Taxation (Post-transition Period) (Ways and Means)

Northern Ireland (Ways and Means)

I inform the House that I have selected the amendment in the name of the Leader of the Opposition to the first motion.

I beg to move,

That provision (including provision imposing and regulating new duties of customs) may be made in connection with goods in Northern Ireland and their movement into and out of Northern Ireland (whether the movement begins or ends in Great Britain or elsewhere).

It is a delight to see you in the Chair, Mr Deputy Speaker.

In less than a month’s time, the UK will reach the end of the transition period and resume its place as a fully sovereign trading nation. As colleagues across the House will be aware, our negotiations with our counterparts in the EU continue. The Government remain cautiously optimistic about the conclusion of those talks. However, there is no doubt that we have a responsibility to the people of the United Kingdom to be ready for every outcome. The measures contained in the Taxation (Post-transition Period) Bill, which will be introduced and published following this debate, will play an important part in those preparations. The Bill will help to give confidence and certainty to the owners of businesses small and large throughout the United Kingdom after the end of the transition period.

Will my right hon. Friend explain exactly how this matter we are dealing with now will be affected by the statement made by the Chancellor of the Duchy of Lancaster about an hour ago, which also deals with the question of goods to be considered not at risk, and with questions relating to customs and tariffs, and the decision that appears to have been taken that the Government have agreed in the Joint Committee with Mr Šefčovič on a number of matters of which at the moment we only have an outline? I know the Chancellor will make a statement tomorrow, but perhaps my right hon. Friend could assist us in this matter, because it quite clearly has relevance to what he is saying now.

I am very grateful to my hon. Friend for raising the question, and I will touch on it in my remarks in my opening speech, but I should say to him that I am not better sighted on the breaking news than he is. He will have ample opportunity to address this matter tomorrow with the Chancellor of the Duchy of Lancaster when he comes to the House. As my hon. Friend will be aware, this matter was a product of a joint negotiation with the Commission, and the UK Government do not control the timing of that, and therefore the Chancellor will come at the earliest opportunity to the House to discuss the matter with colleagues from all political parties.

Today’s debate is on the important but technical Ways and Means motions that we need to pass before the Bill is debated tomorrow. If I may, I will talk a little about the Bill’s key elements in greater depth in order to foreshadow what we are going to see over the next day or so. The Bill will take forward important changes to our tax system to support the smooth continuation of business across the UK. In particular, it will ensure that we meet our commitments to the people and businesses of Northern Ireland in relation to the implementation of the Northern Ireland protocol. It will help to uphold our pledge to protect the UK’s internal market by ensuring that Northern Ireland goods have unfettered access to Great Britain. To that end, the Bill will set 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 movements.

If I may, I will start with the areas of the Bill that relate to customs. The motion before us relates to legislation that will be required for customs duties and processes to support the practical implementation of the Northern Ireland protocol. I want to underline to right hon. and hon. Members that the legislation follows directly from the commitments made in the Government’s Command Paper on the implementation of the protocol, which was published in May of this year. The House will recall that the Northern Ireland protocol guaranteed no checks or controls at the Northern Ireland-Ireland land border and maintained the UK as a single customs territory.

As my right hon. Friend knows extremely well, all these matters relating to the Northern Ireland protocol and the withdrawal agreement have direct relevance to the question of sovereignty. A statement was made by the Paymaster General yesterday relating to the question of negotiations, but the matters that have just been raised by the Chancellor of the Duchy of Lancaster in his statement to the press and to the public, but not to this House so far, have not been dealt with properly, because that statement has not yet been made to the House of Commons, although it has been published in general.

The point that I wish to make is simple and I would be grateful if my right hon. Friend addressed it. In withdrawing the notwithstanding provisions—clauses 45, 46 and 47 of the internal market Bill—which have a direct relevance to the question of sovereignty, does he have any comment to make and could he please help the House to understand, if these provisions are being withdrawn from the internal market Bill and will not be introduced in the taxation Bill, for which he does have responsibility, what are the implications for sovereignty with respect to what has been announced? I understand that the Chancellor of the Duchy of Lancaster will make further comment tomorrow.

I thank my hon. Friend for having another go at this issue. Let me address the questions that he raises. I do not accept the point that he tries to make about whether this is, in some sense, an inappropriate procedure. As I have indicated, this is a product of a joint negotiation. The UK did not control the timing. It is as agreed with the other party to the debate and the discussion.

The Chancellor of the Duchy of Lancaster will be coming to this House at the earliest opportunity once he returns from Brussels, in order to make a statement to discuss this and to receive scrutiny from my hon. Friend and from other Members of the House. That seems to me entirely appropriate. I cannot, of course, comment on matters relating to the United Kingdom Internal Market Bill, but what I will say is that, in withdrawing these “notwithstanding” provisions, we do not regard that UK sovereignty is being in any way impeded or undermined—on the contrary. Therefore, I think his concern can be and should be allayed, but I leave it to the Chancellor of the Duchy of Lancaster to address those points tomorrow.

The Business, Energy and Industrial Strategy Committee heard evidence this morning that the IT systems and processing procedures to allow the Northern Ireland protocol to be implemented on 1 January are not in place. Will the Minister update the House on what the Government are doing to rectify that situation to meet the technical provisions for what he is bringing forward?

I think the hon. Gentleman knows that the work that we are doing in terms of legislation very much has as its counterpart a great effort to put in place all the procedures that may be required. Significant work has been done. He will be aware that there is a Trader Support Service that works directly with people who will be importing into Northern Ireland to make it as close to a one-stop-shop arrangement as possible. What we are discussing today is the framework for the law under which those movements will operate.

The Minister has not yet reassured me about the sovereignty issue. Is it not the case that when any good in commercial quantity comes into the UK across any border—Northern Ireland or one of our marine borders—there are usually VAT and excise adjustments to be made and those take place by computer, not actually at the port of entry? Why do we need special arrangements here?

My right hon. Friend will be aware that under the terms of the Northern Ireland protocol, we have agreed arrangements for Northern Ireland with the European Union. The goal of the legislation is to make sure that, as far as possible, it is a completely seamless and straightforward process for those who are trading and that it is unfettered in regards to trade from Northern Ireland into Great Britain. That seems to me to be a very important technical fact.

On the VAT issue, which comes to the sovereignty issue once again, under article 8 of the Northern Ireland protocol, Northern Ireland traders will be subject to not just UK VAT rules, but EU VAT rules. Do the provisions that the Minister is now putting forward exempt Northern Ireland traders from being subject to dual VAT rules, given the costs that that would present and the huge administrative issues which would arise from it?

We do not expect the vast majority of any trade into Northern Ireland to be subject to any dual VAT arrangements. The whole purpose of these rules is to put in place the simplest and most straightforward arrangements that can be put in place and that replicate in so far as possible the current experience that people will have when they trade with the EU.

Will the Minister give way?

I will give way once more, and then I will make some progress.

The Minister has said that he would not expect that Northern Ireland traders will be subject to VAT rules of another jurisdiction, but article 8 of the protocol makes it clear that they will be subject to a dual VAT regime. Do these provisions remove that requirement from all traders in Northern Ireland, or are we giving away some of our sovereignty by accepting that some parts of the United Kingdom and some sectors in that part of the United Kingdom will be subject to VAT rules from another jurisdiction?

I am afraid that inadvertently the right hon. Gentleman has misrepresented my position, or misdescribed my position. I am saying that we are following the Northern Ireland protocol and, therefore, following any provisions that he refers to, but what we are doing is putting in place mechanisms that make them as easy and as facilitated as possible, so that the experience of someone trading in Northern Ireland should be as close as possible to that which they would have today.

The Bill will allow us to amend or modify certain provisions in relation to VAT and excise, including mechanisms to ensure that, in so far as possible, VAT will be accounted for in the same way as it is today, as I have said. In addition, it will make provision for amending current legislation for excise duty. Most of these changes are necessary to ensure that there is comprehensive VAT and excise legislation in place in relation to Northern Ireland at the end of the transition period.

In addition to those steps, there is also a small number of other taxation measures that need to be in place before the end of the transition period. They include 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 private aviation.