Carbon Emissions Tax

Finance (No. 3) Bill – in the House of Commons at 7:55 pm on 19th November 2018.

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

Photo of Lindsay Hoyle Lindsay Hoyle Deputy Speaker and Chairman of Ways and Means, Chair, Panel of Chairs, Chair, Standing Orders Committee

With this it will be convenient to discuss the following:

Clauses 69 to 77 stand part.

Amendment 10, in clause 78, page 51, line 32, after “may”, insert—

“(subject to section (Review of expenditure implications of Part 3))”.

Antecedent to new clause 10.

Clause 78 stand part.

Amendment 14, in clause 89, page 66, line 30, at end insert—

“(1A) The Chancellor of the Exchequer must, no later than the date provided for in subsection (1C), lay before the House of Commons a statement of the circumstances (in relation to the outcome of negotiations with the EU) that give rise to the exercise of the power.

(1B) The statement under subsection (1A) must be accompanied by—

(a) an assessment of the fiscal and economic effects of the exercise of those powers and the circumstances giving rise to them;

(b) a comparison of those fiscal and economic effects with the effects if—

(i) a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to, and

(ii) the United Kingdom had remained a member of the European Union;

(c) a statement by the Office for Budget Responsibility on the accuracy and comprehensiveness of the assessment under paragraph (a) and the comparison under paragraph (b).

(1C) The date provided for in this subsection is—

(a) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(1)(b) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(b) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(6)(a) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(c) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(8)(b)(i) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(d) the date on which this Act is passed, whichever is the earliest.”

This amendment requires the first use of the powers intended to modify tax legislation in the event of a no deal Brexit to be accompanied by a statement of the circumstances and a comparative analysis of their impact, accompanied by an OBR assessment.

Amendment 15, page 66, line 30, at end insert—

“(1A) No regulations under this section may be made until the Chancellor of the Exchequer has laid a statement before the House of Commons setting out—

(a) a list of the powers in relevant tax legislation that the Treasury has acquired since June 2016 in connection with the United Kingdom’s withdrawal from the European Union,

(b) a list of the powers in relevant tax legislation the Treasury expects to acquire if—

(i) a withdrawal agreement and a framework for a future relationship with the European Union have been agreed to, or

(ii) the United Kingdom has left the European Union without a negotiated withdrawal agreement.

(c) a description of any powers conferred upon the House of Commons (whether by means of the approval or annulment of statutory instruments or otherwise) in connection with the exercise of the powers set out in subsection (b).”

Amendment 22, page 66, line 30, at end insert—

“(1A) The Chancellor of the Exchequer must, no later than a week after the passing of this Act and before exercising the power in subsection (1), lay before the House of Commons a review of the following matters—

(a) the fiscal and economic effects of the exercise of those powers and of the outcome of negotiations for the United Kingdom’s withdrawal from the European Union giving rise to their exercise;

(b) a comparison of those fiscal and economic effects with the effects if a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to;

(c) any differences in the exercise of those powers in respect of—

(i) Great Britain, and

(ii) Northern Ireland;

(d) any differential effects in relation to the matters specified in paragraphs (a) and (b) in relation between—

(i) Great Britain, and

(ii) Northern Ireland.”

Amendment 7, page 67, line 1, leave out subsection (5) and insert—

“(5) No statutory instrument containing regulations under this section may be made unless a draft has been laid before and approved by a resolution of the House of Commons.”

This amendment would make clause 89 (Minor amendments in consequence of EU withdrawal) subject to affirmative procedure.

Amendment 20, page 67, line 2, at end insert—

“(5A) No regulations may be made under this section unless the United Kingdom has left the European Union without a negotiated withdrawal agreement.”

Amendment 2, page 67, line 13, at end insert—

“(7) This section shall, subject to subsection (8), cease to have effect at the end of the period of two years beginning with the day on which this Act is passed.

(8) The Treasury may by regulations provide that this section shall continue in force for an additional period of up to three years from the end of the period specified in subsection (7).

(9) No regulations may be made under subsection (8) unless a draft has been laid before and approved by a resolution of the House of Commons.”

Clause 89 stand part.

Amendment 8, in clause 90, page 67, line 16, after “may”, insert—

“(subject to subsections (1A) and (1B))”

This amendment is antecedent to Amendment 9.

Amendment 9, page 67, line 18, at end insert—

“(1A) Before proposing to incur expenditure under subsection (1), the Secretary of State must lay before the House of Commons—

(a) a statement of the circumstances (in relation to negotiations relating to the United Kingdom’s withdrawal from the European Union) that give rise to the need for such preparatory expenditure, and

(b) an estimate of the expenditure to be incurred.

(1B) No expenditure may be incurred under subsection (1) unless the House of Commons comes to a resolution that it has considered the statement and estimate under subsection (1A) and approves the proposed expenditure.”

This amendment would require a statement on circumstances (in relation to negotiations) giving rise to the need for, as well as an estimate of the cost of, preparatory expenditure to introduce a charging scheme for greenhouse gas allowances. The amendment would require a Commons resolution before expenditure could be incurred.

Clause 90 stand part.

New clause 10—Review of expenditure implications of Part 3—

“(1) The Chancellor of the Exchequer must review the expenditure implications of commencing Part 3of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) No regulations may be made by the Commissioners under section 78(1) unless the review under subsection (1) has been laid before the House of Commons.”

This new clause would require a review within 6 months of the expenditure implications of introducing a carbon emissions tax. It would prevent Part 3 coming into effect until such a review had been laid before the House of Commons.

New clause 11—Report on consultation on certain provisions of this Act (No. 2)—

“(1) No later than two months after the passing of this Act, the Chancellor of the Exchequer must lay before the House of Commons a report on the consultation undertaken on the provisions in subsection (2).

(2) Those provisions are—

(a) sections 68 to 78,

(b) section 89, and

(c) section 90.

(3) A report under this section must specify in respect of each provision listed in subsection (2)—

(a) whether a version of the provision was published in draft,

(b) if so, whether changes were made as a result of consultation on the draft,

(c) if not, the reasons why the provision was not published in draft and any consultation which took place on the proposed provision in the absence of such a draft.”

This new clause would require a report on the consultation undertaken on certain provisions of this Act – alongside new clauses 9, 13 and 15.

New clause 17—Review of the carbon emissions tax (No. 2)—

“Within twelve months of the commencement of Part 3 of the Act, the Chancellor of the Exchequer must review the carbon emissions tax to determine—

(a) the effect of the carbon emissions tax on the United Kingdom’s carbon price in the context of non-participation in the European Union emissions trading scheme, and

(b) the effect of the carbon emissions tax on the United Kingdom’s ability to comply with its fourth and fifth carbon budgets.”

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

In these parts of the Bill, we make sensible preparations for our exit from the European Union. While right hon. and hon. Members across the House may well disagree on Brexit, I would hope that all would wish to see us prepare as carefully as possible so that we can maintain the stability of the tax system; provide as much certainty for the taxpayer as possible; in respect of carbon pricing, meet our commitments to the environment; and do all those things in all eventualities, including in the event of no deal, which is clearly not the Government’s preference but remains a possibility.

At Budget, the Government announced essential provisions to ensure that the tax system can continue to function in any outcome.

Photo of Neil Gray Neil Gray Shadow SNP Spokesperson (Work and Pensions)

The Minister talks about preparations for no deal. In the OBR’s “Blue Book”, it quoted assessments made by economists who suggested that the economy had already shrunk by between 2% and 2.5% since the referendum, and the Library has suggested that that has cost the UK economy anywhere between £40 billion and £50 billion. Does he agree with that assessment, and what work has been going on the Treasury to account for it?

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

What I can tell the hon. Gentleman is that the economy has been growing for eight years—for five years, in every successive quarter. Unemployment is at its lowest rate in my lifetime and employment is at its highest. The British economy is sound and robust, and that is exactly why in the Budget the Chancellor was able to make the tax cuts for 32 million of our citizens and the increased spending on the NHS.

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

I will not give way again at this stage, but I could come back to the hon. Gentleman later.

The changes that we have outlined in these clauses will, I hope, signal that the UK is committed to maintaining stability and certainty for taxpayers and for businesses across the economy, especially in respect of the environmental tax provisions that I will talk about in a moment. Clauses 69 to 78 will allow the Government to introduce a carbon emissions tax to replace the EU emissions trading scheme—the ETS—in the event of no deal. Clause 90 will allow for essential preparatory expenditure to begin work on a domestic emissions trading scheme in the event that one is required. Clause 89 will introduce a power to make minor technical amendments to UK tax legislation—essential for maintaining the continued effect of the tax system.

Let me turn first to clauses 68 to 78 with respect to the carbon emissions tax. These clauses will take effect only if the UK leaves the European Union in 2019 without a deal. The clauses will give the Government the power to introduce a no deal carbon emissions tax. The rate for 2019 would be set at £16 per tonne of carbon dioxide equivalent, and the tax would cover the same electricity generators and industrial businesses that currently participate in the EU ETS. The tax would provide the same protections against carbon leakage as the EU ETS. Operators would pay the tax only on emissions of carbon dioxide and other greenhouse gases emitted above an allowance set for each installation in advance of the tax year. This is in line with the EU ETS system of free emissions allowances.

In effect, the carbon emissions tax would seek initially to replicate the effects of the EU ETS as closely as possible, in the event of no agreement. This is important, as I hope hon. Members in all parts of the House will agree, for two reasons: first, because we want to provide certainty for businesses and for the energy industry to enable them to make investment and business decisions with confidence, as the industry has asked us to do; and secondly, because maintaining a carbon price is a key component of meeting our legally binding climate change commitments.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs) 8:45 pm, 19th November 2018

Does the Minister accept that now that the Government have greater freedom of operation, this is fairly timid? We have an emissions crisis in this country, as we do across the rest of the world. Why are the Government not being more ambitious in trying to bear down on emissions, as seen in the Intergovernmental Panel on Climate Change report?

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

I appreciate the point the hon. Gentleman makes, but perhaps he has missed the argument I have tried to make, which is that this is not prejudging the later outcome of how we should handle our carbon pricing as we leave the EU; it is trying to ensure that in the unlikely event, which the Government wish to avoid, of a no-deal Brexit we can maintain the system as close as possible to the present one. We chose the price of £16 because that is broadly the same as where the EU’s floating price has been in recent months. Of course the price has floated very widely from as low as £6 to as high as over £20, so making that assessment is not a precise exercise, but we believe that £16 is a reasonable figure to maintain stability, and that seems to have been well received by the industry and environmental groups.

Clause 90 is about preparatory expenditure. Alongside preparing for no deal, the Government are developing long-term alternatives to the EU emissions trading scheme. As set out already in the outline political declaration on the future relationship between the EU and the UK, we are considering options for co-operation on carbon pricing, including, if possible, linking a UK national greenhouse gas emissions trading system with the EU ETS. Clause 90 will allow Departments to begin preparatory expenditure on a UK ETS, which is included in the Bill, to prepare for a linked or unlinked domestic trading scheme. It does not mean, as I said earlier, that a final decision has been made as to which option to implement, but it does ensure that all the options are kept open and we can proceed with the kind of planning that one would expect.

I shall now turn briefly to amendments 8, 9 and 10 and new clause 10 tabled by the SNP. Amendments 8 and 9 propose that the Government must table a statement on the circumstances that require expenditure in the case of clause 90 and an estimate of the expenditure to be incurred and that the House would come to a resolution to approve that expenditure. New clause 10 and amendment 10 would require the Chancellor to review the expenditure implications of the carbon emissions tax and lay a report of that review before the House within six months of the passing of the Bill, and no regulations could be made by the commissioners unless that had taken place.

A statement of circumstances, as required by amendments 8 and 9, is in our opinion unnecessary. We are legislating because the UK is leaving the EU, and as part of that we have to prepare a domestic ETS, as mentioned in the outline political declaration, and for a carbon emissions tax only in the event of no deal.

More importantly, with all these amendments, the Finance Bill is not and has never been the place for detailed questions of expenditure. The Finance Bill is primarily a Bill about tax. Parliament gets other opportunities to review and vote on departmental expenditure, and if that is important to Kirsty Blackman, I suggest that she direct her scrutiny to the estimates process when it arises in due course.

New clause 17 would require the Chancellor to review the carbon emissions tax to determine its effect on the UK carbon price and the UK’s ability to comply with its fourth and fifth carbon budgets. We are confident that the carbon emissions tax would be similarly effective to the EU ETS, and I can assure Members that there are already robust requirements to report on progress towards the UK’s emissions reductions targets. For example, the Climate Change Act 2008 provides a world-leading governance framework that we certainly support. First, it ensures that the Government are required to prepare and lay before Parliament an annual statement of emissions, setting out the total amount of greenhouse gases emitted to, and removed from, the atmosphere across the UK and the steps taken to calculate the net UK carbon accounts. Secondly, the independent Committee on Climate Change is required to prepare and lay before Parliament an annual report on the Government’s progress towards meeting the UK’s carbon budgets, which the Government are required to respond to. Thirdly, the Government are required to prepare and lay before Parliament a statement setting out performance against each carbon budget period and the 2050 target. We believe that, taken together, these are strong existing mechanisms, which are respected and understood, to ensure that we monitor and report to Parliament on greenhouse gas emissions. I therefore urge hon. Members to reject new clause 17.

Let me turn to amendments 2, 7 and 21 to clause 89, which deals with minor amendments in consequence of our EU withdrawal. We need to ensure that the tax system continues to work effectively and that we maintain stability and certainty, including in the event that the UK leaves without a deal. To allow us to do that, clause 89 will allow minor technical amendments to be made to UK tax law to keep it working as it does now and to update it to continue to work with changes made to other areas of law on account of EU exit. Clause 89 will provide the Government with the power to make such minor amendments.

These are, I stress again, minor and technical changes that are absolutely necessary to maintain the continued effect of tax legislation in the unlikely event of no deal. I can reassure the Committee that the power is not being taken to make changes to do anything other than ensure that existing tax legislation continues to have effect in the event of no deal. It will not be used to change tax policy or the tax paid by taxpayers. To reassure the Committee of that, I have placed a list of changes that the Government intend to make under the power in the Library and sent a copy to the shadow Chief Secretary to the Treasury.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

I thank the Minister for reaffirming that it is not the Government’s intention to leave with no deal. It is the intention to leave with a deal. On tax, there seemed to be some confusion over the weekend about the draft withdrawal agreement. Some people seemed to suggest that the UK would be bound into the EU tampon tax for a further five years. Can he confirm that under the withdrawal agreement, VAT on goods sold after the transition period will be subject to rates set by the British Government, not EU law?

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

My hon. Friend, who is always well informed, is correct on both counts.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

I thank my hon. Friend for confirming that from the Dispatch Box. Does he therefore agree that, before jumping to conclusions about what the draft withdrawal agreement says, colleagues should instead look at No. 10’s response to Steerpike’s 40 so-called horrors and at the true facts and answers from the lawyers who negotiated it before coming up with their own concerns?

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

I would obviously advise all right hon. and hon. Members to read the withdrawal agreement, unlike the Leader of the Opposition, and not to rush to conclusions. The document produced by No. 10 to which my hon. Friend refers, which rebuts over 40 suggested flaws in the agreement, was very instructive, and I certainly found it helpful.

To finish on this point, I re-emphasise that I have laid before the House a comprehensive list of the changes that will need to be made to tax legislation. I advise right hon. and hon. Members who are interested to take a look at it. They will see that the changes are indeed minor and technical items that are not, I hope, controversial.

Amendments 14 and 22 would require the Government to publish an economic and fiscal analysis of the effects of our exit from the European Union before using the powers in clause 89. I can reassure the Committee that the Government have already confirmed that before we bring forward the vote on the final deal, we will ensure that Parliament is presented with the appropriate analysis in good time to make an informed decision. The Chancellor set that out in his letter of 23 August to the Chair of the Treasury Committee, a copy of which is in the public domain. He said that that analysis would look at the economic and fiscal effects of leaving the EU.

To provide Members with further detail today, I can confirm that that analysis will bring together evidence from across the Government, insight from external stakeholders and a range of data and analytical tools. The analysis will consider the long-term costs and benefits of moving to new trading relationships with the EU and the rest of the world. Having considered the amendment and spoken to several right hon. and hon. Members, I am happy to confirm that the baseline for this comparison will be the status quo—that is, today’s institutional arrangements with the EU. The analysis will consider a modelled no-deal scenario, or World Trade Organisation terms; a modelled analysis of an FTA scenario; and a modelled analysis of the Government’s proposed deal. Each will be compared against the status quo of the current institutional arrangements within the EU.

Amendment 14 would not require the analysis to published until after the Bill receives Royal Assent. As a result, the Bill would not be binding on the Government until after the meaningful vote had taken place. I hope that the commitment that the Government have made today and the conversations that I have had with Members from across the House will provide reassurance that we will publish an appropriate analysis—the analysis that right hon. and hon. Members seek—in good time before the meaningful vote.

I turn briefly to the OBR’s role, which is mentioned in amendment 14. The House will know that the OBR’s remit is clearly defined in the Budget Responsibility and National Audit Act 2011, and that the amendment, which asks the OBR to assess our analysis of the effects of a deal, goes beyond its statutory responsibilities. That would set an undesirable precedent, with Parliament being able to commission specific pieces of work from the OBR on an ad hoc basis outside the clear and bounded remit set in the OBR’s charter. That would effectively transform the OBR into a parliamentary budget office, fundamentally changing its purpose and potentially damaging its credibility. Such a decision should be taken only after a full and frank debate on its own merits.

The House will be aware that the Treasury Committee, which is headed by my right hon. Friend Nicky Morgan, has appointed Sir Stephen Nickell, formerly of the OBR, to provide an independent view of the Government’s analysis. My officials have already had initial conversations with Sir Stephen about the scope and scale of his review, to ensure that we can provide him and his team with the necessary information in due course. I hope that that gives further reassurance to Members that scrutiny, of the nature that they seek, of the Government’s work will be undertaken by the Treasury Committee.

Furthermore, the OBR has already published a detailed review of the approach taken in the analysis provided across Whitehall, comparing it with other academic publications since the referendum. We believe that extending the OBR’s remit, as proposed by amendment 14, would require the OBR to analyse alternatives to Government policy. That would draw the OBR into political debate and expose it to a significant risk to its credibility and that of the UK’s fiscal framework. It remains highly unlikely that the OBR could, in the time available, go beyond the points it has already made in its discussion paper in any assessment of the Government’s analysis, bearing in mind its capacity and modelling today.

As for the effects of the power mentioned in amendment 20, I hope that my previous assurances will reassure right hon. and hon. Members that the Government intend to use the power not to introduce tax policy changes, but merely to secure the continued effective operation of the tax system. I hope that my right hon. and hon. Friends who sought this amendment will see that we have listened and engaged and that the reassurances that I have provided today achieve the amendment’s purpose. I therefore urge them not to proceed with their amendments.

I turn to amendment 15, which calls for the Government to provide a list of powers in relevant tax legislation that the Treasury has acquired since June 2016, or that it expects to acquire, relating to any EU exit scenario. All such powers have been passed as primary legislation. They have been scrutinised by this House and were voted through accordingly. As with all legislation, that which relates to these powers is in the public domain, should anyone wish to examine it. I do not think that it is necessary to reprise this list. I hope that hon. Members will see that amendment 15 is therefore entirely unnecessary, and I encourage them not to proceed with it.

Amendment 20 asks that no regulations be made under this power unless the UK has left the European Union without a negotiated withdrawal agreement. As is the job of any responsible Government, we are preparing for all possible EU exit outcomes, which extends to the unlikely event of no deal. As I have already said, that is not the Government’s preferred outcome. The power is tightly drafted only to provide scope for the sort of minor, technical changes I have set out in my letter to Mr Deputy Speaker. At the current time, we need the power to make changes in the event of no deal, but providing stability for tax legislation and for the taxpayer is of paramount importance into the future, regardless of our EU exit outcome. I want to ensure we can deliver that in any scenario, even if I have focused more on the unlikely event of no deal; this is what the power will provide for. However, no matter when we use the power, our intention for its use would remain the same and would not be broader in any eventuality. I hope this reassures hon. Members of the Government’s intentions in this respect, so there is no need for amendment 20.

New clause 11 calls for a report detailing the consultation process for the legislation discussed in this session. As my right hon. Friend the Financial Secretary said earlier this evening, the information asked for is in the public domain, and I encourage Members to examine it. For the legislation relevant to our exit from the European Union, it has either not been possible or would be unnecessary to publish these things in draft. Clause 89 contains a closely drafted power that would not have benefited from consultation and will not change the taxpayer experience—indeed, it will do quite the opposite, in that it seeks to ensure continuity.

Clauses 68 to 78 introduce the legislation for a carbon emissions tax and need to be introduced in this Bill to be ready for March 2019. The Government have already committed to consult on the detail of this tax during 2019. Clause 90 lays the ground for preparatory expenditure. Again, it would not benefit from consultation. However, we will continue engagement with stakeholders and the devolved Administrations on the most effective long-term approach to carbon pricing post Brexit. This is an important decision for the country, and I look forward to those discussions, including meeting colleagues from the Scottish Government in due course. I hope that these answers will satisfy the House and that colleagues will not proceed with their proposals.

These clauses take a number of essential steps to ensure that UK tax legislation is prepared for any EU exit outcome. We will continue to responsibly prepare for every eventuality to ensure stability both for the UK taxpayer and for businesses. These measures are pragmatic steps that any responsible Government would need to take. Importantly, these measures are essential provisions for ensuring the continued effect of the UK tax system and for maintaining stability. For all these reasons, I therefore hope that they will command respect from across the House and ask that they stand part of the Bill.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury) 9:00 pm, 19th November 2018

It is lovely to see you in the Chair, Dame Rosie, and thank you for calling me to speak for the Opposition on our second grouping, which includes clause 89. As the Minister has helpfully explained, this group deals with the operation of tax law in the UK after our withdrawal from the EU, with a consequential set of Brexit-related amendments. This week, we have all seen the complete chaos the Government have unleashed on the country with their disastrous handling of the Brexit negotiations. We are just months away from the UK’s exit, and it seems the Conservative party remains as divided as ever over what to do next. As the Leader of the Opposition explained in his address to the CBI earlier today, this proposed Brexit deal offers no certainty at all and in many ways is the worst of all worlds, offending remain and leave voters in equal measure. So after two years of negotiations, we are teetering dangerously close to a no-deal Brexit, which should simply never have been an option. It would be bad for individuals, for businesses and for the economy, and Labour will do all we can to prevent it.

As we have said repeatedly, Labour wants the Government to negotiate a comprehensive and permanent customs union that gives the UK a say in future trade deals and ensures that there will be no hard border in Northern Ireland. We would protect workers’ rights, block any race to the bottom and negotiate a strong single-market relationship that gives businesses continued access to European markets for goods and services.

I would like to think that we are heading for a more stable time, but that seems unlikely. I was appalled to read press reports at the weekend that Downing Street’s alleged strategy is to encourage a crash in the financial markets should the deal fail to pass through Parliament, to pressure MPs into voting for it a second time. I can only hope that those reports were false. We should never forget that the markets reflect people’s savings, investments and pensions. They should not be used as a political device by the Conservative party.

It is also worrying that the Government are steadfastly using Brexit to substantially transfer powers from Parliament to the Executive. The Opposition have warned about this repeatedly, throughout the passage of each piece of legislation connected to the UK’s withdrawal from the EU. We should be deeply worried about this unprecedented transfer of powers.

We see another example in this Bill. In clause 89, which is rather innocently named “Minor amendments in consequence of EU withdrawal”, Ministers give themselves the power to make amendments to tax law outside the normal due process. Good checks and balances make for good government, which is why the Opposition have tabled a series of amendments that would help to address the democratic deficit that the provisions in the Bill would create, if passed unchecked. We do not believe it is possible to make a democratic case for the transfer to the Treasury of powers to make changes to tax law in perpetuity, which is why Labour’s amendment 2 proposes a sunset clause to the Brexit powers that the Bill will confer on the Treasury. It would ensure that those powers can only be used within two years of the passage of the Bill. Surely that offers sufficient time for the Government to use them as is required.

As the Minister outlined, the Government’s case is that during our withdrawal from the EU there may be a situation in which some elements of tax law need changing urgently or at short notice. However, we do not believe that there is a case for the powers, unless the UK crashes out of the EU with no deal. The agreement of a deal, with an attached transition period, should provide room for preparation, without the need to furnish the Executive with powers to make changes to the law unilaterally.

The number of Treasury-related statutory instruments that are currently being passed to create a new financial regulatory regime proves the point. Although it has been far from ideal for Ministers and their shadows, the use of secondary legislation is an improvement on the taking of such decisions behind closed doors in the Treasury.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

The hon. Gentleman said earlier that in his relationship with the European Union he would expect to have a say in trade deals by being part of a customs union, but even when we were full members of the European Union and it agreed the Comprehensive Economic and Trade Agreement with Canada, his party refused to vote for that deal in this House. How on earth does he think that that will work on a completely third-party, third-nation basis?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

I am happy to take that point, which although a little outside the remit of the Bill is none the less interesting. For us, the relationship that we would seek with the EU would be based quite simply on a solid cost-benefit analysis of what is in the UK’s best interests. If we look at the various options on offer, given that half the world is already in a regional trading bloc or a customs union of some sort, it is absolutely clear that what we would risk losing by losing frictionless trade with the European Union would never be gained by external trade deals with the rest of the world. A customs union is therefore the right way to go forward. Were the UK to enter one, we clearly could not have a situation in which we were unilaterally exposed to the deals that the EU did with other countries without having a say, so it is a pretty logical position. That does not mean that those deals would always receive the backing of all parts of this House. Elements of those deals might be unacceptable.

The point about sovereignty, which comes from Brexiteers in the main, is so important, because people say, for instance, “Let’s not do a customs union, let’s do a deal with Donald Trump’s America,” but would our constituents really accept unilateral access to the NHS for American healthcare providers? Of course they would not. Would our constituents accept hormone-treated beef in the supermarkets? Personally, I do not think they would. The question is always about the balance between what is in the proposed economic relationship and the political oversight that should go with it. That position is fairly logical and straightforward.

Photo of James Cartlidge James Cartlidge Conservative, South Suffolk

The hon. Gentleman has just said that he would have a customs union and a say in those trade deals. How would we have a say if we were in a customs union run by the European Union yet not in it anymore? I do not understand that.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

We are not proposing to remain in the customs union but not be a member of the EU. We are discussing joining a new customs union that we would negotiate with the European Union. I will say to the hon. Gentleman—I do not think that I am revealing any secrets here—that for a large number of Conservative MPs and, indeed, perhaps for the Treasury itself, that is their preferred solution; they are just not in a position to negotiate that or to request that because of the parliamentary arithmetic of the Conservative party. It does also have the very substantial benefit of our being able to honour our commitments under the Good Friday agreement. That is something that should have been a much bigger part of the referendum negotiations, and it should certainly be a paramount concern for this House going forward. I will get back to the Finance Bill, but I hope that that allays the concerns of Conservative colleagues and makes it quite clear what we think the relationship should be going forward.

Photo of James Cartlidge James Cartlidge Conservative, South Suffolk

How would the hon. Gentleman have a say? This would be a customs union with the European Union which we would have left. How would he have a say in it? We would not have a vote anymore.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

That is what we are proposing that we would negotiate. That is the entire basis of the proposal. I have no doubt that such an arrangement was on offer and may still be on offer from the European Union. The hon. Gentleman is well-informed and I always look forward to his contributions in these debates. I am sure that he has contacts as we do in other European Parliaments or perhaps in the Commission itself. If he does some investigations, he will see that that was always a preferred option for many people and it is, without question, the right way of going forward for the national interest of this country.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

The hon. Gentleman mentioned earlier in his remarks that a certain deal might be a betrayal of the leave voters. There were plenty of myths flying about during the referendum campaign, but one area that probably was quite plausible was that if we left the European Union, we would be able to do independent trade deals—not through the European Union, but independent bilateral trade deals. Does he not see that his customs union would effectively mean that we could not do independent trade deals and that would be a real betrayal of leave voters who expect to be able to do exactly that?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

I think quite the reverse. What leave voters were promised was that the economic relationship would not leave anyone worse off and, in effect, would not be ruptured at all. That was the promise made in explicit terms by leading leave campaigners. Where there were concerns that motivated that leave vote, they were heavily about sovereignty and also about immigration. I do not think that the specific trading relationships that this country has with other parts of the world were a particularly paramount issue in the campaign. I know that it is a sensitive issue for leave campaigners to talk about the fact that immigration was a big part of that campaign, but, without question, it was in my constituency. In terms of that future trading relationship, it is by far the best thing to focus on what is simply in the best economic interests of the country once we leave the political side of the European Union with all of the objections that leave voters had to it. I do not think that leaving in such a way that preserves the best of our economy, minimises the disruption and honours our commitments under the Good Friday agreement is a betrayal at all. Many people want to see that economic relationship continue, even if they were of a position and a viewpoint that we are leaving the political side of the European Union with all that entails.

I will now get back to amendment 15, Dame Eleanor, before we are all rightly admonished for straying from the Finance Bill. The measure lays out a stipulation to provide clarity around which powers in relevant tax legislation have been transferred to the Treasury since June 2016 in connection with the UK’s exit. It also covers the powers that the Treasury expects to acquire, and, most importantly, it requires Ministers to set out a timeline for when these powers are to be returned to Parliament—I think the Minister missed off that last point in his speech.

Photo of Rupa Huq Rupa Huq Labour, Ealing Central and Acton

My hon. Friend is doing a good job on amendment 15, but I think that he has missed the good news of my hon. Friend Chuka Umunna following his tenacious work. It looks like we have some movement on amendment 14 from the Government, and we will get these impact assessments before the meaningful vote. Will my hon. Friend, the shadow Minister, comment on the fact that the last time we saw such a thing was in the horrors of the Reading Room? We were shown that in every region of our nation, even in London where my own seat is, every sector of our economy will be worse off under every form of Brexit. Will he comment on that?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury) 9:15 pm, 19th November 2018

I thank my hon. Friend for that intervention; I always welcome good news from my hon. Friend the Member for Streatham. Yes, it is very welcome that the Government have conceded on this point, reflecting the parliamentary arithmetic. I am not sure that they did it voluntarily, until they saw the names on the Order Paper. Transparency about the consequences of different types of Brexit arrangements has to be a good thing, because the country and all Members of this House should be as well informed as possible. It is extremely pleasing to see the Government concede on this point.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention), Shadow PC Spokesperson (Business, Energy and Industrial Strategy)

I also pay tribute to the work of the hon. Member for Streatham on this issue. I was happy to support him, as he has led a very valid endeavour that I hope will inform our decision making in the weeks to come.

Will Jonathan Reynolds confirm that if these assessments indicate quite clearly that the status quo offers the best economic prospects for every part of the British state, the Labour party will support the status quo as the preferred Brexit option as we approach the next few weeks?

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

The points I made about transparency are relevant, as every Member of this House will make different assessments. We all know that Brexit is not just an economic concern; political concerns about sovereignty and issues such as immigration form part of the decision that each of us would make. But it has to be a good thing for every part and region of the UK to have the maximum degree of transparency on the economic options available to us. Surely, transparency is the best way forward.

I return to amendment 15, which goes to the heart of what I was trying to articulate—that is, our concerns about the unprecedented power grab that this Government are undertaking. The Government have spent the last two years seizing all manner of tax powers with no regard to the constitutional role of this House. Meanwhile, Ministers have refused to honour any level of transparency, and outline once and for all a clear list of the powers that the Treasury has acquired since the referendum in June 2016 and those it expects to acquire by the time the UK leaves the EU. Amendment 15 would address this and oblige the Chancellor to publish a comprehensive list of the powers the Treasury has acquired and the powers it will then expect to acquire, and to state when we might see those powers returned to the House, where they surely belong.

Amendment 21 would provide a further important element of accountability. This would oblige the Government to deliver a review of the impact of using the powers conferred by clause 89 on tax receipts. This amendment would deliver greater transparency around the true impact of the Brexit deal that the Government have negotiated. It is vital that we have that data available so that we can discuss this in depth and quickly identify if a particular impact has occurred.

In amendment 22, the Opposition are also calling for a review of the Brexit powers being handed to the Treasury. This amendment would require the Chancellor to publish a statement assessing how the powers handed to the Treasury in this Bill would be applied respectively to Great Britain and Northern Ireland. We tabled this amendment because we need urgently to establish whether these powers will cause disparity in the treatment of Northern Ireland in comparison to the rest of the UK. Members may ask why there is urgency on this point, but it is clear from the draft withdrawal agreement that under the so-called backstop arrangement Northern Ireland will maintain a regulatory alignment with the European Union. This is the case in particular in relation to EU customs law, but it also applies to compliance with elements of single market regulation in areas such as the technical regulation of goods, agricultural production, environmental regulation, state aid and other areas of north-south co-operation between Northern Ireland and the Republic. Northern Ireland will also be included in parts of EU VAT and excise regimes and in the EU single electricity market, so Northern Ireland’s compliance with EU rules and regulations will be enforced by the EU Commission and the European Court of Justice.

With this in mind, it is clear that the powers handed to the Treasury by this legislation may not be applicable to Northern Ireland in the legal and regulatory areas under which EU authority remains supreme. We therefore seek a review of where each of the powers being granted to the Treasury can be applied in the event that the Prime Minister’s draft agreement successfully passes. This is clearly a very important amendment, and one in which we hope Members of the Democratic Unionist party will also see value in passing. We therefore call on all Members of the House to look carefully at amendment 22 and support it in the Lobby.

Finally, new clause 17 would require the Government to publish a review of the effectiveness of introducing a UK carbon emissions tax in the event of a no-deal Brexit, in terms of helping the UK to meet its carbon emissions targets and carbon reduction commitments. The new clause builds on Labour’s commitment to ensure that 60% of the UK’s energy comes from zero-carbon or renewable sources by 2030.

It is worrying that making provisions for collapsing out of the European emissions trading scheme and all the benefits and economies of scale that it brings is one of the scant mentions of green issues in this Finance Bill. Our exit from the European Union cannot be used as an excuse to take a step back from action on climate change, as was outlined starkly in the report published last month by the Intergovernmental Panel on Climate Change. As I highlighted in my Second Reading speech last week, we are already lagging behind our European counterparts on green finance, as they are forging ahead with sovereign bond funds and mandatory climate disclosure laws. Our new clause would ensure that the Government were held accountable for making progress on reducing emissions, without using Brexit as an excuse to stall.

Photo of Jo Johnson Jo Johnson Minister of State (Department for Education) (Universities and Science) (Joint with the Department for Business, Energy and Industrial Strategy)

I have arrived late to the debate, relatively speaking, having been detained by the trains in my previous role.

I wish briefly to address amendment 14, tabled by Chuka Umunna. We stand at a critical moment in our nation’s post-war history, and the decisions we take in the next few days and weeks will shape not just what happens over the next few months and years but our entire lifetimes. It is vital that we take these decisions in full possession of the facts and that we are answering the right questions. I believe amendment 14 will help us to do exactly that.

The Government are attempting to frame the choice before us in a binary way: the Prime Minister’s deal or no deal at all, which is effectively vassalage as rule takers on the one hand, or chaos and disruption on the other. As I said in my resignation letter last week, I believe that to present the country with this narrow choice represents the single greatest failure of British statecraft since the Suez crisis in the 1950s, for neither choice is in the national interest. Amendment 14 rightly seeks to expose this for what it is and will make clear everything to full public scrutiny. Both options—deal and no deal—are significantly worse for the UK than our present arrangements, and the amendment will make that clear by requiring the Government to be transparent.

Any serious appraisal of a major policy change needs to measure the costs and benefits against a clear economic baseline. Indeed, the Green Book—the Treasury manual on how to appraise policies, programmes and projects—states clearly that the Government’s preferred course of action must always be assessed against a “do nothing, business as usual” benchmark. If the business as usual option—in this case, staying in the EU—were not to be included in any such appraisal, the process would be contrary to the Government’s own manual, in addition to being clearly below the standard applied in any well-run business.

I am worried and concerned that it appears to have taken an amendment that the Government would have been in no position to overturn to secure their commitment that this full appraisal will eventually be published in time for it to be fully considered by Members of this House before the meaningful vote. Members need to know detailed information about this appraisal. We need to know the impact, region by region and sector by sector, because the impact, as hon. Members have made clear, will vary sharply around the country. We also need to know which groups in society will suffer the most, relative to other courses of action available to us as a country. I would be grateful if the Minister, in his winding-up speech, could confirm that that will form part of the appraisal that the Government publish and that the OBR will provide an independent assessment of the Government’s appraisal.

If we have learned anything from the chaos of the past 30 months, it is that facts are sacred. This debate has been characterised by falsehoods and misinformation from day one. It is extraordinary that we have now had to force the Government, at this relatively late stage, to publish the vital information necessary for an informed public debate. Some may say that this horse has long bolted, but I say it is better late than never. I believe that amendment 14 will go some way to righting this wrong.

Given that the reality of Brexit has proved to be so far from what was once promised during the campaign, the democratic thing to do is not just to accept amendment 14, as my hon. Friend the Minister has done, and to publish the like-for-like economic analysis showing how costly this Brexit will be, but to give the public the final say about whether they really want to proceed on this hopeless basis.

Photo of Chuka Umunna Chuka Umunna Labour, Streatham

It is a pleasure to follow Joseph Johnson, who kindly spoke in favour of amendment 14. The amendment is in my name and in those of Anna Soubry and 70 other Members from all parts of the House. I want to take this opportunity to thank all the Members who have supported this amendment.

As the Minister said, what we were seeking to do with this amendment to clause 89—as he says, the clause allows the Government to make amendments to UK tax law—is to ensure that this House is provided with all the information needed for it to come to an informed decision. The Prime Minister made a very important admission last week, both outside No. 10 and in this House, where she moved on from the falsehood that has been peddled by too many, which is that this House has only two choices: the withdrawal agreement that has been presented by the Government, or leaving without an agreement at all. She moved on from that to the very clear choice that we now know faces this country: no Brexit, no deal or the agreement that the Government are putting forward. As may already have been said in this debate, this is arguably the biggest decision that this House will be making since the second world war, and it is absolutely vital that we are provided with the requisite data in order to come to an informed decision.

For the benefit of the record, our amendment seeks to make the exercise of the powers sought in clause 89, which the Minister mentioned, subject to the publication of a proper economic impact assessment of, and comparison between, each of the three scenarios the Prime Minister has set out before any meaningful vote on the withdrawal agreement takes place under the provisions of the European Union (Withdrawal) Act 2018. It is true, as the Minister said, that this Bill is likely to become an Act after the meaningful vote, but the amendment we have tabled is worded in such a way that its provisions will need to have been complied with before the meaningful vote in order for the powers under clause 89—to keep the tax system running in the event of no deal—to be usable.

I want very quickly to explain why we felt it was necessary to table this amendment and to deal with the three principal objections, which have been made in the House before, standing in the way of providing the information that this House needs to make a decision.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

I think it was Mark Twain who first said, “You should never make predictions, particularly about the future”. The hon. Gentleman refers to these forecasts as data, but does he accept that they are not data? They would simply be predictions, and as predictions they are inherently unreliable because they cannot take into account the reaction of business to the different scenarios we may be in. Does he accept that they are simply a forecast and cannot be relied on as facts?

Photo of Chuka Umunna Chuka Umunna Labour, Streatham

The hon. Gentleman intervened at precisely the moment when I was about to deal with that point, which is one of the three objections that are raised to our being provided with this important information. I will go through each of them, and I will address his point.

The first argument that is usually put up as to why the House should not be provided with the relevant economic impact assessments, which the Government are producing internally in any event, is that publishing that analysis would undermine the ongoing negotiations. That is clearly ridiculous. The leaking of the cross-Whitehall economic impact assessments by BuzzFeed in January had no obvious impact on the Government’s negotiating position vis-à-vis the European Commission, and frankly it is not as if those on the other side of the negotiating table will not have access to similar economic forecasts and models so that they can come to similar conclusions.

The second argument, which I would argue is more distasteful, is that Treasury forecasts cannot be relied upon—not because of their accuracy, which the hon. Gentleman just referred to, but because they have somehow been rigged. The Brexit champions, most of whom sit on the Government Benches, tell us that the Treasury is stuffed full of civil servants whom they describe as remainiacs, remoaners and God knows what else, and who they suggest doctor the figures to say what they want. I say to the civil servants here today and those listening that there is no shame in believing, as I do, that the best deal with the European Union is the one that we have now.

I want to say very clearly on the record that the routine denigration of our civil servants, in all Departments, and the questioning of their independence by the European Research Group is a complete and absolute disgrace. These are dedicated, faithful public servants doing their jobs, and they do not deserve to have their motives impugned.

I note that these champions of the Brexit cause take issue with the accuracy and independence of Treasury forecasts when they are on Brexit issues, but when it comes to the impact of austerity on the public finances or changes to benefits—the cack-handed introduction of universal credit, for example—they are never shy of quoting official forecasts that suit them.

Let us not forget that those who question the robustness and accuracy of forecasts do not exactly have a very good record of forecasting themselves. Let us not forget what the now ex-ex-Brexit Secretary, Mr Davis, said. This guy said that we would get a free trade and customs agreement concluded before March 2019. John Redwood, who is often in debates such as this, told us:

“Getting out of the EU can be quick and easy—the UK holds most of the cards”.

And as we all know, the former Foreign Secretary famously went around the country in a big red bus proclaiming that Brexit would lead to £350 million a week extra going into the NHS.

Then, of course, there has been the ultimate forecast from these people over the past 48 hours. This ERG has been going around stamping its feet and telling us all that if it does not get the extreme form of Brexit that it wants, the poor Prime Minister will have these 48 letters going in calling for a vote of no confidence in her. As far as I am aware, she is still sitting in Downing Street right now. I do not know whether the ERG has hit the 48 letters it said there were going to be, but the bottom line is that these individuals, who impugn the motives of Treasury civil servants and call into question the accuracy of their forecasts, are in no position whatsoever to lecture any of us on the accuracy of forecasts given the huge, outlandish claims that they have made over the past few years.

Photo of Luke Graham Luke Graham Conservative, Ochil and South Perthshire 9:30 pm, 19th November 2018

The hon. Gentleman talks about statistics. Does he not agree with me that many Members—this is shared across the House—use statistics as a drunk man uses a lamppost: for support, rather than illumination? Will he join me in trying to strengthen the Office for Budget Responsibility, so it can have more resources and ensure the statistics presented to the House are objectively verified?

Photo of Chuka Umunna Chuka Umunna Labour, Streatham

I have to say that when I gave way to the hon. Gentleman I did not imagine I would actually end up agreeing with what he said. He pre-empts my final point, which is that I understand the general worry about the accuracy of official forecasts. The bottom line is that we are never going to get forecasts that are 100% accurate, but we have to work with a certain number of assumptions to make policy, as I am sure he will discover if he has the privilege of serving in government.

On the point he makes about the OBR, I was quite careful in how I drafted the amendment. Its powers and capacity from a resource point of view are circumscribed, but there is no reason why we should not change the statutory remit of the OBR. At the very least, for those who worry about the accuracy of forecasts, we could see whether the OBR would be prepared to do an evaluation on the methodology and the techniques it uses to produce the forecasts by the Treasury.

Photo of Sarah Wollaston Sarah Wollaston Chair, Health and Social Care Committee, Chair, Liaison Committee (Commons)

Does the hon. Gentleman agree that this issue relates not just to future forecasting? The Health and Social Care Committee has been hearing that hundreds of millions of pounds are already being spent by pharmaceutical companies on no deal contingency planning—money that would be far better invested in our NHS.

Photo of Chuka Umunna Chuka Umunna Labour, Streatham

I could not agree more with the hon. Lady.

I will finish by saying this: the reason we tabled the amendment, and why I think so many colleagues on all sides of the House supported it, is because ultimately it is an assertion of parliamentary sovereignty. If the House was denied this really important information in order to come to a considered informed view, it would make a mockery of the argument that says the reason for withdrawing from the European Union is to assert parliamentary sovereignty.

I did not expect to be in this position at the beginning of today. I am grateful to the Minister for making this important concession and for making the promise, at the Dispatch Box, that we will get the economic impact assessments that we sought to secure through the amendment. Given the firm commitment he has made to the Committee, I will not be pressing the amendment to a vote. I would like to take this opportunity to thank all Members who supported it. Ultimately, we have done this because we think it is important that our constituents understand why we make the big decision that we are going to have to make in the next few weeks.

Photo of Justine Greening Justine Greening Conservative, Putney

I was a signatory to amendment 14 because I think that good policy making needs good evidence at its heart. That is what the amendment sought to do. I think we all recognise that the debate on our future relationship with the European Union has often been characterised by facts that have turned out not to be facts, and, far too often, by lofty ideals and phrases that have had little meaning to back them up in practice. It is now time, as we come to possibly the most crucial parliamentary debate in 50 or 60 years, for Members to have the information they need to be able to take an informed decision—and, dare I say, for members of the public to have the information they need to be able to convey to their own Members of Parliament what they think about that information and how why they want their MP to vote accordingly.

I welcome the statement the Minister made at the beginning of this debate, in which he set out his plans to provide more information to the House. Along with the rest of the Treasury, he will play a vital role in ensuring that we have an informed debate. I was one of those MPs who earlier this year went to the Reading Room—I actually went three times—to wade through the Treasury analysis. I would like a similar level of detail so that, again, Members are able to analyse the impact of the three different choices facing our country, as the Prime Minister has now set out: whether we have the deal that she proposed, whether we leave effectively with no deal, or whether we keep the existing deal with the European Union. I would like a level of analysis that includes a sectoral split in relation to the different impacts of the different deals on different sectors, as well as a regional and geographical split, so that we, as Members of Parliament representing very different communities in very different parts of the country, can really understand what the geographical impact of Brexit and the options will be.

I would like the analysis perhaps to go beyond what we originally had from the Treasury, so that we can understand what the impact on GDP might be for employment and jobs. There will be many MPs who do not believe that unemployment is a price worth paying for some of the options on the table. I believe that MPs and communities have a right to be informed about the risks to local jobs before casting their votes in favour of different options. Of course, we need to see, for all the options, the impact on public finances, both in the short and longer term. I know that the Minister has in mind a period of 15 years for forecasting. I think that that is absolutely necessary for us to see not just the immediate shorter-term effect, but the medium and longer-term structural impacts of any route forward on our economy.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

I know that my right hon. Friend is in favour of a people’s vote that would have three different options—deal, no deal, or remain—but as she will concede, it was difficult enough to explain the different implications to people in the first referendum, even with a binary choice, and there were a lot of different opinions about those implications. How easy does she think it will be to explain what the outcomes and implications of all those three different options might be?

Photo of Justine Greening Justine Greening Conservative, Putney

I have no doubt that at the last election, at which my hon. Friend was elected, there were many different candidates on his ballot paper, and I do not think that his constituents were prevented from making the very fine choice they made. They were quite capable of working their way through the different options. This House has MPs representing very different parties and communities, and again, the electorate have been perfectly capable of working their way through what, as we all know, are often very lengthy and different party manifestos. Like any election, this is a choice about the future. There are different choices, just like in any election, and we should not limit the choices to two just for the sake of it. Arguments can be made for having a two-choice referendum, but saying that it is too complicated for the British public is not one that holds in practice. This is a British public who regularly choose between many different alternatives and indeed, in some elections, are sophisticated enough to vote tactically to get the outcome that they want.

My proposal, as my hon. Friend may be aware, is that people have not just one but two other choices. That will enable them to pick their own compromise, because it is clear to me that this House will not be able to reach a compromise and will just vote against all the different paths. I have no doubt that we will come back to that debate and I very much respect the different views that people have in this House. This is an important debate and we need to get a route forward. I simply reflect on the fact that my view remains as it was back in July. Regrettably perhaps, this House is gridlocked, and my advice now, as it was back then, is that, rather than ignoring that fact, we have to confront it as a Parliament, however difficult that is. We need to make a proposal on how to get through it, so that ideally, we do not reach that moment of crisis when we have seen every single option ahead of us on Brexit voted down.

I was quite surprised, when the Treasury did its previous impact assessment, that more MPs did not go to the Reading Room to look at it. As I understand it, about 60 MPs out of 650 booked themselves time to look through the analysis. It is crucial that MPs look at it. I thought it was important to do so, but clearly if MPs find it hard to go to the Treasury, the Treasury must go to MPs. I would very much recommend that that analysis be sent out to every Member and, if he can, that the Minister finally sets out what he means by publishing analysis “in good time”. If Members have parliamentary questions to submit, clearly it is important that the House should have time to scrutinise it all properly.

The Prime Minister has acknowledged, as has Chuka Umunna, to whom I pay tribute for tabling the amendment, which I support, that there are three options facing our country. It means that we do not have to have a divisive debate about what direction we take. We can simply reflect the fact that there are three options and that they all have pros and cons. We need to have a measured debate, not a divisive one, but whether it is divisive will depend on all of us and how we conduct ourselves over the coming weeks and on whether we can accept that people have different views, respect those views and then engage with them constructively.

I have no doubt that the analysis the Treasury will produce, having conceded on this amendment, will be one of the ways by which we give ourselves and the country the chance to have an informed debate on the most important question to have faced this country in over half a century.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader 9:45 pm, 19th November 2018

I rise to speak in favour of SNP amendments 7 to 10 and new clauses 10 and 11. I would also like to mention amendments 14, 15, 22, 20 and 2 and new clause 17, all of which we would be comfortable supporting, if any of them are pushed to the vote.

There has been a lengthy discussion across the Committee on trade deals. People are confusing free trade agreements and trade deals. It is perfectly possible to make arrangements that improve the flow of trade without signing an FTA; they are two very separate things. It is not understood widely enough that any trade agreement between countries involves compromise. Whatever is signed up to between, let’s say, the UK and the USA will involve the UK having to give some things away as well as gaining something.

The consultation on trade deals looked at trade deals with New Zealand and Australia, with the comprehensive and progressive agreement for trans-pacific partnership, and with the US. However, despite the fact that UK Government Members have talked about how important our trade is with countries such as South Korea and how fast it has grown, the Government have not consulted on that and they did not do so because we have those trade deals already, as a member of the EU. That is why our trade has grown so quickly with South Korea.

Thank you for your indulgence, Dame Rosie. I will move now to the actual subject of the debate. Our amendment 7 asks that clause 89 be subject to the affirmative resolution procedure. I appreciate that the Minister has put a list in the Library, and I will take a look at the list of tax changes he proposes to make under the clause, but I am on the Committee that is sifting the statutory instruments the Government are bringing forward, and some of those SIs that the Government think should be taken under the negative procedure should never have been so proposed. Some are fairly dramatic changes to the law—to powers or new institutions, for example—and yet are being put to the statutory instrument sifting Committee as negative instruments.

I hope that the Minister will forgive me, but I do not trust the Government to introduce only measures in the category that we believe should be subject to the negative procedure. I will look carefully at that list, but I will still press amendment 7, because, given my experience of Ministers, I do not yet have the level of comfort that I need.

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

I hope that in due course the hon. Lady will have an opportunity to read the letter that is in the Library and see that these are truly minor technical amendments, changing, for example, a reference to the EU to a reference to the EU and the UK, and a reference to euros to a reference to pounds sterling. I hope that, in due course, she will be comfortable with those minor technical changes.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader

As I have said, I will definitely read the letter. However, I draw the Minister’s attention to the House of Lords Committee that met, I understand, on 17 November—or possibly not, as that was at the weekend, but very recently—to discuss the Finance Bill 2019. Someone drew my attention to an article by Wendy Bradley, which talks about HMRC’s powers and about power creep. Wendy Brady says that

“it is incumbent on Parliament to determine whether the powers it has given HMRC are sufficient and being exercised correctly”.

That, in my view, is important in relation not just to HMRC, but to the powers of the Treasury and the powers of Ministers. I think it important for Parliament to consider what delegated authority we are handing over, whether to the Minister, to the Treasury, to the Chancellor, or to HMRC directly. As I have said before, the Government do not adequately review these matters, publicise those reviews and repeat them regularly. It is important to have a handle on this, especially now, when so much delegated authority being given to various institutions. It is important for someone to have an idea of how much power has been taken away from Parliament and ceded to those institutions and for there to be a regular review of whether it is still necessary for it to be in their hands.

Let me now say something about the release of the analysis and the changes that the Minister has said he will make. I praise Chuka Umunna for his work and his amendment and for creating the real change that we have seen in the Government’s position today. It is important for us to be able to support and trust that analysis—to believe that it is accurate. Mention of the OBR was positive in that regard, because people trust that the OBR is an impartial observer of these matters.

Luke Graham initiated a debate in Westminster Hall about the OBR’s remit, and I found it incredibly interesting. I learnt a huge amount about the workings of other organisations around the world. We do not have an organisation that reviews Government policy impartially across the board because the OBR’s remit is so tight, being confined to scrutiny of budgetary matters. I was pleased to support the hon. Gentleman that day. Widening the OBR’s remit would be extremely useful, because, as I have said, people out there trust the OBR to get this right.

A status quo baseline against which all the options should be compared is important, and I am pleased that the Minister referred to it. What was said about whether the analysis will be produced in good time was also important, especially given the lack of time that we had to scrutinise the Bill and the short period during which it was in our hands before we had to talk about it on Second Reading. It was only published on the Wednesday, and then we had to stand up and talk about it on the Monday. Let me say again that if the Government want us to trust, they need to gain that trust, and they must therefore produce legislation in what is actually good time, rather than what they say is good time.

Obviously, everything in the Bill is a prediction. Everything in the Red Book is a prediction for future years. Everything that the Government predict, in terms of their tax take for the changes to entrepreneurs relief or anything else in the Red Book, is a prediction. We have to work on that basis, but we must have the best possible predictions, and, as I have said, they must be looked at by an impartial observer so that we can be absolutely sure that they are as close to accurate—or as close to a best guess—as they can possibly be.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention), Shadow PC Spokesperson (Business, Energy and Industrial Strategy)

A number of Members have talked about the upcoming votes being the most important votes that we will ever undertake as Members of Parliament. Does the hon. Lady therefore agree that it is vital that the independent assessment should be published in the public domain, so that our constituents can understand the decisions that we are making? We should not have to have one of those reading room scenarios, as we did with previous assessments.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader

I agree. The reading room provided for the cross-Whitehall analysis was not fit for purpose, in that I could not go there and mull over the papers in the way that I would normally do. Generally, if I am presented with a Finance Bill, for example, I will sit at home and read it. That is what I like to do on a Saturday night. I will sit at home and read these things. We have to be able to access any analysis that is published in a way that suits us, and releasing it publicly would be the best possible way to do this. Another reason for doing that is that the external stakeholders could provide their comments in the best possible way, so I entirely support the hon. Gentleman’s suggestion.

New clause 11 asks for a report on the consultations that have, or have not, been carried out in relation to the tax measures. As I said on Second Reading, not enough of the tax measures in the Bill were consulted on this year. I understand that there were more such consultations in previous years. If we do not want the Government to have to row back next year because they have screwed something up as a result of inadequate consultation, it will be important for these tax measures to be published and consulted on and for us to get the expert advice that we need from the stakeholders.

Clause 90 is just bizarre. I read it, and then I had to go back and read it again because I could not believe that a clause would give the Government the power to spend whatever they liked. It does not cap the spend on the emissions reduction trading scheme’s preparatory expenditure. I was genuinely confused about how the Government could propose that. The clause will give the Government carte blanche. Our amendment 9 and our new clause 10 ask for a Commons resolution and an expenditure review before that expenditure can take place. We think it reasonable—and I am sure the general public would think it reasonable—that if the Government want to spend money on something, they should tell us how much they intend to spend.

The Government are spending money to stand still. This is a cost, and the Government have to spend the money for things to be exactly the same after Brexit as they are today. It is a cost that we would not have if we were not leaving the European Union. The Minister talked about the estimates process. I am pleased that he is as interested and excited by the estimates process as I am. I talk on the estimates whenever I possibly can. There are two parts to the estimates process: one in February and the other in July. I am not sure whether this money counts as in-year spend or as part of next year’s spend. We might be able to discuss it in February, which would be great, because at least that would be before we leave the EU. However, if it is classed as next year’s expenditure, we might not be able to discuss it until July, by which point the money will have been spent.

Photo of Patrick Grady Patrick Grady SNP Chief Whip

We can discuss this all we like during the estimates process, but does my hon. Friend agree that it is incredibly difficult to actually vote on any of this? Despite all the promises made when the English votes for English laws system was introduced, it really is impossible for Members of Parliament to have a say on specific aspects of Government spending through the estimates process.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader

That is absolutely the case. The Minister’s comments about the lack of ability to scrutinise spend in the Finance Bill were incredibly illuminating. The reality is that we cannot adequately scrutinise or amend spend anywhere. I was talking to some people about the Budget process and the Finance Bill in the last couple of weeks, and about how the two fit together. I explained that we discuss tax in the Finance Bill, but that we do not discuss spend until the estimates process. Some spending measures will come through, at which point we will sanction them. For example, if the immigration Bill comes forward, we would imagine that it would have some spend associated with it, and we will debate that spend at that time. But a huge proportion of the billions of pounds that the Government spend on a regular basis is only ever discussed during the departmental estimates, which we cannot amend or change. I do not understand how we can have a Parliament that is supposed to be so powerful and supposed to be taking back control when we do not have control over Government spend, which is surely fundamental to how the Government behave.

I am a bit on my high horse in relation to Government tax and spend, but this is incredibly important. Surely, one of the most important things that we do is to scrutinise the Government’s spending, and we are not able to do it adequately because the rules of this House bar us from doing so. We cannot scrutinise tax adequately in relation to this Bill because the Government have failed to introduce an amendment of the law resolution, so we cannot propose anything tangible or very tangible. Then the Government will stand up in the Public Bill Committee and say, “They are just asking for a review. We are going to say no because it is just a review.” We are asking for a review as we cannot move anything that has any actual effect because the Government are not introducing an amendment of the law resolution. This part of the Bill, particularly clause 90, really bugs me. I was really annoyed that there was a total lack of clarity from the Government—that the explanatory notes did not even say how much they intended to spend on this.

In relation to the minor and consequential amendments, I am very pleased that the Minister has put forward a list of the proposed changes that he intends to take place. In reality, however, even though he has put forward this list, he is not held to it. He is given more wide-ranging power than it actually appears from that list. Therefore, he could in future, because of the powers that are being given, introduce something that is not on the list. We will be looking to press amendment 7.

Photo of Grant Shapps Grant Shapps Conservative, Welwyn Hatfield 10:00 pm, 19th November 2018

I rise briefly to address clause 89, which is on an amendment to tax legislation in consequence of EU withdrawal, and to make one specific comment to the Minister that I hope he will take on board and do something about.

I chair the all-party parliamentary group on general aviation, which has as its membership 177 Members from across this House and other place. There is a particular issue that I am very keen for the Minister to know about in relation to pilot training. According to Boeing, the world will need 790,000 more pilots in the next 20 years. The UK, with English as our language and with our history in aviation, should be in an absolutely key place to train new pilots, but there is a massive problem: in this country, people have to pay for that training themselves. It costs about £100,000, and then the Government charge £20,000 VAT on top of that. The all-party group has taken up this issue with the Chancellor of the Exchequer. He tells us that it is tracked into EU regulations and there is nothing that we can do about it during our time within the EU. However, I want to make an impassioned plea to the Minister to have a really good think about what we could do with regard to clause 89.

It is clear and obvious—one need only travel on an aircraft anywhere to realise this—that the pilots in this country, and indeed worldwide, but in this country generally, are nearly all male, nearly all middle-class and nearly all from backgrounds where families might say, “I’ll tell you what—we’ll remortgage our home and let you go and spend £120,000 on learning to be a commercial pilot.” That puts off too many people from too many hard-to-reach sections of society. That puts off a lot of people, particularly women, who we want to persuade into these very well-paid STEM—science, technology, engineering and maths—jobs, which really should be the future for this country.

Photo of Roger Gale Roger Gale Conservative, North Thanet

The ambassador for the all-party group is Carol Vorderman, who has probably done more than any other single living person to try to encourage young women to take up aviation as a profession, but the young women she is trying to persuade are hitting the buffers all the time because they are coming up against this cost. That is driving our trainee pilots overseas to places like Spain, which does not have the VAT, when we ought to be training them at home. Should this not be taken on board by the Treasury?

Photo of Grant Shapps Grant Shapps Conservative, Welwyn Hatfield

My hon. Friend is absolutely right. This is a crazy situation. We are driving pilot training out of the UK, but English is the language of the air and should be our natural advantage. Our ambassador for the all-party group Carol Vorderman regularly reminds us that she wanted to go into the Air Force but was rejected, not through any lack of knowledge, STEM education or mathematical ability, but because she was a woman. It cannot be right that our Government are not able to address this.

I am very hopeful that the Minister will take on board clause 89, which will allow the amendment to tax legislation in consequence of leaving the EU, to do what other EU countries have somehow already managed to do—such as Spain, which does not charge VAT on pilot training. This gives us an enormous opportunity as a country to take a big chunk out of the global pilot training market, which should be, in effect, a massive export for the UK.

While we are on the VAT issue, I have one other point. This country has the ability to lead aviation into a much quieter, cleaner and more environmentally friendly future. The future of aviation eventually is to have electricity in planes—electric planes—but that will not happen without having the same dedication and enthusiasm that this Government and the previous one showed towards electric vehicles transferred to electric aviation.

This is a revolution in aviation that is coming, but it would be very encouraging if we saw the UK lead the way, and, again, this is in no small part down to how VAT is treated, in terms of not only pilot training but the inquiry, investigation, research and development that goes into electric aircraft.

The all-party group is starting a STEM aviation working group headed by a fantastic woman called Karen Spencer from Harlow College. It has the aviation STEM college at Stansted airport, where it is training 294 youngsters this year and over 500 young people next year in STEM aviation qualifications. I encourage the Minister to go and see it for himself. I believe that if we work together on this we can make aviation a much more inclusive profession, and it starts with clause 89 and what can be done under these amendments to tax the legislation consequence and EU withdrawal.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

I too wish to speak about clause 89, which allows the Treasury to make minor amendments to tax legislation after we have left the EU.

EU tax issues are often extremely controversial. I think back to EU tax decisions I have seen in the past, such as the decision not to introduce a financial transaction tax, which this side of the House always strongly objected to but the other side would strongly have proposed at a European level. We objected to it because we felt it would have unintended economic consequences. Then there were the changes to the VAT MOSS—mini one-stop shop—situation for digital tax for small businesses. These decisions were taken without deep consultation or deep impact assessments, but were then found to have a huge number of unintended consequences. There were also the controversial issues to do with VAT on tampon taxes that sometimes came back.

Photo of Anneliese Dodds Anneliese Dodds Shadow Minister (Treasury)

It is important that Members are not misled, and it is important to say for the purposes of accuracy that a number of EU countries are looking to move forward with a financial transactions tax through the open method of co-ordination that I know the hon. Lady is very well aware of through her expert knowledge of the EU.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

That brings me back to the point I was making: EU taxation matters can be hugely controversial, partly because decisions affecting tax at an EU level are often unanimous decisions, and therefore it would be very difficult for one member state to change them if a decision has gone wrong. Because they are so controversial it is worth thinking about the delegation of powers given to Ministers here. Indeed, during my time looking at European matters, I long argued for the concept of better regulation before decisions were made. People should be consulted and impact assessments published. Only after the assessments have been made public and the views of stakeholders who might be affected taken into consideration should be decisions be made.

That is why I sit on ESIC, the European Statutory Instruments Committee, to which Kirsty Blackman referred. It was a Committee that I argued we needed. She suggested that when it decides to change a negative instrument to an affirmative instrument, that is because of some controversy with the Government’s decision, but by establishing that Committee, under the excellent chairmanship of my right hon. Friend Sir Patrick McLoughlin, we can ensure extra transparency in these complex decisions. I genuinely believe that we should think carefully before giving delegated powers to Ministers. However, clause 89 is very much about making minor decisions. It is tightly worded, and I do not believe that the amendments tabled by Opposition Members are necessary, as they would cause over-complexity. Amendments under clause 89 would be necessary, were we to leave the EU without a deal.

I am absolutely convinced that leaving the EU without a deal is not in the interests of this country, and I am glad to hear Ministers confirm that. However, I would also be glad to hear Ministers confirm that they will give Members a great deal more detail about the impact assessments of a no-deal scenario and a deal scenario, and also how that compares with remaining a member of the European Union, before our final vote on the withdrawal agreement, so that we can all be fully apprised of the impacts and make our decisions wisely.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

I want to speak first to amendment 14. Chuka Umunna is no longer in his place, but he said that all the choices before us were the worst possible choices and worse than the deal that we have today. I was certainly not someone who campaigned to leave the European Union—I have my reservations about our departure from an institution of which we have been a member for effectively 45 years—but we should not ignore the opportunities that lie ahead of us.

I do not look at these things through rose-tinted spectacles, but many years ago, following protests by those concerned about the impact on their livelihoods of imports from India by the East India Company and the successful lobbying of their Members of Parliament, legislation was introduced from 1700 called the Calico Acts, which banned all imports of calico—rough-cotton cloth—from India. That gave rise to the industrial revolution, because at that point we could not produce enough calico, so Watt linked his steam engine to Hargreaves’s spinning jenny and mass production resulted.

Photo of Martin Docherty Martin Docherty Shadow SNP Spokesperson (Industries of the Future and Blockchain Technologies)

The hon. Gentleman mentions the historical Calico Act. He does know that it also impoverished the people of India, rather than just creating the industrial revolution.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

The hon. Gentleman may well be aware of that fact, but that is not the point that I was making. I am not keen to impoverish people from any nation; the point is that what happened gave rise to a huge opportunity. Amendment 14 looks at one side of the equation, as if we can rely on a Treasury forecast simply as fact. It does not take into account the other side of equation, which is that business will respond to the future framework that it is part of. There are concerns about the future, but there are also opportunities.

I want to talk mainly about clauses 68 to 78, which concern our carbon emissions. Dr Drew seemed to imply that we were not succeeding at reducing our carbon emissions, but actually the UK is fifth in the world in the climate change performance index, a German-based index published every year by Germanwatch. We are ahead of many countries that people might think would be ahead of us, including France, Italy and Germany. I cannot say that our climate change credentials are second to none, but they are second to those of only four other countries. Every other country that we might mention—other than, I think, Norway, Sweden and Lithuania—is behind us on that performance index. We are performing admirably in carbon emissions, but we need the right mechanisms to enable us to continue that success. The carbon emissions tax that the Exchequer Secretary to the Treasury described earlier is a good framework to ensure that the carbon price is right and business has stability in the undesirable event of a no deal situation.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford 10:15 pm, 19th November 2018

Does my hon. Friend agree that stability in the carbon pricing regime is as important as any other area of business legislation? That is why it is important that we deal with the devil in the detail in the Bill.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

My hon. Friend makes a good point. Above all, business is looking for stability. It is absolutely right that in the worst-case scenario, in which we end up with no deal, we have a stable framework to enable us to manage our future trading relationship with the European Union.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

Does my hon. Friend agree that although the clause is helpful in giving some stability, it does not give anything like the level of stability that would be delivered by a negotiated exit?

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

It is hugely important that we have the negotiated exit that we all want. No deal is the worst possible option, and it is not where we want to go. Nevertheless, we cannot take no deal off the table.

I return to my key point about our future energy emissions and ensuring that we reduce our carbon emissions wherever we can. We are world leaders in moving our electricity production away from coal, which we have committed to phasing out by 2025, and into gas.

Photo of James Heappey James Heappey Conservative, Wells

My hon. Friend has done an awful lot of research into the energy mix that we might require to achieve those targets. Does he agree that carbon pricing sends an important signal to ensure that the phase-out of coal is delivered on time and that other technologies—such as gas and renewables—come online to enable us to hit those targets?

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

My hon. Friend is absolutely right. He has a great deal of knowledge in this area, too, and I absolutely defer to it. This discussion about the most energy-efficient way to produce our electricity has run throughout my parliamentary career. I know that my hon. Friend is not a big fan of shale gas, but there are petroleum exploration and development licences right across my constituency. Over the last three years I have not had a frack-free day; in fact, I spent some time out in Pennsylvania looking at shale gas exploration out there. The US has used shale gas to excellent effect in reducing its carbon emissions.

Photo of James Heappey James Heappey Conservative, Wells

My hon. Friend is very kind to give way a second time. The issue is not necessarily where the gas comes from, but the fact that it is an important part of our future generation capacity and it is, for now, indispensable to the delivery of heat. Whether it is delivered onshore or elsewhere is not necessarily the important part of that debate.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

It is interesting; my hon. Friend says that the point is not where gas comes from, but imported gas has a larger carbon footprint. That is particularly true if it is put in large ships that go from Qatar to the UK, in which case its temperature has to be reduced to about minus 156 °C in order to liquefy it. If we produce gas domestically, its carbon footprint is much smaller, and that is why shale gas makes sense. As he knows, we import about half our gas, but by 2030 we will be importing about 70% of it. It makes sense to produce something that we would otherwise have to import. On that point, I am happy to conclude, and I am grateful for the opportunity to speak.

Question put and agreed to.

Clause 68 accordingly ordered to stand part of the Bill.

Clauses 69 to 78 ordered to stand part of the Bill.

Clause 89