at all with the European Union, as we certainly do not expect.

The hon. Lady raised the important issue of HMRC resourcing. As we move towards our day one scenario—whatever that may finally look like—I assure her that the Government are vigorously engaged not just with issues around HMRC’s human resource requirements, but with other infrastructure requirements, whether for hard infrastructure or information technology systems such as the Customs Declaration Service, which will be important.

To address her particular issue, the head of HMRC has made it clear that his feeling is that we will need between 3,000 and 5,000 additional staff across HMRC to ensure that we cover off, wherever the day one deal lands. For an organisation of well in excess of 50,000 personnel, such an increment in staffing, particularly given that some will be reallocated rather than entirely new recruits, is perfectly manageable.

--- Later in debate ---
Anneliese Dodds Portrait Anneliese Dodds (Oxford East) (Lab/Co-op)
- Hansard - - - Excerpts

I am grateful to you for being in the Chair, Ms Buck. If I may, I will question the Minister on his explanation. I am grateful for it, but on Tuesday we learned that after HMRC’s ongoing restructuring programme there will not be a single HMRC hub north of Edinburgh and Glasgow, nor will there be one anywhere along the south coast, including Dover. We heard ample evidence in the witness sessions that that is the busiest and most concerning port from the point of view of customs procedures going wrong. In the light of that evidence, should we reconsider that HMRC reorganisation programme?

Mel Stride Portrait Mel Stride
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I welcome the hon. Lady to the Committee. She mentions the location of the new HMRC hubs as they are rolled out, and I will make two important points. First, Border Force, which is very much part of the frontline, is in the Home Office’s remit, not HMRC’s. Secondly, proximity to the hubs or otherwise is not critical in determining whether HMRC provides the support that Border Force and other agencies require. The absence of a hub close to a need does not mean that HMRC staff cannot be in proximity to that point; they do not need to be based constantly at any one hub.

Peter Dowd Portrait Peter Dowd (Bootle) (Lab)
- Hansard - - - Excerpts

May I pick up on that? I will not repeat what my hon. Friend the Member for Oxford East said, but try to reinforce the seriousness of the evidence witnesses gave on Tuesday. Mr Runswick said:

“HMRC is closing offices in places such as Southampton…So we think that there will be a real struggle to deliver the work that HMRC does with Border Force in that situation. My union believes that HMRC should pause the office closure programme until it is clear what the Government will need HMRC to do in a post-Brexit situation.”––[Official Report, Taxation (Cross-Border Trade) Public Bill Committee, 23 January 2018; c. 37, Q45.]

I want to tease out a little more from the Minister. Does he recognise that argument at all? It seems to be business as usual.

Mel Stride Portrait Mel Stride
- Hansard - -

I welcome the hon. Gentleman to the Committee. He reiterates the point that the hon. Lady just made, so I will spare the Committee a repeat of every element of my answer. However, specifically with relation to the points made in the evidence session by Mr Runswick, the trade unions have been resistant to the changes to HMRC wholesale, right across the piece. Therefore, when it comes to arguments about whether HMRC can be effective in clamping down on avoidance, evasion and non-compliance, bringing in tax yield and so on, the argument has been run that we need a number of offices in multiple locations to do that.

The critical answer is that the very nature of running an efficient tax system and customs regime needs technology, the right skills and the right people. That lends itself to having a concentration of such individuals in hubs, where skills and IT can be developed and brought in to be effective. Without repeating my answer to the hon. Gentleman’s hon. Friend, the Government and HMRC are clear that the configurations of the new hubs will lend themselves to appropriately support the new customs regime.

Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

Other than the resourcing, which the Minister has fully addressed, I am concerned about the geographical issue. We do not want people to be a number of hours’ drive from the customs officials. Can the Minister give us some comfort that even though there might not be hubs in the area, there will be customs officers based closely and able to respond on a 24-hour basis?

Mel Stride Portrait Mel Stride
- Hansard - -

I can certainly assure the hon. Lady that the situation as it will pertain when we move to the new hubs—we are making some assumptions about what exactly the end point of the negotiations will be—will be sufficient to make sure we have a customs regime that works, that is low friction, and keeps trade moving and raises revenues on the duties that we may or may not apply.

Emma Hardy Portrait Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
- Hansard - - - Excerpts

On resourcing, to add to the points already made, I want to double-check this because the first time I saw it I did not believe it was true, but it is. In December you asked for volunteers to be deployed to help plug the gaps in the UK’s Border Force. There had already been an acknowledgment that it did not have the number of people needed and you called for volunteers, which was opposed by Conservative MPs, who said they did not want to see a return to a Dad’s Army protecting the UK. Are you still planning to plug the gap with volunteers or will people be employed?

Mel Stride Portrait Mel Stride
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I will take the hon. Lady’s references to “you” as not meaning the Chair of this Committee, but me. The issue that she has raised, which ran in the press a few weeks ago, relates to an issue for the Home Office and Border Force, not HMRC. It is outside the immediate scope of this Bill. I know that at least one Minister in the Home Office was able to refute those suggestions, but I will not dwell on that in this Committee.

Nic Dakin Portrait Nic Dakin (Scunthorpe) (Lab)
- Hansard - - - Excerpts

The other thing that came out in the evidence was the concern about the loss of experience at a critical time. Is the Minister giving us a strong assurance—I think he is—that there will not be any problems as we move forward? If there are any problems, the Minister and HMRC will be jointly and severally responsible.

Mel Stride Portrait Mel Stride
- Hansard - -

I thank the hon. Member for his very helpful intervention. Of course Ministers have responsibilities for the areas that they oversee. I can assure the hon. Gentleman that I have had discussions with HMRC staff, including the head of HMRC, and we have looked specifically at the right mix of skills and people, so I am confident that we will have the right team in place to meet the challenges ahead.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Schedules 1 and 2 agreed to.

Clause 4

When liability to import duty incurred

Question proposed, That the clause stand part of the Bill.

Mel Stride Portrait Mel Stride
- Hansard - -

The clause determines when a liability to import duty is incurred. This is a necessary part of establishing a stand-alone customs regime as both businesses and HMRC need to know the point at which any money is due. The clause sets out a framework for determining the point at which liability to import duty is incurred. The general rule for importers wishing to release their goods for free circulation—that is, to discharge all customs obligations—is that the liability is incurred when HMRC accepts their declaration. For example, if a business were importing electronic goods from east Asia and declared the goods for free circulation, the liability for import duty would arise when HMRC accepts that declaration.

Similarly, the general rule when importing something under the temporary admission or authorised use procedures is that liability is incurred when HMRC accepts the declaration, but at a reduced rate. However, to facilitate trade and support businesses, liability can be deferred. In cases where goods are declared for a transit procedure, inward processing or a storage procedure, liability does not occur at the point when HMRC accepts the declaration, although liability may arise at a later date. The clause also makes further provisions governing these situations, including the consequences for liability purposes of the incorrect usage of the special procedures or their breach. The clause makes it clear when liability to import duty is incurred.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5

Goods not presented to Customs or Customs declaration not made

Question proposed, That the clause stand part of the Bill.

Mel Stride Portrait Mel Stride
- Hansard - -

Clause 5 deals with cases where goods imported into the UK are either not presented or not declared to HMRC. Where that is the case, it provides for the goods to be liable for forfeiture. It is essential to have rules that cater for situations in which someone fails to meet their obligations when they import goods into the UK. The clause provides such a rule: it makes imported goods liable to forfeiture if they have not been presented or declared to HMRC. That simply mirrors the existing position in EU law that applies in such cases.

The clause also makes it clear that such goods remain liable to import duty at the same time that they are liable to forfeiture. It is essential that appropriate sanctions are in place to deal with failure to meet the requirements of the import duty regime. That is what clause 5 provides in cases where goods are not present or declared to HMRC.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6

Person liable to import duty

Question proposed, That the clause stand part of the Bill.

None Portrait The Chair
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With this it will be convenient to discuss clause 7 stand part.

Mel Stride Portrait Mel Stride
- Hansard - -

Clause 6 establishes who is liable to pay any import duty on goods imported into the United Kingdom. It is essential to establish who is obliged to actually pay import duty when it becomes due. The clause establishes the series of rules that do just that.

The rules set out by the clause illustrate a fundamental principle of the import duty regime, namely the link between the making of a customs declaration and the liability to pay an import duty that might be due. In cases where procedures have been followed correctly and the information provided is accurate, the liability for duty falls upon the person named on the declaration, or on whose behalf the goods have been declared. That could be the importer of the goods and/or an agent appointed to act for them. The basic rule is supplemented by other rules that apply in less straightforward circumstances: for instance, in cases where goods are not declared, the liability to pay duty falls on the person who is in possession or control of the goods when they arrive in the UK.

The clause also caters for other situations in which the rules have not been followed. They include cases where someone has provided false information when they make a declaration, or where they have not followed obligations imposed upon them, such as those that are imposed when goods are subject to a special customs procedure. In such cases, a person who has provided false information or who has breached the obligation can be liable for import duty. The clause also makes it clear that where the liability falls to two or more persons, the clause provides that they are jointly and severally liable for the import duty. It is essential to establish who is liable to pay import duty in all circumstances in which such liability arises. That includes making those who provide false information in connection with declarations liable for import duty.

Clause 7 contains no powers, but introduces the clauses in the Bill that will be used to set the amount of import duty applicable. The customs tariff will apply in all cases, but may be amended or adjusted to change the standard rate of duty in certain circumstances. The clauses referred to in this clause ensure that. The customs tariff will set out the rate of duty applicable to imports of goods into the United Kingdom. The tariff is made up of import duty rates for product categories. The standard customs tariff that the UK currently applies as a member of the EU is made up of more than 17,000 tariff lines.

The customs tariff established under clause 8 will contain the duty rates that apply to all imports from every country unless varied by another clause. The following clauses in the Bill enable the variation of the standard rate of import duty. For example, the UK will be able to reduce import duty when goods are imported under a preferential trade agreement, where preferential rates are granted unilaterally to developing countries. Parliament will also be able to reduce duty rates for applying a tariff suspension or relief, such as for items imported for educational, scientific or cultural purposes.

There are also circumstances where we may apply higher duties. For example, additional import duties can be applied when imports are causing injury to UK industry, as long as such additional duties are applied in line with our obligations as a member of the World Trade Organisation.

Clause 7 introduces the provisions under which we will establish our own tariff regime on leaving the EU. I suggest that clauses 6 and 7 stand part of the Bill.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7 ordered to stand part of the Bill.

Clause 8

The customs tariff

--- Later in debate ---
Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

I mentioned during Second Reading that the Law Society of Scotland had produced a paper on the Bill, and I offered to provide the Minister with a copy. If he does not yet have one, I am still happy to do that. The paper explains more fully the rationale behind these three amendments.

The amendments are not necessarily about changing the tack of the Bill; they are about making better law and ensuring that the law is clearer. I will quote a short extract from the paper submitted by the Law Society of Scotland. It states that,

“the power under clause 8(1)(a) to classify goods ‘according to their nature, origin or any other factor’ is a very broad one. At the very least, this should be limited to ‘any other relevant factor’ but it would be preferable to limit the scope of this provision by giving an indication of the types of factor which might be appropriate in this context.”

So, in our amendment, we have taken up the “very least” option suggested by the Law Society of Scotland. It seems a bit extreme for the Minister to be able to make changes or decisions on “any” factors, some of which may not be relevant. Adding the word “relevant” would ensure that, under the clause, the Minister was stuck to making changes or decisions in relation to relevant factors. It is simply a small technical change that would tighten up the way the law is written.

Similarly, amendments 105 and 118 are very small technical changes that the Law Society of Scotland suggests would be preferable or useful additions to the clause. It suggests that clause 8(3)(b) say, “the number, weight or volume of the goods or any other measure of their quantity or size.” Again, the aim is just to tighten up the language and ensure that the laws that we are starting off with in this wonderful Brexit Britain are as good and clear as possible and can be interpreted, if they need to be—by a court, for example—in the best possible way. As I said, they are very small technical changes, and I would appreciate it if the Minister would consider them.

Mel Stride Portrait Mel Stride
- Hansard - -

Clause 8 requires the Treasury to establish and maintain a customs tariff. The rates of duties set under this clause will apply to goods from every country, unless varied by another clause. It enables the implementation of a range of tariff options, so that the UK can respond to changes in the global trading environment, both now and in the future.

The UK currently applies duty to imports to the UK under the Union customs code. The standard duty rates of the UK, as a member of the EU, are contained in the common external tariff. When we leave the EU, this Bill will require the Treasury to establish and maintain a customs tariff that will, among other things, specify the rate of import duty applicable to goods. The UK is working with the WTO to establish the UK’s bound tariff schedule. That schedule sets the maximum rate of import duty that a country may apply to imports. The UK can then choose what rate to apply, provided it is at or below the bound rate. Import duty rates specified under this clause must be consistent with those international obligations.

Clause 8 sets out what must be contained in the customs—

None Portrait The Chair
- Hansard -

Order. May I remind the Minister that there will be an opportunity for a general debate on clause 8, but not necessarily at this point? He should be responding specifically to the amendment.

Mel Stride Portrait Mel Stride
- Hansard - -

I am sorry, Ms Buck. I assumed that we were also debating that clause 8 stand part. My apologies. I will turn specifically to the amendments tabled by the hon. Member for Aberdeen North. Although she may see them as clarifying matters, the Government’s view is that they are additional and unnecessary amendments to areas where no further clarification is required.

Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

Just to be clear, it is not just me who sees them as necessary in terms of clarification; it is the Law Society of Scotland, which, I assume, knows quite a lot about the law, and therefore feels that these are appropriate changes that would be helpful in terms of the actual law.

Mel Stride Portrait Mel Stride
- Hansard - -

I thank the hon. Lady for that intervention and I fully appreciate that she is taking up recommendations made by the Law Society of Scotland, but let me comment on the two fundamental points she has raised.

First, relating to the relevance—that relevant considerations should be taken into account. The relevance of having the word “relevant” in there, prompts the question whether anybody would ever take decisions based on things that were entirely irrelevant, or at least not relevant. If one went down the road suggested by the hon. Lady, the word “relevant” would probably be inserted in multiple places throughout all the legislation that we ever pass in this House. It is understood that rational Ministers and others would take relevant decisions, rather than irrelevant decisions.

Secondly, before I go too far down this tongue-twisting route—

Mel Stride Portrait Mel Stride
- Hansard - -

Will the hon. Lady indulge me for a second? Parliament—through secondary legislation and in many cases in this Bill—will have the opportunity to test whether any of these measures are being taken on the basis not only of relevant considerations, but of all sorts of other considerations that will be taken into account as to whether these measures that come forward should proceed.

As to the specific point about the amendment relating to the insertion of the numbers, that clause already refers to reference or consideration being made of the quantity of the goods concerned. I think the meaning of the word “number” is, in that context, subsumed by the meaning of the word “quantity”. The Government have received the opinion that the clause already does that which the hon. Lady would like to see it do, namely ensure that the number of goods is also relevant to the function of that particular clause in the legislation.

Anneliese Dodds Portrait Anneliese Dodds
- Hansard - - - Excerpts

It is just a brief—the Minister may feel, facetious—comment, but in the Help-to-Save regulations that we recently discussed there is reference to sufficient proof of death from a GP being required. The Government apparently felt that the word “sufficient” was necessary in that context, but most people would think it was not necessary if there is proof of death. Therefore, if an expert body such as the Law Society of Scotland feels that a word such as “relevant” is required, perhaps I would take its word for it.

Mel Stride Portrait Mel Stride
- Hansard - -

I am not a legal expert. I obviously appreciate that different words have different meanings in different legal contexts, but from the Government’s point of view, we are satisfied that there is not a requirement to have the word “relevant” inserted. That would be superfluous—to throw in another term—as would be the insertion of the word “number”, for reasons I have given to the hon. Member for Aberdeen North, because it would not affect the functioning or meaning of that clause.

Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

I am not going to press the Minister on the word “number”, but on the word “relevant”, I think the Minister dug a hole when he was talking about “rational” Chancellors or Ministers in the Treasury. We are looking at ensuring that this regulation is future-proof, ensuring that if a Minister is not as reasonable as the one standing here, we can ensure that they are held to making relevant regulation. The clause states:

“The Treasury must make regulations establishing, and maintaining in force, a system which…classifies goods according to their nature, origin or any other factor”.

The Government are asking for this House to give them a significant level of delegated authority. They are asking for us to trust the Government, or any future Government that come after, in relation to making these regulations. In this case they are asking us to trust the Treasury. I think the Government can understand why there may be a lack of trust at the moment, given that we have been promised things that have not been followed through on. It would not be too much to ask to insert the word “relevant” into that clause, so that in future, if we do not have as rational a Minister as this one, we can ensure that they have to make the regulations on the classification of goods on relevant factors, rather than on ones that may be irrelevant.

Mel Stride Portrait Mel Stride
- Hansard - -

I reiterate that the Government are not in the business of taking irrelevant factors into account when they make decisions. I give that assurance equally in respect of the Opposition and other parties when they are or have been in government.

The hon. Lady also raises the issue of delegated legislation. At the introduction of the tariff, delegated legislation will be in the form of an affirmative statutory instrument that will be fully considered by a Committee, passed or otherwise by it and agreed to or otherwise by the House. A higher level of delegated legislative scrutiny will also apply to every occasion on which a duty is increased, as opposed to decreased. There is provision in the Bill for a higher level of scrutiny for the introduction of the tariff and for elements of its operation thereafter.

Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

I thank the Minister. I would like to press amendment 104, but not the other two in the group.

Question put, That the amendment be made.

--- Later in debate ---
Peter Dowd Portrait Peter Dowd
- Hansard - - - Excerpts

It is a pleasure to serve under your stewardship, Mrs Buck. I hope that, as in the sessions on the Finance Bill, we will have a major climbdown—the Minister and other members of the Committee will note that from that Bill.

The SNP amendment 106 would require the Government to have regard to the public interest in considering the rate of customs tariffs on our exit. It would add a public interest test to the four existing conditions that the Bill requires the Treasury to have regard to when deciding to apply customs tariffs to goods entering the United Kingdom. Those existing conditions in the Bill are the interests of consumers, the desirability of promoting external trade, the desirability of promoting productivity in the UK and the extent to which goods are subject to competition.

Members will note that, throughout the passage of the Bill, we have been seeking to ensure parliamentary scrutiny. We will continue to do so. In one of the evidence sessions, we heard from one witness, Kathleen Walker Shaw, the European officer of the GMB union, who said that she spent many evenings drafting her union’s response to the trade White Paper only to find eight hours later that the Bills had been published. I think that it is fair to say that that was not a particularly isolated view in the session.

The Opposition have concerns about the specifics of the SNP amendment, which means we take a slightly different approach. We believe that, in key sections of the Bill, the public interest is being used as a mechanism to widen the powers of the Secretary of State. That is perhaps most pronounced in schedule 4, which empowers the Secretary of State to reject a recommendation of the Trade Remedies Authority based upon a belief that it is not in the public interest. I respect people’s beliefs, but in this forum they have to be based on evidence, and I am not sure that we will get much of that. We have tabled a number of amendments of our own, and I want to dwell on them.

It is incumbent on me to point out that public interest is not defined in the Bill. That leaves a good deal of room for manoeuvre for the Secretary of State to determine the public interest, without appropriate parameters about precisely what it means. Precision is not one of the endearing features of the Bill. We are happy for the Government to have powers to take the public interest into account in certain circumstances, but only on the basis that it is concretely defined in primary legislation. That is yet another lacuna in the Bill, and a stubborn point that will be addressed time and again in these proceedings.

The Minister used the example of national security in the evidence session on Tuesday. That does seem a useful definition of public interest, and we believe that national security should provide an explicit limit to the definition of public interest in the Bill. We know, after all, that the Secretary of State has some novel ideas about what the public interest might be. They are views that ostensibly focus on the needs of the consumer over the producer. However, it has to be said that that is a one-dimensional approach taken by the Government, which was laid bare in the witness session. In response to the Financial Secretary’s question about consumers potentially being disadvantaged compared to producers, Ms Crawford responded:

“Consumers are also workers who are employed in some of these industries, and they will not benefit from having unfair trade practice disadvantage them and the quality of their goods. That is something we must bear in mind.”––[Official Report, Taxation (Cross-border Trade) Public Bill Committee, 23 January 2018; c. 42, Q53.]

That is a more sophisticated definitional approach than the Government’s.

Although we support the efforts of the Scottish National party to introduce checks and balances, we have concerns at this stage. In that regard, we cannot support the amendment. I hope the hon. Member for Aberdeen North will take our statement in good faith.

Mel Stride Portrait Mel Stride
- Hansard - -

We have had a wide-ranging debate on this group of amendments, much of which covers matters that we will come to later in the Bill. I will focus my remarks on the details of the amendments and the clause.

The hon. Member for Scunthorpe rightly pointed out that I said earlier that the Government’s intention was to ensure that we had a minimum of change in the regime, for the obvious reason of providing familiarity and certainty to businesses. That is an important point and it is why clause 8(5) takes precedent from the Treaty on the Functioning of the European Union. It is very much grounded in where we currently are, as opposed to venturing out to pastures new, some of which would be unfortunate or inappropriate, or so the Opposition would have us believe.

The hon. Member for Oxford East mentioned authorised economic operators, which we will come to in clause 22, to make the general point that a number of things do not appear in the Bill, such as our habitats and various other things in existing EU legislation. On AEOs, the Bill introduces powers in clause 22 that will allow us to address exactly those elements when HMRC and the Treasury come to lay regulations as to, for example, what qualifications there might be to become registered as a certified AEO. Those kinds of issues can be picked up at that time and scrutinised further by the House.

The meat of clause 8 is in subsection (5), which states:

“In considering the rate of import duty that ought to apply to any goods in a standard case, the Treasury must have regard to…(a) the interests of consumers in the United Kingdom”

and

“(b) the desirability of maintaining and promoting the external trade of the United Kingdom”.

It is hard to see how that would not have to take into account the manufacturing element and the health of the manufacturing sector. Subsection (5)(c) states that the Treasury must have regard to

“the desirability of maintaining and promoting productivity in the United Kingdom,”

It is very difficult to see how the manufacturing sector, which represents around 10% of the UK economy, could be entirely ignored or in any sense neglected. Subsection (5)(d) states that the Treasury must have regard to

“the extent to which the goods concerned are subject to competition.”

I suggest that manufacturing would be core to any decisions on the setting of duties made in that context.

Subsection (6) states:

“In considering the rate of import duty that ought to apply to any goods in a standard case, the Treasury must also have regard to any recommendation about the rate made to them by the Secretary of State.”

As the Committee will know, the term “Secretary of State” refers to any Secretary of State in any Department, so on concerns relating to sustainable development, the relevant Department—

Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

Actually, subsection (7) goes on to say that the Secretary of State

“must have regard to the matters set out in subsection (5)(a) to (d)”,

and not to other factors such as sustainable development.

Mel Stride Portrait Mel Stride
- Hansard - -

The hon. Lady has pre-empted my next point. Although subsection (7) does say that, it does not say that the Secretary of State cannot have regard to any other matter—it does not exclude. It would be strange if a Secretary of State was told that they had to have regard to those four aspects when considering an issue and they took that to mean that they could not consider any other aspect. I draw the Committee’s attention to that aspect of the Bill.

On the specific case of sustainable development, we will debate and scrutinise the provisions in the Bill that accommodate setting up our unilateral trade preferences, which are extremely important in the context of sustainable development. On those grounds, I urge the Committee to reject the amendments.

Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

Specifically on what the Minister has said, it is clear from various evidence we have received that the Government have not chosen simply to replicate things such as the Union customs code. In some places they have chosen to replicate it, but in others they have chosen not to. The concern is that the Government’s judgment has not been great in choosing which parts to replicate and which parts not to replicate. The measure has clearly been drafted in a hurry. From the Minister’s argument in relation to what the Secretary of State would have regard to, it is clear that this section of the legislation has not been particularly well thought through.

Opposition Members are not asking for unreasonable things. Having regard to sustainable development is completely reasonable. If the Minister is clear that that will be looked at anyway, or if the Secretary of State decides to get involved in any decision, it does not cost anything to add that into the Bill. If the Minister is clear that the Government will consider the interests of manufacturers because they are integral, it does not cost anything to add that into the Bill. It would be useful and helpful to businesses and would be a nice sign of confidence in businesses. It would be great for the Government to not just talk about increasing productivity, but to say to manufacturers, “We will support you and ensure that your interests are protected.” If the Minister is clear that such things are going to happen anyway, it would not cost the Government anything and they would lose nothing, but it would ensure that people feel more positively about the Bill.

Mel Stride Portrait Mel Stride
- Hansard - -

I will be brief because the Committee is anxious to make progress and move on to some important clauses. I will not repeat the earlier comments that I made other than the overarching comment, which is that the provisions in the Bill as drawn are very broad and will pick up on the concerns that the hon. Lady has raised.

Jonathan Reynolds Portrait Jonathan Reynolds
- Hansard - - - Excerpts

I appreciate the Minister’s response and his words of reassurance, but if he were being fair-minded he would acknowledge that there is still significant uncertainty and concern in UK industry, particularly in the manufacturing sector. As the evidence session showed the other day, there are more known unknowns than anything else in this area, and amendments that seek to mitigate that and provide more reassurance are reasonable and prudent, so we would like to press the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---
Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

I have previously complained about the composition of Public Bill Committees, given the UK Government’s gerrymandering so that they can have a majority in Bill Committees despite not having a majority in the House. The change would mean that scrutiny would be done effectively, and not just by Committees with a majority of Government representatives who will win every vote by 10 to nine. The amendment is incredibly important and would ensure effective and appropriate scrutiny, and make for better legislation.

Mel Stride Portrait Mel Stride
- Hansard - -

Amendment 2 would require the Treasury to consider recommendations made by a relevant Select Committee or a resolution of the House of Commons when considering the rate of import duty that ought to apply in the standard case.

The Treasury will listen closely to recommendations from a range of interested parties, including relevant Select Committees and, of course, Members of the House. In addition, Select Committees already have the power to question Ministers on policy within their departmental remit, and the Treasury will answer any questions from relevant Select Committees. Therefore, the Government believe that it is not necessary to include that in the Bill.

Amendment 3 would place the same obligation on the Treasury when considering what provisions to include in regulations related to quotas, such as determining the rate of import duty applicable to goods that are subject to quotas, and amendment 4 would introduce that requirement when making regulations concerning tariff suspensions. For the same reasons that I set out in relation to amendment 2, the Government do not believe that it is necessary to include such provisions in the Bill.

I have one final point in response to the point made by the hon. Member for Aberdeen North about scrutiny and needing provisions in the Bill. This Bill will, of course, have Report stage, which will be an opportunity for scrutiny by a far wider group than a Committee on which the Government might typically have a majority of one. Every Member of the House will have an opportunity to participate in that debate and consideration of further amendments.

Peter Dowd Portrait Peter Dowd
- Hansard - - - Excerpts

The amendments seek to ensure that the Treasury must have regard to any Select Committee recommendations or House of Commons resolutions in two circumstances: first, when setting the rate of import duty on a specified good; and secondly, when lowering the rate of import duty on specific goods. Through the amendments, we seek to improve the mechanisms of accountability and ensure that any decision taken by the Treasury on duties and tariffs is taken on the basis of a democratic approach to the management of our economy, with a full and proper place for Parliament and its constituent parts.

We want the UK to have a full and functioning customs system in place when we leave the European Union. The powers transferred in the Bill give the Chancellor, the Secretary of State or others the ability to restructure the entire economy at a few strokes of a pen, without any consultation with those affected by changes to our customs regime. That is deeply concerning for anybody.

Since the Government failed to win a majority at the recent general election, we have seen numerous attempts to centralise power within ministerial portfolios, reducing the role of Parliament and the scrutiny of Government decisions, as has been alluded to on a number of occasions today. The Bill is yet another example of that trend. As the Lords Delegated Powers and Regulatory Reform Committee made clear, the current trend is towards a “massive transfer of power” to the Executive and away from Parliament. Every parliamentarian in this room should be deeply concerned about that because, at the end of the day, we get £75,000 a year to come here and scrutinise the Government and we are not being allowed to. We are therefore seeking to introduce the checks and balances necessary to ensure that a future customs framework and its operation continue to have proper democratic scrutiny and oversight. Stakeholders should be brought into the process.

The amendments would introduce an advisory capacity for Select Committees or the House in the process of determining import duties. That would broaden the number of those who have a democratic role in supporting and informing decision-making. That is what we are here for. Currently, as the Lords Committee made clear, the Bill provides 150 separate powers to make tax law. We are merely suggesting that widening the number of parliamentarians who can influence those decisions is a matter of building a genuinely rigorous democratic process.

Crucially, as hon. Members are aware, Select Committees are made up of Members from across the House. That cross-party approach can only support a proper decision-making process on the important issue of customs tariffs. We hope therefore that Members will consider the benefits of including the expertise of a Committee or the House in general within the vital process of examining evidence and providing independent advice— the Government may not wish to hear that advice, but it should nevertheless be given to them. Ultimately, that can only help to support the work of the Treasury in achieving the best outcome, regardless of party concerned.

It is reasonable in distillation to assert that Mr Blackwell from the Hansard Society said that there is a problem that

“the balance between Parliament and the Executive...has always been on the side of the Executive”––[Official Report, Taxation (Cross-border) Public Bill Committee, 23 January 2018; c. 51, Q71.]

This is a chance to rebalance that. Given the extent of delegation to Ministers set up in this Bill and other Brexit Bills, the role of Parliament is being downgraded. The Government know that; Members in this room know that; consumers know that; and producers know that and the public know that. The Government should think on that. Frankly, they should come clean, have the courage of their convictions, acknowledge it publicly and, in so doing, stop hiding behind what for many people are the vagaries of procedure—negative, affirmative and so on. We ask the Committee to support our amendments today in the interests of democratic scrutiny.

Question put, That the amendment be made.

Taxation (Cross-border Trade) Bill Debate

Full Debate: Read Full Debate
Department: HM Treasury

Taxation (Cross-border Trade) Bill

Mel Stride Excerpts
3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018

(5 years, 8 months ago)

Commons Chamber
Read Full debate Taxation (Cross-border Trade) Act 2018 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 16 July 2018 - (16 Jul 2018)
John Bercow Portrait Mr Speaker
- Hansard - - - Excerpts

I call the Financial Secretary to the Treasury, Mel Stride, but, as I do so, I must advise the House that the right hon. Gentleman is accompanied tonight, on his 13th wedding anniversary, by his good wife Michelle and their daughters Ophelia and Evelyn. It is an unusual way to spend the evening, but we hope they are enjoying it and we look forward to hearing the right hon. Gentleman.

Mel Stride Portrait The Financial Secretary to the Treasury (Mel Stride)
- Hansard - -

Mr Speaker, that is quite an introduction; thank you most graciously for your lovely comments—you will no doubt be injecting some zip into my marriage.

The Government have been clear that when we leave the EU we will leave the customs union; this is a matter of fact. And when considering the end state, the Government will not be seeking to negotiate any form of customs union. The Government proposal will create a UK-EU free trade area which establishes a common rulebook for industrial goods and agricultural products. This will maintain common high standards in these areas, but also ensure that no new changes take place in future without the approval of Parliament. As a result, we will avoid friction at the borders and protect jobs and livelihoods, as well as meet our commitment to Northern Ireland. We are proposing a new business-friendly customs model with the freedom to strike new trade deals around the world, a facilitated customs arrangement.

Paul Farrelly Portrait Paul Farrelly (Newcastle-under-Lyme) (Lab)
- Hansard - - - Excerpts

I wish the right hon. Gentleman—my old friend, who was my former economics tutorial partner at university—a happy anniversary, but why are services less important than goods?

Mel Stride Portrait Mel Stride
- Hansard - -

Services are most certainly not less important than goods; they make up about 80% of the economy and we will retain greater freedoms in terms of being able to do deals around the world in that respect. But under this approach, the UK will apply its own tariffs and trade policy for goods intended for the UK and the UK’s tariffs and trade policy for goods intended for the EU. This option meets the UK’s strategic objectives for our future customs relationship with the EU.

Lord Clarke of Nottingham Portrait Mr Kenneth Clarke
- Hansard - - - Excerpts

I congratulate my right hon. Friend on his wedding anniversary. He has mentioned the facilitated customs arrangement, which is the point of the White Paper. In describing it, the White Paper states at paragraph 17:

“However, the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK,”

and also says we are not expecting it to be replicated in Europe. New clause 36 directly contradicts that. I gather that there are legalisms that the people who advised on the White paper no doubt did not consider when we put in the reference to reciprocity. Now my right hon. Friend is going to give us legalisms as to why it does not matter if we take reciprocity. The political point of these amendments is to destroy the White Paper and the arrangements it proposes. If he accepts them, their supporters will come back for more. Why does he not vote against them and leave them in the tiny minority in the House of Commons, that they actually represent?

Mel Stride Portrait Mel Stride
- Hansard - -

I thank my right hon. and learned Friend for that intervention. I have very little time, but I will come on to his point. The main point is that one has to read paragraph 17a of the White Paper in its entirety to grasp its full meaning, rather than take one part of it.

I will now address the amendments before us today. New clause 1 and consequential amendment 2, as spoken to initially by my right hon. Friend the Member for Broxtowe (Anna Soubry), would establish a negotiating objective for the UK to maintain its participation in the EU customs union and make the commencement of parts 1 and 2 of the Bill conditional upon the outcome of those negotiations. I have already set out that the UK leaving the EU customs union is a straightforward legal consequence of leaving the EU, so the Government must reject these amendments, as well as amendment 1.

The same applies to other amendments before us today: new clauses 1, 3, 4, 11 and 12 and their various consequential amendments, as well as amendments 8, 9, 12 and 14, but that does not mean that we will not seek to enter into a business-friendly and pragmatic arrangement that maintains trade that is as frictionless as possible between the UK and the EU27 as part of our future partnership with the EU. That is because this Government fully recognise, as was set out so eloquently by my right hon. Friend the Member for Broxtowe, the vital importance of the EU as a trading partner that in turn supports the economy and jobs and prosperity throughout the UK.

Let me now turn to new clause 36, tabled by my right hon. Friend the Member for Witham (Priti Patel), which would prevent the implementation of a new arrangement that would see HMRC accounting for duty collected by HMRC to the Government of another territory or country unless the arrangement was reciprocal. The Government have been clear in the White Paper that under their proposed facilitated customs arrangement, the UK and the EU would agree a mechanism for the remittance of relevant tariff revenue. The UK proposes a reciprocal tariff revenue formula taking account of goods destined for the UK entering via the EU and of goods destined for the EU entering via the UK. The White Paper itself states:

“The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue. On the basis that this is likely to be the most robust approach, the UK proposes a tariff revenue formula, taking account of goods destined for the UK entering via the EU and goods destined for the EU entering via the UK.”

New clause 36 is consistent with the Chequers proposal and the White Paper, so the Government are content to accept it—

Amber Rudd Portrait Amber Rudd (Hastings and Rye) (Con)
- Hansard - - - Excerpts

Will the Minister give way?

Mel Stride Portrait Mel Stride
- Hansard - -

I will not give way, no. [Hon. Members: “Give way!”] I have a lot to cover, and I will not give way.

Amendment 72, tabled by my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin), seeks to ensure that clause 31 cannot be used to form a customs union between the UK and the EU without primary legislation. As I have set out, the Government have been clear that as we leave the European Union, we will also leave the EU’s customs union, so the Government have no objection to this enhanced level of parliamentary security—[Interruption.] I have four minutes remaining, but I will take one intervention if it is brief.

Amber Rudd Portrait Amber Rudd
- Hansard - - - Excerpts

My right hon. Friend will be aware that there is some concern on this side of the House regarding new clause 36. He has set out why he is prepared to accept it, but will he reaffirm for those of us on both sides of the House who have those concerns that this will not impact on the negotiating strategy of the UK Government?

Mel Stride Portrait Mel Stride
- Hansard - -

The negotiating strategy of the UK Government is to seek reciprocity in this respect, and that is set out very clearly in the White Paper. Importantly, amendment 72 does not interfere with the Government’s purpose. We have no objection to the principle behind the amendment and we therefore accept it.

Amendment 73, tabled by my hon. Friend the Member for South Thanet (Craig Mackinlay), will remove a specific power that will enable HMRC to make regulations covering the application of VAT to goods in circumstances where we reach a customs union agreement with other customs unions or territories under clause 31. The Chequers agreement does not propose such an arrangement with the European Union as part of the future economic partnership, so the Government accept this amendment.

The effect of new clause 37, tabled by my hon. Friend the Member for Tewkesbury (Mr Robertson), would be to ensure that Northern Ireland would not form part of a separate customs territory from Great Britain. This new clause is a straightforward statement of Government policy. It ensures that the Government will not act in a manner incompatible with the commitments made in the joint report of December last year, when we committed to protecting the constitutional integrity of the United Kingdom, as well as to turning the joint report commitments into legally binding form. The Government also accept this new clause.

I shall turn now to our future VAT arrangements with the EU. New clause 2 seeks to establish a negotiating objective to maintain the UK’s participation in the EU VAT area. This would limit our ability to appropriately consider our future VAT policy, and for that reason we reject it. The Government are also making an amendment to a schedule to the Finance Act 2008. Amendment 83 is consequential on the new customs framework provided for in the Bill and is necessary to ensure certain excise penalties remain in place on EU exit.

I now wish to turn briefly to the powers in the Bill. It is critical that we have these powers to allow us to respond flexibly, but we accept that in some cases it may be considered proportionate to apply the made affirmative procedure, and I am grateful for the discussion that I have had with my hon. Friend the Member for Eddisbury (Antoinette Sandbach) in this regard. It is on this basis that the Government have brought forward amendments 75, 76, 79, 81 and 23, which apply the made affirmative procedure to the powers under clauses 30, 42 and 47—the powers to make general provision in relation to import duty and to deal with retained EU VAT and excise law.

Clause 25 permits disclosures for customs duty purposes and makes it clear that disclosures that would contravene the Data Protection Act 1998 are not permitted. We accept the Scottish National party’s amendments 33 and 34, which seek clarity in that regard.

Finally, we have had a full, robust and comprehensive debate today, as is entirely appropriate for a Bill of such importance. It is important for our ability to continue as one of the world’s great trading nations after our departure from the EU and to accommodate our future customs arrangement within our future economic partnership with the EU.

John Bercow Portrait Mr Speaker
- Hansard - - - Excerpts

For one sentence, I call Anna Soubry.

--- Later in debate ---
John Bercow Portrait Mr Speaker
- Hansard - - - Excerpts

Order. Colleagues will understand me if I say that I think there might be some evidence of what I might call ritualism involved in this matter, but it is up to people to find their own salvation, and I think that the Financial Secretary to the Treasury is well able to do so, with help from others if he is so minded.

Mel Stride Portrait Mel Stride
- Hansard - -

rose—

John Bercow Portrait Mr Speaker
- Hansard - - - Excerpts

Order. It is very good of the right hon. Gentleman, but I think that the Government had previously signalled, and I had been advised—although this is not a matter for the Chair—that they had accepted this amendment. However, when it was put to the vote, and Scottish National party voices shouted Aye, there was what might be described as an instinctive reaction of No from some quarters. If that is what the right hon. Gentleman was attempting to articulate, we are most grateful to him.

Mel Stride Portrait Mel Stride
- Hansard - -

Thank you, Mr Speaker. The instincts on our side are often divided, but not on this matter. We are at one in accepting amendment 33, as well as amendment 34, tabled by the Scottish National party.

John Bercow Portrait Mr Speaker
- Hansard - - - Excerpts

Well, an absence of Tellers will suffice to achieve the objective of the Minister. Division off.

Amendment 33 agreed to.

Amendment made: 34, page 17, line 4, at end insert—

‘(8) In this section, “the data protection legislation” has the same meaning as in the Data Protection Act 2018.’ —(Kirsty Blackman.)

Clause 31

Territories forming part of a customs union with UK

Amendment made: 72, page 18, line 34, at end insert—

‘(4A) In the case of a customs union between the United Kingdom and the European Union, Her Majesty may not make a declaration by Order In Council under subsection (4) unless the arrangements have been approved by an Act of Parliament.’—(Sir Bernard Jenkin.)

This amendment provides that the delegated powers under this clause may not be exercised until a proposed customs union with the European Union has been approved by a separate Act of Parliament.

Clause 32

Regulations etc

Amendments made: 75, page 19, line 15, leave out paragraphs (a) and (b) and insert

“any regulations to which this subsection applies”.

Amendments 75 and 76 provide that regulations under Clause 30 (general provision for import duty purposes) cease to have effect if not approved by the House of Commons within 28 days of being made.

Amendment 76, page 19, line 21, at end insert—

“( ) Subsection (2) applies to—

(a) the first regulations under section8 (the customs tariff),

(b) any other regulations under that section the effect of which is an increase in the amount of import duty payable under the customs tariff in a standard case (within the meaning of that section), or

(c) regulations under section30 (general provision for import duty purposes).”—(Mel Stride.)

See the explanatory statement for Amendment 75.

Clause 39

Charge to export duty

Amendment made: 77, page 27, line 12, at end insert—

“( ) the interests of producers in the United Kingdom of the goods concerned,”.—(Mel Stride.)

This amendment requires the Treasury, when considering whether to impose export duty and the rate of export duty that ought to apply to particular goods if it is to be imposed, to have regard to the interests of UK producers of those goods.

Clause 42

EU law relating to VAT

Amendments made: 78, page 29, line 45, at end insert—

“( ) No regulations may be made under this section on or after 1 April 2023.”

This amendment provides that the powers to make regulations under Clause 42 (EU law relating to VAT) are not exercisable after 31 March 2023.

Amendment 79, page 30, line 1, leave out from “section” to end of line 2 and insert

“must be laid before the House of Commons, and, unless approved by that House before the end of the period of 28 days beginning with the date on which the instrument is made, ceases to have effect at the end of that period.

‘( ) The fact that a statutory instrument ceases to have effect as mentioned in subsection (6) does not affect—

(a) anything previously done under the instrument, or

(b) the making of a new statutory instrument.

( ) In calculating the period for the purposes of subsection (6), no account is to be taken of any time—

(a) during which Parliament is dissolved or prorogued, or

(b) during which the House of Commons is adjourned for more than 4 days.”—(Mel Stride.)

This amendment provides that regulations under Clause 42 (EU law relating to VAT) cease to have effect if not approved by the House of Commons within 28 days of being made.

Clause 47

EU law relating to excise duty

Amendment made: 80, page 32, line 47, at end insert—

“( ) No regulations may be made under this section on or after 1 April 2023.”—(Mel Stride.)

This amendment provides that the power to make regulations under Clause 47 (EU law relating to excise duty) is not exercisable after 31 March 2023.

Clause 48

Regulations under ss. 44 to 47

Amendments made: 81, page 33, line 12, after “section” insert “, or regulations under section 47,”.

This amendment provides that regulations under Clause 47 (EU law relating to excise duty) cease to have effect if not approved by the House of Commons within 28 days of being made.

Amendment 23, page 33, line 30, leave out “47” and insert “46”.—(Mel Stride.)

This amendment is consequential Amendment 81.

Clause 51

Power to make provision in relation to VAT or duties of customs or excise

Amendment made: 82, page 34, line 41, at end insert—

“( ) No regulations may be made under this section on or after 1 April 2022.”—(Mel Stride.)

This amendment provides that the power to make regulations under Clause 51 (power to make provision in relation to VAT or duties of customs or excise) is not exercisable after 31 March 2022.

Schedule 4

Dumping of goods or foreign subsidies causing injury to UK industry

Amendments made: 103, page 66, line 26, leave out from “that” to end of line 30 and insert

“it is not in the public interest to accept it.

‘(2A) In considering that, the Secretary of State must accept the TRA’s determination that requiring a guarantee in accordance with the recommendation meets the economic interest test (see paragraph 25), unless the Secretary of State is satisfied that the determination is not one that the TRA could reasonably have made.”

Amendments 103 and 108 provide that the Secretary of State may reject a recommendation by the TRA to apply an anti-dumping or anti-subsidy remedy only if the Secretary of State is satisfied that it is not in the public interest to accept the recommendation. In deciding that, the Secretary of State must accept the TRA’s view that the economic interest test is met, unless satisfied that the TRA could not reasonably have come to that view.

Amendment 104, page 68, line 42, leave out

“such period as the TRA considers necessary”

and insert

“a period of 5 years unless the TRA considers that a lesser period is sufficient”.

Amendments 104 and 105 provide that the recommended period for the application of an anti-dumping amount or a countervailing amount is 5 years unless the TRA considers that a lesser period is sufficient to counteract the dumping, or the importation of subsidised goods, which has caused or is causing injury.

Amendment 105, page 69, line 1, leave out from beginning to “and” in line 3.

See the explanatory statement for Amendment 104.

Amendment 106, page 69, line 8, at end insert—

“( ) In the case of a recommendation of such a prior date made by virtue of paragraph 19, the reference in sub-paragraph (2)(a) to a period of 5 years is to be read as a reference to a period of 5 years plus the relevant period (within the meaning of paragraph 19).”

This amendment ensures that where it is recommended that an anti-dumping amount or a countervailing amount is applied to goods from a date on or before the day of publication of the relevant public notice under clause 13, the default recommended period of 5 years for the application of the amount (provided for by Amendment 104) is extended by that prior period.

Amendment 107, page 69, line 8, at end insert—

“( ) See also paragraph 21 regarding the possibility, following a review, of extensions or variations to the period for which an anti-dumping amount or a countervailing amount applies to goods.”

This amendment is consequential on Amendment 105.

Amendment 108, page 70, line 12, leave out from “that” to end of line 17 and insert

“it is not in the public interest to accept it.

‘(2A) In considering that, the Secretary of State must accept the TRA’s determination that the application of an anti-dumping amount or a countervailing amount to goods in accordance with the recommendation meets the economic interest test (see paragraph 25), unless the Secretary of State is satisfied that the determination is not one that the TRA could reasonably have made.”

See the explanatory statement for Amendment 103.

Amendment 109, page 72, line 11, leave out

“5 year period referred to in paragraph 18(2)(b)”

and insert

“period referred to in paragraph 18(2)(a)”.

This amendment is consequential on Amendments 104 and 105.

Amendment 110, page 75, line 28, at end insert—

“(zi) the injury caused by the dumping of the goods, or the importation of the subsidised goods, to a UK industry in the goods and the benefits to that UK industry in removing that injury,”

Paragraph 25(4)(a) of Schedule 4 lists certain matters which the TRA and the Secretary of State must take account of, so far as relevant, when deciding whether the application of an anti-dumping or anti-subsidy remedy is not in the economic interest of the UK. Amendment 110 inserts an express reference in that list to the injury caused by the dumping of the goods or the subsidised imports to a UK industry in the goods and of the benefits to that industry in removing that injury.

Amendment 111, page 76, line 9, at end insert—

“(zi) the UK industry referred to in sub-paragraph (4)(a)(zi) and other producers of goods,”

Amendments 111 and 112 make clear that the references to “affected industries” in paragraph 25 of Schedule 4 continue to include the injured UK industry referred to in Amendment 110.

Amendment 112, page 76, line 10, leave out “producers and”.—(Mel Stride.)

See the explanatory statement for Amendment 111.

Schedule 5

Increase in imports causing serious injury to UK producers

Amendments made: 113, page 81, line 32, after “plan” insert

“or the TRA waives the requirement for the application to be accompanied by such a plan”.

This amendment enables the TRA to waive the requirement for an application for the initiation of a safeguarding investigation to be accompanied by a preliminary adjustment plan.

Amendment 85, page 84, line 12, leave out from “goods” to end of line 14 and insert

“or to specified relevant goods;

(b) that all the relevant goods, or specified relevant goods, should be subject to a quota for a specified period during which a lower rate of import duty should be applicable to imports of goods within the amount of the quota than is applicable to imports of goods outside the amount of the quota (referred to in this Schedule as a ‘provisional tariff rate quota’).

(3A) Where the TRA makes a recommendation under sub-paragraph (3)(a) in relation to relevant goods it must, as part of the recommendation, recommend to the Secretary of State how a provisional safeguarding amount applicable to those goods should be determined.”

This amendment enables the TRA, where it makes a provisional affirmative determination during a safeguarding investigation, to recommend that goods be made subject to a provisional tariff rate quota as an alternative to recommending that a provisional safeguarding amount be applied to the goods.

Amendment 86, page 84, line 16, leave out

“the application of a provisional safeguarding amount”

and insert

“applying a provisional safeguarding amount to relevant goods, or making relevant goods subject to a provisional tariff rate quota,”.

This amendment is consequential on Amendment 85.

Amendment 87, page 84, line 22, leave out sub-paragraph (5) and insert—

“(5) The TRA may only make a recommendation under one or other of paragraphs (a) and (b) of sub-paragraph (3) in relation to any particular relevant good.

(5A) The TRA may make a recommendation under paragraph (a) or (b) of sub-paragraph (3) in relation to specified relevant goods (rather than all the relevant goods) only if the recommendations which it makes under that sub-paragraph, when taken together, cover all the relevant goods.

(5B) If the TRA determines that there are one or more recommendations which it could make under sub-paragraph (3) in relation to all the relevant goods, or that there are one or more recommendations which it could make under sub-paragraph (3) in relation to specified relevant goods, it must make that recommendation or one of those recommendations (subject to sub-paragraphs (5) and (5A)).”

This amendment is consequential on Amendment 85. It has the effect that the TRA may recommend that goods in relation to which a provisional affirmative determination is made should be subject either to a provisional safeguarding amount or a provisional tariff rate quota, but not both, although some of the goods may be subject to one type of provisional remedy whilst the rest are subject to the other type of remedy.

Amendment 88, page 84, line 35, leave out “11(3)” and insert “11(3)(a)”.

This amendment is consequential on Amendment 85.

Amendment 89, page 84, line 41, leave out

“The recommendation referred to in paragraph 11(3)(b)”

and insert

“A recommendation under paragraph 11(3)(a)”.

This amendment is consequential on Amendment 85.

Amendment 90, page 84, line 42, at end insert “(see paragraph 11(3A))”.

This amendment is consequential on Amendment 85.

Amendment 91, page 85, line 11, leave out “11(3)” and insert “11(3)(a)”.

This amendment is consequential on Amendment 85.

Amendment 92, page 85, line 12, at end insert—

“TRA’s recommendations regarding provisional tariff rate quotas

12A (1) This paragraph applies to a recommendation by the TRA under paragraph 11(3)(b) in relation to goods.

(2) The specified period referred to in paragraph 11(3)(b)—

(a) must not exceed 200 days, and

(b) if the recommendation is accepted by the Secretary of State, must begin on the day after the date of publication of the public notice under section 13 giving effect to the recommendation.

(3) The recommendation must (in addition to the specified period) include—

(a) the TRA’s recommendation regarding—

(i) the amount of the quota,

(ii) how the quota should be allocated, and

(iii) the rates of import duty that should be applied to goods subject to the quota, and

(b) such other content as regulations may require.

(4) The TRA must consult the Secretary of State before making a recommendation regarding the allocation of the quota.

(5) The things recommended by the TRA by virtue of sub-paragraph (3)(a) must be such as the TRA is satisfied are necessary to prevent serious injury which it would be difficult to repair from being caused during the investigation to UK producers of the goods.

(6) Regulations may make provision for the purposes of sub-paragraph (5) about how the things which the TRA is satisfied are necessary to prevent the serious injury described in that provision are to be determined.”

This amendment makes provision about the content of a TRA recommendation that goods should be subject to a provisional tariff rate quota. See the explanatory statement to Amendment 85 concerning the making of such a recommendation.

Amendment 93, page 85, line 14, leave out “11(3)” and insert “11(3)(a)”.

This amendment is consequential on Amendment 85.

Amendment 94, page 85, line 37, leave out sub-paragraph (5).

This amendment is consequential on Amendment 85.

Amendment 95, page 85, line 40, leave out

“of a provisional remedy in respect of goods”

and insert

“for which a provisional safeguarding amount applies to goods”.

This amendment is consequential on Amendment 85.

Amendment 96, page 85, line 42, at end insert—

“Secretary of State’s power to subject goods to a provisional tariff rate quota

13A (1) If the TRA makes a recommendation under paragraph 11(3)(b), the Secretary of State must decide whether to accept or reject the recommendation.

(2) The Secretary of State may reject the recommendation only if the Secretary of State is satisfied that—

(a) making goods subject to a provisional tariff rate quota in accordance with the recommendation does not meet the economic interest test (see paragraph 21), or

(b) it is not otherwise in the public interest to accept the recommendation.

(3) If the recommendation is rejected, the Secretary of State must—

(a) publish notice of the TRA’s provisional affirmative determination in relation to the goods, of the recommendation and of the rejection of it,

(b) notify interested parties (see paragraph 29(3)) accordingly, and

(c) lay a statement before the House of Commons setting out the reasons for rejecting the recommendation.

(4) If the recommendation is accepted, the Secretary of State—

(a) must publish notice of the TRA’s provisional affirmative determination in relation to the goods, of the recommendation and of the acceptance of it,

(b) must notify interested parties accordingly, and

(c) is required under section 13 to make provision by public notice to give effect to the recommendation.

(5) The period for which goods are subject to a provisional tariff rate quota ceases (if it has not already expired) when the safeguarding investigation in relation to the goods terminates.”

This amendment makes provision about what the Secretary of State is to do if the TRA recommends that goods should be subject to a provisional tariff rate quota. See the explanatory statement to Amendment 85 concerning the making of such a recommendation.

Amendment 114, page 86, line 32, at end insert—

“( ) But sub-paragraph (5) is to be read as if paragraph (b) were omitted if the TRA waived the requirement for the application to initiate a safeguarding investigation in relation to the relevant goods to be accompanied by a preliminary adjustment plan.”

Paragraph 14(5)(b) of Schedule 5 to the Bill requires the TRA to be satisfied that an adjustment plan is in place before recommending to the Secretary of State, following the making of a final affirmative determination in a safeguarding investigation, that a definitive safeguarding amount should be applied or a tariff rate quota imposed. This amendment disapplies the paragraph 14(5)(b) requirement in cases where the requirement to provide a preliminary adjustment plan was waived at the point when the application was being made for the initiation of a safeguarding investigation.

Amendment 97, page 88, leave out lines 1 to 13 and insert—

“(7) If a provisional safeguarding remedy has been applied to some or all of the goods as part of the same safeguarding investigation, sub-paragraph (8) applies for the purposes of sub-paragraphs (2)(b) and (4)(b).

(8) The length of the specified period referred to in paragraph 14(3)(a), so far as relating to goods to which a provisional safeguarding remedy has been applied, is to be treated as extended by the length of the specified period for which the TRA recommended that a provisional safeguarding remedy should be applied to them.

(9) Where the application of sub-paragraph (8) results in the length of the specified period referred to in paragraph 14(3)(a), so far as relating to goods to which a provisional safeguarding remedy has been applied, exceeding 1 year, sub-paragraph (4)(b) is to be read as if references to goods were references to the goods to which the provisional safeguarding remedy has been applied.

(10) In this paragraph, references to the application of a provisional safeguarding remedy are to—

(a) applying a provisional safeguarding amount to goods, or

(b) making goods subject to a provisional tariff rate quota.”

This amendment is consequential on Amendment 85. It explains what effect the period of a provisional tariff rate quota is to have where the TRA later recommends the application of a definitive safeguarding amount. The amendment also incorporates the existing provision about the effect of the period of a provisional safeguarding amount.

Amendment 98, page 89, leave out lines 6 to 18 and insert—

“(7) If a provisional safeguarding remedy has been applied to some or all of the goods as part of the same safeguarding investigation, sub-paragraph (8) applies for the purposes of sub-paragraphs (2)(b) and (5)(b).

(8) The length of the specified period referred to in paragraph 14(3)(b), so far as relating to goods to which a provisional safeguarding remedy has been applied, is to be treated as extended by the length of the specified period for which the TRA recommended that a provisional safeguarding remedy should be applied to them.

(9) Where the application of sub-paragraph (8) results in the length of the specified period referred to in paragraph 14(3)(b), so far as relating to goods to which a provisional safeguarding remedy has been applied, exceeding 1 year, sub-paragraph (5)(b) is to be read as if references to goods were references to the goods to which the provisional safeguarding remedy has been applied.

(10) In this paragraph, references to the application of a provisional safeguarding remedy are to—

(a) applying a provisional safeguarding amount to goods, or

(b) making goods subject to a provisional tariff rate quota.”

This amendment is consequential on Amendment 85. It explains what effect the period of a provisional tariff rate quota is to have where the TRA later recommends that goods be subject to a tariff rate quota. The amendment also incorporates the existing provision about the effect of the period of a provisional safeguarding amount.

Amendment 115, page 91, line 8, leave out “the adjustment plan” and insert “an adjustment plan as”.

This amendment is consequential on Amendment 114.

Amendment 116, page 93, line 27, at end insert—

“(zi) the serious injury caused by the importation of the goods in increased quantities to UK producers of those goods and the benefits to those UK producers in removing that injury,”

Paragraph 21(3)(a) of Schedule 5 lists certain matters which the TRA and the Secretary of State must take account of, so far as relevant, when deciding whether the application of a safeguarding remedy is in the economic interest of the UK. Amendment 116 inserts an express reference in that list to the serious injury caused by the importation of the goods in increased quantities to UK producers of the goods and of the benefits to those producers in removing that injury.

Amendment 99, page 93, line 43, after “a” insert

“provisional tariff rate quota or a”.

This amendment is consequential on Amendment 85.

Amendment 117, page 94, line 1, at end insert—

“(zi) the UK producers referred to in sub-paragraph (3)(a)(zi) and other producers of goods,”.

Amendments 117 and 118 make clear that the references to “affected industries” in paragraph 21 of Schedule 5 continue to include the injured UK producers referred to in Amendment 116.

Amendment 118, page 94, line 2, leave out “producers and”.

See the explanatory statement for Amendment 117.

Amendment 100, page 96, line 18, after “a” insert

“provisional tariff rate quota or a”.

This amendment is consequential on Amendment 85.

Amendment 101, page 97, leave out lines 24 and 25.

This amendment is consequential on Amendment 85.

Amendment 102, page 97, line 29, at end insert—

“‘provisional tariff rate quota’ has the meaning given by paragraph 11(3)(b);”.—(Mel Stride.)

This amendment is consequential on Amendment 85.

Schedule 8

VAT amendments connected with withdrawal from EU

Amendment proposed: 73, page 135, leave out paragraph 14.—(Craig Mackinlay.)

Question put, That the amendment be made.