Rt Hon Sir John Redwood MP (Wokingham) (Con): Will the Financial Secretary confirm that the Treasury will never use the argument that we must not press ahead with the very necessary VAT cut on energy in the cost of living crisis because we cannot apply it in Northern Ireland? It could damage GB as well as NI if that argument were used. Will she promise that the Government will energetically pursue complete sovereignty over VAT?
Lucy Frazer, Financial Secretary to the Treasury: After this legislation has passed, we will be able to introduce VAT legislation across the UK in the interests of both GB and Northern Ireland. I can assure my right hon. Friend that the Treasury consistently looks at tax policies, including VAT, and the benefits and disbenefits of bringing in changes.
I turn now to amendments 37 and 41 in the name of Mr Lammy. I should note that this issue was addressed in a previous debate, so, in the interests of time, I shall aim to be brief. The amendments would restrict the use of the Billâs powers to only make provision that is ânecessaryâ rather than to make provision that the Minister considers is âappropriateâ.
As my right hon. and learned Friend the Minister for the Cabinet Office and I have said previously, ânecessaryâ is a very strict legal test. The amendments would therefore remove the policy discretion for the exercise of these powers, potentially limiting Ministersâ choice of the right solutions to the problems caused by the protocol. Changing the test to an objective one will provide additional uncertainty to businesses and consumers and it would severely limit the ability to facilitate consistent VAT, excise and other relevant tax policies between Northern Ireland and Great Britain, as well as a domestic subsidy control regime that applies to the whole of the UK.
I want to comment on how that was expressed by the hon. Member for Hove, who suggested that Ministers could make changes on a whim. That is simply not the case and is a misrepresentation of the position that is clearly set out in the legislation. Clause 12(3) clearly states:
âA Minister of the Crown may, by regulations, make any provision which the Minister considers appropriate in connection with any provisionâ.
Therefore, he or she would need to consider those matters very carefully, as Ministers from across the House would do. The amendments might also prohibit the Government from responding in a flexible way to issues facing Northern Ireland. That, in turn, will have a negative impact on Northern Irish businesses and individuals, so I ask the hon. Gentleman to withdraw his amendment.
Many hon. Members discussed the negotiations, and I hope that I have answered those points in my response to the intervention from Stephen Farry, The hon. Member for Hove talked about the single electricity market. The right thing to do is not to impact the single electricity market. As the Foreign Secretary has said, we want to cement the provisions in the protocol that are working, including the single electricity market. That is why this Bill does not seek to exclude article 9 or annex 4, which maintain the single electricity market. The Government are committed to preserving it and the benefits that it provides to UK citizens in Northern Ireland.
For those reasons, taken together, these clauses will ensure that the Government can set UK-wide policies on subsidy control and VAT, ensuring that those in Northern Ireland can benefit from the same level of support as those in the rest of the United Kingdom.
July 22, 2022
The problem with the cost of living crisis re fuel in this country is not primarily VAT. It is the absolute cost of it, to which VAT is applied. That is far higher in this country than in most, because so-called light touch Tory regulation and enforcement has allowed the only-for-profit suppliers to shut down storage and to expose customers to spike prices.
So the answer’s extremely simple then, isn’t it Sir John?
That is, the WHOLE UK should have the same relationship with the European Union that NI does. All your ERG-imposed Irish Sea borders and the rest would vanish in a flash then.
Don’t pretend that you care one jot about struggling families though, please.
July 22, 2022
I 15 years of your beloved Labour Party taxes on fuel increased and for green reasons the fuel price escalator was additionally used.
Don’t pretend that you care one jot about struggling families though NHL.
July 23, 2022
You don’t appear to have much knowledge of other European energy costs.
Germany’s energy bills are higher than the UK’s, and getting higher still (according to Eurostat, AllianzVersicherung, & HM Gov figures), it must be because of Germany’s ‘light touch Tory regulation and enforcement’, nothing to do with Russia and the war in Ukraine, which more seasoned and objective reporters seem to think is rather material.
The only reason France has slightly reduced its energy bills to make them 200 euros per year lower than ours is by imposing a massive multi-billion hit on EDF.
But then, you probably think that an admirable socialist economic policy.
July 22, 2022
In the Times today:- âIf Tories want a Thatcher it has to be Rishi Sunak
In this contest the former chancellorâs family background, financial rigour and political bravery make him the true heirâ
James Forsyth trying to argue that black is white. Highest taxes for 70 odd years, OTT regulation, absurd tax complexity, dire and declining public services, vast government waste, a devalued currency and inflation (that he is directly responsible for), vast government borrowing increases, an appalling BOE record, not really attached as a family to the UK, pusher of the net zero expensive energy religion and almost guaranteed to lose the next election with Sunak too James!
July 22, 2022
Indeed LL. Sunak’s relationship with the WEF is also of great concern. We need ministers and MPs who put our country and its people first. It would be good if we stopped funding such organisations too.
July 23, 2022
+1
July 23, 2022
Sunak should be thought of as a mixture of back-stabbing Gove, with the financial acumen of Gordon Brown, the plotting of Howe. Just what we need as a PM?
July 22, 2022
Really a lot of waffle. The bill won’t sort out the problems with the protocol it has more holes than a collander.
We will continue to be ruled by Dublin which will lose you even more votes.
July 22, 2022
The issue of sovereignty and out tax policy still remains, when affecting any UK wide tax change we must consult and consider the UK/EU Withdrawal Agreement, the EU and the Northern Ireland ProtocolâŠ..Peru doesnât have to consult anyone when implementing its tax policy
July 22, 2022
I think your question implied that the UK can set VAT rates in NI NOW, whereas the reply suggested that the new Bill was necessary before that could happen.
My understanding is that it can happen now, without the Bill. Politicians never seem to answer the question. In this case, I really don’t understand why they don’t simply adopt your view and set the VAT rate they want.
Perhaps it’s a case of listening to Treasury advice – when the politicians themselves don’t have the klnowledge / experience to know better.
July 22, 2022
https://hansard.parliament.uk//Commons/2022-06-28/debates/B545B755-53C7-4673-88E5-468F3FAE2519/CostOfLivingNorthernIreland#contribution-885C49F0-565D-4961-8E3A-C642E804FD30
“The right hon. Gentleman makes an excellent point. As I said from this Dispatch Box at the time of the spring statement, we were unable to extend our VAT cut on energy-saving materials to Northern Ireland because of some of the provisions in the protocol. He will know that the legislation we have put before this House, which I am glad received support last night, will address exactly those issues.”
July 22, 2022
I think it might be useful to look at the EU Commission’s estimates of the long term economic cost of Brexit and how it will be mitigated by Boris Johnson’s fantastic trade deal, for as long as that deal survives.
For some reason the UK government has declined to make, or at least publish, any similar estimates.
Page 21 here:
https://ec.europa.eu/info/sites/info/files/economy-finance/ip144_en_1.pdf
âFor the EU on average, the exit of the UK from the European Union on FTA terms is estimated to generate an output loss of around Âœ % of GDP by the end of 2022, and some 2 ÂŒ % point for the UK. Compared to the âWTO assumptionâ that was modelled in the Autumn forecast, the EU-UK FTA reduces this negative impact for the EU on average by about 1/3 and for the UK by about 1/4. Whereas the FTA sets tariffs and quotas on goods at zero, there is a significant increase in NTBs for both goods and services. Member States with a higher share of goods trade with the UK therefore benefit relatively speaking more from the FTA than those with a higher share of trade in services. In sum, while the FTA improves the situation as compared to an outcome with no trade agreement between the EU and the UK, it cannot come close to matching the benefits of the trading relations provided by EU membership.â
Therefore the benefit to the UK of the free trade agreement, FTA, would be 2.25% of GDP divided by 3 = 0.75% of GDP.
On the EU’s model, for what it is worth, leaving on basic WTO terms without a special FTA would have cost the UK 3.00% of GDP in the long term, but the FTA will retrieve one quarter of that, 0.75% of GDP, equivalent to ÂŁ16 billion a year.
That is the low value that the staunch unionist Boris Johnson put on the UK’s sovereignty over the Irish part of its territory, and all of these excruciating problems with the protocol spring from that.
And that is also what we stand to lose if the EU cancels the trade deal, less than GDP growth in Q1 2022.
July 22, 2022
Faced with a choice of someone who will reduce my taxes and someone who will put them up I’ll choose the former thanks. Why wouldn’t I ?
July 22, 2022
I see that the UK is to be sued by the EU over the NIP. Presumably both Sweden and Finland support this legal action. It was only a few months ago that the UK entered into Defence agreements with both countries to keep them safe from Russia. It was only a few months ago that the UK sent an armoured battle group to Finland. They really are ungrateful nations.
July 22, 2022
I agree SW. They all soon forget the help we give. If it weren’t us and our commonwealth allies Europe would not exists in the way it does today. Personally I’m sick of the lot of them.
July 22, 2022
We are always taken for mugs, we cannot defend Europe against aggressors – and shouldn’t try.
It is about time we pulled the drawbridge up – EU countries are keen for us to provide defence, all the while treating us as long term enemies.
What are our ambassadors saying?
It should be along the lines of USA to us ie ‘You will show you are with us, or we know you are not’.
Look to EU for defending you – a joke.
You will be on your own.
July 22, 2022
OFF TOPIC.
When Liz Truss was first appointed junior education minister in David Cameronâs government in September 2012, a civil servant who had just shown her round her new office asked whether she had any questions.
The minister, at the time aged 37 and in parliament for just two years, appeared to resent the slightly patronising tone from the mandarin and snapped back haughtily: âMaybe you have a question for me?â
It is not surprising that, even back then, MPs and officials at the time thought they noticed something of a young Margaret Thatcher in this confident new minister, who had been a favourite of Mr Cameron from her days on the Tory candidates âA Listâ years earlier.
Those who have worked closely with Ms Truss in government say this exchange typifies her ministerial style â and that it offers a glimpse of how she plans to rule from Downing Street if, as the polls currently suggest, she wins the Tory leadership contest and becomes Britainâs next Prime Minister.
The Foreign Secretary has already made clear during this campaign that she wants to take on the civil service and challenge orthodoxies, including a plan to âbulldoze through blockagesâ at the Treasury.
Too good to be true? We will find out perhaps.
July 23, 2022
I’ve never heard of “disbenefits” before.
It sounds like a New Labourism for life on the dole, a disincentive to work.