I beg to move,
(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.
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?
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.
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.
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.
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?
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.
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.
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.
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.
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 we 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?
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.
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.
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?
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.
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?
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.
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.
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.
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.
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.
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?
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.
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.
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?
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.
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.
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?
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.
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.
As the Minister will know, this is in the interests of my constituents, as well as those of my hon. Friend 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.
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.
At last, we have the Ways and Means motion before the House. The enigmatic—some might say pretty puzzling—part of it all is that it does not have much to say practically about taxation, cross-borders or trade. That is somewhat perplexing given that the title of the Bill is the Taxation (Cross-border Trade) Bill. The only word in the title that in any way reflects this subject is the word “Bill”.
I wait with bated breath for the customs Bill, which I trust will have—hope springs eternal—more substance to it. Perhaps we will see more of the same powers to alter primary legislation going into Ministers’ back pockets. However, if this Ways and Means motion is the warm-up act to the customs Bill, I imagine that it will be just as disappointing, vague, opaque and abstruse.
I exhort the Minister to have a look at the representations of the Chartered Institute of Taxation. I am sure that he will read those observations will alacrity, as I do. In the institute’s response to the Government’s White Paper, “Customs Bill: legislating for the UK’s future customs, VAT and excise regimes”, it made a number of observations that are worth highlighting. For example, paragraph 1.3 states:
“The paper gives rise to an unusually complex mix of legal and technical issues within equally complex political constraints. It is not our remit to enter into debate about the political constraints, but a lack of clarity around the political constraints makes the technical analysis somewhat more difficult.”
That is a fair reflection, in very measured tones, of what the rest of us think, which is that the cack-handed manner in which the Government have approached the negotiations with the EU has left the important detail that is necessary to ensure the deal that the Prime Minister ostensibly wants—namely, streamlined customs arrangements—to the vacillations of the Government in general and the Brexit Secretary in particular. That is very worrying.
It is worrying in that the Government continue to be dragged screaming and shouting to this Chamber on any issue that they feel uncomfortable debating. When they do discuss it, they try to curtail the debate. The Chartered Institute of Taxation also has something to say on that in paragraphs 5.4 and 5.5 of its response to the White Paper, which state:
“We acknowledge the predicament of needing to begin the legislative process before knowing the outcome of negotiations. However, we have concerns around the limited level of scrutiny that this law-making process allows, given the political uncertainty, the potential for large-scale changes and tight timescales…
The Bill will, we understand, have the powers to amend primary legislation using secondary legislation;
raising similar concerns around delegated powers as with the EU Withdrawal Bill.”
The Government are even dragging their feet on the production of the 58 impact assessments, some two weeks after this House demanded them. The Opposition recognise the need for the Government to begin preparations for an independent customs and tariff regime, as that is both logical and necessary. However, it does not mean giving the Government a blank cheque to concentrate power in the hands of the Executive. The upcoming Taxation (Cross-border Trade) Bill will outline the powers of a new trade remedies authority, the creation of which is outlined in the Government’s Trade Bill.
Let me be clear: although Labour supports the creation of a truly independent trade remedies authority to help to protect UK industry and advise the Government on how best to tackle the dumping of state-subsidised cheap goods on the UK market, we do not want to see an authority compiled of the International Trade Secretary’s cronies, who are tasked with advising him on how best to dismantle key sectors of the UK economy. Instead, we want a trade remedies authority that reports directly to Parliament, rather than to the Department for International Trade. It should have representatives from the trade union movement, British business and each of the devolved Administrations. We will not allow this House to be sidestepped or side-lined by a Government consumed by chaos.
Whether with the Henry VIII powers in the European Union (Withdrawal) Bill or the delegated powers set out in the Trade Bill, this Government have shown an unhealthy obsession for cementing power in the hands of the Executive and shying away from any parliamentary scrutiny.
It seems that the mantra of “taking back control” that we saw during the EU referendum campaign essentially means taking back control to Ministers, not to this democratically-elected Parliament.
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.
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?
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.
I think the hon. Gentleman is really struggling on this. It makes eminent sense that the Government should have the powers to deal with all eventualities. Perhaps he could help this place by explaining the Labour party’s current policy on the customs union. Is the Labour party in favour of us remaining in the customs union de facto as we go into transition, or is it against that? Is it in favour of our staying in the customs union by way of a final deal, which I think is an eminently good idea?
I will tell the right hon. Lady what we are in favour of: parliamentary scrutiny. It was John Bright who reportedly coined the phrase “the Mother of Parliaments”, which is completely alien to Conservative Members and, obviously, to the right hon. Lady. I suspect that he, along with many other Radical and Conservative parliamentarians, would be turning in his grave at the idea that a Government living on borrowed time have the arrogance, hubris and others would say bluster to treat Parliament in the fashion this Government are intent on doing.
Conservative Members have to ask themselves this question: did their constituents send them to this House to acquiesce is the systematic stripping away of parliamentary scrutiny, which is not in the national interest, or did they send them here to hold the Government to account, regardless of their party allegiance? The Minister should take seriously the concerns I have raised, as many others inside and outside the House have, about the fast and loose approach the Government are taking to parliamentary scrutiny.
The fact of the matter is that we are not closing off options, which the Government seem to have a pathological obsession with doing.
I hope that, between now and Second Reading, the Government will consider the importance of comprehensive parliamentary oversight and pay attention to the concerns of this House in relation to this whole question.
It is a pleasure to stand here tonight and to talk about this Bill on behalf of my constituents. Having listened to the speech by Peter Dowd, they might have been a bit surprised to hear that there was no point to this place at all. However, what we are doing tonight, if we pass these resolutions, is giving our consent to the Government bringing in a Bill that is a key part of enabling us to have the proper machinery of Government if, and as, we leave the European Union. This is not a warm-up act for the Bill itself; this is a gateway we need for the Bill, and it is entirely sensible. This is about giving our consent to the Government making changes to financial matters that will affect every one of our constituents.
As part of those mechanics, we have a massive opportunity to set our own tariffs and duties as we go forward as a nation and to set our own trade policy and all that goes with that. However, this is a very technical matter.
The hon. Gentleman talks as if it was an entirely unilateral decision on our part what tariffs and trade agreements we have. We have to get out there into the wide world and try to negotiate these trade agreements. Does he not acknowledge that we are in a much weaker bargaining position than we were when we were negotiating those as part of the EU?
I do not accept that at all, but I thank the hon. Lady for her intervention. We have a major opportunity to think about what tariffs are best for all of our economy, rather than always having to think about just the EU. This is a really big opportunity to shape many of our industries, when we have just had to cope with a one-size-fits-all solution for many years now.
Our ability to cope on day one is dependent on the measures in the Bill being effective. I have to thank my right hon. Friend the Minister for listening so intently when I have slightly harangued him about trying to ensure that we have enough resource and application on these detailed matters. It is absolutely right that leaving the European Union is a complex business; it is not something we can just assume will be fine. We really need to devote resource, time and application, and to get as much as we can out of the private sector advising and helping us, to make sure we have the necessary technological solutions as part of these processes.
Does my hon. Friend agree that the Bill is very much about preparing the way for when we leave the EU? When we talk about going forward with a global Britain, that is about seeking every opportunity we can to take our country forward.
My hon. Friend makes an important point, and I completely agree.
It is massively important that we look at the data systems, and I have talked a lot with Ministers about the customs declaration service that we are putting in place by January 2019. I have met industry representatives, and I have to thank my hon. Friend Charlie Elphicke for organising some of those meetings in a very efficient fashion. They have been incredibly useful in bringing key civil servants and key stakeholders up to date with exactly what is required.
I do not think we need to reinvent the wheel. We do not need to go for full, all-singing, all-dancing, new solutions overnight; there are some practical steps we can take in the interim. We heard from one panel about a system called Intrastat, whereby economic flows around the European Union, based on actual transactions, are recorded. It was suggested that it is possible to, effectively, bolt the tracing of different liabilities on to that system, with the customs system operating in parallel with it.
What our partners in the EU, or in any other part of the world, want to know when goods are moving across one of their borders is what is in those consignments and whether they need to think about a tariff or take into account some other regulatory provision. It is massively important that we can talk to our counterparts on the other side. I implore Ministers to try to persuade the EU, even though so far it has been very reluctant, to allow member states’ national customs authorities to talk properly to us about what data interfaces are going to be required for what will probably be quite a lot of extra transactions and considerations that will have to be made. I certainly stand ready to help with my contacts, if I can, to enable some of those conversations to happen. Whether it is a ramped-up trade facilitation exercise—the “option 1” that the Minister described—or a partnership based on a new type of tracing of the way in which goods move around our economy and across our external borders and those of the EU, at the moment, we will need to make and record lots of declarations of one kind or another, and the other side will have to be confident that what we say is the status of these goods is in fact the case.
VAT processing has been the Cinderella of this conversation over the past few months. Everyone has been focused on the duty side, and not enough focus and attention has been given to the VAT side. The manner of the processing of VAT really makes a difference to very many businesses, and it is a major cash-flow issue for most businesses. If we want to stay open to ideas, as we do, with our EU friends and allies, and if we want to have good facilitation of cross-border trade, we need to address, for example, the ability of a vendor to attend a trade show and take a load of samples with them, because if there is a VAT issue, that could really be a problem. It is also a problem in the art world where very high-value objects are moving around. We need to think about that.
I entirely agree with the hon. Gentleman’s comments. Does he share my concern that because the Government are not giving any clarity on this issue, it is very likely that British businesses will have to deal with all the vagaries of the 13th directive on VAT unless we look for some clarity on retaining our current systems for trading, whether through the customs union or the single market?
I thank the hon. Lady. I agree that we need clarity as early as possible on all these issues, and I encourage Ministers to come forward with ideas on that.
Returning to what we heard about Ireland in various interventions on the Minister, I would like him to think about whether, in the VAT resolutions, we are confining ourselves a little too much by saying that the Government may not, through the Bill, make any amendment relating to VAT rates, exemptions and zero rating. One of the issues with the Irish border historically, and where the real problems came from when Ireland was given its independence, was the amount of smuggling, and the rates and tariffs on goods going into the UK were a major factor in that. Perhaps we could look to smoothing the feelings and the actual processes on the Irish border to make sure that, as far as possible, our VAT rates are as harmonised as they could be so that there is no temptation to smuggle there.
My hon. Friend makes some extremely important points. In connection with the Irish border, a derogation already exists, potentially, between the European Union and its neighbouring states through EC regulation 1931/2006, which allows, particularly within a certain distance of the border, small and medium-sized enterprises legally to avoid duties and customs, thus ensuring and promoting cross-border trade. Does he agree that that model could be appropriate on the island of Ireland?
I thank my hon. Friend. That is a very interesting point, and I am sure that Ministers will look at it.
The Irish economy probably has more to lose than any other party in the negotiations between us and the EU. We have been talking in our papers about wanting to maintain the common transit convention, and that is probably right. Ireland is incredibly dependent on that because 80% of its trade with the mainland EU goes via our UK land bridge. There are many issues with that, not least the licensing of drivers who currently drive these goods across the borders in a seamless fashion. We need to make sure that we focus on enabling that if we want—
I cannot take any more interventions, I am afraid, because other people want to speak.
Given the apparent attitude of the Government of the Republic of Ireland to some of these matters at the moment, we should not automatically assume that we will allow them access to the common transit convention. Ministers should take a pretty firm view of that given that we certainly do not want our islands and our nations to be split into different areas. I am very happy to support these resolutions.
I am pleased that the Government have finally brought forward something that is at least a bit more solid than things were previously, albeit not yet very solid.
The customs White Paper says that we should refer to the future partnership agreement and to the Northern Ireland position paper, and the Northern Ireland position paper says that we should refer to the customs White Paper—this is a complete guddle! Having read all these things, not only am I still not clear about how customs will look after the UK leaves the EU, but I am not clear about how the UK Government want customs to look. The only thing that I am even vaguely clear about is that they want the process to be as close to frictionless as possible, yet they have not made any clear commitments about exactly how they expect that to work. Let us look at some of the things they have said in their various papers. With regard to Northern Ireland, for example, they want to agree
“at an early stage a time-limited interim period, linked to the speed at which implementation of the new arrangements could take place, that allows for a smooth and orderly transition.”
I might be wrong, but I think that now is an early stage. In fact, before now would have been a good time at which to make decisions and commitments, and to be clear to business about at least what the direction of travel is, but we are not there yet. We are very close to Brexit day. Brexit day is coming in March 2019—who knows at what time?—and the Government have not been clear with businesses about even their aspirations for how customs will look.
It is undoubtedly the case that we benefit from being members of the EU single market and members of the customs union. Even those who are most vociferously in favour of Brexit agree that we benefit from those things. The lower estimate of the effect on GDP due to leaving the customs union and the single market is that we will lose 3.8%. The upper estimate of the effect of the trade deals that we will strike with Japan, the USA, the Association of Southeast Asian Nations, Canada, Australia, New Zealand and India all added together is a gain of 2.37 percentage points. That is significantly less than the 3.8% that we are going to lose, so even on the best estimates, we are going to be down. The EU is pretty close to striking a trade deal with some of those countries anyway, so the benefits to us are notional rather than actual.
The single market and the customs union continue to benefit us. We are told by the independent and respected Fraser of Allander Institute that a hard Brexit could cost Scotland 5% in GDP growth. A really interesting paper by the National Institute of Economic and Social Research told us last year that if we have these free trade arrangements instead of being a member of the single market and customs union, Scotland will lose £5 billion of exports in services alone. That is very significant. Analysis by the Scottish Government states that Scottish GDP could be around £11 billion a year lower by 2030 than would be the case if Brexit did not occur.
For those reasons and many others, we in the SNP have been clear from the beginning that we are against Brexit. We are against driving off this cliff, and we are against the incredibly hard landing that will happen when the Brexit bus hits the bottom. Despite our opposition to all these things, we are trying in this House to mitigate the impacts of Brexit. If the Government are determined to drive us off this cliff, we will try to make sure that there are fewer spiky things at the bottom for us to be impaled on.
I do not know how many Members have read the Government’s White Paper on customs, but it refers to the Government’s two proposed scenarios for the working of the future customs relationship. It also talks about contingency options for if the Government do not achieve their aspirational, bespoke deal—nobody has ever managed to get such a deal, and the Government do not really know what it is—and I think that people at home will be really interested to hear what it says. In a contingency situation, there would not be a £15 VAT-free threshold on parcels posted to people by family members, businesses and organisations in the EU. The Ways and Means motions that we are supposed to be agreeing today would allow the Government to charge VAT on gifts sent to people from the EU, which is ridiculous. If somebody gets a parcel worth less than £15 from a person in America, no VAT is payable on it, but the Government propose that such an exemption would not apply to things that came from the EU in a contingency situation. A lot of people would be pretty unhappy to discover that they will have to pay a customs charge on presents or other items that have come from the EU. Such things have not been spelled out to people or fully discussed.
I have referred to the various papers—I think we are up to four—that the Government have published on this matter. They have been pretty comprehensively savaged not just by experts, but by businesses, which are the real experts in this area. The Minister talked about roll-on/roll-off ports and the speed at which things have to come through ports. The Government have tried and failed to solve the problems with Operation Stack at Dover. Only last week, the Under-Secretary of State for Transport, Jesse Norman, put out a statement to say, “Our plans for sorting out Operation Stack are, basically, dead in the water, and we’re going to have to start again. But don’t worry: we’ll definitely have something done by March 2019 when the UK leaves the customs union and the single market.”
The hon. Lady will agree that the oil and gas industry, which is important to both our constituencies, largely trades internationally outside the EU. It does not fear international trade. Is it wrong?
I am not saying that anybody should fear international trade. International trade is a very good thing, particularly for productivity, for example, which the oil and gas industry has been quite good at bringing up. The more international trade a country has, the better its productivity growth, but Brexit is not going to result in more international trade—[Interruption.] Brexit is going to result in the UK having more say over the terms of some trade deals with third countries. It will not result in more international trade, because the EU is international—it is made up of a number of other countries—and there is going to be a reduction in frictionless trade to the EU as a result of the changes. [Interruption.]
My hon. Friend will have noticed that Conservative Members are expressing a fair degree of anger. Clearly some of them do not believe her when she says that Brexit will not lead to an increase in international trade. The Government have carried out assessments, so is it not the case that if they wanted to demonstrate that Brexit would lead to an increase in international trade, they could quite easily publish those assessments and we could find out for ourselves?
I absolutely agree.
Monique Ebell from the National Institute of Economic and Social Research has written a report that compares participation in very comprehensive free trade agreements with membership of an organisation such as the single market, which is pretty much unparalleled in its encouragement of cross-border trade. Being part of a very close free trade arrangement does not give the same access to trade in services or goods as membership of the single market. Even if we had a comprehensive free trade agreement with every country in the world, we would still lose out as a result of Brexit.
I am listening with a great deal of interest to what the hon. Lady has to say. The amendments she tabled express commendable encouragement to the European Union, which does her great credit. However, in the interests of being balanced and fair, is she also concerned for much of Africa and South America? At the moment, they suffer the whip end of the customs union, as it makes the export of raw food products to Europe virtually impossible for many of them. Would she like to comment on that, since I am sure that the SNP is very concerned to promote the wellbeing of people in those countries?
The hon. Gentleman raises an interesting case. I have not looked into all the impacts, but the WTO gives developing countries tariff protection, for example. It is likely that some of these things balance out, but I have not looked into the exact details. I am aware that some Brexit supporters are suddenly concerned about how developing countries will cope with international trade, although they were not particularly worried about that before.
I want to move on to talk specifically about some of the impacts of the proposed changes. I have mentioned the problems that people sending and receiving parcels might face. The Government’s “Future customs” paper states:
“Trade is a key driver of growth and prosperity. It stimulates greater business efficiency and higher productivity, sharing knowledge and innovation across the globe.”
It goes on to say that trade
“provides a foundation for stronger and more prosperous communities. It ensures more people can access a wider choice of goods at lower cost”.
Those are all arguments for staying in the customs union, not leaving it.
All the Government’s papers refer to consulting businesses. In all our conversations, the Government have said that they have spoken to businesses. The problem is that although businesses are lobbying the Government as loudly as they possibly can about the impacts of Brexit, the Government are not listening. The Government have an aspirational picture of how wonderful Brexit is going to be and no matter how much evidence to the contrary they are provided with, they continue to push on. Even Conservative Members who supported remain are suggesting, in the main, that we will have benefits from Brexit. In my eyes, that is not right.
The customs declaration service was mentioned by Mr Fysh. The Minister is generally very good at explaining such things. He has said that he hopes to have pilots soon, with the service up and running by January 2019, but three months is not enough to test a customs declaration service fully. It is not enough to allow businesses to iron out all the problems that might arise or to get used to the red tape.
I want to go back to the issues raised by some of the Government’s aspirations and ideas that are, honestly, unworkable. One of the nine principles they have set out for what they expect to do to deal with trade between Northern Ireland and Ireland is:
“Consider how best to protect the integrity of both the EU Customs Union, Single Market and trade policy, and the new independent UK customs regime, internal market and trade policy, in the context of finding flexible and imaginative solutions, while recognising that the solution will need to go beyond any previous precedents.”
That is an aspiration without a solution. They are not putting forward a potential solution. They cannot even think of anything to square this circle, fix this problem or dig themselves out of the hole into which they have fallen.
This is an unmitigated disaster. The changes that the Government propose, particularly the customs duties that will be put on goods coming from the EU, or leaving the UK to go to the EU, are a disaster for businesses and for people at home. Some of those goods cross the border several times. For organisations such as car manufacturers or aerospace companies, sometimes the widgets—for want of a better word—cross from the UK to the EU and back many times before there is a finished product. If there has to be a customs declaration each time, and if there is an increase of even a few minutes in the time taken on each occasion, real problems will be caused to a huge number of businesses.
Businesses are speaking to the Government and raising concerns, but the Government are not listening. They now need to give businesses a clear direction. They need to make it absolutely clear today that their intention is that we will not have customs duties between the UK and the EU, so they should support the amendments.
Great Britain’s historical reputation as one of the greatest trading nations on earth can be revived and rejuvenated by Brexit. In freeing ourselves from our EU blinkers, we can now open our eyes to the rest of the world and the vast new opportunities that lie ahead of us. Scotland, as a proud partner in the UK, has played a crucial role in cementing Britain’s place as a truly great trading nation. The city of Glasgow was a key trading centre for the UK and acted as an international business hub. For the past 40 years, the UK has legally been forbidden from striking its own trade deals.
The hon. Gentleman and I argued during the Scottish independence referendum that one of the key arguments for Scotland not leaving the UK was that it would leave the UK single market, which would mean having a hard border at Berwick. Does he think the same in relation to Northern Ireland and the Republic of Ireland?
Let us be absolutely clear that during that referendum campaign, the hon. Gentleman and I were on the same side. It actually said on page 210 of the White Paper produced by the Scottish Government that, if we voted to stay within the UK, the UK could very well leave the European Union. Everyone had all the information to hand and they voted with their eyes open, and Opposition Members have—
I am grateful to the hon. Gentleman for allowing me to clarify that that is not what I asked him. I said that we were on the same side in the independence referendum, and one of the key arguments we both made incessantly during the referendum was that the UK single market would be broken up if Scotland became independent, which would require a hard border. The question was: why is that any different from the situation in Ireland now?
As we have heard from the Minister, no one wants a hard border between the rest of the United Kingdom and Northern Ireland, and the Government are working to achieve just that. I also made it clear during the referendum campaign that I have always believed in Britain’s future being outwith the European Union. I made such an argument, and I am sure others, especially those in the Labour party, would have done so too if they had perhaps been a bit more honest about their positions.
No. I want to make some more progress.
Scotland’s exports are world-renowned—I am sure Ian Murray and I can absolutely agree about that—and whisky is just one example of a British export success story, with more than 90% of Scotch whisky being sold outwith the UK.
No. I want to make some more progress.
The city I represent, Aberdeen, is a global leader in some of the most innovative sectors, such as life sciences, new oil and gas technology, and food and drink. As the oil capital of Europe, Aberdeen is a global city and new bilateral trade deals—whether with the US, South America, Africa or even the middle east—will help the granite city to grow and to take advantage of trade inward and outbound investment.
No. I want to make more progress.
Furthermore, striking new trade deals will unlock the potential of many more Scottish businesses, helping them to make their mark around the world and boosting our economy at home, too. If we are to seize these opportunities and make the greatest possible success of them, Britain needs to be ready on day one of our exit from the EU for new trade relationships. On this point, the clock is now ticking.
That is why this customs Bill is so important. Irrespective of any agreements reached between the UK and the EU as part of the negotiation and exit process, the UK will need primary legislation to create its own stand-alone customs regime, and to amend the VAT and excise regimes so that they can function effectively after the UK has left the EU.
The Bill will create a framework that lasts for a new UK customs regime. It will lay before us the necessary foundations to allow new arrangements on customs to be put in place depending on whatever the outcomes of the Brexit negotiations are, such as the implementation of a negotiated settlement with the EU, or leaving the EU without an agreement on customs.
I am sure that all Members of this House want our withdrawal from the EU to provide as much certainty and continuity as is possible for our businesses, employees and consumers. Currently, as the majority of rules governing customs in the UK are contained in directly applicable EU law, such as the Union customs code, it is important at this stage that new domestic legislation is brought forward and put in place for when we leave the EU in March 2019.
In the longer term, depending on the outcome of the negotiations with the EU, the Government will want to consult on possible changes to this law to help UK businesses, but now is the time to help businesses in all of our constituencies by providing the continuity of the existing rules, wherever possible.
Furthermore, the Government will ensure, as they do at present, that their future customs regime is consistent with internationally agreed rules and arrangements. What does this mean in practice? As we all know, trade is not just about the trade deals that we strike or where the growing markets are in the world; it is also about the tariffs, regulatory barriers and terms of trade that we decide to set as part of a new UK policy. The Bill therefore enables the UK to establish a new UK tariff, charge customs duty on goods, set and vary rates of customs duty, and suspend or relieve duty at import in certain circumstances. The UK will be able to set preferential duties and additional duties—for example, to implement a preferential tariff applicable to developing countries.
No, I want to make this important point: free and fair trade is the greatest poverty alleviation policy. As the Secretary of State for International Trade has already highlighted, over the last generation more than 1 billion people have been taken out of abject poverty, thanks to the success of global trading. The Bill will therefore enable the development of policy that helps some of the world’s poorest and developing countries to trade their way out of poverty, rather than simply to depend on aid.
As we set an independent UK trade policy for the first time in 40 years and take up our own seat at the World Trade Organisation, we as champions of free trade can be at the forefront of ensuring that, across the world, there is an ever widening sharing of prosperity. Such prosperity encourages and develops social cohesion, underpins political stability and supports conflict resolution, which in turn supports Britain’s own national security aims. The Bill also includes powers for the Government to introduce trade remedies and to protect domestic industries from injury caused by dumped, subsidised or unexpected surges of imports.
In all of this debate, the key point to bear in mind and to stress is that once the UK is outside the EU’s customs union, we will take our destiny into our own hands and be able to determine our own overall independent trade policy. We will no longer be bound by the EU’s protectionist tariff structure. Free of this, we will have the choice to lower duties on goods. In leading the world on free and fair trade, we can take forward a policy that liberalises trade. I am excited and optimistic about the new deeper and freer trade deals we will be able to strike that will support businesses and services in my constituency.
The golden opportunity of Brexit is the opportunity to open up our markets and lead the world in liberalising trade across the globe. It is not every day that an economy the size of the UK gets to set up a new Department for trade, or to draw up and set its own trade policy. This opportunity will not come again, so let us seize it with both hands.
With deep pleasure, I beg to move amendment (e), in paragraph (a), after “goods”, insert
“other than goods originating from the European Union”.
I will also speak to amendment (f). Both amendments stand in my name and the names of my right hon. and hon. Friends.
Let me first say to Ross Thomson that, although I did not agree with a word he said, I thought he made a good speech. However, while he and I have always disagreed on the European Union and we respect each other’s position—I am very much an elected Member of Parliament who wishes to stay in the EU; I am pro-European Union and he is very much anti-European Union—I have to point out to him the complete intellectual incoherence of the two arguments he makes. He says we can leave the single market, the customs union and European Union and have a frictionless, seamless, invisible border between Northern Ireland and the Republic of Ireland, but during the Scottish independence referendum campaign, he argued that leaving the UK single market would result in a hard border in goods, services and the movement of people. He does the fight against the scourge of independence in Scotland no good by making those contradictory arguments. Many of the arguments that our colleagues in the Scottish National party make about staying in the European Union and working with our closest colleagues and neighbours with regard to trade in goods and free movement of people completely contradict their arguments on coming out of the UK single market. These positions are contradictory, and I warn politicians that when they play with fire, they get burned.
May I bring the hon. Gentleman back to amendment (e), to which he is the lead signatory? It would close off options and prevent us from imposing any tariffs on goods from the EU. Peter Dowd described such closing off of options as “pathological”. Ian Murray always strikes me as a very nice chap; does he share my concern that his own Front-Bench spokesman thinks that amendment (e) is pathological?
I anticipated that intervention, although not quite so early in my speech. I return the hon. Gentleman’s compliments—he is one of the nicest gentlemen in this House. The Labour party’s position on the customs union is that we want the UK to have tariff-free access to the European Union throughout the transition period, with the added option of the UK staying in the customs union. That is the position of our Front-Bench team. It is perfectly clear and chimes perfectly well with amendments (e) and (f).
I am disappointed that the amendments in the name of Kirsty Blackman were not selected. She has done a lot of work to bring the Ways and Means motion to the House, and I think the arguments advanced reflect the fact that we both want our country to stay in the single market and the customs union, not for ideological reasons, but because we know that that the businesses of Aberdeen North and Aberdeen South require us to stay. It is impossible to suggest that the United Kingdom should have exactly the same benefits of the single market and the customs union, with a frictionless border and tariff-free access, but not keep the customs union and the single market on the table. It makes no sense.
My hon. Friend is making a powerful case. Often it is said that sometimes we just need to simplify: if it walks like a duck and talks like a duck, it is a duck. If everything the Government are saying they want looks like and sounds like the customs union and single market, why are we wasting time debating other things?
I am tempted to say that is because they are all quackers, but I am sure that would not go down well and I gave up on the bad jokes some time ago. My hon. Friend is right: the Government are actually arguing for the single market and the customs union, but do not want either. That is why the Bill on the customs union, which will be published tomorrow, will show clearly that the Government are hell-bent in the negotiations with the EU to take us off a cliff edge. No deal is probably their preferred option, and that is what they are promoting in the Ways and Means motion.
If that is indeed the case, anyone who is surprised by that speech has not been listening to the debate to date. It seems that the whole thrust of the Government’s negotiating position so far has been to just walk away—that no deal would be the best deal to have. As my hon. Friend Heidi Alexander said at Prime Minister’s questions not long ago, the Prime Minister is in thrall to the extreme right-wing Brexiteers of the Conservative party, and that is dictating the Government’s policy. We can see from this evening’s debate that that is true.
My hon. Friend makes an important point. We will have to think about investment in this country if there is no deal, because a lot of international companies have invested here for the option of being able to trade in Europe. There would be serious consequences, particularly for industry.
Indeed, and I will come to more of those arguments later in my speech. The Foreign Affairs Committee, of which I am a member, visited the border regions in Ireland and Northern Ireland just last week, and one of the key concerns we heard from the businesses that employ many thousands of workers on both sides of the border was that they use the UK as the transit route into the European Union. We are the landing strip for all the goods they export through the United Kingdom into the European Union, because it is the fastest way; the alternatives are not suitable for their businesses. It will be exactly the same for businesses in Coventry, in Aberdeen and in Edinburgh South. The hon. Member for Aberdeen South spoke eloquently about the Scotch whisky industry, which we all defend and champion. That industry needs easy access to the markets in which it sells its products, so it too is pushing for as close a deal as possible to the customs union.
My hon. Friend will be aware that the finest Scotch whisky in the world is sold in ceramic bottles made in my constituency. Exiting the European Union without a proper trade deal will result in not only the price of the whisky but the cost of the bottle going up, which will threaten jobs in my constituency. What does he make of the Government’s proposals so far on market and trade remedies?
I am glad my hon. Friend makes that point because the Scotch whisky industry is not just a Scottish industry. It is a UK-wide industry involving bottling, packaging and delivery companies—a whole UK supply chain. If the main driver of that supply chain, which is the whisky coming out of Scotland, is disturbed, the jobs in my hon. Friend’s constituency are potentially disturbed, too.
Much though I enjoy a decent malt whisky, the impact of leaving the customs union would be far greater. If we take into account the agriculture, defence, aerospace and automotive industries, it is clear that if we do not get this right, the impact on complex supply chains in the integrated European Union marketplace could severely disrupt the UK economy.
Before my hon. Friend moves on from Scotch whisky, I wonder whether he would like to comment on the fact that when several of us were in Peru recently, Peruvian Ministers asked the British ambassador what we wanted out of a new free-trade deal with Peru, post Brexit, adding that they knew what they wanted: all Scotch whisky to be made in Peru, or at least 40% of it, or at least for the whisky to be bottled in Peru. Does not that undermine the argument made by Ross Thomson?
Absolutely. My hon. Friend tempts me to go down a road you may not want me to take, Mr Deputy Speaker, but let me at least tiptoe to the start of that road. Not only does the EU give Scotch whisky solid legal protection, but Scotch whisky has to be made in Scotland, and as my hon. Friend Gareth Snell has highlighted, the supply chain extends across the United Kingdom. We will be competing with markets where bottling and packaging are much cheaper, not only for Scotch whisky but for a host of other manufactured items that this country makes so much money from—money that pays for our public services and creates employment for our people.
While I am on that point, can the Minister tell us what representations he will make in the talks to leave the EU with regard to defending big industries such as aerospace, automotive, and food and drink, which in Scotland is underpinned by the Scotch whisky industry? In the 20 minutes or so in which he spoke and in answer to a lot of questions from my right hon. and hon. Friends, it was clear that HMRC, customs and so on will need more resources. The Government cannot tell us how much more they will require, why they will require them, when they will get them and whether that will be enough. It is very easy for Ministers to talk in platitudes, but we need solid answers on how many people are required and what the consequences will be for the public purse.
Is the hon. Gentleman surprised, as I am, that Government Members seem quite content to recruit 3,000 to 5,000 more people for HMRC, and, as I understand it, 1,200 more people to work for the Home Office—many, incidentally, from the EU, because of a shortage of staff? Was this not about getting rid of red tape? It seems the Government are willing to invest huge amounts in creating more red tape.
That is a key secondary argument to the one I have been making. They say they want everything to be as close as possible: they want it to be frictionless and as close to the customs union as we currently are. My hon. Friend Stella Creasy said that if walks like a duck and sounds like a duck, it probably is a duck. I do not understand, and have never understood, the Government’s position in taking the single market and the customs union off the table. Regardless of whether we want to argue that they are positive or negative, good for the country or bad, they immediately took them both off the table, so right from the very start the negotiating position was diminished, for all the reasons my hon. Friend has just mentioned.
Is my hon. Friend aware—he probably is not, because I have yet not told him—that a couple of weeks ago I asked the Secretary of State for Exiting the EU whether a deal like the Canada’s free trade agreement with the EU would be a good deal for Britain. He said, “No, because it would not be as good a deal as the customs union. It would leave us worse off.” I therefore cannot see how one can possibly argue that one should automatically discount staying in the customs union.
That is indeed the case. The Comprehensive Economic and Trade Agreement between the EU and Canada has been held up as a blueprint for what world trade agreements should look like in the future, and we look as though we are just about to walk away from it because we want something better. If there was something better, I am sure Canada and the EU would have negotiated it. I was aware of my hon. Friend’s question, because I was sitting behind him when he posed it to the Secretary of State for Exiting the EU during Brexit questions. I thank him for his intervention.
I would like to set out the three reasons why I tabled my amendments. The first reason chimes with what my hon. Friend Peter Dowd said from the Opposition Front Bench about Parliament having a say. “Taking back control” became the strapline for the leave campaign during the EU referendum. If taking back control is truly what we wish to do—I think that it is what the public wishes us to do—it should surely mean taking back control for this Parliament. Whether through the European Union (Withdrawal) Bill, which is going through the House at the moment, this Ways and Means motion or the customs Bill when it is published, Ministers will hold the power to do anything they want, carte blanche—on trade, tariffs, immigration and removing us from the EEA and the customs union—without any recourse at all to this House.
In the past six weeks or so, the Government have been championing a meaningful vote—whatever a meaningful vote would mean—that would be neither meaningful nor even a vote. The Government’s position on what it means is never the same from one day to the next. Indeed, a couple of weeks ago they made three clarifications on one day, with the Secretary of State and the Prime Minister saying contradictory things. Their spokespeople had to correct what they had said, as they had both been incorrect.
We need greater clarity from the Government, rather than platitudes from the Minister, on what they want to do. Lord Callanan has had to make two statements to correct what he said about article 50 in the other place just a few weeks ago. We need answers to these questions. Opposition Members are very doubtful about whether we can trust a Government who say, “We’ll take the power. We may not use it. We may use it. We need to use it. We need to have it in case we want to use it, but trust us everything will be fine.” Unfortunately, trust has to be earned. The Opposition are being told clearly that they cannot trust the Government to do things properly on our behalf, because they are not able to do so. My first point, therefore, is to ensure that that power is not held by Ministers. We should give Parliament a say if we truly want to take back control.
That leads on to my second point. Nobody in this House, when we get to the end of this process, will ever have voted on leaving the customs union. Nobody will ever have voted on leaving the single market. Nobody will ever have voted on leaving the EEA. The people of this country voted to leave the European Union. When we start to work through the process and see how complicated it is—how difficult it could be for businesses, and all the challenges, barriers and hurdles that will be put in place—it is quite clear that nothing can be as good as what we have at the moment. Whatever happens, there will be losers, but nobody voted to be poorer. It is wrong for the Government to bring this motion on excluding tariffs with the European Union, because nobody has yet voted for us to leave the customs union. The customs union is vital to this country and not just for businesses on the UK mainland—I will come on to comment on the island of Ireland shortly.
My third point, and the main reason why the motion should be defeated or at least amended, is that the Government are clearly preparing for no deal. My hon. Friend Stephen Doughty said that a former Minister will make a speech tomorrow saying that the Government should be persuaded to prepare for no deal. It seems that the talks are stalling. The clock is still ticking, but they seem to be no further forward. The Brexit Secretary and the Foreign Secretary seem to have the attitude that we can wrap ourselves up in a Union Jack, ride the waves like Britannia used to and everyone will listen to us. That is the sort of 19th century British arrogance that created many of the problems in the world today. Everything the Government are putting through Parliament is being done on the basis of preparation for no deal, which would be utterly disastrous for this country.
I am very grateful to Mr Speaker for selecting my amendments. Let me tell the House why no deal would be disastrous and why I tabled them. We have heard many Members talk about that economic impact. Our annual goods trade with other countries within the customs union is £466 billion. It has been estimated that leaving the customs union would cost £25 billion every year until 2030. If the Opposition brought a proposal to this House for the Government to consider that cost £500 billion and £25 billion every year, the word “bankruptcy” would be coming out of the Minister’s mouth every second minute. It would be irresponsible for us to do that, yet that is what is being proposed with the customs Bill and this motion.
The cost of new tariffs alone could be at least £4.5 billion for UK exports, according to detailed research, and analysis by HMRC suggests that new customs checks could increase the cost of imported goods by up to 24%. We have already had reports that there will be 17-mile tailbacks at ports across the United Kingdom. I wonder whether the Minister can remember the French customs strike and how long the queues were. They formed very quickly and the impact on local communities, let alone the perishable goods sitting in trucks, was devastating. It is okay for the Minister to suggest that we will have so many customs border checks and that we will pushing things through as quickly as possible, but the way to resolve the situation is to stay in the customs union.
A humble bottle of fabric conditioner crosses the border of a member state four times in the process of its manufacture. Imagine how many times the components that make up a Rolls-Royce jet engine cross the border—thousands of times. On that basis, how can this country’s economy afford to even think about leaving the customs union?
I am grateful to my hon. Friend. If I were the Minister and she made that point to me, I would just say, “It’ll be okay. We want something that’s as close to the customs union as possible. It will be frictionless. It will only take seconds. We’ve got new technologies”, but without spelling out what those are, how they will work or how a company such as Rolls-Royce, exporting and importing goods and parts all the time, would actually operate. It seems that we have to take this on trust. Well, many of the businesses around the country need certainty, because they will be making decisions very shortly about the years ahead.
I am grateful for that intervention. I said earlier that nobody voted in the EU referendum to be poorer, yet all the analysis shows that we will be. I would be delighted, if the Minister wants to intervene, if he can point to any analysis done internally, externally or otherwise—by any other Government in any country, any think-tank, any organisation, any business organisation, any individual business—saying that what the Government are offering will make the country better off. I will let him intervene now—I know he is listening; he is just pretending to ignore me. The answer is: absolutely none. The silence is deafening. Not even the producers of our microphones will make more money, because the Minister refuses even to use his to point to just one organisation that says our position will be even remotely similar once we have left the EU. The answer is clearly none. The Government are on the wrong track and gambling everything—the family silver, everything—on a no-deal scenario.
On the impact of our leaving the customs union, I want to deal with a few particular sectors. My hon. Friend Angela Smith mentioned the automotive sector earlier. The Society of Motor Manufacturers and Traders, which is an organisation whose briefings on Budgets and Bills we, as parliamentarians, trust and which I always read with great interest—it is the knowledge in motor manufacturing —has said that going off the cliff and moving to trading on WTO rules would see a 10% tariff on vehicles and an average 4.5% tariff on car components. These figures have been repeated in the House ad nauseam. It also said it would push the cost of an average car up by £1,500. We have already heard figures recently showing new car sales and levels of new car manufacturing dropping dramatically. I think that most people considering whether to buy a new car would decide not to if they knew it was costing an additional £1,500. I appreciate that the Minister does not agree, but I am more likely to believe the SMMT’s figures than the Government at the Dispatch Box saying, “Don’t worry. Everything will be all right on the night”, without giving us any detail about how that could possibly operate in the context of no customs union and no customs arrangements.
Is the hon. Gentleman happy, then, for us to be locked for all time into a situation where we can never make a free trade deal with any country, bloc or anybody outside the EU, locked into a body with a declining share of trade and locked out of free trade deals with the growing markets in Asia and America? He is happy with that, is he?
I am happy with the intervention—I am delighted with it—because it allows me to say three things: first, the reason the Scotch whisky industry is doing so well is partly because of EU free trade arrangements, particularly with countries such as South Korea; secondly, we are already in 57 free trade agreements; and thirdly, the hon. Gentleman’s Government have failed wholeheartedly to start to negotiate just one free trade agreement, despite all the bluff and bluster about being at the front of the queue, about their happening easily, about our seamlessly entering into these wonderful free trade agreements all over the world.
I say also to the hon. Gentleman that his intervention completely contradicts his first intervention. If he votes against my amendment and we end up trading with WTO rules, and we end up without tariffs with the EU, we will have tariffs with no one and we will ride the waves—rule Britannia—setting up more than 57 free trade agreements with every country banging at our door to trade with us. He is not listening to his Foreign Secretary or Trade Secretary when they say this is becoming much more difficult, if he thinks that free trade agreements with more than 57 countries will just appear as low-hanging fruit from this magic money tree the Government seem always to produce.
To pick up on the point from Sir Edward Leigh, of course free trade is to be welcomed, but in certain sectors, such as the ceramics industry, what we need is protection against the illegal dumping of tiles and white goods, which affects our industry and puts our jobs at risk. In some sectors, the unilateral free trade and open markets that some talk about would harm employment and make my constituents poorer.
Absolutely. Illegal dumping is something that the House will have to come back to and debate at length, because it is one of the key issues around what might happen when we leave the EU and do not have that bloc to defend us. On my hon. Friend’s point about free trade, I have a great idea for how to advance free trade in this country: we could have a customs union and a single market, and that would certainly advance free trade, would it not? Or we could come out, as the hon. Member for Gainsborough wants, and end up with no free trade agreements, rather than 57.
I wanted to mention a whole list of sectors, but I will not in the interests of time. I will briefly mention two or three of the very big ones that have raised concerns. Pharmaceuticals is a key area bringing a lot of tax and corporation tax into the public purse. The Association of the British Pharmaceutical Industry has called for free trade with the EU on terms
“equivalent to those of a full member of the Customs Union”.
I would rather believe the pharmaceuticals industry, an industry that has brought so much economically—in terms of jobs and growth—than the Minister, and it says it wants free trade on terms equivalent to those of a full member of the customs union. Well, the Government will be ruling that out tonight when they pass the motion, so what will he say to the pharmaceuticals industry, which says it needs it to trade as it does now?
Would the hon. Gentleman like to speculate on what contribution today’s departure of the European Medicines Agency to Amsterdam has made to our pharmaceuticals industry?
Well, it is jobs, isn’t it? [Hon. Members: “Nine hundred jobs.”] Yes, 900 jobs, and maybe even more, if we include the knock-on effect. So the Government have just given up 900 jobs; that is the start—the tip of the iceberg. If the pharmaceuticals industry cannot get equivalence with the current customs union, how many more jobs will go in that industry? Before everybody says, “Oh, you’re just a remoaner”—
I am loth to interrupt the hon. Gentleman’s excellent speech, but I am slightly concerned that he keeps talking about the views of experts. We know that Government Members are not keen on the view of experts. Does he think they might listen this time?
I can answer the hon. Lady’s intervention in one word: no. They clearly are not going to listen to the experts on these issues. In fact, they have sown the seed of doubt that none of us should listen to experts, and the country will be much diminished as a result.
I want to touch on two more sectors. The chemicals sector is another key driver of the UK economy. We have a great chemicals sector—one of the key chemicals sectors across the EU—and it has said that
“the best way to guarantee no adverse disruption to business and trade…and to guarantee only one adjustment before reaching a final agreement with the EU, is to seek to retain our existing membership of the Single Market and Customs Union”.
So we have the automotive industry body—the one we all trust—and the pharmaceuticals sector, and we now have the chemicals sector, yet the Minister has come to the Dispatch Box and said, “Don’t worry. We’ll put more people in place to help all this along”. I suggest that the customs union might be an answer to this particular question.
I will finish with the shipping sector—the very sector that takes the goods from these islands to the continent. The UK shipping sector has warned that the UK is facing an “absolute catastrophe” if it does not sort out a “frictionless and seamless” border at Dover and other ports. The Government keep talking about a frictionless and seamless border but cannot tell us what it means. I suggest that the best way to maintain or enhance the border—to make it frictionless and seamless and operate as a single market—is to maintain our status in the customs union.
If we were starting from scratch—with a blank sheet of paper—and seeking to determine the best way for an island nation to trade with other nations, it would be to have a customs union with those nations. Under such an agreement, we would not need to use the word “frictionless”, because there would be absolutely no friction at all, and it would be completely seamless. The best way to highlight how seamlessly and how frictionlessly a single market and a customs union can operate is to look at the markets between Scotland, Wales and England. They have a completely seamless border: they are completely free market, completely single market, completely customs-free.
I am delighted to see that the Secretary of State for Environment, Food and Rural Affairs has joined us. At the time of the referendum, he claimed, along with me—and I have said this to his colleague the hon. Member for Aberdeen South—that one of the key arguments against an independent Scotland was the lack of a border at Berwick. Now he is arguing the opposite in the context of Northern Ireland and the island of Ireland. That is completely contradictory, and he cannot tell us how it will be resolved. How could it not have been resolved in the Scottish context?
As a member of the customs union, the UK is party to preferential trade agreements. We want to walk away from those agreements, and make our own. It is likely that, outside the customs union, the UK would need to renegotiate many, if not all, of those agreements with those who would become third parties. It is not as easy as just rolling over those agreements, which is what the Government seem to want to do.
I am conscious of time, Mr Deputy Speaker, so let me move on a little. I want to talk about Northern Ireland and the Republic. [Interruption.] I know that the Government do not like to hear these arguments, because they have no answers to them, but I think it important for them to be highlighted in the House. If the Government can provide only limited time for the European Union (Withdrawal) Bill, they may as well rehearse some of the arguments today. We have until 10 pm, after all, and if Sir Edward Leigh wants to intervene and waste time, he is more than welcome to do so.
We have already talked about the massive queues at our ports, airports and rail terminals. Now, as I have said, I want to say a little about Northern Ireland and the Republic. The Foreign Affairs Committee visited Dublin and the border on Thursday and Friday last week to consider the consequences of our leaving the European Union. Let me say again to the Minister that if he wants to name any organisation in either Northern Ireland or the Republic which thinks that Brexit will be good for the isles of Ireland, let him please do so, because I have not heard of any, and am unlikely to hear of any. In fact, the only two people I heard supporting our withdrawal from the customs union and the single market in the context of the isles of Ireland were the two Brexiteers on the Foreign Affairs Committee. Some of the words used were “catastrophic”, “irreconcilable” and “unsolvable”.
I simply cannot understand how the Minister can table motions such as this to pave the way for major Bills without having the basic answers to these questions, while using meaningless phrases such as “frictionless” and “seamless”. I am very concerned about the Belfast agreement, or Good Friday agreement, which is underpinned by the European Union, underpinned by a seamless border, and underpinned by a single market in the island of Ireland. It is almost impossible for the Government to reconcile wanting no borders, and frictionless and seamless trade, with the route that they are taking with a non-deal Brexit.
I have another suggestion, which the Minister may recognise. The way to have a seamless and frictionless border between Northern Ireland and the Republic is the customs union. That would mean that trade in goods could go across the border, unfettered, seamless, and I may even push it to frictionless, which is what the Government have been saying all along.
Our Committee travelled from Cavan—Cavan County Council hosted us on Thursday evening—to drive on to the motorway back to Dublin. It is a distance of about four and a half miles, and we were in a minibus. We crossed the border seven times just to travel a short distance. That is irreconcilable. Many people in Northern Ireland and the Republic who spoke to the Committee—and I am sure that the Minister will be pleased to read its conclusions when they are published—said that it was intellectually incoherent to argue that it was possible to have no border while requiring a border. It is not possible to have frictionless and seamless trade while having to check goods, and it is not possible to have a border at sea level while trying to ensure that the Good Friday agreement is maintained.
Former president Mary McAleese spoke to us in great depth about the passion for the Good Friday agreement. Let me say to the Minister and the Government, in all seriousness, that they ruin that agreement at their peril. It is something of which everyone should be incredibly proud. The way in which the Government are going about the Brexit negotiations, the way in which they are treating the border between Northern Ireland and the Republic, the way in which they are fooling the public that it is possible to have everything and not have everything, is indeed wrong. Michel Barnier, the chief negotiator whom we all know so well now, has said to the Government, particularly in relation to the issue of Ireland, that they cannot have their cake and eat it. Something will have to give, and that is why I tabled the amendments. The Minister must think very seriously about that physical border.
Let me end by saying a little about the Labour party’s position. I think that we are right on this issue, and our position is written into the documents that we have here. We want to stay in the customs union, if possible. I agree with my hon. Friend the Member for Bootle, who tabled the amendments about parliamentary scrutiny. We should always press such amendments, because the Government, who talk of taking back control, are not giving control to Parliament.
All the issues relating to Ireland, to trade, to tariffs and what will happen in the future, to jobs, to borders and to tailbacks at customs can be resolved if the United Kingdom at least leaves on the table—regardless of whether we agree—the possibility of remaining members of the single market and the customs union. That would take away all these concerns. When we reach the end of the process, whether or not there is a meaningful vote in this place, the Minister and his Government will know when the jobs start leaving this country, when borders start being erected, when customs becomes more difficult, when trade becomes much more difficult, when public services become much more difficult to fund, when debt rises and deficit rises, that his Government have let the people down by not telling them the truth about the consequences of leaving the single market and the customs union.
That is why I tabled my amendments, and I hope that many of my right hon. and hon. Friends will join me in the Lobbies.
It is a great pleasure to follow Ian Murray, who spoke, at considerable length, of his conviction that the customs union is the way forward. He has always spoken with great clarity and certainty, although I suggest that he is more compelling in his usual manner as Tigger than as the Eeyore whom we saw tonight. I would also say that the difficulty of assuming that business is monolithic, and always speaks with one voice, is that it does not. There are businesses in my constituency with which I deal as a trade envoy that are concerned about the future, but there are others that are relaxed. Both those views will depend, ultimately, on what sort of arrangement we reach on trade and customs, and on what terms.
That brings us to this preparatory Bill. As the Minister has explained, it is fundamentally nothing other than necessary preparation for when we leave the European Union. It is a framework, not a position on a preferred type of future customs relationship. It allows for either of the Government’s options: a streamlined system that is, as far as I can see, identical to the current one; and a new customs partnership of which I am sure we shall hear more when the Bill is published. This preparatory work will be even more important in the sad event of future arrangements not being agreed with the EU.
The Minister confirmed that HMRC arrangements at our roll-on/roll-off ports will be in place in January 2019, ready to deal with worst-case scenarios. I believe that there is an important political point behind that, which Members who, like the hon. Member for Edinburgh South, would much prefer to stay in the customs union need to consider very carefully. There are some who believe that leaving the EU without a future deal or any implementation period would be a walk in the park, whereas others believe that it would be impossible to operate our ports, and, perhaps, much of our trade, and that it would therefore be a disaster to leave the customs union at all.
However, many of us who have always thought that both the UK and the EU would benefit hugely from a strong customs partnership for the future, and what Michel Barnier calls a “new partnership” in general, believe that this preparatory Bill is essential to that. It is absolutely vital that the EU does not overplay its strong hand at this delicate stage of negotiations, for if it decides that negotiations on citizens’ rights, Ireland and finance have made insufficient progress to allow us to move on to debating an implementation period, future trade and other partnerships, there is a real danger that the momentum will move behind those who believe not only that no deal is possible, but that it is likely or even desirable, and that we need to prepare for that situation above all else.
I am sorry, but I will not give way.
For those of us who want the negotiations to succeed and a new partnership, it is therefore incredibly important that our partners in the EU encourage us to build momentum for that by moving to detailed talks on future trade and customs arrangements as soon as possible. For now, this is simply an enabling Bill of changes, allowing for future UK tariffs, VAT levels, goods classifications and so on. As Peter Dowd said, it is both practical and necessary. Today’s amendments close off the options and it would be sensible to avoid them.
It is a pleasure to follow Richard Graham, a fellow remainer, and I hope that remainers on the Conservative Benches will be a little more outspoken about their concerns.
If I am indeed following a pragmatist, I hope that the hon. Gentleman will listen to what is being said by many economic sectors, and perhaps read carefully the 58 sectoral reports once they are published, and come to the very pragmatic conclusion that he, as a pragmatist, will want to start to be more outspoken about the Government’s agenda of taking us over the cliff.
Members have suggested that the UK needs to leave the EU to be able to trade, but that is clearly not true. Many European countries are just much more successful than us at trading with other countries, including Germany, France and Italy. They do so within the EU, so there is no reason why we could not do so more effectively than at present. If we are unable to trade while we are part of the EU, I wonder why previous Prime Ministers, particularly David Cameron, spent so much time and effort sending trade delegations to various countries around the world to drum up trade. Was that a completely pointless exercise? Was that just about having 10-course banquets in Beijing, or was it because we can do a lot to boost trade while we are in the European Union? I think it was the latter, rather than a desire to have big dinners courtesy of foreign Governments. Of course the UK is in a position to trade—and, perhaps, to do so more effectively—with other countries while we are members of the EU.
It is nice, as a Liberal Democrat, to be able to make a speech that is longer than three minutes, so I might take full advantage of that in the couple of hours that remain for me to make a contribution, before the Front Benchers make their response. First, I want to focus on the issue of Ireland and Northern Ireland. Frankly, Opposition Members have had enough of listening to Ministers’ platitudes about how they will sort out the problem that is the border between Ireland and Northern Ireland. We do not want to hear about “frictionless” any more, or about blue-skies solutions that do not yet exist. What we want to hear from Ministers is the solution to this problem, because if the Irish Prime Minister was asking on Friday for a written guarantee from the UK Government that there would be no border controls, that was because he is worried and because he has heard nothing from our Government to explain how we will be able to leave the customs union, yet have no border and no border controls between Ireland and Northern Ireland.
Does the right hon. Gentleman also agree that if the Government were to have a change of heart and agreed to ask to remain in the single market, that would take out two of the three stumbling-blocks? The rights of EU and UK citizens would be solved immediately, and the Irish question, although not completely answered, would be made a lot more soluble. We would then be left with the financial settlement as the only stumbling block to getting on to talk about trade deals, which is what we want to do.
I entirely agree. Like other hon. Members, I am perplexed as to why the Government ruled out several obvious solutions to the dilemmas they face from the outset.
I am sure that a number of Members in the Chamber will have visited Northern Ireland. When I did so, which was about five weeks ago, one of the communities I visited was Forkhill in South Armagh, which was very badly affected during the troubles. A garrison of 3,000 soldiers in that town was responsible for the safety of approximately 24,000 people. The people of Forkhill reckon that when the garrison was there, it was the most militarised place in western Europe, and they are worried about returning to the troubles they experienced there in the ’70s, ’80s and so on. People were placing improvised explosive devices in culverts, under roads and on the approach roads to the border, and the residents of Forkhill are worried that there will be no means to control safely the 275 border points between Ireland and Northern Ireland. If the proposal is that part of the solution will be to conduct ad hoc checks at separate border points, or at some distance from the border, those people are worried that the British customs officer, the British police officer, or perhaps the British soldier will become a target.
All we have heard from a succession of Ministers is dismissive comments. The Secretary of State for Exiting the European Union dismisses any concerns expressed about the difficulties that could arise at the border. We need reassurances from Ministers, not the dismissive comments they are making.
As far as I can gather, the Government’s policy is that they are definitely not going to have a hard border and they are definitely leaving the customs union. That could be very good for the community that the right hon. Gentleman visited, because smuggling was a very profitable source of income in the past for a large number of inhabitants on both sides of the Irish border. It seems to me that so long as the Government maintain their totally contradictory pose, smuggling will once more come back to the border in a big way.
Indeed, and it might be a growth industry. When I was in Northern Ireland, the people who were taking me around pointed out a number of large homes and suggested that they might have been acquired through not entirely legitimate means. The Government might be reopening that way of doing business. We also know what has happened with regard to common agricultural policy payments, and with cattle or fuel being transferred from one side of the border to the other within a shed. That long-standing problem has the potential to become an even greater one, courtesy of what the Government propose.
If we are outside the customs union, it suggests that there will be a hard border, but if we follow the Government’s logic that that will somehow be mitigated and we will have an open, frictionless border, surely the border will simply have to be around Great Britain—it will have to be at the Scottish and Welsh ports. Does the right hon. Gentleman agree that if Northern Ireland is treated separately, that will cause a constitutional problem?
Absolutely, and that is why I believe that the question of Ireland and Northern Ireland is the most challenging of the three. The Government could and should have resolved the question of EU citizens 15 months ago by simply saying to them, “You have the right to remain.” The settlement bill is clearly very difficult politically for the Conservative party, because many of its Members are on record as saying, “We won’t give the EU a single penny; in fact, they owe us loads of money,” so they now have a difficult political position to adopt if they say that they support a payment. We do not know how much that will be, but one figure that has been mentioned is £40 billion, and an interesting article in The Sunday Times a couple of weeks ago, which seemed to be flying a kite, referred to £53 billion. Although that question could be resolved at the cost of some political pain, no one has put forward any solution to the issue of Ireland and Northern Ireland that does not involve some sort of control. That might be ad hoc control, and it might not be directly at the border, but some sort of control will be required.
The right hon. Gentleman has touched briefly on citizens’ rights. Given that both sides have said that that is their absolute top priority, can he explain why the European Union turned down our proposal to treat citizens’ rights first, on their own, so that the matter could have been agreed in perpetuity, regardless of what happened to anything else?
That might be an issue on which we agree. If we are moving towards a no-deal scenario, there is an overwhelming case for parking the issue of EU and UK citizens’ rights and resolving it, because it is a question of humanity and giving safety and security to the 3 million EU citizens here and the 1.2 million UK citizens in the EU.
The border between Ireland and Northern Ireland has 275 crossings. If there is to be some sort of control, will it be at each and every one of those crossings? Presumably not; otherwise, the number of people that HMRC is going to have to recruit would be much greater than the 3,000 to 5,000 it already needs.
The right hon. Gentleman is making a good point about border crossings. I have spoken to someone who has the border going through their kitchen. Does he agree that that would pose a practical difficulty for them, should they wish to get to their cake and eat it?
Presumably they would have no difficulty in smuggling their cake from one side of the border to the other.
If some of those 275 border posts were closed down, many issues would ensue. I have heard examples of graveyards with entrances on both sides of the border, and of children going to school and people going to work across the border from where they live. If border crossings were closed, as happened during the troubles, that would be a major issue for Ireland and Northern Ireland. If I were to speak for the next couple of hours, that might give the Minister time to work out what the solution is. Clearly there is not one yet, but perhaps that would enable him to go away and find one.
I am delighted that the right hon. Gentleman is making these arguments about the Irish border. This is not just about a physical border; it is about what this says symbolically. There has been no border on the island of Ireland since the troubles, and the symbolism of reinstating one should be avoided at all costs.
The hon. Gentleman is right, and I thank him for pointing me in that direction. Clearly, there would be substantial economic problems associated with a border, but the fundamental problem would be the message that would be sent out to those who want to cause trouble, if there were to be a British presence on the border. That would be a step in the wrong direction in terms of a united Ireland and it could give such people a reason to resume the troubles. That is the major risk, which is probably why the Government and the European Union are both saying that progress is being made. No one wants to admit that this remains a problem without a solution, because of its potential to generate trouble.
I have referred in interventions to the port of Dover. Many Members will have visited it, as I have done, and I certainly recommend it. The first thing to know about the port of Dover is that it is not really a port. The port authorities clearly state that it is in fact a bridge. I have stood in the control tower and watched the trucks flowing virtually seamlessly—that is an interesting word; perhaps the Government could look at how things operate there—on to the ferries. They slow down and go into channels and if they are lucky they can drive straight on to the ferry while the trucks coming into the UK are being unloaded from the lower deck. There is nothing to stop those trucks getting on to those ferries. They are not booked on to a specific ferry; they just turn up and drive on to whichever one is there. The only checks that the UK is carrying out on trucks coming into this country are related to smuggling, and they are done on the basis of intelligence, rather than, for example, on the basis of checking one truck in every 100. That is why the system flows smoothly.
The right hon. Gentleman is making an excellent speech. Has he heard the often-quoted statistic that if each truck were held back by just two minutes, we would have a 17-mile tailback? Is he as pessimistic as I am in thinking that two minutes is a remarkably short period of time to stop each truck, even simply to ask where it is going?
Absolutely; I do have those concerns. It is worth knowing that when the 17-mile tailback occurred two years ago, it was the result of just two French border officers not turning up for their shift. The 20 sq km lorry park—whose construction has now been kicked into the long grass because of the judicial review—would accommodate 3,500 lorries. However, 10,000 lorries go through that port each day, so a lorry park that would accommodate 3,500 lorries will not do very much if there is severe disruption at the port. That is why one of the options the port is considering is to create lorry parks all over the country. In the event of a delay, the port could text drivers in, for example, Leeds or Edinburgh to say, “Sorry, we’ve got a bit of a problem at Dover. Don’t bother coming, because if you do, the town will collapse. Just stay in that lorry park and we’ll tell you when it’s safe to come down.”
We have heard much of what the right hon. Gentleman is saying before. No doubt he will have heard the mayor of Calais and the head of the port there saying that no deal would be a catastrophe for them as well. Does that not encourage him to believe that good sense should prevail, and that we can arrive at an arrangement that suits those on both sides of the channel equally well?
Like the hon. Gentleman, I would like good sense to prevail. However, when the Government seem to be planning for no deal, there does not seem to be much good sense available. I shall say a bit more about Calais in a moment.
As I was saying, Dover has what is effectively a bridge between Dover and Calais. The Minister was very frank when I intervened on him earlier, saying that any level of disruption and delay in the processing would have a significant impact. That is true, and that is what he will have heard from the port of Dover. Unfortunately, nothing that the Government have come forward with as a solution is likely to provide the answer.
I want to touch briefly on the issue of Calais. We have said a great deal about the need for the UK to be prepared in terms of our customs systems, of what we are going to do on the border and the approaches to the border, and of how we are going to put in place the 3,000 to 5,000 members of staff needed at HMRC and the 1000-plus at the Home Office. The same will be true at Calais, and at the ports in Belgium and Holland. We could have fine-tuned everything at our end, but if they do not do the work on their side, there could still be a problem with ferries getting to Calais, for example, and having nowhere to discharge their trucks. So unless everyone else is just as prepared as we are, we could still be in an almighty jam. Before I was elected, I used to work in the IT industry. If anyone thinks that we can have an IT solution in place that will cope with a no-deal scenario in March 2019, they really need to have their head examined, because achieving that is an impossibility.
Madam Deputy Speaker, you will be pleased to hear that I am not going to take full advantage of the two hours available to me, and I would like to conclude by commenting on the Government’s apparent solutions to these customs problems. We know that they are preparing a contingency plan for no deal. I have not seen anyone on the Government Benches nodding their head and saying, “No deal is a fantastic thing and we really need to press for that”, so this is their opportunity to intervene and say that no deal would in fact be fantastic for the UK. No one is doing that, however, so I have to assume that nobody on that side wants that, even though the Government are apparently planning for it.
We are therefore left with two options. The first is a highly streamlined customs arrangement. Now, reading between the lines, I am absolutely certain that a “highly streamlined customs arrangement” means a border between Ireland and Northern Ireland. It does not mean “frictionless” or some high-tech, blue-sky-thinking solution that does away with the need to check the contents of trucks. One of the Government’s solutions therefore involves a border between Ireland and Northern Ireland and all the associated complications.
The other solution is a new customs partnership. I must say that the customs Bill paper makes for entertaining reading, and I am sure that Members on both sides of the House will have read what it means. It will be
“an innovative and untested approach”— that reassures me—
“that would need to be discussed further with the EU and businesses”.
The customs Bill paper was published in October, so there is not much time left to discuss that arrangement with the EU and businesses. The paper also states that
“the Customs Bill could not be drafted to specifically provide for the implementation of this outcome. Should negotiations conclude that future customs arrangements with the EU should follow this model, further domestic primary legislation may be required.”
As for how many times a statement can be caveated in one paragraph, I think that is probably five or six, so good luck to the Government if they plan to roll out that particular solution—the blue-sky solution that no one has thought of, has programmed for or has any hope of implementing any time soon.
It will be to the relief of Government Members that I will conclude at this point. Nothing we have heard so far from Ministers gives me or anyone on the Opposition Benches any reassurance that in March 2019—or even at the end of a two-year transition period—the Government will be in a position to have a smooth customs arrangement that prevails on the border between Ireland and Northern Ireland or a smooth, seamless, frictionless border, or bridge, at Dover and Calais.
The Taxation (Cross-border Trade) Bill is important, because customs matters have been governed by EU law for many decades, and Britain needs its own primary legislation on customs. A good Government need to be prepared for all eventualities, but while the Bill would provide customs legislation in a no-deal scenario, I am glad that the UK is instead looking for more bespoke solutions. We should not just cut and paste the customs procedures that we use for products from far-flung parts of the globe on to our trade with Europe. Goods that travel long distances can have their customs paperwork cleared while they are on the sea or in the air, which would be much more challenging for our cross-channel activities, let alone those between Ireland and Northern Ireland.
Furthermore, EU-UK trade covers vast quantities of goods. Honda estimates that it alone transports 2 million parts across the channel every day. Additional paperwork or delays add costs and hit competitiveness, and companies—both UK and EU companies—need time to adjust to new procedures. We need a specific deal. We need a transitional period.
The legislation covers customs matters, but it does not cover many other activities that happen at our ports and airports, such as tackling counterfeit goods, detecting firearms or plant and animal health checks. The latter—the so-called sanitary and phytosanitary checks—will be a particularly sensitive element of any future trade deal, and we here should not underestimate how seriously our counterparts in Europe take the issue of counterfeit goods, not just fake handbags, but dangerous electrical goods, fake chemicals and fake medicines. Britain and Europe are stronger when we face those sorts of challenges together. Our trading partners will want to ensure not only that we have custom laws and processes, but other procedures and the ability and commitment to police them properly.
Mr Barnier said today that if the UK wants an ambitious partnership, we must also find common ground on food standards and product standards and on many other areas. I say back to Mr Barnier that the vast majority of people in this country want that amicable partnership and a close trading relationship, so please—I know that this is difficult as there is no Government in Germany—let us move on to the detailed negotiations, so that we can find that common ground together.
I think that the Minister said at the outset that it is the Government’s policy to leave the customs union. It was not on the ballot paper in the referendum; it is a policy choice that the Government are taking. It is therefore the Government’s policy to exit the most efficient, tariff-free, frictionless, free trade area anywhere in the world, and what we will end up with afterwards is therefore bound to be inferior—possibly very much inferior—to the basic free trade arrangements enjoyed by most countries around the world. We could find ourselves at the mercy of basic WTO tariff arrangements, so the Bill that we are paving the way for with this Ways and Means motion comes at a crucial juncture.
I thought it was unfair that many Government Members referred to the speech of my hon. Friend Ian Murray as Eeyore-ish. He is actually quite a positive character, who wants to do the best for trade, for business and for this country. In fact, if anything is negative, it is the legislation that the Government are proposing. The Minister was the harbinger of doom, because the Bill plans for a no-deal scenario. This set of legislative changes paves the way for circumstances in which the UK may be imposing tariffs on our nearest trading neighbours and vice versa. I cannot think of something more depressing, defeatist or premature, especially given that we have not even had the negotiations yet. In fact, I cannot think of anything much more aggressive towards the negotiation settlement that we are trying to get than the suggestion that we are going to put into legislation the ability for us to raise significant tariffs with our nearest trading partners, with whom 50% of our trade takes place.
The hon. Gentleman is talking rationally, as always. The reason why I felt that Ian Murray was being rather Eeyore-ish is that he underestimates the impact on Scottish whisky, about which he talked quite a lot, of the far east. He needs to go and see the Johnnie Walker shops in Shanghai and Beijing. He needs to look closely at Whyte & Mackay—a failing Glaswegian whisky manufacturer now saved and re-energised by a buyer from the Philippines—to understand that the future of Scottish whisky lies as much in Asia and other far-flung places as it does in Europe.
That may be so, but this is not an either/or situation. This is not about selling a fantastic Scottish whisky product to China or to Europe; we should be doing both. German car manufacturers and French food producers are trading exceptionally well with the far east, while remaining a member of the customs union and of the single market. My quibble with Ministers and some Government Members is that they give an impression that this is a binary, either/or arrangement. They say, “Oh well, we can ditch our trading relationships and partnerships with our nearest neighbours, because we might eventually be able to do something with China, India, Australia or Brazil,” but we should be able to do all those things. We can do all those things simultaneously, while remaining part of the greatest free trade area of any set of nations anywhere in the world, but we are about to throw that overboard for no reason resulting from the referendum, but due to Government policy.
We all obviously hope that we can salvage that relationship within the single market and the customs unions in a short transitional period, but that will take quite a lot of negotiation and depends on several different things. It is a shame that the German Government are in an unstable situation, because I suspect that that will make things far harder. I did not vote in favour of triggering article 50 because I thought that doing so was premature. I thought we should have secured a better timetable than the one we ended up with, because of course the clock ticks down. We could end up with unforeseen diplomatic wrinkles in the process and be backed into a corner, possibly finding ourselves with an inferior transition arrangement and a snap general election that nobody anticipates, least of all Conservative Members.
Let us bear in mind what this Ways and Means motion might presage for tariffs on our different imports and exports. [Interruption.] I know the Whip, Graham Stuart, and the Minister are listening very carefully. A 7% tariff would be introduced on ceramic products. On cars, the tariff would be 10%.
I thank my hon. Friend for raising ceramics. He will know that the best ceramics in the world are made in this country, but the Ways and Means motion, which talks so much about how we will trade around the world, talks very little about the protections that can be afforded to the ceramics industry, so that it remains one of the best producers in the world. Is he, like me, worried that with this motion the ministerial team appears to be completely devoid of any intention to help this country’s manufacturing bases?
That, of course, is exactly why the amendments tabled by my hon. Friend the Member for Edinburgh South should be accepted and embraced by Ministers and by Labour party Front Benchers. I am sure my hon. Friend Anneliese Dodds will reflect on that. We should fear such tariffs, because they might not just be one-offs. Products can sometimes cross a border multiple times and accumulate tariffs.
There would be an 11% tariff on footwear, 20% on beverages, potentially 45% on cereals and 50% on meat products. Those are serious impediments to some major industries in the United Kingdom. We can prepare for a tariff regime, but as stated in the amendments tabled by my hon. Friend the Member for Edinburgh South, we do not wish to impose tariffs on goods traded with our nearest neighbours in the European Union. In essence, we want to replicate the customs union arrangement we currently have.
I am delighted with the amendments, and I want to ensure the House has the opportunity to voice support for them this evening. It is a shame that, in Committee on the European Union (Withdrawal) Bill, the amendments on the customs union have not been selected, so we will not get a chance to vote on customs union issues in Committee. In many ways, we now have an opportunity to do so.
I also want the House to have the opportunity to vote on the amendments today, and I look forward to it. Has the hon. Gentleman been following the question of local content in cars? The UK could, of course, be in a very difficult position whereby the local content of the cars we manufacture would not be high enough to allow us to sell any of them abroad.
The question of rules of origin, of course, is the other factor in the debate about the customs union, because it is not just a question of tariffs; it is about what proportion of these products originates from within the United Kingdom and what proportion relates to components or other parts that may have come from the inventory or warehouse of the whole European Union. Currently, under just-in-time arrangements for warehousing, a car manufacturer located in the UK can avoid the need to stack up expensive inventory. It can assume that goods and parts are able to be transmitted within a matter of hours or days, which is what we risk losing if we end up with such tariffs and impediments at our borders.
Is the hon. Gentleman aware that, apparently, the solution the UK Government are proposing to rules of origin might be to ask the European Union to allow its content to be included as part of our local content?
Some solutions have to be forthcoming. I have high hopes for the Minister’s winding-up speech. I do not know whether he is able to say anything about that suggestion, or about any other part of the negotiation.
Let us remember that the customs union currently allows a vehicle manufacturer to sell a car in Berlin as easily as in Birmingham or Bradford. That is the nature of the market we currently have, but it could end if we impose tariffs at the levels to which the motion paves the way.
Earlier, Tom Brake raised the border with Northern Ireland, and my hon. Friend the Member for Edinburgh South talked about how the Belfast agreement is one area where that question is crystallised most of all. I cannot think of any hon. Member who would say that there should be a hard border between Britain and Northern Ireland. If we are not to have such a border, there should not be a hard border between Northern Ireland and the Republic of Ireland. Of course there cannot be a hard border between the Republic of Ireland and the European Union, but, somehow, we are talking about instituting a hard border between the European Union and the United Kingdom. The logic of that, as Mr Clarke said earlier, completely falls to pieces. We are still waiting for that blue-sky solution, the kite flown in the recent trade White Paper. The Irish Government are now asking for written proposals from UK Ministers on those points.
These are serious questions, and a lot of it roots back to whether we will find ourselves voluntarily opting for circumstances in which we want tariffs, hard borders and rules of origin checks to be put in place. By supporting the amendments tabled by my hon. Friend the Member for Edinburgh South, the House has a way to signify that, actually, we choose a different course by choosing to retain as much as possible of the frictionless free trade and tariff-free area that we currently enjoy in the customs union.
The Prime Minister has emphasised that there will be no “physical infrastructure” on the border between Northern Ireland and the Republic of Ireland. The Secretary of State for Northern Ireland, in evidence to the Select Committee on Northern Ireland Affairs, ruled out having cameras on the border. If we are not to have cameras or physical infrastructure on a frictionless, seamless border, how exactly does Mr Leslie foresee the Government being able to collect customs duties on imports between Northern Ireland and the Republic of Ireland?
There is absolutely no logic to the Government’s position right now. Again, none of this was on the ballot paper in the referendum. That is important to remember because people are assuming that, somehow, this is a natural consequence of the referendum result. It is not. We could choose to negotiate to remain in the customs union. By doing so, of course, not only would we have that fantastic free trade access for 50% of our imports and exports, as at present, but we would retain our access to the 57 free trade agreements with non-EU countries that we have by virtue of our membership of the European Union and customs union—that is another 12% of our trade. Added together, knocking on two thirds of our trade is, in many ways, dependent on our current relationship with the customs union.
I look forward to the speech of my hon. Friend the Member for Oxford East from the Labour Front Bench. I say to her and to our Front-Bench colleagues that we cannot just sweep away the question of the customs union. It is positive that the Labour party is saying we want to stay in the customs union for the transition period, and it is positive we are saying that, after Brexit, we want to get as close as we can to a customs union, but I urge Labour Front Benchers to go that little bit further.
It is nonsense to suggest that there is such a thing as a jobs-first Brexit, which is as nonsensical as saying that we could have a books-first library closure. It just does not work. If we end up going down this route, exiting the customs union and the single market, jobs will be lost. We have already seen 900 jobs go in the European Medicines Agency today from the UK to Amsterdam; we are talking about highly skilled, highly valuable activity. I am appalled that we are in that circumstance, and it is just the tip of the iceberg. I therefore urge my colleagues to support the excellent amendments from my hon. Friend the Member for Edinburgh South.
I rise not only to support those excellent amendments, but to make it clear that I shall be voting for them. That is because I made it clear in the run-up to the general election in June that I would continue to make the case for the customs union, the single market and the positive benefits of immigration to everybody in Broxtowe. Having been returned to this place, admittedly with a diminished majority but with an extra 1,800 votes, I take the firm view that to be true to the words I have said and to my conscience, I am going to vote for these amendments. It is an absolute pleasure to follow some of the excellent contributions we have heard tonight, notably those of the hon. Members for Nottingham East (Mr Leslie) and for Edinburgh South (Ian Murray), and the right hon. Member for Carshalton and somewhere equally pleasant—
Exactly—somewhere equally pleasant.
The pleasure I have in speaking in this debate is primarily this: the fact that we are actually having a debate and, moreover, we are actually having a vote. We are providing this House and this place at last with an opportunity to have a real and meaningful say in the future of our country, which has been denied within this place ever since
Not only are all the things the Prime Minister promised and said she did not want—no deal—likely, but in quarters of this place some people are positively urging and welcoming that. I find it utterly perverse and bizarre that my party, the party that has always been so proud to be the party of business, is increasingly being seen as the party that no longer represents business in this country. Let us be absolutely clear: the overwhelming majority of businesses, not just in Broxtowe, but the length and breadth of this country, do not want a hard Brexit. This is not just a choice between a hard Brexit—that no deal—or a bad deal, because there is a third option, one that has not even been debated and until tonight has certainly not been voted on. I refer to this third way; tonight we are talking about the customs union, but in my view this also includes the single market.
I am not going to repeat the excellent arguments advanced by the hon. Member for Edinburgh South, but I absolutely endorse all the arguments he made and the interventions that he took from other hon. Members who also see the value of the customs union. It delivers what I think the British people want. Overwhelmingly the majority of people in this country are thoroughly cheesed off with the whole darned thing; they are fed up with Brexit. They are fed up with the arguments and the squabbling. I am going to be blunt about it: they are getting fed up with a Government who have still not worked out what their policy is for the transitional deal or for the final deal. Some might say that that is shameful, given all the time that has progressed since we jumped, as I fear we did, into triggering article 50. Some of us—my goodness, we know how we got all the attacks for having said this— did caution the Government, saying, “Please don’t trigger article 50 until at least the Germans have had their elections and that stable Government have been put in place.” I get no pleasure in saying how right we were to put that caution forward. The British people are looking at all of this, they are fed up to the back teeth with it and they want us to get on with it. I do not demur from it—we should get on with it—but not in the way that a small ideological group of people, mainly in my own party, I am sorry to say, are now urging the Government to do: by leaping off the cliff and getting no deal.
When the history books are written about this period of time, the right hon. Lady’s name will be prominent for trying to pull her own Government back from the brink, so we all appreciate the work she is doing on this. We have heard all the arguments tonight, and I, too, am delighted we are debating the customs union. The Government are suggesting a frictionless and seamless border and frictionless and seamless customs arrangements, so does she agree that the best thing they could do to deliver that is to stay in the darned thing?
I could not agree with the hon. Gentleman more. That is what the people need to understand now: there is this third option. There is this other way of getting a Brexit. We would be out of the European Union, so we would have satisfied the 52% of voters on that, but we would deliver what everybody wants, which is the best possible Brexit that is in the interests of everybody in this country, with the economy, jobs and prosperity right at its heart. This would solve the problem that Northern Ireland faces and that Ireland faces, because we would keep the customs union.
I am deeply disquieted by the fact that prominent Conservative Members are seemingly in favour of no deal as we leave the EU, because today’s Belfast Telegraph carries a report saying that republican organisations in Northern Ireland and Sinn Féin are hoping that there is a hard Brexit. They are exploiting that idea to then campaign for a border poll to try to rip Northern Ireland away from the rest of the UK. That is extremely concerning to me, as a Unionist.
I listen to the wise words of the hon. Lady, as she, more than many, knows exactly the serious consequences of getting this wrong. It is not just about trade and the economy in Northern Ireland; it is also about the politics. I take the point that there is a huge danger of abandoning the customs union and going for some ghastly hard border, which plays right into the hands of Sinn Féin, the IRA and all the rest of them.
I am not going to speak for much longer, because I agree with so much of what has been said by the three Members I particularly picked out and by the hon. Lady. I am old enough to remember my father having a car and when we asked what had happened with it and why did we not have it, we were told, “It is down in the garage and we are waiting for a part. It hasn’t cleared customs.” Some other Members will remember that, too. The terrible problem with much of this debate is that so many people are so much younger than I am and they have never experienced this. People like me are old enough to remember the days of having to have our suitcases opened at customs control, but this is lost on huge swathes of our population. Yet here we are actually beginning to plan for a return to those bad, dark days when we were the sick man of Europe.
So we need to stay in the customs union for the sake of our economy and because it will deliver what the people want: we will get on with this and we will make progress. We can take it, because it is there on a shelf and we can take it off the shelf. We may have to tweak it here and there but it will get us on and it will deliver Brexit, and it will ensure that we can then look at these huge other domestic problems we face.
I was going to say something else, but I have no doubt completely forgotten it. It matters not, though, because these are important matters. [Interruption.] Ah, I know what it is. As I said the other day, history will record the profound irony, which cannot be right, that the overwhelming majority of right hon. and hon. Members in this place agree that we should be in the customs union and the single market. The only reason why that is not even on the table anymore—this is an uncomfortable truth—is because, I fear, my party is in hock to 30 to 35 hard, ideologically driven Brexiteers. The British people will not thank my party unless we stand up for business and for the economy. We must deliver Brexit but also make sure that we deliver for the British people.
The right hon. Lady talks about the extremists in her own party; does she share my horror that a former Minister in the Department for Exiting the European Union is planning to make a speech tomorrow morning in which he actually advocates our dropping off the cliff and going on to WTO rules, and in which he will tell the Prime Minister that she needs to take forward a no-deal Brexit? What an absurdity!
I do not like to speculate or comment on things about which I do not know, but that is terribly interesting.
Finally, I just need to ask: why are we leaving the customs union? Apparently, we are leaving the customs union so that we can make trade deals with other countries. It is the stuff of complete fantasy. As the hon. Member for Nottingham East rightly pointed out, we already have this fantastic arrangement: the customs union and single market, the biggest in the whole world. We are turning away from that, causing this dreadful self-inflicted wound, looking into other places and dreaming of deals that will never be done. Was there ever a better example than if we look to America? Look at Bombardier, and look at the most protectionist, anti-free-trade President that that nation has probably ever seen. That is the reality. There is no wonderland ahead of us; what there is ahead is real economic damage to our country unless we stay in the customs union. That is why I shall vote for the amendments tonight.
It is a pleasure to follow Anna Soubry, who spoke with her trademark passion in this debate on one of the most important issues to arise from the Brexit referendum vote. I admire the ingenuity of Ian Murray in tabling the amendments that have been selected. If he presses them to a Division, my colleagues and I will support him.
The British Government are intent on pursuing a Brexit strategy that does not put the economy first. In her Lancaster House speech at the beginning of the year, the Prime Minister stated clearly that the British Government intend to leave both the single market and the customs union. Like many Members who have spoken today, I could not understand for a second why the British Government decided at that stage to close off both those options, which was why I could not bring myself to vote subsequently for the triggering of article 50. No outline was given of what the British Government were going to put in place to replace two key cornerstones of our economic policy framework that have existed over the past 40 years.
Has the hon. Gentleman, like me, spent the debate waiting for a Conservative Member to give a ringing endorsement of our leaving the single market and customs union? That has not happened, has it?
That is a valid point. When we begin to consider the customs Bill and the Trade Bill, answers will have to be forthcoming, because the House and people throughout the UK are becoming increasingly restless. We need answers from the Government about what they propose to put in place instead of those frameworks, rather than the empty platitudes we have heard since the referendum result.
The customs union is of course the largest and most lucrative trading bloc in the world. It gives us unhindered access to nearly half a billion of the wealthiest consumers in the world. It also acts as a protective measure against cheaper and lower-standard goods, thereby safeguarding our domestic producers, especially food producers, who are a vital part of the Welsh economy. Of course, the UK Government have not negotiated a trade deal since the UK joined the customs union because doing so has been a European competence. There is little expertise in the British civil service to deal with the task at hand.
In the previous Parliament, I visited Washington DC with a parliamentary delegation to scrutinise the Transatlantic Trade and Investment Partnership deal between the EU and the US. When, over a pint one evening, I asked a British Government official there how many people were on his team, he said, “Well, it’s just me.” That indicates the difficulty of getting the British civil service ready to deal with the challenges we will face with respect to our trade policy. Recent press reports about the staff and expertise required in the Department for International Trade do not give me much grounds for confidence. A huge amount of work needs to be done to get the British state ready for the shark-infested waters of modern international trade negotiations, because they are hugely complex.
I do not profess to be an international trade expert in any shape or form, but it seems clear to me that large trading blocs have far more power in negotiations than smaller ones. As I said earlier, the EU customs union is the world’s most powerful trading bloc, and it obviously helps to promote and protect our interests and those of its producers during negotiations. As we move forward, there are big questions as to whether the UK will, as an insular trading bloc, be able to perform the same tasks to the same ability.
During the aforementioned visit to Washington, we had several difficult meetings with representatives from US sectors, who all bemoaned EU intransigence. Nevertheless, the reality was that they had no option but to accept it, because the EU customs union was such a large trading bloc. I remember vividly one meeting with people from the food sector who were impressing on us the need to open up EU markets to the chlorinated chicken and hormone beef that they have in the US, as well as, of course, genetically modified products, but they knew that there was no way they would get that past EU negotiators. I wonder whether UK negotiators will be able to withstand such pressure when they start trade negotiations with the US—I doubt it very much.
The hon. Gentleman may be interested to know that a couple of weeks ago I tabled a parliamentary question to ask how many people in the Department for International Trade had successfully completed a trade negotiation. The answer I got was the newly appointed Crawford Falconer, so there is apparently one person in the Department who has completed a trade negotiation.
That is grounds for huge concern, because these trade negotiators will be up against expert teams that have been carrying out such negotiations for many years, and this is not just about the EU deal. If it is the British Government’s intention, as one of their first options, to take on the United States in trade negotiations, I would advise them to take the advice of the experts who told the Exiting the European Union Committee in the previous Parliament that the UK should perhaps look to smaller countries for their initial trade negotiations, rather than something as powerful as the US trade lobby.
The EU customs union’s numerous existing international trade deals have already have been mentioned. Those deals cover more than 50 countries, and several other trade negotiations are ongoing. A third of all EU members’ trade outside the EU is with those countries. When the Department for International Trade was set up and the Secretary of State for International Trade answered oral questions for the first time, the first question I asked him was what would happen to all the trade deals that we already enjoy around the world. His view was that they were going to be renegotiated, seamlessly, but I fear that that showed extreme naivety on his part. Why would those countries agree to the same terms and conditions with a far smaller trading bloc, which is what the UK will be, as they agreed with the EU customs union? Surely they will want to renegotiate so that they look after and promote their own interests, rather than just accept what is on the table.
The British Government’s intended policy of leaving the single market and customs union is already having a huge impact on Welsh people’s standard of living. The Centre for Economic Performance has calculated that Brexit has already cost the average worker in Wales £448 annually, with its effect on wages and the higher cost of living disproportionately affecting people in Wales—and that is before we actually leave the EU.
With 90% of Welsh food exports destined for the EU customs union, a reckless Brexit could be disastrous for the communities I serve in rural Carmarthenshire. In a recent meeting with sheep farmers, I was amazed to find out that 50% of their produce was sold domestically, with 50% sold in Europe. Domestic markets will not be able to fill those gaps if we lose unfettered access to European markets.
It is also worth concentrating on some of the tariffs associated with food products. The average tariff on dairy products in 38%. For meat products, we are talking in the region of 58% to 70%. That would clearly make our food products destined for the EU completely uncompetitive. Farmers are preparing for 2019-20 at the moment, so they need answers now. They cannot wait for a protracted trade negotiation.
I also want to concentrate on the impact of leaving the customs union on the border between the British state and the Republic of Ireland. Much has already been said on this matter tonight and it has also had considerable media coverage, not least because the border on the island of Ireland is one of the three sticking points that need to be resolved before we reach first base in our negotiations with the European Union. Despite the fact that both sides have focused on this matter since the beginning of the negotiations, we are no nearer a solution. Indeed, press reports over the weekend seemed to indicate that things are getting even more difficult.
The British Government have miscalculated the resolve of the European Union. The EU’s overriding priority in these negotiations is maintaining the integrity of the single market and the customs union. Therefore, in choosing to leave those frameworks, the UK will become a third country—in other words, a competitor. In those circumstances, we will not get a “have your cake and eat it” solution. As the right hon. Member for Broxtowe said, the British Government are living in fantasy land. There will be no such thing as a special partnership. If we are not part of the single market or the customs union, the best thing that we can hope for is a free trade agreement similar to that of Canada. A welcome development in recent months is the fact that both Labour and the Government have agreed that a transition is a good idea, but the key question is what happens at the end of the two years.
Does the hon. Gentleman agree that the reality is that we will not get a great deal because the EU does not want to give us a great deal? If it gives us a great deal, it would have to give one to a whole load of other people who might decide to leave the European Union. Although I am not saying that it wants to punish us—I do not think that it does—it does have a responsibility to keep the European Union together.
The right hon. Lady captures my sentiments exactly. By deciding to leave the single market or the customs union, we effectively become a competitor —a third country. On that basis, the overriding priority of the European Union is to protect its interests. A lot of the problems that are arising in our negotiations, as we heard from Peter Grant, could be dealt with if we said that we wanted to stay in the single market and the customs union.
The transition period is a welcome development, although I am slightly unclear about whether the British Government and indeed the Labour party are arguing for being in “the” customs union or being in “a” customs union with the European Union, because they are diametrically opposed. Even if we did decide to stay within the single market and the customs union for the transition period, the key question arises of what happens at the end of that two-year period. If we are to have a free trade agreement such as that with Canada, it will take far longer than two years to negotiate.
With reference to the border on the island of Ireland, Michel Barnier, the chief negotiator on behalf of the European Union, has said that the EU will not tolerate the UK using this soft border between the six counties and the Republic as a way of avoiding the trade consequences of leaving the customs union. That is the crux of the problem. Even if the British Government’s position stands, there will be two types of borders between the Irish Republic and the British state. There will be a soft border on the island of Ireland and a hard border on the maritime divide between Ireland and Wales. Inevitably, that will have a huge impact on Welsh ports.
We heard earlier about the huge tailbacks that we can expect at Dover and some of the Channel Island ports. Welsh ports will face exactly the same situation, and the infrastructure is not there to deal with such challenges. That might lead to business being diverted away from the traditional Wales-Ireland trade routes to trade routes between Belfast and Scotland and England. Therefore, instead of businesses flowing between Dublin, Dun Laoghaire, Rosslare and Cork to Holyhead, Fishguard and Pembroke, they will be flowing between Belfast and other parts of the UK. We must remember that the Welsh ports sustain thousands of jobs. This is all an unintended consequence of the British Government’s muddled policy.
I want to finish with a point about the impact of leaving the customs union on the UK’s constitutional arrangements. International trade is a reserved matter. However, trade policy could have massive ramifications on the ability of the Welsh, Scottish and Northern Irish Governments to deliver on devolved competences. For instance, if the British Government were to allow food products of a lower standard to enter the UK, it would obviously have an impact on Welsh agricultural policy, not least our ability to export to our main European market in the customs union. If the British Government, for whatever reason, open up public services to further private interference, which has been the concern of many experts in this field, it would fundamentally undermine the ability of the devolved Governments to deliver competences within their public services for which they have responsibility. There is probably a whole range of other problems that I have not even considered yet.
In recognition of those potential problems ahead, the trade White Paper does talk about reconstituting the Board of International Trade with representatives from all four constituent parts. However, that does not go anywhere near far enough. In my view, trade policy would have to become an area of shared competence between the British and the devolved Governments. Within the EU customs union, EU trade deals need the endorsement of all member states and even some other governments, as we saw with the issue of Wallonia during the comprehensive economic and trade agreement discussions. It would be absolutely incredible to me if trade policy was the sole preserve of Westminster, with the interests of Wales, Scotland and Northern Ireland neglected, and our devolved and democratic Governments and Parliaments not allowed to have a say on that. In my view, Brexit will make a new UK constitutional settlement inevitable. Inter-governmental networks within the British state will need to be formalised and strengthened. If we fail to do that, every trade deal could be a constitutional crisis.
I am pleased to speak in favour of amendments (c) and (e) in the name of Ian Murray. I sincerely hope that he will press them to a vote later this evening.
No one here would disagree with the need to have new customs legislation in place. Given that much of the customs legislation that we currently have is derived from EU legislation, nobody would argue with the fact that when the UK leaves the European Union that legislation will have to be replaced. However, as is so often the case in the debate about the European Union, we have moved very quickly from, “We need to have something in place” to being told that, “You will agree to put this in place whether you like it or not.” It is quite clear that there is a fundamental disagreement between—I suspect—a substantial majority of Members of this House and the Government on whether we should also be preparing to leave the customs union and the single market.
As well as paving the way for new customs tariffs, which is what this resolution is about, the resolution also implicitly paves the way for all the additional bureaucracy, all the additional infrastructure and all the additional border delays that leaving the customs union will inevitably create for every single journey of every single person and every single lorry and every single suitcase that travels to and from the European Union in future. It has been estimated that there will be an additional 548,000 customs declarations needed every day—that is six and one third declarations per second.
I am sure that the hon. Gentleman will recognise that this particular problem will apply pretty severely to perishable goods such as food, agricultural produce and fresh fish.
Absolutely. There are significant implications for perishable goods and, as was mentioned earlier, for the manufacturing supply chain where the goods can cross borders several times. There are also implications for medical supplies such as radioisotopes, which are useless if they are held up for a few hours at customs. That, of course, is before we even think about the massive inconvenience to travellers—either for business or leisure. Even if they have nothing to declare, they have no guarantee that they will not be on a plane when, for whatever reason, UK or French customs decide that they are going to search every single passenger coming off that plane.
We are told that in return for that, we will have this brave new world of trade deals with everybody and anybody. Ross Thomson, who is no longer in his seat, harked back to the glory days of Glasgow’s place as the second city of the empire, blithely forgetting that, to our eternal shame, that empire was built on slavery. We cannot go back to the days when Glasgow was a huge trading port for tobacco, sugar and cotton because—thank God—we no longer have the slave plantations that were such an important part of that economic model.
We are not going back to the days of empire and too many virtual reality Government Members—well, there are not currently many Members on the Government Benches—need to understand, once and for all, that empire has gone. It is now partnership. Partnership means that when we are in a weakened position and the big players such as the Chinese, the Singaporeans and the Malaysians are in a strong position, we are not going to get a favourable deal from them if we negotiate on our own.
I do not want this motion to apply to goods going to and from the European Union or the customs union, because I want us still to be in the customs union. It has been made clear that that offers by far the simplest and least disruptive way of giving effect to the referendum result in June last year. The referendum, as far as the voters of England and Wales were concerned, certainly gave a mandate to leave the European Union, and we have to respect that. But there has never been a referendum mandate to leave the customs union or the single market. There was what looked to be an almost spontaneous, hasty and precipitate decision by the Prime Minister; a red line was drawn that has now painted the Government into a corner.
It is becoming clear that many of the Government’s highly plausible-sounding objectives simply cannot happen if we leave the single market. Those highly plausible-sounding objectives include the “deep and special partnership” that we are going to have with the European Union, the “continued close association” with the customs union, and the
“freest and most frictionless trade possible” with the single market. Except it will not be as deep and special a partnership as it would if we were in the EU, it will not be as close an association with the customs union as being in the customs union, and it certainly will not be anything like as free or frictionless a trade deal as we can get by staying right where we are now in the single market.
As an indication of how much substance there is to these sound bites that the Government Whips are so fond of encouraging their Back Benchers to use, it is worth remembering that they were doing the same thing just over two years ago. But the sound bites that got cheers on the Tory Benches then, on the days when there was anybody there to cheer, were “long-term economic plan” and “Majority Conservative Government”. “Hear, hear”, they would shout. The Government’s current platitudes about easy trade deals are likely to be consigned to history just as quickly as the things that they thought would be around for a long time back in 2015.
We are now more than halfway through the journey from referendum to leaving day, and there is not one single major policy area where the Government have put forward a clear, concrete proposal for discussion. That means that on every major policy decision, the Government have taken longer to come up with an idea than 27 Parliaments—and 27 Governments will have to agree it. Putting pressure on those Governments and telling them that it is not fair to delay it will not work; they will act and speak in the interests of their people. It is ridiculous to condemn the Irish Prime Minister for speaking in favour of the interests of the people of the Republic of Ireland. That is what Prime Ministers are supposed to do. I wish that some Prime Minister would maybe listen to that.
As it stands, we are in serious danger of crashing out of the EU without a deal, but there is a simple way that the Government can avoid that. There is a simple way that they can move very quickly to clear the logjam—to avoid having interminable discussions about Northern Ireland that do not have a solution and to avoid having interminable discussions about the rights of 4.5 million citizens. Both those major problems can be substantially resolved simply by the Government having the humility to say, “We got it wrong. We have to change tack and stay in the single market.”
There is an urgent need for the Government to follow their own advice, listen to their own rhetoric and listen to the advice that the Brexit Secretary gave to the Germans last week: stop putting politics before prosperity, because it is never a smart thing to do. The Government should take the decision that they know as well as I do will prevent the worst economic and social damage of Brexit. The Government should confirm today that they want to remain in the single market and the customs union, and they should signal that intention by accepting the amendments of the hon. Member for Edinburgh South without forcing the House to a Division.
It is a pleasure to follow Peter Grant, who made another powerful case for what is becoming incredibly evident in British society.
Let me start by trying to find some common ground on something that has divided us for more than 18 months now. I do not think that anybody here tonight wants to re-run the referendum; we all recognise the referendum result. I do, however, disagree with Anna Soubry. I think we can get deals with anybody. The question is, what kind of deal and what are the consequences? And that includes no deal. Yes, we could get a free trade deal with other countries but, as we saw when Switzerland tried to negotiate with China, when big goes against little, the results are often not good for little. It is a real Hobson’s choice. China now has immediate access to the Swiss market, while the Swiss will have to wait decades to get similar access to the Chinese market.
All the options have consequences, including the option that this Government have taken over the past 18 months: trying to fudge and bombast their way through. Like many Government Members, I welcome the fact that we are finally having this debate because I want to speak up, above all, for the people whose lives, livelihoods and businesses depend on the certainty of knowing what happens next. That is a certainty that they are not getting from this Government. Some 18 months after the referendum, there are some 759 different treaties that have to be renegotiated, but there has been no progress on any of them, and we are fewer than 18 months away from the date on which we are supposed to leave the European Union.
The Government are spending money, hand over fist, to try to sort out the mess that they are creating every single day. We have had it confirmed that that money is coming from our armed forces, and the Minister has confirmed to me today that it is also coming from our education services. Money is being reprioritised to try to figure out what on earth a deal with Europe would look like. Eighteen months on, we have no answers. And all because the Prime Minister simply cannot admit that she simply got it wrong in the Lancaster House speech when she ruled out of access immediately the customs union and the single market.
I support the amendments in the name of my hon. Friend Ian Murray because the British public deserve better. If the Government are going to make a mess of it, it is up to us as parliamentarians to try to give the people we represent—who need certainty and to understand what their future holds—the clarity that they desire.
Does the hon. Lady think that it says something about the Prime Minister’s priorities that she took the time to apologise to her own Back Benchers for the disastrous general election that she dragged them into, but she will not apologise to the people of these islands for the disastrous Brexit that she is dragging us into?
I was struck by the discussion earlier about making decisions so quickly. I, too, did not vote for the article 50 legislation to be triggered, because I was concerned it was too soon in the process. However, some disasters are of our own making, and a snap general election in which the public thoroughly rejected her hard Brexit is certainly something the Prime Minister should learn from.
In her Lancaster House speech, the Prime Minister said that she wanted associate membership of the customs union—a membership that does not exist. The legislation that will come from the motion before us tonight is supposed to answer that question. Yet, I have read the Government’s White Paper, I have asked the Prime Minister repeatedly about the idea of associate membership, and I have asked her whether she has raised it with her European counterparts, and we have no answer.
It is a bit like someone asking to be an associate member of a gym—to use the swimming pool, but not to pay for all the weights or classes. Oddly enough, most business people would turn them down flat or at least give them an answer. I am very struck by the fact that, 18 months on, the Government cannot even tell us whether they have asked whether the wonderful, mythical, innovative, creative, dynamic partnership they believe they can get is even on the table.
This approach literally makes no sense. If we look at the reality of how we trade as a nation, we see that we are not an island factory; we are a nation that works with other countries to produce goods, and we are proud of the goods we produce through our hard endeavour. Let me give a great example. In the food and beverages industry, the EU accounts for almost 70% of our supply chain. In our car industry, 44% of the value of UK car exports comes from imported products. In the UK, we are great at making bumpers, brakes and clutches, but we are not so good at radiators, suspension or gearboxes. That is why we work with other countries to produce the great British cars that we are all so proud of. That is what is at stake when we reject the customs union out of hand: the ability to navigate and manage those relationships effectively and efficiently. For every £1 in car exports from the UK, 44p is spent on importing foreign parts. Some 24% of all imports from the EU are from the car industry. That is at stake when we suddenly rip up the rules under which that relationship happens.
The car industry is not alone. In 14 different sectors, at least 15% of the supply chain is dependent on the European Union—dependent on not having the kind of customs tariffs we are talking about and on having frictionless trade. That is true of some sectors much more than others. In the paper industry, 71% of the supply chain is dependent on the European Union. In the rubber and plastics industry, the figure is 69%; in pharmaceuticals, it is 66%. That is why we know that leaving the customs union will cost us £25 billion. These new tariffs alone will add at least £4.5 billion a year to importers’ costs—money they can ill afford to spend.
Then we get on to the practicalities—this is not just about the money that being part of the customs union and the single market helps us to save. We will see delays at Dover because nobody has yet invented the technology that will allow this frictionless trade. When we talk about pre-lodging customs checks, we know that that means still more paperwork and more complexity in the supply chain. It is no wonder the car industry is desperate for us to continue our membership of the customs union. So too is the National Farmers Union; so too are the leading pharmaceuticals brands. Being part of the EU gives us access not just to markets in the EU but, through our free trade agreements, to a third of all global markets at preferential trading rates.
When we look at the case for the customs union and at what it gives us now, it is clear that this is not about nostalgia for the “Ode to Joy”; cold, hard business sense says that if we have a good way of working, why would we rip it up? But ripping it up is exactly what the Government are doing—for something that, 18 months on, they still cannot tell us will exist. [Interruption.] I am sorry to see that I have made the Ministers entirely leave the Front Bench by pointing that out, because I really hope that at least one Minister will be here to answer one of my concerns about this legislation and particularly about the VAT proposals.
We have all talked about tariffs and customs tonight, but I want to unmask myself as a geek interested in VAT. When I talk to small businesses in my local community, VAT is one of their prime concerns. [Interruption.] I am grateful to the Minister of State, Ministry of Justice, Dominic Raab for being here. I am particularly looking for answers on the 13th directive—I know it is something he knows intimately.
VAT is one of those issues every business will say is a nightmare. I never thought that Labour Members would be arguing for less red tape than Government Members were, but that is exactly what we are talking about tonight. Some 63% of small businesses say that Europe is their priority market. If we add to the paperwork they have to deal with by removing the customs union and the single market, we will of course make trading harder for them. Compared with the bigger companies, they do not have the flexibility that Ministers blithely suggest they have.
Currently, businesses incurring VAT in the EU are able to claim it back through intra-country mechanisms. If they sell printers to Sweden, and they incur VAT as part of that, they can claim it back—it is relatively easy. Specifically—I am sure the Minister will want to look this up—we are talking about articles 170 and 171 of Council directive 2006/112/EC—the prime VAT directive. The detailed rules are in Council directive 2008/9/EC, and they are in our legislation. These Ways and Means resolutions will therefore have to address this point. I am sad that the Financial Secretary to the Treasury is not here to hear it, because I have been raising it with him for some time. I can see that he is talking to his officials. I very much hope that in his concluding remarks he will finally be able to tell me the answer.
Right now, because we have the single market, businesses trading with Europe can reclaim their VAT and manage VAT relatively simply. If we leave the single market, they will have to move on to the 13th directive, which covers non-EU companies trading in the EU. The details of the 13th directive are clearly written to be advantageous to companies, saying that they can set their own VAT terms. Let us think about that for a moment. A UK car manufacturer trying to trade across Europe in radiators and the pieces and parts that make them will suddenly have to deal with VAT across 27 different countries, and 27 different pieces of paper. I am glad that the Financial Secretary is now here because he and I share a concern to remove red tape for our businesses to make sure that British businesses are not facing additional paperwork and additional complexity.
Does my hon. Friend agree that the very serious problems for businesses that she is so ably identifying have implications for the whole of a local community? As companies get into great difficulties and jobs may be lost, that reduces spending power and affects the whole community and the services there.
I absolutely agree. This is the challenge that we face.
Eighteen months on, it is not unfair that businesses across the country are saying “What next?” and asking how they might adapt to whatever the final deal with Europe might be. Eighteen months on, none of us is any closer to being able to give them any answers. They do not need White Papers that talk about ambition and creativity in VAT proposals; they need clarity, because if they are going to have to learn new systems and have additional paperwork, and if there are going to be excessive delays in their imports and exports, they need to be able to adjust for it. The Government can say all they want about getting these ambitious deals, but they have to negotiate with 27 other countries that are quite happy with the relationships that they already have, perfectly satisfied with the intra-EU arrangements that they already have, and think that the customs union works for them. If we in this House want frictionless trade, if we want to make it as easy as possible for our businesses, big or little, to trade, and if we want them to have as little paperwork—digitised as it is—as possible, then the answer is the single market and the customs union. In 18 months, nobody has been able to come up with a better arrangement. I will wager that the same will be true in 18 months’ time.
Let us not leave British businesses hanging any longer. I am backing the amendment tabled by my hon. Friend the Member for Edinburgh South because I want to be able to go tomorrow to those businesses in my community that trade with Europe and say to them, “This is what it’s going to look like. You can plan ahead in your supply chain, you can buy ahead, you can do the deals you need to do, and you can invest.” I understand why they feel that they cannot do that right now, and it is my job to try to help them gain that certainty. That is why I ask other Members of this House to join us in voting for this amendment and giving this Government the message that Britain deserves better.
I am grateful for the opportunity to make a very brief contribution to this debate. I support the powerful case that my hon. Friend Peter Dowd made for preventing Parliament from being sidelined on this important issue, and welcome the very significant contribution by my hon. Friend Ian Murray.
The provision for customs duties is a crucial consideration in what is rapidly unravelling as the very expensive and complicated process of Brexit. The Home Affairs Committee, of which I am a member, held an inquiry looking in detail at customs operations in the delivery of Brexit. The evidence given to our Committee should give us all great cause for concern, particularly if the Government’s uncosted and unspecific plans proceed unamended. Delivery of our customs policy is a cross-Government process, with a wide range of Departments and agencies working in a delicate balance and under significant pressure.
The impacts of changes to our customs regime are widespread. There are serious concerns about the urgent work needed on port and transport infrastructure, customs operations, capacity in the Border Force, and HMRC—particularly in preparation for a no-deal scenario, which the Home Secretary described in our Committee as “unthinkable”.
The customs White Paper continues the Government’s worrying trend of relying heavily on secondary legislation and circumventing Parliament. My constituency in Croydon has been on a key trading route between the coast and the City for hundreds of years, and it continues to be so today. It is my job to ensure that businesses and industries in my constituency continue to flourish.
Sweeping new and unscrutinised arrangements for customs duties are a threat to our domestic industries and have the potential to choke up our entire customs system. I want to highlight a few issues identified by the Home Affairs Committee that show us how important it is to get this right and how damaging it will be if we do not. Having the right checks and balances in place before changes are made is a big part of that.
IT systems are a particular concern. Amyas Morse of the National Audit Office has warned that the current system threatens to become “a horror show” because of a lack of flexibility to cope with any new rules after Brexit. The chief executive of HMRC told us that the delivery of the customs declaration service was absolutely vital and that it would be “catastrophic” if the system was not operational on Brexit day. HMRC will need to add another 5,000 staff by March 2019. Its capacity to deliver what is needed has been mentioned, and it remains a significant concern of the Committee.
The Government’s planning to date was completely unconvincing to the Home Affairs Committee. The National Audit Office expressed further concerns about the struggles that the Border Force will face in dealing with the training, workforce, financial and prioritisation adjustments that will result from the multitude of operational changes caused by Brexit in a very short timescale. My right hon. Friend Yvette Cooper, the Chair of the Committee, warned that getting things wrong in our ports infrastructure could lead to “Operation Stack on steroids”.
The Committee made the obvious point that the option that would cause the least upheaval would, of course, be the operation of the status quo and that the Government should agree transitional arrangements to that end—that is, remaining in the customs union. The Committee expressed a lack of confidence in the important question of who is in charge of the customs change, and the Committee was not satisfied with the Government’s answers to that question. Progress seems to rely on working groups of Government officials with no meaningful ministerial leadership. The fact that multiple Departments and agencies are involved in delivering customs means that a fully joined-up approach from the Government is urgently needed. We recommended that a Minister of State, at the very least, should be named as the lead Minister responsible for delivery of post-Brexit customs arrangements.
The more unfettered the power held by Ministers and unaccountable agencies, the greater the risk that we get this wrong and leave our current systems simply unable to cope. The House should not accept the Government’s approach of trying to undermine Parliament, doing Brexit on the cheap and perhaps steering us towards a no deal, while sneaking measures through the back door. Kirsty Blackman said that she had read all the things and that she remained very unclear about how customs might look in the future. I agree with her point.
I was part of the Government Olympic executive as a senior civil servant, and we spent years putting in place the right frameworks and doing very detailed planning for the Olympic and Paralympic games. The House will remember that the one area where we faltered was the recruitment of security staff by G4S, which led to the Army being brought in. We read today that there are already problems with the recruitment of staff to deal with Brexit. It is crucial that Ministers do what they can to ensure that the right framework remains in place or that we continue with the status quo on customs, so that we do not find ourselves in a similar situation.
It is a pleasure to follow many excellent speeches on this crucial issue. Sadly, it seems to have attracted less attention that it deserves, given its huge implications for our economy and our future trading partnerships. It has always been my view that we should stay in the customs union, and I am glad that the Labour party position keeps that possibility open.
I very much agree with what my Front-Bench colleagues have said today about the importance of scrutiny. That applies not just to customs deals; I have signed early-day motions and supported many other motions calling for us to have much greater scrutiny in this place over trade deals. Whatever our views might be on the nature of those deals and where they should go, it is only right that they are properly scrutinised in this place.
For me, there are two fundamental issues: first, the practicalities and, secondly, the cost. I want to draw somewhat on the report on customs arrangements by the Home Affairs Committee, of which I am a member. The report encapsulated the situation most clearly with the statement:
“At some ports, including Dover, as much as 99% of traffic relates to trade with the EU;
witnesses told our predecessors that a no deal scenario might therefore result in effectively 100% of trade becoming ‘non-EU’, leading to a hundredfold increase in the number of customs declarations. This would be an unprecedented delivery challenge to UK border operations.”
My hon. Friend can see the coast of my Bristol North West constituency from across the channel. Does he recognise that the issue involving ports such as Bristol that import and export tens of thousands of cars, wings, landing gears and engines every year is one not just for businesses, but for the entire city, which will be clogged up, as will cities around ports throughout this country? This will be a nightmare for constituents, but it will also create air pollution, as well as ruining business.
I wholeheartedly agree with my hon. Friend’s points. I can indeed see his constituency across the waters of the Bristol channel. I will come on to say something specifically about the aerospace industry, which is crucial not only for his constituents, but for many of mine and for the whole of Wales.
Our report made very clear the costs involved. It highlighted the fact that an Institute for Government report has stated that the introduction of customs declarations on EU trade could cost traders between £4 billion and £9 billion a year, based on its various estimates, including of an expected 200 million additional declarations after Brexit. Mark Corby has estimated that the additional cost is likely to be between £19 and £26 billion a year, as a result of losing the customs and trade facilitation and duty benefits that EU membership offers.
We must also look at the costs of putting in place all the infrastructure. We have heard much discussion today about infrastructure, whether at Dover or at other ports. I am thinking in particular of Welsh ports, especially in relation to the maritime border between Wales and the Republic of Ireland, which is important to get right. This is not only about the relationship between Northern Ireland and the Republic of Ireland, but about the maritime border between Wales and the Republic. Jon Thompson, the chief executive of HMRC, has told the Public Accounts Committee that HMRC estimates the costs at between £300 million and £450 million in the scenario of the UK leaving the EU without a deal and that between 3,000 and 5,000 additional staff would have to be recruited.
These are huge sums, and it is very important that the public understand the costs, the risks and the practicalities. However they voted in the referendum and whatever form of Brexit they prefer, these are the sorts of facts that we need to put before the House and the country when we are taking decisions about the nature of our future relationship with our European partners.
I said that I would talk about the aerospace industry, and I draw attention to the relevant declarations in my entry in the Register of Members’ Financial Interests. Airbus has been very clear that its work involves 80,000 trips between the UK and EU countries a year, which relies on a seamless flow of goods and people, and that removing the seamless nature of that will be dangerous for its business and its prospects. Airbus and companies in its supply chain currently collect limited data for customs needs, but on the assumption that the UK becomes a third country, it would need to produce a customs declaration on wings and satellite components moving from the UK to the EU27. One early assumption is that this would require as many as 50 datasets for declarations, including for country of origin.
At the moment, the Airbus transport aircraft fly from Toulouse, Hamburg and Broughton with only two hours between landing, loading and departure, but should they need to await additional customs inspectors or paperwork, that would lead to delays and have an impact on its delivery schedule. As many Members will be aware, there are heavy commercial penalties for missed deliveries and delays in parts and equipment. This is not just a trifling matter: Airbus spends £5 billion a year in its UK supply chain. We are looking at the problems of transferring small parts and equipment back and forth, which has an impact not only on Airbus directly as a company, but on all those involved in its supply chain, which stretches much further than the thousands it employs directly.
Does the hon. Gentleman know of any Government plan to solve this problem for Airbus? I think this would be fatal to such a fantastic project, which completely relies all these different components moving right across the European Union so frictionlessly. Does he know whether anybody has come up with an alternative?
I am not aware of any alternative. Indeed, we can sense growing frustration in the country at the moment about the lack of such information. In fact, Airbus has come out in public today to make very clear its view that we need a “lengthy transition”, in its own words, and it has made a very clear statement about what it wants if it is to keep its business going.
I have mentioned Rolls-Royce. I was recently visited by Unite’s shop stewards from its manufacturing facilities in Derby, who were very clear about the implications for them. Simon Hemmings, the chief negotiator for Rolls-Royce staff, said:
“If we are not in the customs union there will be job losses. If we have a hard Brexit, the foundations we have built…for the next generation of engines will not be built upon. They will be built elsewhere.”
That is absolutely clear: some aerospace parts cross the channel five times as they move along the various assembly lines in factories in both the UK and continental Europe. That is just one example, one industry that contributes an incredible amount in terms of high-skill, high-tech jobs not only to Wales, but to south-west England, Derby and more widely. We ignore the concerns of those businesses at our peril.
The Home Affairs Committee was clear about the implications—for example, concerns about IT systems, the lead times needed to train new customs officials and the worries about whether the Home Office, which maintains Border Force, which would carry out many of the customs checks on behalf of HMRC, plans only 300 extra staff, even though HMRC says between 3,000 are 5,000 extra staff are needed. Where is the planning going on? Who is in charge of the process within the Government? Whatever the final scenario, it is crucial that we have trained, skilled staff in place. It is crucial to our security that staff who are there to police our borders, checking passports and other identity documents and people who may be involved in illegal activities, are not diverted into dealing with customs backlogs. One can imagine a situation in which we crash out with no deal, leading to queues—Operation Stack on steroids—and the Government suddenly having to drag staff back and forth, with delays at borders and delays at customs. If we do not plan and get the staff in place, we will have serious problems.
The report is clear that, given the lead times for changes in staffing, technology and infrastructure, Border Force, HMRC and other public sector agencies need to clarify rapidly whether and what changes will be required for transition, and crucially, how much they will cost. It is only right that the British public and Parliament see the costs of a no-deal Brexit, or a hard Brexit versus some of the other options, such as staying in the customs union.
Our report states that
“If no deal is reached on customs arrangements, it will result in all those involved in customs in the UK experiencing a huge amount of change in a very short time, with a vast increase required in capacity and processes at the border, with the risk of either significant delays at points of entry, or of inadequate checks taking place.”
The Minister said earlier that cliff-edge changes were in no one’s interest and spoke of a two-year implementation period and various plans that he will produce. I hope that if, as I suspect, we hear from the more extreme elements on the Government Benches saying, “Get on with a no-deal Brexit. Let’s fall out of these arrangements,” he will be the first to condemn and criticise those voices. To do otherwise would be at odds with his statements today.
These matters are fundamental to the future of our economy, our jobs and our ability to trade with the rest of the world. It is important that they are given due scrutiny and that we understand the full costs. I commend the many speeches that have been made in this debate.
I am grateful to the Minister for his introductory remarks, but I have to say that both they and the resolutions leave four important problems unresolved. Many Members have spoken to those problems today. I will speak as telegraphically as I can about them, and speak to amendments (e) and (f).
First, as many colleagues have said, the resolutions fail to ensure that the Government’s approach on customs is properly democratically accountable. Kirsty Blackman said the Government proposals were a guddle, and my hon. Friend Sarah Jones spoke eloquently about their incoherence, but I think there is an element of coherence, as stated clearly by my hon. Friends the Members for Edinburgh South (Ian Murray) and for Bootle (Peter Dowd), who highlighted the presence of the paragraph that, sadly, we see in the European Union (Withdrawal) Bill, elements of the Finance Bill and the Trade Bill. The resolutions would give Ministers the ability to vary customs duties without what we regard as proper parliamentary scrutiny, and we cannot stand by and allow that as a House that is accountable to our constituents, who could suffer greatly from that sort of action.
Secondly, the Minister would say only that we need some kind of customs association during the transition period. It is unfathomable to Opposition Members why the Government are refusing to rule in continuing customs union membership, even during a transition period, when that is what business has so clearly demanded.
Thirdly, we had very little enlightenment about the capacity of HMRC and the concrete actions the Government will take to deal with the many challenges my hon. Friends expressed so very eloquently. My hon. Friends the Members for Liverpool, Riverside (Mrs Ellman) and for Walthamstow (Stella Creasy) expressed concerns about the additional administrative burdens that will apply, as did my hon. Friend Stephen Doughty. It has been suggested that the number of customs declarations could shoot up by 100%, and that is in the context of HMRC’s headcount being reduced by over a sixth since 2010. Of course, we did not have the clarification we needed about the scope and functions of the new trade remedies authority, despite my hon. Friend Gareth Snell pushing hard on the issue.
Fourthly, we have had much discussion about the dangers of a hard border between Ireland and Northern Ireland. I can say very strongly that we on the Labour Benches do not just want an aspiration to avoid such a border, we need a cast-iron assurance and we do not have it yet from the Government.
I understand, and indeed agree, with many of the sentiments underlying amendments (e) and (f), especially as they were articulated by my hon. Friends the Members for Edinburgh South and for Nottingham East (Mr Leslie). It is absolutely right to highlight, as they did, the recklessness of the Government in ruling out membership of the customs union as part of our future relationship with the EU. I am concerned, however, about how the amendments would interact with WTO rules, not least because of the Government’s disturbing unwillingness to rule out leaving the EU without a deal. The amendments would apply regardless of the future customs model. The scope is not restricted, as currently drafted. We on the Labour Benches have repeatedly indicated why leaving the EU without a deal would be a huge blow to British businesses and British jobs, yet the Government have failed to rule out this eventuality and their existing negotiating approach does not inspire confidence—quite the opposite.
I am grateful to my hon. Friend for her helpful intervention. As she will know, the Labour position is that we want to leave all possibilities open. We think that is an appropriate approach to take. [Interruption.] I see Government Members laughing at that. We are in a negotiation where it is surely absolutely essential that we put Britain’s interest first and that means not taking options off the table. Sadly, the Government did that very early on and caused an enormous amount of bad will from our other EU partners, which we regret enormously. They should not have done that.
If the worst does happen and the Government lead us—through their lack of application and, frankly, the internecine squabbles on the Government Benches—to leave the EU without a trade deal, the rules of the WTO leave us no option but to trade with our European partners on the same basis as we trade with all countries with which we have no free trade agreement. This is the most favoured nation principle at the heart of the WTO: that there must be no arbitrary discrimination between trading partners of a similar developmental status, unless those countries have negotiated a free trade agreement that meets the WTO’s definitional requirements.
If we were to adopt amendments that allow the UK Government to set customs duties on imports and exports from every other country in the world but not our European neighbours, in the case of a chaotic no-deal situation we would be faced with two unpalatable options. First, we could disregard the most favoured nation rule, in which case we would be exposed to virtually limitless potential dispute challenges from all other WTO members. The second option is abiding by the most favoured nation rule, but that would mean having to trade with all other countries on the same basis as we traded with the EU—namely, as the amendments would have it, without tariffs or quotas. Some Conservative Members and groups, such as the so-called Economists for Free Trade, would wish for such an outcome—a unilateral abolition of tariffs and all other trade barriers—freely admitting that such a scenario would see the end of manufacturing in the UK, as well as the end of agricultural production and the concomitant loss of millions of jobs.
I hear very much my hon. Friend’s argument, but would she acknowledge that this is a paving Ways and Means motion seeking, at this snapshot in time, to circumscribe the scope of the Bill to ensure that we can replicate the current customs union? Should we have, at some hypothetical point in the future, that crashing-out scenario, Parliament could address that at that point, and so at present the amendments from my hon. Friend Ian Murray are absolutely pertinent to the message we need to send to the Government.
I am grateful to my hon. Friend for his question, but the problem is that the Government’s stated intention with these motions—they have said it time and time again—[Interruption.] May I finish my point? They have said time and again that these motions are about our future relationship with the EU. I am afraid that they do not see them as part of a negotiation that might change. I would hope that generally the Government would be far more open about their negotiating position—
I just have, if the hon. Gentleman doesn’t mind. The Government have stated that the motions are about that future relationship, and so we have to take them at their word, even if we might have been mistaken in doing that on other issues.
It has been suggested that, if the Government recover a sense of responsibility and sincerity and genuinely engage us in negotiations, albeit after wrongly ruling out a customs union with the EU, it could involve the adoption of deals similar to CETA or the Turkish deal. Now, CETA does not cover agriculture, so if we get a deal on industrial goods procurement and so forth, we might then need, concomitantly, still to have a deal on the protection of sensitive agricultural products, so we would need to have those powers still there. The Turkish bespoke deal, for its part, still necessitates anti-dumping and countervailing duties on both the Turkish and the EU sides.
To conclude, we have to be clear about what amendments (e) and (f) ask for. They do not, in and of themselves, guarantee that the Government will seek continued customs union membership, because they would apply across the piece of whatever arrangements the Government lead us to.
I am a new Member and I do not know how appropriate it is to talk about which amendments have been allowed and which have not. Ultimately, we are seeking a more democratic process, but we cannot vote on that, which is unfortunate. My hon. Friend will know, as will other Opposition Members, that, as I stated before, the Labour Front-Bench position is to leave all options on the table. That is the best thing for Britain to do. It is very unfortunate that the Government have failed to do that, because it is enormously damaging to our negotiating position. I very much regret that the Government still could, irresponsibly and recklessly, lead us towards a no-deal scenario. In that case, these amendments—sadly—would worsen our situation. I know that that is not his intention—quite the opposite—but as stated that is technically what they would lead to.
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 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. 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.
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.
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 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 were 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 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.
The House divided:
Ayes 76, Noes 311.
Question accordingly negatived.
Main Question put and agreed to.
(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).
The Deputy Speaker put forthwith the Questions necessary to dispose of the remaining founding motions (