Future Relationship Between the UK and the EU

Part of Domestic Gas and Electricity (Tariff Cap) Bill – in the House of Commons at 4:39 pm on 18th July 2018.

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Photo of Keir Starmer Keir Starmer Shadow Secretary of State for Exiting the European Union 4:39 pm, 18th July 2018

I am grateful for that intervention. I will come to that, because I am coming to the detail now and I will go through it.

I turn to the facilitated customs union arrangement, because it demonstrates how unworkable the White Paper is. It is based on the idea that traders can reliably distinguish at the border between goods intended for the UK and goods intended for the EU. Paragraph 16a of the White Paper says that

“where a good reaches the UK border, and the destination can be robustly demonstrated by a trusted trader, it will pay the UK tariff if it is destined for the UK and the EU tariff if it is destined for the EU.”

The idea is that, at the border, someone can safely distinguish between goods that are going on to the EU and those that are not and then apply different tariffs and different regimes to them. Whatever “robustly demonstrated” means is not set out, but it is a complicated two-tier system, which is why business has been so concerned about it. It involves the idea that we will account to the EU for the tariffs that are collected. If the destination of goods is not known, the higher tariff is paid at the border and recouped at some later stage. That is a hugely complicated two-tier system, with a third system overlaid for goods the destiny of which is not known.

I have heard it said that, happily, for 96% of goods, the destiny will be known on the border. The reference for that is footnote 6 on page 17 of the White Paper. I do not know whether the Secretary of State has chased that footnote, but I have. I challenge him to explain on some occasion—now, if he can—how that 96% figure is arrived at, because it is not at all clear from that footnote. However, the important point is this: whether it is 96%, or some lesser percentage, there will need to be checks to ensure the integrity of the system and to avoid abuse.

The solution that the Government have put forward is the tracking mechanism that was floated last summer. It is an interesting idea; it is a shame that it does not yet exist. It is no good Ministers on the Front Bench shaking their head. If the position is that there will be no checking at all after the event to see whether the right tariff was indeed paid, to avoid abuse or to protect the integrity of the scheme, I will let the Secretary of State intervene on me to say that the proposal is that, as goods pass the border, that is it—no check. If that is not the case, he must accept that, as with any system, whatever the percentage, rightly designated or not at the border, there will have to be tracking systems to check that the correct tariff was paid; otherwise, it is very obviously open to gross abuse.