Taxation (Cross-border Trade) Bill
Public Bill Committee, 23 January 2018.
Examination of Witnesses
Peter Dowd (Labour, Bootle)
This is a broad question in relation to the concerns that your members may have expressed—any of you can pick this up—on the capacity of Her Majesty’s Revenue and Customs and UK Border Force to absorb changes to the customs arrangementsQ .
Peter Dowd (Labour, Bootle)
Q I have one more question, if I may. What is your satisfaction level, on a level between one and 10, or your confidence that the Government will fully engage prior to making customs-related regulations once the outcome of the Brexit negotiations is clear? How confident are you that the lines of communication are actually in place?
Chris Davies (Conservative, Brecon and Radnorshire)
Would you not agree that the essence of the Bill is as an enabling Bill for when we leave the EU? All the Bill is trying to do is put arrangements in place. Would you not agree that the whole framework and the essence of the Bill is correct in that respect?Q
Chris Davies (Conservative, Brecon and Radnorshire)
Do you not think there is enough flexibility in the Bill already?Q
Kirsty Blackman (Scottish National Party, Aberdeen North)
Around the VAT issue, do you have concerns about moving from acquisition to import VAT? What do you think could be put in place to mitigate the issues that you see comingQ ?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q A couple more questions. On the division between primary and delegated legislation in the Bill, are you happy with how much is being done with secondary legislation or do you feel that the balance is not right?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q Finally, given the information that you have had from the Government and this Bill, do you feel that businesses are adequately prepared for what will happen in March 2019?
Anneliese Dodds (Labour/Co-operative, Oxford East)
Thank you, Ms Buck. The question that Mr Morris asked me to ask on his behalf is, if anything, even more pertinent after something that Mr Bain said. In the general area of customs—we are talking not only about duties, charges and processes strictly for customs, but about issues to do with migration, security, veterinary checks and haulage—I wondered, on behalf of Mr Morris, whether members of the panel would expand on what changes might be needed there. Are those being taken sufficiently in the round with matters strictly dealt with in the Bill?
Julian Sturdy (Conservative, York Outer)
MsQ Beliakova, I want to take you back to an earlier comment that you made, and which you put in your written evidence as well. You said that no clarification on the continuity of country of origin declaration is a concern. Could you outline the potential implications of that, as you, or your customers, see it?
Julian Sturdy (Conservative, York Outer)
Q I understand about the agreements, but if that existing means did not continue what implications do you feel that would have on potential trade?
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
Good morning—it is nice to see you all here. Earlier this week, the director general of the CBI said that the UK should seek to negotiate a comprehensive customs union with the EU. Having listened to all the complications that you have just outlined, would you support that proposal?
Nicholas Dakin (Labour, Scunthorpe)
Can I follow upQ Kirsty Blackman’s question about statutory instruments? Is it helpful or unhelpful to business confidence, including the confidence of your members, that so much of the detail—some people estimate that there will need to be about 1,500 statutory instruments—is left to secondary legislation? Is that helpful or unhelpful to business confidence?
Nicholas Dakin (Labour, Scunthorpe)
Q What role could trade associations—as in chambers of commerce—play in facilitating overall custom co-ordination, both with the EU and more broadly? What are the opportunities?
Anneliese Dodds (Labour/Co-operative, Oxford East)
Q I will be quick and roll two things into one because I see that we are running out of time. We touched on the issue of trusted trader schemes and potential new impediments to that given the need for pre-approval of software. Is there anything else that prevents the further expansion of those trusted trader approaches? Some have suggested that they would be one way of facilitating processes.
Secondly, regarding HMRC capacity, we have obviously seen a big reduction in headcount and changes with all the offices becoming regional hubs. Are there other alterations that you would make to HMRC’s set-up to facilitate the big challenges coming down the road with these new systems?
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
Q A quick question. You talk a lot about the need for clarity and time. Even if you were given the clarity you needed in the next couple of months, how long would you need a transition period to be to swap over to any new system?
Jonathan Reynolds (Labour/Co-operative, Stalybridge and Hyde)
I will try to be brief. The fundamental issue for this Committee is that we must have Bill that will cope with any scenario we face. It is unfortunate, but one of those scenarios could be a relatively hard border around UK and a big increase in friction in our trading relationship with the EU. If that were to happen, listening to the very good evidence you have given, will this Bill give us the powers and framework required to deal with that and then try and reduce as many of those barriers as Q possible? Alternatively, will some of these many known unknowns need to be addressed in our proceedings if we are to do that?
Mike Hill (Labour, Hartlepool)
You have already answered the question I was going to ask; I represent the port town of Hartlepool. A quick question: do you have an estimate of how many retail businesses will be drawn into customs arrangements for the first timeQ ?
Peter Dowd (Labour, Bootle)
Q Just a very quick one. There are quite wide-ranging issues here today. How about the actual hard costs for your various organisations and the companies you represent of the introduction of the new processes, new liaison arrangements and new engagement processes?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q Customs and immigration forces were put together in the Border Force. Given the Government’s political priority around immigration, do you feel that there is a resourcing issue with customs staff or do you feel that it is a structural issue and that decoupling customs and immigration would fix that?
Mel Stride (Conservative, Central Devon)
Q First, thank you very much for coming. It has been a really helpful session. I have two questions, which you have two minutes to answer; if you can give me a one-word answer for each one down the line, that would be perfect.
Would you describe HMRC’s engagement with yourselves—your own organisation, in the context of the discussions and the issues we have gone over today—as having been good, average or poor? Starting with Gordon.
Mel Stride (Conservative, Central Devon)
That is more than one word—you can tell who the former politician is. My final question has clearly been identified. Naturally, there are many challenges and uncertainties out there. Some come from the sheer fact that we have decided to leave the EU and the short time frame, for example, for decisions. Many of the issues we have described come out of the negotiations and the uncertainty about where we may land in that respect.
However, what the Bill is doing and the focus of this Committee is to make sure that we are as close as we can be to existing arrangements and, secondly, that we have the flexibility to be nimble enough to move and adjust our configuration to accommodate wherever we land on day one. Very quick answers down the line: in essence, in broad terms, do you think the Bill is about right?
Mel Stride (Conservative, Central Devon)
Thank you very much.
Jonathan Reynolds (Labour/Co-operative, Stalybridge and Hyde)
Q One of the Opposition’s general concerns about a lot of the Brexit-related legislation is about the level of clarity. A lot of the concerns relate to the powers that will then go to the Executive and the future policy consequences of that. In your assessment, do you think that this Bill provides the right level of legislative scrutiny and safeguards as to what the policy intentions will be?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q The Chartered Institute of Taxation submission is particularly damning; it is quite difficult to pick out a particular issue to ask you about because it has so much about how unclear this legislation is and how many unintended consequences it might have. In terms of the members that you have, the organisations that you work with, making decisions now for what will happen in 15 months’ time, are organisations making decisions now that will have a negative impact because of the process that we are undergoing, and is there a way that this process could be made better in order, for example, to safeguard supply chains in the UK rather than moving them to Europe?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q In terms of the measures on developing countries, Helen, how do you feel that the Bill explores those issues? Do you feel that it adequately ensures that fair trade happens, for example, and that developing countries are given a fair deal?
Anneliese Dodds (Labour/Co-operative, Oxford East)
Q Many thanks to Mr White for setting out quite a different approach to how the Bill could have been structured. It has been quite salutary for the Committee to hear that. In the comments that you made, Helen Dennis, about the proposed system for least developed countries, you said that you felt that the Government have taken the best bits of the existing approach. Certainly, the exclusion of arms is retained here. There is a question about the extent of conditionality, because in the European system there is conditionality about good governance and environmental sustainability. Could you comment on that? I understand that that is not replicated to the same extent.
I have an additional question about the distorted economies. We have very little detail about how distorted economies will be dealt with in the Bill. Do you have any comments on that, given that there are severe human rights concerns in many of those economies about certain elements of production, including modern slavery?
Chris Davies (Conservative, Brecon and Radnorshire)
Q May I go back to Mr White’s response? I would have thought that you would be very happy with what the Government have come up with, because you may be able to produce yet another volume of your book. You have certainly given the first volume great marketing—many points to you for that. The previous panel seemed, in general, to approve of the Bill. They liked its flexibility and agreed that it is an enabling Bill. They are the ones whose members will have to implement it. You, as a lawyer, do not seem as happy with it. Forgive me for saying this, but every lawyer I have encountered in an evidence session since we decided to trigger article 50 has seemed very dismissive and upset about the way we are going forward. Is this lawyer-speak, or is it something that will cause problems for the Bill?
Chris Davies (Conservative, Brecon and Radnorshire)
Q Which version is that, again? Would you like to mention the book again, by any chance?
Chris Davies (Conservative, Brecon and Radnorshire)
We will leave it there. Thank you very much.
Peter Dowd (Labour, Bootle)
Q Welcome, Ms Scott. As you said, your business has repeatedly asked for the new legislation to replicate as far as possible the current customs regulations, and you were disappointed to find that that is not the case. You also said that the Bill looks like an “antiquated” piece of legislation, rather than a modern law for a modern and forward-thinking new customs administration. Would you like to put a bit of meat on the bones of that?
Peter Dowd (Labour, Bootle)
Q Mr White, paragraphs 3.4 and 3.5 of evidence from the Chartered Institute of Taxation state that
“new UK legislation is needed to create a separate UK Customs regime.”
I think everyone acknowledges that.
“However, we believe the Government’s approach, of providing Ministers with exceptional (yet apparently permanent) powers to create a Customs regime from scratch, with minimum parliamentary involvement or scrutiny, in a very short space of time, is unnecessary.”
Why? What is wrong with that? The Financial Secretary is a very reasonable person, and I am sure that nobody would want to pull the wool over anybody’s eyes. What is the problem with that idea?
Peter Dowd (Labour, Bootle)
Q You have said:
“The explanatory notes to the Bill state that the new standalone regime will be ‘largely based on EU law’ and that it is intended that the customs regime ‘will continue to operate in much the same way as it does today’.”
I want to tease out a little more on that. Do you think that aspiration will be delivered by the Bill?
Peter Dowd (Labour, Bootle)
Q Finally from me, in relation to the appeals process, you identify in paragraph 6.1 of your evidence:
“We are concerned that taxpayers’ rights in relation to an effective appeals process are retained. This Bill could be”—
you do not say “will be”—
“a backwards step in relation to an effective appeals process, because it affords such wide discretion to HMRC. We wish to see the adoption of clear unambiguous legal requirements for customs matters, which minimise commissioners’ discretion.”
Could you tease that out a bit more? That is in paragraph 6.1 of the Chartered Institute of Taxation’s evidence.
Mark Menzies (Conservative, Fylde)
I would like to return to the point made by Helen Dennis on fair trade. Do you agree that it is very important that the Government have a wide remit within the scope of the Bill? Some of the current rules regarding EU regulations and tariffs are detrimental to fair trade. I will cite one example. Colombian coffee producers export low-value green coffee into the EU for the value to be added, usually in Germany and in some cases in Italy. Massive value is added here in the EU to the benefit of German manufacturers and large German brands, which therefore has huge detriment to the coffee producers back in Colombia. That is one example. There are many. Having a wide scope in the Bill will give the Government, in the fullness of time, the ability to make sure that free trade arrangements work as consumers in this country think they work, as opposed to how the EU has currently drawn them upQ .
Mark Menzies (Conservative, Fylde)
Q But those people that it does affect, it affects in a great way. That is why it is really important to have a wide scope in the Bill, so that we can get into the detail in the fullness of time, and get it right.
Douglas Chapman (Scottish National Party, Dunfermline and West Fife)
I would like to ask an additional question. In the previous session we heard that, for example, in terms of SMEs, 130,000 small businesses would be affected by this kind of legislation for the very first time. Does the panel have a view on the particular challenges that the Bill might bring to small business and its impact, especially if Mr White’s book has to be trawled through every time some decision has to be made? What is the panel’s view on thatQ ?
Mike Hill (Labour, Hartlepool)
Q I shall ask a question on behalf of my colleague, Grahame Morris, who has lost his voice. He has not lost his question. His voice is somewhere in Dover. Do you have any concerns that the Bill may create opportunities for tax avoidance or evasion?
Nicholas Dakin (Labour, Scunthorpe)
Q In sectors like steel that operate pretty much in a free market without tariffs, trade defence instruments are very important in ensuring fair trade. What do you think about the UK’s proposed system of public and economic interest tests? How do they compare with elsewhere? To me, at first glance, they seem more cumbersome than what is already there, and therefore there might be higher risk, but I am interested in your views.
Nicholas Dakin (Labour, Scunthorpe)
Q There are four tests here—four different checks. That seems to me to be potentially over-checking. There needs to be a test, but do there need to be four tests?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q My question is specifically for Barbara Scott on the issue of HMRC resourcing. Is the authorised economic operator system working as it should, and will it work post Brexit? Is there enough focus within Border Force on customs issues, or does that need to change as well?
Mel Stride (Conservative, Central Devon)
Q Thank you all for your evidence today, which has been really helpful. I have a specific question for Mr White regarding his assertion, which I generally agree with, that the simplest way forward would be to effectively take the UCC on board, but modify it as required. Is there anything in the Bill that would prevent us from doing that? If your thought is that we should be required to do it, given that we might not be prevented from doing it by the Bill, would bringing it into the Bill not just risk us tying our hands in a way that would be unhelpful, given that we do not know exactly where the negotiations are going to land in that respect?
Mel Stride (Conservative, Central Devon)
Q But would there not be provisions? The EU withdrawal Bill would annul the effect of the UCC, you are right, but what would stop us from bringing that in, using this Bill, on day one to achieve what you are attempting and would like to see as the outcome?
Mel Stride (Conservative, Central Devon)
Q But, through various powers in the Bill, we could then bring in those aspects and elements that we wished to do so.
Mel Stride (Conservative, Central Devon)
Q I am sorry to be a real dog with a bone, but I have one last quick question on this point. On the UCC, your contention is that you would have to amend the Bill under schedule 7 to stop it being switched off, to allow the time to bring it in to UK law and amend accordingly. Why could you not just continue with the provisions of schedule 7 and have secondary legislation that comes into immediate effect at the appropriate time, by way of a made affirmative statutory instrument, for example?
Mel Stride (Conservative, Central Devon)
Q In that sense, the Bill as it stands does accommodate your desired outcome.
Peter Dowd (Labour, Bootle)
Thank you, Mrs Main. My first question is a general one. I would like a view from the coalface, so to speak. If the Bill is passed in its current form, will it offer adequate protections to the UK economy against dumping, for exampleQ 43?
Peter Dowd (Labour, Bootle)
Q Let us stick with that theme. What assessment have you made, or are there any assessments that you might be aware of, regarding industries that are most vulnerable to losses caused by dumping, for example? You referred to steel. Could we just tease that out?
Kirsty Blackman (Scottish National Party, Aberdeen North)
The first question is about Border Force. Do you think that Border Force will be able to cope with the increased customs volume that it will need to deal with, and if not how do you think the Government can fix that?Q
Kirsty Blackman (Scottish National Party, Aberdeen North)
Clause 31 allows for the UK to enter into a customs union with another territory. Do your members feel that a customs union with the EU would be positive or negative for jobs?Q
Kirsty Blackman (Scottish National Party, Aberdeen North)
In general.
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
Thank you, and welcome. If the Bill is passed in its current form, do you think it will prevent excessive delays when importing freightQ ?
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
Q Is there anything specific that you would want to see to prevent delays?
Mark Menzies (Conservative, Fylde)
This is specifically for Rosa. You mentioned that you had concerns over the lesser duty rule. I wonder whether you could give us some specific examples of where you feel the lesser duty rule currently is not workingQ .
Mark Menzies (Conservative, Fylde)
Q Do you have any other examples of the lesser duty rule that we should be aware of?
Mel Stride (Conservative, Central Devon)
Q Thank you very much for your contribution so far. In the previous sitting, we had a witness representing consumers—from Which?—and she made the point that she would be concerned if there were no lesser duty rule. She was concerned that consumers would be unduly damaged by any trade remedies that we might undertake under those circumstances. Do you recognise, as a panel, that there are risks to consumers in solely relying on remedial action, which takes a view on the dumping margin, which may be very significant but is equally in excess of those changes required to remedy the injury being incurred by producers? Or do you think that consumers are always going to be safe under an arrangement without a lesser duty rule?
Mel Stride (Conservative, Central Devon)
Q I totally accept the argument that if a lesser duty rule is not fit for purpose, it is not fit for purpose—if it is not operating as you would want it to, that is a problem. However, setting that to one side, if you have a lesser duty rule that does what it is meant to do and the injury that producers have suffered has been remedied as a consequence of the lesser duty rule changes, I cannot understand why those producers should be concerned and why you would want to remove that—and, in certain circumstances, have additional remedial punitive tariffs or duties apply over and above those that would meet the injury suffered by the producer. That would be simply at the expense of the consumer, and indeed other companies that were relying on the use of those imports in their production processes. That is the bit I do not quite get.
Mel Stride (Conservative, Central Devon)
Q If we could assess it accurately and make it fit for purpose in that sense, you would not object to the lesser duty rule? Your objection is to do with how it is framed rather than the principle? Would that be right?
Mel Stride (Conservative, Central Devon)
Q A final question to Rosa, which goes back to Mr Menzies’s question. What is the specific trade case you can cite where the application of the lesser duty rule has failed?
Nicholas Dakin (Labour, Scunthorpe)
On the lesser duty rule, as a result of things such as the steel crisis, the EU is moving to be exception-based, in line with Canada, Australia and others. Is there a lesser duty rule anywhere else in the world that will operate like this one?Q
Nicholas Dakin (Labour, Scunthorpe)
Q Can I come to Kathleen? The lady from Which? did not actually refer to the lesser duty rule with respect to the Minister. She did refer to the economic test. Of course, everybody recognises that there should be an economic test, but there are a number of tests—public interest tests, and tests by various people. I noted that you, Kathleen, said that you were alarmed by the state of the current proposals. What needs to change in them to remove your alarm?
Anneliese Dodds (Labour/Co-operative, Oxford East)
Thank you, Mrs Main, for chairing the session. I share concerns that there is very little in the Bill on the issue of distorted economies. It would be helpful if you could indicate what provisions you think might be necessary to remedy that current deficiency.Q
Jonathan Reynolds (Labour/Co-operative, Stalybridge and Hyde)
During the steel crisis, I sat in this very room as a member of the Business, Innovation and Skills Committee taking quite a lot of evidence from some of you as well. It is clear that if this bit on trade remedies is got wrong, the consequences will be severe.Q
My worry on the public and economic tests is that, even in something like the steel crisis, there were people arguing for the benefits of very cheap steel coming into UK for construction and so forth. If those tests are not drafted correctly, frankly, we do not have any trade remedies at all. If we are going to have them in the Bill, how can we draft them to ensure that they are robust and fair? Who should be involved in the Trade Remedies Authority to ensure that that is the case?
Peter Dowd (Labour, Bootle)
Everybody in the Committee shares concerns about democratic oversight, industry protection, consumer protection, worker protection, the whole question of resources for HMRC, and sunset clauses or the lack of them. Taken together, it is of concern—not just at an individual level. In relation to your role in all this, I do not get the sense that you have had any substantive or significant consultation with the Government as a legitimate group of organisations. Is that a fair assessment of the situationQ ?
Examination of Witness
William Wragg (Conservative, Hazel Grove)
ItQ is good to see you. You were on the panel that came before the Procedure Committee, of which I am a member, when we were drawing up the amendments that were accepted by the Government on the European Union (Withdrawal) Bill about a sifting committee for secondary legislation. It appears that secondary legislation is talked about more than ever at the moment. Is it a problem of the system or just an excuse for ineffectual parliamentarians?
William Wragg (Conservative, Hazel Grove)
Q Would you not think that given all the interest expressed in it, whether it is boring is neither here nor there? People are able to do it.
William Wragg (Conservative, Hazel Grove)
Do you think it is perhaps not the system but rather the ignorance of parliamentarians?Q
William Wragg (Conservative, Hazel Grove)
Forgive me—just one more question, Mrs Main. I was playing devil’s advocate there. You mention that this goes back as far as a report in 1933. So it really is not the case that somehow our Brexit legislation and this legislation brings forward new questions about secondary legislation.Q
Anneliese Dodds (Labour/Co-operative, Oxford East)
Q Thank you, Mrs Main. In response to the points already made, surely it is not just about the preparedness of parliamentarians, but also the preparedness of the Government and Ministers to answer questions that are asked about the detail of the legislation that they are meant in theory to be ready to defend.
The question that I wanted to ask was, do you think there might be a role for sunset clauses in relation to some pieces of delegated legislation?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q On the different procedures for delegated powers—the negative procedure, the made affirmative, the draft affirmative and the super-affirmative procedures—in this Bill specifically, do you feel the balance is right? Or do you feel, for example, that there are too many negative procedures, which are quite difficult for parliamentarians to get involved with?
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
Q Welcome. Could you discuss in more detail the proposals you have for sift and scrutiny committees to deal with the delegated legislation?
Nicholas Dakin (Labour, Scunthorpe)
Q What is your view on the Henry VIII powers in this Bill and their impact on this area of legislation?
Mel Stride (Conservative, Central Devon)
Q Thank you for your evidence. The negative SIs, on balance, given that they do not necessarily get “called in”, for want of a better expression, are on average scrutinised less than affirmative SIs, but is there anything that would in any circumstances stop an Opposition party calling one in? Is there any reason why they would be out of the reach of scrutiny, should the Opposition decide that more scrutiny was appropriate?
Mel Stride (Conservative, Central Devon)
Q Given where we are with secondary legislation and Brexit, which means there is rather a lot of it, can I clarify that your position is not that we should not have negative-procedure SIs, but just that some of them should perhaps be affirmative?
Peter Dowd (Labour, Bootle)
Q This is one of the biggest political and constitutional shifts that most people in this room can remember. The House of Lords Delegated Powers and Regulatory Reform Committee, to which you referred, said it is a massive transfer of powers from the House of Commons to the Crown. There is also the general issue of all the delegated powers that go with the withdrawal Bill, this Bill and the Trade Bill. In those circumstances, do you agree that this is more like a new constitutional precedent for a land grab by the Government from Parliament, and it has nothing whatsoever to do with the aptitude or the adroitness of Members of Parliament? It is about a constitutional and parliamentary stitch-up.
Peter Dowd (Labour, Bootle)
Q Given what you have just told us, do you acknowledge at the very least that the concerns in the House of Lords and all the delegation around the Trade Bill, the withdrawal Bill, this Bill and other Bills to come, show a significant constitutional shift in the balance of power between the Executive and the legislature for whatever reason? I am not making a judgment. Do you think that is a fair assessment?
Peter Dowd (Labour, Bootle)
Q Just so I am clear—
Peter Dowd (Labour, Bootle)
Are you saying, therefore, that this is neither a quantitative nor a qualitative shift of power from Parliament to—
Graham Stuart (Conservative, Beverley and Holderness)
Q I was going to follow on in pretty much the same area. Despite that desperate effort to lead you, you were quite clear that there was no fundamental shift, that we need frame- work legislation, that this is an appropriate vehicle for such framework legislation and that, despite the shortcomings as you see it in the scrutiny of delegated legislation within this House, there is nothing untoward about the way that the Bill is set up or uses secondary legislation.
Jonathan Reynolds (Labour/Co-operative, Stalybridge and Hyde)
Q Are there any specific areas of the Bill that currently put significant powers in the hands of the Secretary of State but that make you think we should consider the arguments for an enhanced degree of parliamentary oversight?
William Wragg (Conservative, Hazel Grove)
Q What are the constitutional similarities between this Bill and the European Union (Withdrawal) Bill?
William Wragg (Conservative, Hazel Grove)
Q But do you recognise the fundamental difference between this Bill and the European Union (Withdrawal) Bill, on which the Government accepted five of the amendments that concerned enhanced scrutiny? Do you recognise that distinction?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q With all the issues that have been raised, especially about the negative procedure and the ways in which the House of Commons can scrutinise this, given it is not going to the Lords particularly, do you think this is a good way to do things or would there be a better way?
Anneliese Dodds (Labour/Co-operative, Oxford East)
Q I have two quick questions. One is to ask you to comment on the use of not just secondary but tertiary legislation in this Bill on public notice law. That would be helpful for us. Secondly, in our previous discussion we talked a lot about the new Trade Remedies Authority, and some of the witnesses suggested that the Secretary of State will be able to overrule its suggestions, without, it appears, any parliamentary process underlying that. I wonder whether the Hansard Society has any comments on that.
Peter Dowd (Labour, Bootle)
Q On the point about tertiary, are you saying that you have fundamental issues with tertiary legislation?
Mel Stride (Conservative, Central Devon)
Q On that specific point: if, for example, HMRC was to produce a small amount of guidance on a small part of the customs process, why would it make sense to make that subject to potentially being a regulation, rather than having it as a public notice? Why would you want to clog Parliament up with all these additional items, which may be very insignificant in some senses—in a grander sense?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q Is there a difference in how strong something is in law, depending on whether it is in primary or secondary legislation? Is it easier for lawyers, for example, to use primary legislation, rather than secondary legislation that was made further down the line, in making their cases?
Mike Hill (Labour, Hartlepool)
Brexit with no deal is likely to massively increase the number of customs declarations required for transporting goods through ports. What impact do you think that will have on your membersQ ?
Kirstene Hair (Conservative, Angus)
As a follow-on from that point, how feasible would it be to ensure that smaller ports, such as Montrose port in my constituency, have dedicated customs officers? Would there a detrimental impact for these smaller ports, whether in Scotland or in any other part of the United Kingdom, if customs support was not provided on siteQ ?
Anneliese Dodds (Labour/Co-operative, Oxford East)
Q My first question relates to the point just made by Kirstene Hair, about the staffing at different ports and the availability of HMRC staff. We have seen quite significant ongoing changes and consolidation of staff into regional and specialist centres. We have heard that the Border Force relies on those HMRC staff on certain occasions. I wonder whether any of your members are raising problems with you that might be arising due to that change in the availability of HMRC staff.
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q Anneliese has stolen my thunder slightly. Clause 31 opens up the possibility of the UK going into a customs union with other territories—let’s say it hypothetically goes into a customs union with the EU. Would that be a better outcome and increase the likelihood of frictionless transport?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q You have all mentioned Dover, but nobody has so far mentioned the ports in Wales, for example, where there is an awful lot of movement between Wales and Ireland. Is that also a concern?
Chris Davies (Conservative, Brecon and Radnorshire)
As it happens, the Welsh Affairs Committee is visiting both Dublin and Holyhead in two weeks’ time, so I shall look forward to chatting to your members about those concerns. For those of us who are slightly uninitiated with the ports’ authorities and the way that the ports work, would one of you give a very brief overview of the differences between accepting a ship coming into this country from the EU and one coming from outside the EU at present, and how long it would take, differentially, time-wise, for a ship from outside the EU and one from inside the EUQ to dock and go through the procedures?
Chris Davies (Conservative, Brecon and Radnorshire)
Q Subject to HM Revenue and Customs being efficient, it should not take that much extra time to get a ship unloaded?
Chris Davies (Conservative, Brecon and Radnorshire)
Q Going through the system basically, not just unloading.
Chris Davies (Conservative, Brecon and Radnorshire)
Q If and when we set up free trade agreements with the rest of the world, will the ships come in and receive the same treatment as if one was coming from Europe at the moment?
Nicholas Dakin (Labour, Scunthorpe)
Q When the Home Office had its e-border thing, it appeared to fail through lack of engagement with key partners. How much engagement have you had with HMRC on the new CDS system? Are you confident that it is getting to the right place?
Peter Dowd (Labour, Bootle)
Q I want to talk about the Joint Customs Consultative Committee. I understand that you are all members. How often has it been convened in the past year, for example? Are there any plans to increase the regularity of its meetings in the run-up to Brexit? What sorts of things have you been discussing at those meetings—maybe the last two or three, for example?
Peter Dowd (Labour, Bootle)
Q I am trying to get to the heart of this. It is absolutely important to the Bill, to be frank, Mrs Main, because it is about the consultation on the Bill via that particular body. That goes directly to the heart of the ability to tease out those discussions that are taking place and how they have informed the Bill. I am trying to tease out from our witnesses the extent to which they can engage with the Bill and help to form it. I will come on to a question or two to tease that out a bit further.
Peter Dowd (Labour, Bootle)
Q May I follow through? Mr Reardon, you say in your views on the Bill—there is a bit of a preamble, but it is important to get this in:
“The Government’s White Paper…outlined an intention to apply a requirement for the goods in such vehicles to be declared prior to shipment so that, on arrival in the port, they can pass straight through in all but exceptional circumstances”.
You go on:
“Schedule 7, paragraph 28, appears to create powers for such an arrangement but is expressed in notably vague terms: their practicability will depend absolutely on detail that is absent.”
How significant is that at this stage, given that we are 15 months away from Brexit? When do you think that you will actually need the detail, especially in light of the fact that you have not been consulted on the Bill in the first place?
Peter Dowd (Labour, Bootle)
Q You said, partly jokily, that you would have liked it four years ago, but in practical terms when do you think it will be? I must ask the question again. Given that there are 15 months to go before the button is pressed so to speak, when would you reasonably expect to be consulted on the detail, basically? At what point do you think it would be reasonable for you to be consulted within the next 15 months in practicable terms?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q Are there ports that have space for lorries to be stacked up, if you like, after they come off the boats, or is that a utopian land that we do not yet see?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q We heard earlier that some suppliers are leaving their supply chains, for example, in order not to have to go through a border process, particularly for things that come in and then go out again from the UK. Are you seeing that from people and organisations that you are in touch with, or is that just an “out there” thing that is not really happening very much?
Anneliese Dodds (Labour/Co-operative, Oxford East)
Q I have a question related to what happened back in 2015 with the first major Operation Stack problems in Kent. They were not caused initially by developments on the British side; it was due to problems on the French side. The capacity issues on the French side were very relevant. To what extent are you aware of activity happening in our partner ports to prepare for a no-deal scenario? Are you discovering that talking to your colleagues in other countries? Are you aware of the UK Government doing anything to promote that preparedness?
Peter Dowd (Labour, Bootle)
Q On the point of infrastructure, which you raised before—interestingly, you raised a point about state-owned ports—our ports are fully privatised. That makes it more difficult in a sense for the Government to control their development, which is understandable. Have you got any evidence that the Government have taken proactive action to improve the infrastructure around the ports in the light of the potential challenges you are facing? I say that as a Member of Parliament who has a pretty big port in his constituency.
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
Q I am so delighted that you said that. I am completely biased, coming from Hull where there are major problems with port connectivity. Is that something you have already given recommendations to Government on, or is it something you are working on now?
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
He probably got stuck on the way there. That is good news, thank you.
Peter Dowd (Labour, Bootle)
Q I want to ask a question, Chair, but I am conscious of the interruption that may come. This question is specifically to Mr Windsor, on the information you provided to us. In that document you said,
“It has been commented that the Bill is not as precise as Members would have hoped for”—
I suspect you were a diplomat in a different life—
“in terms of either the areas covered by the legislation or in certain cases the powers vested in the authorities. Also from our understanding this document will have to be read with other documents such as CEMA and secondary legislation which still has to be written which has the potential to cause confusion and thus perhaps hinder compliance from Trades perspective.”
To what extent will compliance be hindered? How extensive, how comprehensive, how problematic will that compliance be?
Examination of Witnesses
Peter Dowd (Labour, Bootle)
Q For the benefit of the Committee, can you briefly explain the current trade remedies in place and managed by the European Union?
Peter Dowd (Labour, Bootle)
Q It sets the scene and gives really good context to my next question. Can you explain the importance of strong trade remedies and the difference between having those strong trade remedies and what some might call “protectionist measures”? Can you give the Committee a feel for that? It has been touched on today that, somehow, if you have remedies it is protectionist.
Peter Dowd (Labour, Bootle)
Q Okay. Let us try to tease that out, because that touches on something Dr Cohen alluded to. Let us try to get the difference between what you consider to be a remedy and protectionism. They are becoming interchangeable in some people’s minds.
Peter Dowd (Labour, Bootle)
Q What assessment have you made of any trade remedies outlined in the Bill, or that you might be aware are going into the Bill, and their effectiveness to combat the dumping of goods from countries with heavily distorted economies?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q I have two questions. On the first, I am quite happy with a one-word answer if that is how you feel. Do you feel that the balance between primary and secondary legislation is right in this Bill?
Kirsty Blackman (Scottish National Party, Aberdeen North)
Q The other one is about the trade remedies that are in place. On the trade remedies that we have by virtue of being a member of the EU, is it your view that they will definitely roll over and continue to be applicable, or is it your view that they might be challenged when the UK leaves the EU and is no longer part of that kind of conglomerate which has put those remedies in place? I have heard conflicting evidence and information about that.
Nicholas Dakin (Labour, Scunthorpe)
Q How does the UK’s proposed system of public and economic interest tests compare with elsewhere, and are you happy about the proposals as they currently are?
Mel Stride (Conservative, Central Devon)
Q Thank you very much. It is very good to see you again—I know we had a very recent meeting, Laura. Just for clarity, because I do not know whether this suggestion was being made or not, from the Government’s point of view we do not equate sensible, proportionate trade remedies with protectionism at all. We see the value of those, just as everybody else on the Committee, and indeed yourselves, does.
Can I just go into the area of the lesser duty rule in a little more detail? To the extent that the lesser duty rule functions as proposed, and it does provide remedy for injury caused through dumping to those producers who have been affected, why would you want to go further than that in terms of a potential remedy? Why would you want to go beyond that particular threshold? The argument from consumer groups is that that will then start disproportionately to damage consumers and those businesses that use those imports within their own production processes.
Mel Stride (Conservative, Central Devon)
Specifically, what is the justification for going beyond in your trade remedy measure that which puts right the injury to the producer? What is the argument as to why you should go even further still?Q
Mel Stride (Conservative, Central Devon)
May I be allowed one final question?
Mel Stride (Conservative, Central Devon)
Q On the public interest test, are you saying that there are no circumstances whatever under which the Secretary of State might legitimately be concerned about the remedies being taken—for example, on the grounds of national security where particular components might need to come into the country but would otherwise be choked off as a result of recommended measures?
Anneliese Dodds (Labour/Co-operative, Oxford East)
Q I will be brief. That has been enormously helpful for clarifying some of the situation. One of the issues that came up in the previous panel was around the lack of measures in the Bill generally relating to the distorted economies. Obviously, they would be covered by some of the measures that we have been talking about to a lesser or greater degree, but I wondered whether you had any suggestions about whether there should be more explicit recognition of the problem of distorted economies within the Bill or any measures taken beyond those that we have just been talking about.
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
Q This is more of a clarification question, so forgive me if you have answered it in other ways and I have not taken in all the information you have just given me. You are talking about the economic test and the public interest test. How would you propose improving those systems of tests as is set out in the legislation at the moment?
Emma Hardy (Labour, Kingston upon Hull West and Hessle)
To put that into the Bill.
Graham Stuart (Conservative, Beverley and Holderness)
Q Laura, thank you for your evidence; it has been helpful. You said definitively that we will have much lower duties than the EU.
Graham Stuart (Conservative, Beverley and Holderness)
So we may not.
Graham Stuart (Conservative, Beverley and Holderness)
Q You are suggesting that we could end up in a situation where we have had an investigation, it has been found objectively to require imposition of duty, but because of the number of tests they are not going to happen. Are you seriously suggesting that that is because there are these tests in place? Are you not rather exaggerating and doing a disservice to your members by suggesting that?
Graham Stuart (Conservative, Beverley and Holderness)
Q I am not clear: what tests do you think would be appropriate? Earlier, Gareth was clear that it was entirely appropriate that there should be a public interest test. Laura, you sound as if you do not want any.
Graham Stuart (Conservative, Beverley and Holderness)
Q The TRA has that presumption in favour of imposing those duties. Do you welcome that in the Bill?
Nicholas Dakin (Labour, Scunthorpe)
On timescale, is the current Bill likely to mean that things will take longer to get done than currently with the European regime, or will it make things quicker? I am sure that we want everything to be slicker and easier when we come out of the European Union.Q
Peter Dowd (Labour, Bootle)
Q What involvement have you had in your respective sectors with the Department for International Trade on the creation of any potential trade remedies in the Bill? We are expecting a Division shortly, so a short answer would be helpful.