EU VAT area and pre-commencement requirements

Part of Taxation (Cross-Border Trade) Bill – in the House of Commons at 6:15 pm on 16th July 2018.

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Photo of Yvette Cooper Yvette Cooper Chair, Home Affairs Committee 6:15 pm, 16th July 2018

The hon. Lady is right. We need to address the wider issues relating to friction at the border as well.

Let me say something about the Government’s facilitated customs arrangement. I understand what Ministers are trying to do and that they are trying to square a circle. They are trying to pull us out of the common external tariff without paying any of the penalties of being outside it. I think that that is a leap of faith—it is implausible. I think that there are huge questions about whether such an arrangement is deliverable, and whether it would be robust enough for the EU ever to sign up for it.

The Government are expecting that there will be sufficiently robust procedures for tariffs to be collected at the border for widgets coming in from the United States or other countries, and therefore no checks—no spot checks; no additional checks—on whether forms are being filled in correctly and accurately, on whether there is fraud, and on whether there is an incentive for companies to fill in the forms in respect of one direction but then actually to move the goods in another. That is significant, because the European Commission is currently taking action to recover what it believes is €2 billion of under-claimed customs duties as a result of the UK’s failure to crack down on Chinese clothing importers’ customs fraud. Whatever the rights and wrongs of that, the point is that the European Commission and EU member states do not have confidence in our customs arrangements at the moment—never mind our asking them to join in a huge leap of faith with their agreeing to our future facilitated customs arrangement. The Government are relying on some whizzy wonderful new technology, and while I hope that that will arrive very quickly, there are serious questions about how long that will take and what the consequences will be.

My new clause 6 calls for a proper impact assessment of the consequences of being outside the common external tariff. I still cannot believe that that has not been done. I cannot believe that there has been no serious assessment of the fantasy future trade deals that will somehow make us better off, or of the additional burdens that will result from being outside the common external tariff, which will make us worse off.

Let me now say something about amendment 73, which I think is one of the most destructive measures tabled by some of the hard-right Conservatives in the European Research Group. It would remove from the Bill any provisions that would be needed for a customs union. Mr Rees-Mogg, who chairs the ERG, has said that that is okay because there will be a future vote. Why should there be a future vote? Why should we not vote now? I think that we should have a customs union, so let us have that vote now, rather than voting to remove the provisions from the Bill. Why on earth, for the sake of manufacturing, would we ditch those customs provisions? The ERG wants to remove the possibility of a customs union from the Bill.

I am astonished that Ministers want to accept that proposal. It is deeply destructive, and it would actually make it harder for the Government to secure the customs arrangements that we need. It means that if their facilitated customs arrangement does not work, the fall-back position will be no customs deal at all, which would be deeply damaging for our manufacturers.

I hope that our Front Benchers will also vote against this deeply damaging ERG amendment because I do not see how we can tolerate the damage that the hard right of the Conservative party wants to do to our manufacturing industry. We need to be the party that will stand up for manufacturing industry and ensure that our manufacturers can get the best possible deal as part of the Brexit process. We owe it to them to do that.