My Lords, the Bill was introduced in the other place on 8 December.
At the end of this year, the United Kingdom will leave the European Union’s legal jurisdiction and this country will recover its economic and political sovereignty. The measures in the Bill play an important part in those preparations. It sets out a new framework for the UK’s customs, VAT and excise systems following the end of the transition period, so that there are clear rules in place for goods moving in and out of Northern Ireland. It upholds our pledge to protect the UK’s internal market by ensuring that Northern Ireland goods have unfettered access to Great Britain.
I first turn to measures relating to the Northern Ireland protocol. This Government are committed to providing unfettered access for Northern Ireland businesses to the UK’s internal market. That means no tariffs or customs formalities for Northern Ireland goods arriving in Great Britain. Northern Ireland is and remains part of the UK’s customs territory. For goods deemed to be “at risk” of moving into the EU, the Bill introduces a framework for charges on goods arriving in Northern Ireland, both from Great Britain and from the rest of the world. The Bill will allow us to put in place decisions made by the joint committee on goods “not at risk” of entering the EU, ensuring that they do not have to pay the EU tariff. It also imposes a charge to UK customs duty on goods that enter Great Britain from Northern Ireland and are not qualifying Northern Ireland goods. The Bill also includes anti-avoidance rules on the use of unfettered access to ensure that it is not legitimate for goods to be routed to Great Britain via Northern Ireland in order to avoid the UK’s customs border.
For VAT, the Bill includes mechanisms to ensure that, in so far as is possible, VAT will be accounted for in the same way that it is today in Northern Ireland. Noble Lords will be aware that Northern Ireland is and will remain part of the UK and its VAT system. However, it will continue to align with the EU VAT rules in respect of goods but not services. This is to ensure that trade is not disrupted on the island of Ireland and allows us to meet our commitments under the Belfast/Good Friday agreement. HMRC will continue to be the tax authority for the whole of the UK. While the ECJ will continue to have a limited role where EU directives apply in Northern Ireland, the rules will continue to be policed by HMRC. Businesses will continue to have only one UK VAT registration number and to complete one VAT return each period for all supplies. In implementing the Northern Ireland protocol, the Government have sought to minimise changes to how the rules will operate in practice, as far as possible.
The Bill amends current legislation for excise duty to be charged when excise goods such as alcohol and tobacco are removed to Northern Ireland from Great Britain. This does not necessarily entail additional costs for Northern Ireland businesses and consumers. A credit of the duty already paid on the goods in Great Britain will be set against the duty arising in Northern Ireland, meaning that in almost all cases there will be no further duty to pay. In many cases, businesses move goods in duty suspension, meaning that there is no duty to pay in any case until the goods are released for consumption.
My Lords, I thank the Minister and of course welcome the Bill. However, it reflects a chaotic last-minute scramble by the Government to retreat from their outrageous proposal to break international law in relation to the Northern Ireland protocol of the European Union withdrawal agreement, which was agreed by the Prime Minister and EU leaders in October last year. Among other things, the protocol requires that the UK introduce a framework for customs, VAT and excise after the end of the transition period on 31 December. The Bill before us now reflects the decisions of the joint UK/EU committee set up under that agreement on goods entering Northern Ireland “not at risk” of entering the EU, thereby ensuring they do not have to pay the EU tariff, as the noble Lord explained.
Crucially, the Government are therefore not introducing the so-called “notwithstanding” provisions into the Bill, which, along with those measures also now withdrawn from the UK internal market Bill, would have reneged on that withdrawal agreement.
I therefore welcome the statement made on 8 December by the co-chairs of the EU-UK committee. It is good news for businesses trading across the Irish Sea, as it is estimated that 98% of goods going from Great Britain to Northern Ireland will now be able to do so free from tariffs, irrespective of whether there is a UK-EU trade deal.
However, there remains concern about the imminence of the end of the transition period and the potential for disruption, especially to agri-food products; I would be grateful if the Minister could say something about that in his response. The reported three-month grace period for businesses may at least limit, to some extent, the disruption on 1 January. However, as pointed out by the Institute for Government, the joint committee will need to continue to work on ensuring that the arrangements under the protocol are acceptable to the people, and businesses, of Northern Ireland, who have been plagued by months of stressful and disruptive uncertainty. That is the Government’s fault.
My Lords, it is astonishing when the most important comment to make about a Bill is that the British Government have changed their mind and do not intend to use it to break international law and subvert agreements in existing treaties. I really do not understand what sort of hubris led the Government to attempt to take such a position in this Bill and the internal market Bill, but they have done real damage to Britain’s international reputation.
As for the Bill itself, it is troubling that, once again, the Government seek to diminish Parliament’s role by doing so much through negative SIs. The Northern Ireland protocol deals with a complex situation with many sensitive political ramifications—the supply chains alone are far from straightforward. A no-deal result to the UK-EU trade negotiations would make matters seriously worse. In those circumstances, Parliament should be fully engaged. Cutting Parliament out is not the way the Government should have moved within the Bill.
Much of the cross-border trade between Ireland and Northern Ireland involves small businesses. The Government’s answer to new problems for small businesses, which will be legion, seems to be trusted trader status. I sit on the EU Goods Sub-Committee. Small businesses have told us that the trusted trader scheme is simply not fit for purpose. It is complicated, expensive and disproportionate. It must be reformed, but so far the Government seem deeply resistant and certainly seem not to have addressed such issues in their trade negotiations. Therefore, no change is reflected in this Bill. It is an instrument that most will simply not be able to use.
The Bill also allows for new trade rules to be introduced gradually for supermarket supplies and medicines, and that makes sense. But it would have made more sense if it had been extended far more widely. I and my colleagues have called for a six-month adjustment period for all goods and small businesses that form our trade with the EU. Frankly, in the time of Covid intensifying—I suspect that when the Bill was conceived there was an expectation that it would be meandering away at this point—it is even more imperative to apply a much broader breathing space. I hope the Government will rethink that in these last few days.
My Lords, I thank my noble friend for his explanation of the Bill and I certainly welcome it. I congratulate the Government on attempting to reinforce the powers to tackle tax evasion and on seeking to minimise the changes involved. I also welcome, as expressed so clearly by the noble Lord, Lord Hain, and the noble Baroness, Lady Kramer, the decision to pull back from the brink of breaking international law.
As noble Lords will know, I have long been concerned about the position of Northern Ireland. It is important that Northern Ireland goods have unfettered access to Great Britain. These frameworks for the changes have now been agreed with the EU-UK joint committee, as set out in the Northern Ireland protocol. That is good news, but safeguarding the unity and integrity of the internal market is important. However, can my noble friend say when we will get further details on how this will be implemented? Clearly, the view of the joint committee, as established by the Northern Ireland protocol, has now been accepted and I am delighted that the withdrawal agreement and the Northern Ireland protocol will be upheld.
Avoiding no deal is absolutely essential, as is repairing relationships with our European neighbours. May I ask my noble friend what the agreement in principle on the Northern Ireland protocol framework for future customs and tax arrangements means? When will the joint committee set out details and when will regulations be introduced, so that businesses will know what they need to do? We know that the agreement is that Northern Ireland exports to Great Britain will pay EU tariffs only if goods are at risk of moving into the EU. How will this be assessed and checked? How will the money be collected and how will it be policed? We are about to leave in a number of days’ time, and we do not seem to know the answers. As the noble Baroness, Lady Kramer, pointed out, the trusted trader scheme cannot be relied on. I also urge my noble friend to consider, if necessary—and perhaps we can see now that it is necessary—delaying further any temporary exemptions from initiation here.
My Lords, the Bill is welcome for the practical measures it contains, but more for the notwithstanding clauses that have been omitted and were previously threatened. In a way, it is another tortuous step along the way to deliver the easy Brexit that the Government, or their Brexit-controlling cabal, promised. I well remember the Prime Minister during the election, in a draughty-looking warehouse in or near Birmingham, promise that there would be no new paperwork or charges between Great Britain and Northern Ireland. In fact, the “oven-ready deal” proved anything but. The only oven-ready thing about it is that it was stuffed.
Having agreed the deal that Theresa May negotiated, we then got the United Kingdom Internal Market Bill, with its law-breaking clauses now dropped. Why? It was because the EU-UK joint committee met and agreed a way forward. This was always the way it should have been resolved, without the threat of breaking international law or resorting to the latest ploy of gunboat diplomacy. I just wonder how hard the Government are working to alienate everybody that we need to have on side for trade, co-operation, security and all the other things that a respecting nation needs.
Arch-Brexiteers in the Commons tried to reinstate this approach yesterday. It appears that they are still deluded in the belief that sovereignty is an absolute. It can be only if the country puts itself in solitary confinement—an uncomfortable place for a trading nation with a historically massive balance of payments deficit. Facing reality, the Government have now agreed, as they always had to, that at-risk goods will be properly monitored, that Northern Ireland will conform to EU rules on, as a case of detail, aviation fuel duty, and that the rest of the UK will follow suit for “consistency”. Is this a taste of things to come? I suspect it is. Similarly, there is agreement on aspects of VAT, but can the Minister explain the implications for online sales under £15 in Northern Ireland? Do Northern Ireland residents have to pay VAT on online purchases when GB residents do not?
My Lords, it is an honour and privilege to make my maiden speech in this important debate. I had rather hoped to be able to give my speech during the CHIS Bill’s passage through your Lordships’ House, as this is a subject on which I have some specialist knowledge, but my carefully laid plans were undone by contact with a gentleman who had tested positive for the dreaded virus so, in spite of a negative test, I was condemned to two weeks’ self-isolation. This was not much fun, although it left me with a refreshed appreciation for my family, who have to put up with me all the time. I found two weeks of my own company a most severe test. I am pleased to report that the gentleman in question has made a full recovery.
I arrived at your Lordships’ House at an odd time. I have watched, listened and attempted to learn, but the conditions are far from ideal for a new boy. Arriving during Covid is like trying to assemble a complex jigsaw puzzle, but without the picture on the box. At the outset, therefore, I give thanks to a number of people who have helped me paint the necessary picture. Noble Lords on all sides of the House have extended to me a very warm welcome. The doorkeepers and staff of the House carry out their responsibilities with such good cheer. I have to say how skilled the doorkeepers are at seeing through my cunning facial disguise every day. My noble friend Lady Seccombe has generously shared her many years of experience of your Lordships’ House, and last, but by no means least, I thank my two supporters at my introduction in October—my noble friends Lord Taylor of Holbeach and Lady Pidding.
I was particularly honoured that my two noble friends introduced me, as they are also predecessors of mine as chairmen of the National Conservative Convention, by which route I arrived at your Lordships’ House. For those of you who do not know, the national convention’s antecedents date back to 1867—to Disraeli’s time and that of the Second Reform Act. The National Union, as it then was, formed with the explicit intent of reaching out directly to the newly enfranchised voters created by that Act. Over the past 153 years, and no doubt to the regret of some of your Lordships opposite, it has been remarkably successful.
My Lords, it gives me immense pleasure to follow the excellent maiden speech of my noble friend Lord Sharpe of Epsom. Our friendship goes back some 15 years, when we worked side by side as volunteers in the Conservative Party. As my noble friend mentioned, both my noble friend Lord Taylor of Holbeach and I have had the privilege of being chairman of the National Conservative Convention, the position that my noble friend Lord Sharpe currently holds. And what a superb chairman he is, leading from the front, motivating, encouraging and cajoling, but never asking fellow volunteers to do something that he would not do himself.
There are few parts of this country that my noble friend Lord Sharpe and I have not campaigned in together, and I am certain that his passion for democracy and volunteering will continue for years to come. I know, as I have witnessed first-hand, how much my noble friend likes nothing more than a good debate on the doorstep. Now that he is here in your Lordships’ House, he has found a new forum for debate. This outlet will probably be a great relief to his family.
Talking of family, it would be remiss of me not to mention my noble friend’s wife Fiona, son Charlie and daughter Kate, who, over the years, have given their unstinting support to his voluntary work and, on occasion, have got involved too. As is so often the case in working for any voluntary organisation, it has meant his absences on many an evening or weekend.
As noble Lords will have heard from his speech, in my noble friend we have a great addition to our House. We have heard only a snapshot of the experience that he will bring. Not only does my noble friend have a notable background in the world of finance and the unique experience of being an inspector in the Royal Hong Kong Police, but there is so much more. He is well travelled and is even a published historian. In the coming months, when we are able to move beyond this dreaded virus, more noble Lords will, like me, find my noble friend to be the most genial company, and I know that he will prove to be a real asset to these red Benches.
My Lords, it is a pleasure to follow the noble Baroness, Lady Pidding, and to welcome the noble Lord, Lord Sharpe of Epsom, who has just made his maiden speech. I look forward to working with him as he stated that he looked forward to working with all noble Lords around the House.
I thank the Minister for his explanation of the Bill, whose purpose is to implement various aspects of the Northern Ireland protocol relating to customs duties, VAT and excise. While welcoming the provisions of the Bill, I note that it would have been a different position if there had not been a resolution on the operation and implementation of the Northern Ireland protocol in the UK/EU Joint Committee negotiations last week. The protocol will not contain provisions to disapply provisions within the protocol; that agreement has been achieved in the Joint Committee on export declarations for goods moving from Northern Ireland to GB and the application of state aid under the protocol. Notwithstanding that, I have some questions for the Minister.
First, can the Minister provide assurances that this Bill is consistent with the Northern Ireland protocol in all aspects? It is important to remember why the Northern Ireland protocol is in place—it is to prevent a hard border on the island of Ireland between Northern Ireland and the Republic of Ireland. It is also meant to act in accordance with the principles of the Belfast/Good Friday agreement to build on the peace with political, economic and social stability and to continue to foster reconciliation on the island. It is vital, therefore, as it contains those necessary ingredients to enable that to happen.
I hope that there is a zero-tariff trade deal and that that is achieved as quickly as quickly as possible. I implore both the UK and EU to arrive at a deal; I did not want to leave the EU but realise the need for a proper and adequate trade deal so that business can be conducted which will not undermine or hinder trade opportunities and provide goods to customers at affordable prices. Lest we be in any doubt, no deal will not be beneficial for the UK, Northern Ireland or the Republic of Ireland or in fact the wider European Union. I note that the Government, through the debate on the United Kingdom Internal Market Bill, have followed on from the agreement in the Northern Ireland protocol to ensure that qualifying Northern Ireland goods have unfettered access to the UK internal market. This is welcome because it provides assurances to businesses and consumers alike.
20 of 38 shown
Some further taxation measures in the Bill need to be implemented before the end of the transition period. The Bill introduces a new system for collecting VAT on cross-border goods. This includes moving VAT collection on certain imported goods away from the border and involving operators of online marketplaces at the point of sale. UK consumers will now be able to see a VAT-inclusive price at the point of purchase, making pricing more transparent. In addition, measures in the Bill will remove the VAT relief on imported low-value items, meaning that VAT will be due on all consignments, irrespective of their value. This relief has been subject to long-standing abuse and removing it will build on government efforts to further level the playing field for UK businesses by protecting our high streets from VAT-free imports.
The Bill also includes provision for an increase in the rate of duty on aviation gasoline, which will apply across the UK. Otherwise known as avgas, the fuel is a form of leaded petrol, predominantly used in leisure flying. The Northern Ireland protocol requires that Northern Ireland continues to comply with the EU’s energy taxation directive following the end of the transition period. This directive sets a minimum level of duty in euros on leaded petrol used for propulsion. The Government have chosen to apply the change to the whole of the UK to ensure consistency between Great Britain and Northern Ireland. This avoids burdens on business and reduces compliance risks for HMRC. The change made by the Bill will increase the avgas rate by 0.5p to 38.2p per litre from 1 January next year.
To prevent insurance premium tax evasion, the Bill also includes a clause to ensure that HMRC has access to the same anti-evasion tools, regardless of whether an insurer is based in an EU member state. Overseas insurers are liable to pay insurance premium tax where they supply general insurance for UK-located risks. Occasionally, overseas insurers do not pay the insurance premium tax that they owe, so it is important that HMRC has access to tools to deter and tackle IPT evasion. The changes made by Clause 8 remove references to “member states” in current legislation, and allow notices to be issued in the case of a non-compliant insurer based in a member state, without mutual assistance arrangements in place. We do not expect that HMRC will issue liability notices frequently but the ability to issue notices acts as an important deterrent.
Finally, the Bill introduces new powers that will enable HMRC to raise tax charges under the controlled foreign companies legislation for the period from 2013 to 2018. In order to recover state aid in line with a European Commission decision, the changes will enable additional CFC tax charges to be raised for the years 2013 to 2018. The Government are pushing for the decision to be annulled. In the event that it is, Schedule 4 requires the Treasury to make such regulations as are necessary to restore all affected taxpayers to their original position.
The Bill gives businesses throughout the UK certainty about the arrangements that will apply from 1 January next year. It plays a part in safeguarding the unity and integrity of this country and will help to protect our high-street retailers. I beg to move.
No doubt this latest change of direction by the Government demonstrates a recognition of the realpolitik of the outcome of the American election. The Brexiteers’ confidence that a trade deal with the US would be an easy win has already been proven misplaced. President- elect Joe Biden made a very clear statement on 24 November that, if the UK wishes to discuss a trade deal with the US, the Irish border must remain open. In answer to a question from journalists about what he would say to Brexit negotiators, he stated:
“We do not want a guarded border”.
Biden also made his position clear in a New York Times interview at the beginning of December, stating:
“I am not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers and in education.”
In any case, such a deal with the US would have been more political than economically significant. Leaked government forecasts suggest that a trade deal with the US could benefit the UK’s economic output by about 0.2% in the long term—a miserly amount compared with almost half of our trade currently done with the EU, which is at risk unless there is a decent deal.
The advent of the new Administration in the US therefore serves only to underline the fallacies of the magical thinking of hard-line Brexiteers. In debates on this Bill in the other place, they have complained that, under the agreement reached between Michael Gove and Maroš Šefčovič—a vice-president of the European Commission—the EU will be allowed to have its officials permanently based in Northern Ireland to oversee checks on goods crossing the Irish Sea. They protest that this is an infringement of sovereignty, which, of course, they have always mistakenly confused with power. Perhaps we should close all foreign embassies on our soil, in case they also fail this ridiculous sovereignty test.
Is it simply too tempting for us to imagine that there is perhaps a glimmer of light that the Government have finally found the courage to face down the tyranny of their own rabid nationalist Back-Benchers? As the noble Baroness, Lady Cavendish, observed the other day in an article she wrote for the Financial Times, in 2016, in the weeks following the referendum result, it became obvious to those in No. 10, like her, that
“there would be a trade-off between sovereignty and market access.”
Yet, she observes, four years later,
“the UK is still trying to wish away the trade-offs, with no coherent vision for future prosperity.”
On the contrary, she says, Britain is
“engorged with Covid-led state intervention”
with
“few radical policies to help enterprise”.
The Government’s strategy for mitigating the disastrous economic devastation caused by Covid-19, which has reduced the capacity of the UK economy to withstand further shocks, is apparently one of compounding it with a possible disgraceful no deal or, at best, a scrawnily thin-deal Brexit. In July, the London School of Economics published a study showing that the business sectors that have escaped the worst fallout from Covid-19—such as manufacturing and services—are more likely to suffer from the effects of Brexit. Furthermore, the damaging economic impact of no deal is shown to be two to three times as great as that of Covid over the medium to long term. We now learn that Ministers have dreamed up Operation Kingfisher to support
“businesses that may be temporarily affected by changes of circumstances that are related to Brexit”.
Where is the economic strategy to generate the necessary revenues to fund all this state aid and the subsequent desperately needed recovery?
My noble friend Lord Adonis reports that a senior German politician confided in him that Chancellor Merkel thought it best, last week,
“not to speak to Johnson … ‘for fear of damaging British-German relations. It’s like how she managed Trump, by not speaking to him’.”
Last week, both Merkel and Macron refused to take the Prime Minister’s calls—perhaps the ultimate Brexit humiliation for any British Prime Minister for now.
The well-informed commentator Alex Andreou reported on Twitter the Brussels view of Boris Johnson’s behaviour:
“This has led people to split into two camps: There is one school of thought, that Johnson really is utterly clueless. His behaviour at the UVDL dinner last night (a car crash, apparently), has fed that impression. This makes people not want to do business with this government … The second school of thought, is that Johnson negotiated in bad faith throughout. That his aim was always No Deal and he simply strung 27 countries along, at the expense of a huge amount of work, effort and expense. This makes them not want to do business with this government … Note that the conclusion is precisely the same under either theory. That whether idiot or fraudster, Johnson is best kept at arms length. Polling in most EU27 shows that being tough with the UK yields a big favourability boost. So, I’m afraid, nobody is riding to our rescue”—
if we do not rescue ourselves, that is. Let us hope that it is not too late for the Government, having looked over the precipice, to step back from the brink of no deal on the wider relationship.
Given the poor state of relations that now exists between the EU and this Government, a thin deal is the most we can possibly hope for. However, as was spelled out by the Centre for European Reform think tank in August, this would at least avoid tariffs and provide the basis for building a deeper relationship in the future.
The agreement reached in the joint committee on the Northern Ireland protocol surely demonstrates the value of constructive compromise, collaboration and partnership in solving the many daunting issues currently facing our country over Brexit. Can this Government conceivably have the humility to admit that, in a shrinking post-Covid global economy, Britain can never prosper alone?
With more positive smoke signals about the negotiations as we debate this Bill, if the UK and the EU succeed in striking a deal, Boris Johnson will inevitably have a high-noon confrontation with the zealots who elected him Conservative leader, but the country will breathe a sigh of relief. I am afraid that, all along, that has been the problem in this sorry Brexit saga: putting dogma and factional fundamentalism ahead of the national interest.
Lastly, I will touch on VAT. HMRC has said that, in so far as possible, VAT will be accounted for by businesses and individuals as it is today as goods cross the Northern Ireland border. I attended a virtual webinar held just a few days ago on VAT, including the Northern Ireland border issues. I will admit that I could not follow large chunks of it, but it was easy to draw two conclusions. The first is that this is a real Bermuda triangle, with intense complexity embedded in it. Any business will be taking a real risk if it does not get expert advice to be able to cope, and that will be really challenging, especially for smaller and medium-sized businesses. The other conclusion one came to, which was a happy thought for those involved in the webinar, was that VAT experts had been given job security for life with the complexities that will arise.
We in this House have no say in the future of this Bill, but it is one that touches on serious issues that will shape the future of Northern Ireland and of our union. Despite that limitation, I hope that we will continue to follow these issues. We need to continue to hold the Government to account.
I also congratulate the Government on ensuring that online marketplaces must charge VAT and on removing the low-value exemptions to help British businesses and reduce tax avoidance. I welcome, too, the measures to prevent evasion of insurance premium tax, with Clause 8 allowing HMRC to issue liability notices. This should help to ensure that EU insurers do not continue, as in some cases they have, to try to avoid the insurance premium tax.
I finish on an issue that has proved extremely contentious: the abolition of tax-free shopping for overseas visitors. Thousands of people come here to shop and this risks driving wealthy international shoppers elsewhere for their purchases and other expenditure, which would generate tax revenue in the UK through visits to hotels, restaurants and places of entertainment. I believe that France and Italy are already advertising for the business of these wealthy overseas tourists and shoppers. The Government’s estimates have been shown, even by the OBR, to be flawed. The suggestion is that this could save £500 million. However, the OBR suggested that this £500 million estimate in the spending review is significantly overstated and the figure may be £195 million at best, but this is highly uncertain because it does not assume particular behavioural change by those customers who would clearly be likely to go elsewhere. Indeed, the Centre for Economics and Business Research estimated that this change in VAT, opposed by the tourism, culture, hospitality and retail sectors, as well as by airports such as Heathrow, could lead to 138,000 job losses and a potential loss of revenue to the Treasury of £3.5 billion, rather than a net saving.
Hanbury has estimated that this will not just hit London and the south-east. In terms of the Government’s levelling-up agenda, it would appear that Manchester, Liverpool, Leeds and Edinburgh risk losing their current benefits of more than £200 million of tax-free sales last year. The removal of this VAT incentive is something for which I have struggled to find any support in any quarter. I therefore ask my noble friend to take back to his department the extreme concerns on this issue.
Overall, however, I welcome the Bill, hope we will be able to avoid any kind of no-deal outcome and look forward to a successful 2021.
Can we now hope for the dawn of pragmatic common sense and an acceptance of reality? The Prime Minister advocated cakeism, and it appears that Michael Gove believes that it is being delivered, but for Northern Ireland. He seems to be supported by the Foreign Secretary. We have been told that Northern Ireland is in a wonderful position, effectively being in the UK and the single market. This is an enviable position that the majority of businesses in Great Britain wish to be part of, but they cannot be.
The rest of us—the 99.8% of the economy that does not depend on catching fish—want to know where the dust will settle. Even in fishing, the catchers and processors have conflicting interests. If we want to continue trading profitably with the EU, which takes nearly 50% of our exports, we have to accept that there will be EU rules and we will need to accept those rules if we want to secure access. That has always been the case for third countries. We will no longer have a say in shaping those rules but, as the EU states have pooled their sovereignty to make the rules, we can reject them only at a price. We have the right to choose, but there is a price to pay.
Ironically, we are choosing to trade under WTO rules. We have far less influence over these than when we were members of the EU. Indeed, the WTO is a pretty dysfunctional organisation in dealing with disputes among its members. The Government are urging businesses to prepare to end transition in 15 days’ time. Ministers claim that they are trying to provide certainty, but the opposite is the case: how can people prepare for the unknown against a background of promises that it would all be quick and easy? This Bill is necessary, but more legislation is required. We still do not know under which terms, if any, we will leave the EU, and businesses are expected to adapt to unknown rules and regulations, which the Government cannot explain, which are complicated and for which they will probably have to pay for expert advice.
I was astonished, the day after the Prime Minister claimed that there would be no new rules, regulations or paperwork, to go on to the government website and see that its advice was to contact HMRC to get a registration, to take advice on customs requirements and to consider whether you need to employ customs staff or a customs agent. The contradiction was there for all to see on the very day that the Prime Minister made his absurd claim, which everybody knew was unsustainable.
The Bill is necessary. Thankfully, it is limited compared to what it would have been, but it is symptomatic of the bungling incompetence that characterises the Government in delivering an ideological ambition that is deeply damaging to the interests of this country and has left the world looking on in astonishment at how the UK took leave of its senses.
Joking aside, there is an important point to be made here, and more so in these troubling times, and that is that the foundations of our civil society and democracy require the active participation of many selfless volunteers from all walks of life and parts of our United Kingdom, and from every political persuasion. I am sure that your Lordships agree that, without them, many of the things that we take far too easily for granted would not happen and, whether we agree politically or not, we would be the poorer for that. So it has been a privilege and a pleasure to represent those from my side of the argument. I thank them and commit to continuing to represent them and all those who volunteer in your Lordships’ House.
My other life, the remunerated part, involved a lengthy career working in the stock markets of the world, which took me from Hong Kong to Tokyo, New York and back to London. I look forward to returning to the subject of financial markets and regulation in the new year, but I also look forward to contributing to the inevitable debates in this House on Hong Kong. I lived there for a decade and started life as an inspector in the Royal Hong Kong Police. That was a long time ago, and much has changed—not, I fear, for the better—but I have a great affinity for Hong Kong and its people and, having served in some of the more remote places in the New Territories, considerable experience of the pace and rhythms of life outside the glittering towers of Central and Kowloon. I owe these people a lot, this country owes them a lot, and I look forward to making the case that we must continue to demonstrate that.
In pursuing this career that has spanned much of the world, I have been lucky enough to gain a cultural understanding of a number of places, and that has shaped my views on our world and our place within it. As a consequence—and this is very relevant to the debate today—I am an optimist, bullish about our great nation’s future. It is perhaps a little hard to see the wood for the trees right now, but we should not forget the words of the second US President, John Adams:
“Every problem is an opportunity in disguise.”
We have the opportunity to demonstrate leadership in many different areas, and I hope to make the case that large parts of the world will respond favourably if we make the most of those opportunities. Having observed the proceedings in your Lordships’ House over the past month and, indeed, past half hour, I have reluctantly concluded that this may not be the majority attitude here, but I think that this Bill highlights the positive difference that your Lordships can and, I have no doubt, will continue to make.
We need this Bill: it ensures that we are legally prepared to leave the EU. It sets out a framework to prepare for all outcomes of the free trade agreement negotiations with the EU, and of the Joint Committee discussions on the implementation of the Northern Ireland protocol. It ensures the smooth continuation of business following the end of the transition period. The Government have made it very clear that they are committed to providing unfettered access for Northern Irish business to the rest of the UK’s single market, protecting progress made under the Belfast/Good Friday agreement. It is clear to me that this Bill will form a vital part of our preparations as we prepare to become a fully sovereign trading nation, and I have no hesitation in supporting it.
I thank noble Lords for indulging me with this speech and I look forward to taking my responsibilities seriously and contributing to the debate here on those subjects that I have outlined, and perhaps others where I have experience, perspective and knowledge.
Turning to the business before us today, the Taxation (Post-transition Period) Bill is a crucial step on the road that the United Kingdom must take us as we prepare for the end of the transition period at the end of this year. I know, and hear today, that there are noble Lords who see this as a cause for melancholy, whereas others, like myself and my noble friend Lord Sharpe are optimistic for the opportunities that Brexit will bring to the whole of the United Kingdom, Northern Ireland included.
Throughout the negotiations, Northern Ireland has been the focus of much debate. This has caused anxiety from many in the United Kingdom who hold the union dear. However, the most affected are the British citizens who live in Northern Ireland or those whose livelihoods rely on trade and the movement of goods between Northern Ireland and the rest of the United Kingdom’s internal market. This has inadvertently harmed businesses, which are rightly concerned about the legal and practical state of regulations and tiresome taxes governing their trade with the European Union and the rest of the United Kingdom. Reassuring words of politicians have had little impact in soothing this concern. This Bill, however, represents action, ensuring that Northern Ireland will not be left behind or forgotten. It provides legal certainty for the customs, VAT and excise systems in Northern Ireland after the end of the transition period. This legislation will also help deliver the commitment made by this Government to deliver unfettered access for Northern Ireland businesses to the rest of the UK internal market and protect progress made under the Belfast agreement.
As the United Kingdom leaves the European Union, we must do our best to provide the assurances and support needed for businesses to prosper across the country. This is particularly true of SMEs, which are the backbone of the United Kingdom’s economy and which millions of citizens rely on for work. I am glad to see that this Bill has this at its core.
The Bill is no silver bullet but, along with other Bills currently making their way through Parliament, it will create a clear pathway for the whole of the United Kingdom to pass through this transition period, weather any possible storms and emerge stronger and ready for the opportunities awaiting us. Like my noble friend Lord Sharpe of Epsom, I give this Bill my full support.
The protocol applies the EU’s regulations on traded goods, customs and VAT on goods to movements into and out of Northern Ireland. As I have already said, this is to ensure that there is no hard border across the island, to protect the integrity of the EU single market and the customs union, and to respect Northern Ireland’s position within the UK’s customs territory and the UK internal market.
The protocol sets out in depth the parts of the EU’s acquis on goods that are to be given effect to and provides that the protocol will have the characteristics of EU law in terms of precedence and direct effect. This ensures that the legal rules on traded goods, VAT on goods, and customs processes not only are the same in Northern Ireland as the Republic of Ireland but will be enforced in similar ways. Of course, the decision on the continued application of the protocol arrangements on traded goods in Northern Ireland will be for the Northern Ireland Assembly to take on a cross-community basis every four years. I have a query about that, because that is not the true application of that particular facility in the agreement itself.
This legislation, which is to be given its Second Reading today, will give effect to the necessary implementing arrangements on VAT and customs. I understand that associated delegated legislation will need to be put in place quite quickly. Therefore, could the Minister indicate the schedule, framework and content for that delegated legislation?
This legislation also has several consequences, and I have certain questions in that respect. Since it prescribes through provision for taxation and VAT measures, how will the Bill and the Government deal with anti-avoidance? How will that work in the agri-food sector in particular? On the one hand, the Trade and Agriculture Commission, which is to be put on a permanent basis for at least three years through the Trade Bill, will underpin food standards. How will the Government ensure that inferior food products do not come into Northern Ireland to take advantage of the protocol?
How will the legislation prevent organised crime? What work will be carried out with the Police Service of Northern Ireland, other police constabularies, the Gardaí in the Republic of Ireland, and Interpol to underpin those standards and prevent avoidance measures? What will be the role of the National Crime Agency? With HMRC, what are the established practices for identifying and targeting those involved in avoidance measures to ensure that it does not happen?
When will the infrastructure at the ports of Derry, Larne, Belfast and Warrenpoint be in a state of readiness and operation? Where will the officials be based? Where will the EU officials operate from? Will they work alongside officials from HMRC? Has the recruitment of customs agents taken place? When will they take up post at the ports?
Will the Minister ensure that more details are set out on how duties and tariffs might be rebated through regulations under the Bill? For the avoidance of doubt, could he confirm that fish landings at Northern Ireland ports will no longer be subject to tariffs under the Northern Ireland protocol?
I realise that there were several questions there that the Minister might be able to answer today. If he is not able to do so, I would appreciate answers in writing and a copy being placed in the Library of your Lordships’ House.
While welcome, this taxation Bill comes at the end of a long process that many of us felt deeply unhappy about. I hope that there will be full implementation of the Northern Ireland protocol and that the people of Northern Ireland and the island of Ireland, where I live and have worked for many years, will be able to benefit and that there will be an end to this long, very sorry saga.