Taxation (Cross-border Trade) Bill – in a Public Bill Committee at 4:15 pm on 30th January 2018.
I beg to move amendment 126, in clause 19, page 13, line 5, at end insert—
“(6A) No regulations may be made under this section unless a draft has been laid before, and approved by a resolution of, the House of Commons.”
This amendment requires regulations under Clause 19 to be subject to the affirmative procedure.
We tabled amendment 126, and the consequential amendment 127, to ensure that regulations made under clause 19 are subject to the affirmative procedure.
Clause 19 allows the Treasury to make regulations for full or partial relief from a liability to import duty. The clause sets out a number of factors determining whether a relief can be applied, including the nature or origin of the goods, the purposes for which the goods are imported, the person by whom they are imported and the circumstances under which they are imported. The amendment seeks to provide some parliamentary scrutiny over providing reliefs, which is of course an issue of taxation and would therefore normally be subject to some form of parliamentary oversight.
I have said a great deal about the Bill’s centralisation of powers to the Executive and away from Parliament, and this is yet another example. The Government want their cake and they want to eat it as well. They want to impose taxes with no parliamentary scrutiny, and they want the Bill to be considered a money Bill, thereby avoiding parliamentary scrutiny from the House of Lords. In this particular case, extensive powers are being handed to the Treasury to adjust fiscal policy without reference to Parliament at all. As I have said, that is pretty worrying, and it is a pretty worrying precedent to set as Brexit legislation passes through this place. The Government know what they are doing; otherwise, as I have said, they would not have designated this as a money Bill.
On another occasion—perhaps not here—I am more than happy to debate that issue and have that conversation with the Minister. Indeed, if he wants to have that discussion in the Committee, we are more than happy to do so when we debate another amendment. I am sure that he would be delighted with that.
We tabled amendment 126 following the report by the Lords Delegated Powers and Regulatory Reform Committee on the Bill. I am sure that everyone has read that report, which is really interesting. The Committee analysed the powers created by the Bill and decided that it
“involves a massive transfer of power from the House of Commons to Ministers of the Crown.”
The report specifically states that clause 19 should be subject to an affirmative procedure:
“Clause 19 allows the Treasury to make regulations providing for full or partial relief from a liability to pay import duty. Given the importance of this matter and the scope of the regulations (relief can be given in the regulations by reference to ‘any factor’), we consider that these regulations should be subject to an affirmative procedure.”
Amendment 126 responds specifically to that suggestion by a cross-party group of experts in the Lords. I hope that, on that basis alone, the Minister considers taking up the amendment ahead of Report stage.
Clause 19, as the hon. Member for Bootle pointed out, allows for a full and partial relief from import duty. The EU customs regime provides for a relief from import duty on the basis of various factors, including the nature of the goods, their quantity and their value. Those reliefs support trade and address unintended outcomes. They can also be used to address situations in which a change to import duty would have negative consequences, whether for a specific entity or for UK interests as a whole. A relief may relate to a temporary movement, such as a visiting exhibition, or a permanent movement, such as the return of UK materials that were previously exported.
The circumstances in which goods will be eligible for a relief from import duty are carefully defined in EU law. They rely on conditions that ensure that they apply only to achieve the intended outcome. Examples include: where items are imported for scientific, educational or cultural purposes or research; where items are samples, whether for testing or to encourage future trade; where goods are donated or inherited; and where private individuals import goods upon transfer of residence to the United Kingdom due to marriage or for a period of study. The clause also covers goods imported for a specific authorised use that are placed on the home market—aircraft parts, for example, and goods that are temporarily imported, such as those for an art exhibition. Those are dealt with in more detail in the special procedures section.
Reliefs may apply to specific bodies or types of body. For example, reliefs support the operation of organisations such as charities, museums and galleries, as well as private individuals not trading. The changes made by clause 19 will allow the UK to provide full or partial relief from import duty.
Amendments 126 and 127 seek to apply the draft affirmative procedure to regulations made under clause 19. As I have set out and the Committee has had occasion to debate, the Bill ensures that the scrutiny procedures that apply to the exercise of each power are appropriate and proportionate. For the powers under clause 19, the negative procedure is both appropriate and proportionate, given the technicality of the regulations and the frequency and speed with which they may need to be made.
The hon. Member for Bootle raised the House of Lords report. The Government are looking at this issue not just in terms of the scope of the matters at hand and the power that is appropriate on that basis, but from a trading and customs point of view. We are considering the frequency with which we are likely to have to make changes and, accordingly, the ways in which the Treasury and Her Majesty’s Revenue and Customs will have to work.
Clause 19, in effect, gives the Government power to create loopholes—tax reliefs—in the legislation. Given that this is a tax Bill, does the Minister not feel that it would be better for the tax reliefs it creates to be subject to more scrutiny, not less, so that they do not have unintended consequences?
I would not describe the clause as creating loopholes. It simply allows us, by regulation, to ensure the kind of importations to which I referred earlier. The authorised use importation, for example, relates to goods coming into the country for a specific process before typically being exported out of the United Kingdom. Levying an import duty on such goods would clearly not be appropriate, since they get exported shortly thereafter.
The measures facilitate those particular circumstances, or indeed the loan of an artwork. We are told that the French President is suggesting that the Bayeux tapestry might come over here; that particular gesture would be another example where no import duty would be appropriate, and that particular item should be able to come in and out of the country without being bothered by Customs and Excise. I would argue that the measures are important facilitations rather than loopholes.
Each relief provided for under this power will be for a particular purpose and set out the detailed requirements—for example, in relation to the origin of goods or the purposes for which they are imported. The power will be necessary in the first instance to replicate existing reliefs within the EU, to give certainty to traders directly following our exit from the European Union. However, as circumstances change it may be necessary to adapt our system of reliefs to give UK businesses and individuals the support they need to flourish, and to do so in a timely and flexible manner. For any future reliefs, the Treasury would follow established processes, consulting on draft legislation.
The hon. Member for Aberdeen North made some valid points. The reality is that this, to all intents and purposes, is a tax relief. It can be dressed up in whatever way the Minister would like, but it is de facto a tax relief. We already have something like 1,400 tax reliefs, which ordinarily would come to Parliament for their ratification. This seems to be a potential slew of tax reliefs—I will not comment on whether they are good, bad or indifferent—that will be given the imprimatur of a Minister or the Treasury without Parliament having any say whatsoever in that tax raising. That is not a power that Parliament should give away lightly, so I am afraid we cannot accept the Minister’s explanation that these are somehow technicalities and nothing to do with tax. Raising money, which is the prerogative of Parliament, is a technicality in our view.
I am concerned that this is a tax relief, and about the unintended consequences that might flow from it. The Minister almost seemed to say that the Government will make decisions on a case-by-case basis, but that should not be their intention. They should lay out the circumstances in which each kind of widget falls into each category. They are not deciding whether the Bayeux tapestry should be exempt from this duty, but whether artworks should be exempt. Those are pretty significant and major decisions, and I do not think they will be made with the frequency that the Minister suggests.
It might be that in 10 years’ time the world will have changed dramatically and we will be quite a different country, importing things that will need relief in a different way. That is fair enough, but the situation will not require regular change. Given that the measure seeks to encourage industry to flourish and to allow artworks to come to this country to be displayed, it will have a real impact on the UK’s future, so it is completely reasonable to ask the Government to allow more scrutiny. Such instances will not be that frequent, and the measure will have a big impact.
I point the hon. Member for Aberdeen North to my earlier remarks. We believe that the measure is proportionate, particularly taking into account the frequency of the relevant changes. She is absolutely right about the Bayeux tapestry and the import of artworks; the measure sets the regulations by which those kinds of items will come in and go out of the country. There is no doubt that, in this arena of imports and these kinds of facilitations, changes are certain to occur through time, often of a highly technical nature and on a fairly frequent basis. On that basis, in terms of proportionality, there is a strong argument that we should stick with what is in the Bill.