Category: Debates

As the Minister has told us, these are two important statutory instruments for the facilitation of trade generally and for the facilitation of trade within Northern Ireland and between GB and Northern Ireland, and to the extent that they make things easier and allow zero rating of important services and goods, I welcome them wholeheartedly. But, of course, as others have said in this debate, we meet today against the background of clear difficulties and problems in the implementation of the Northern Ireland protocol, where it appears that a number of important impediments to GB-Northern Ireland trade have been inserted, and it is crucial that the talks go well and we get rid of them as quickly as possible.

So when we look at the administration of VAT, which is an important part of the trade process, I would like an assurance from the Minister that these regulations, and all the other VAT and excise rules applying in Northern Ireland and throughout the United Kingdom, will be solely administered and enforced by United Kingdom authorities, because I have much more confidence in them.

Will he also assure me that the aim of these statutory instruments, and the wider VAT legislation that they add to and amend, is to ensure that the movement of goods from Great Britain to Northern Ireland, or the other way, will be as smooth and easy as the movement from London to Surrey or from Manchester to north Wales, because that is what I thought we had agreed and signed up to—that Northern Ireland was a fully integrated part of the United Kingdom single market, under our single market and taxation rules? I would like the reassurance through these statutory instruments that we are intending for that to be true.

Will the Minister also confirm that there has for many years during our period in the European Union been an important VAT border between the United Kingdom and the Republic of Ireland, but that it has always worked very smoothly and was not enforced at the physical border, in accordance with the spirit of agreements and not wanting barriers at the land border?

It was an electronic border and adjustments were made by computer or by correspondence so that these things could be sorted out in a sensible and decent manner without having to have people queuing at borders to make complex calculations and submissions.

If that is the case, does the Minister agree that it is in that spirit that we need to find the answer to the current impositions and difficulties affecting our trade across those borders? It seems very odd that we cannot replicate that success of our past trading, where electronic manifests, trusted trader schemes and so forth, and proper electronic VAT registration worked very well. Surely the UK authorities, if we are the proper and sole enforcement authority in Northern Ireland, can work with trusted traders, VAT-registered hauliers and ferry companies and so forth, and we can accept their certification or word that the goods on their load are entirely GB-Northern Ireland or Northern Ireland-GB. We can then accept, therefore, that there are no other considerations and the loads can then move as smoothly as from London to Guildford or Manchester to north Wales. It would be very helpful to hear the Minister’s views on how that can be achieved and how quickly we can get to that point.

It is absolutely crucial to the people of Northern Ireland, as we have heard from their representatives, that they can trade smoothly with the rest of the United Kingdom. That was fundamental to the spirit of the agreements that the United Kingdom entered into with the European Union over the issue of trade with and between Great Britain, Northern Ireland and the Republic of Ireland. I hope the Minister will have good news for us and that these things can be sorted out quickly.

Sir John Redwood (Wokingham) (Con): People voted to take back control so that the Government would use the new powers to make their lives better, so will the Government urgently make time available for the VAT cuts, the new enterprise zones, the freeports, the policies to increase our fishing fleet, the policies to boost our domestic food production and the so many other good ideas that Ministers should be queuing up to put through our House now we are an independent country?

The Leader of the House (Mr Jacob Rees Mogg): My right hon. Friend is not only right but he reads my mind.

There are great opportunities: the new financial services regulation, which will encourage innovation and competition; the faster and more agile clinical and regulatory regime that is going through with the Medicines and Medical Devices Bill; a revolutionary approach to gene editing, on which the Department for Environment, Food and Rural Affairs is consulting; freeports, on which the Treasury is consulting; and looking at public procurement differently.

We are really taking back control and seeking the advantages, but I hope that my right hon. Friend will join in this enterprise and send a list of all his good ideas to every Minister so that we know there are more ideas bubbling away.

Sir John Redwood (Wokingham) (Con): Will my right hon. Friend introduce urgent legislation to ensure the smooth flow of goods between Northern Ireland and GB? Is it not crucial to our Union, in respect of both Northern Ireland and Scotland, that the Government keep their promise to take control of our laws and borders and to demonstrate a more prosperous internal market for the whole UK?

The Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office (Mr Michael Gove): My right hon. Friend is absolutely right. We want, first of all, to make sure that we are doing everything technically and administratively in order to ensure the smooth flow of goods but, as the Prime Minister confirmed to the House earlier, if we need to take further legal steps, then of course we will.

We have done many more tests than many other countries, and I pay tribute to Ministers and the NHS for all the hard work that has gone into achieving that. We are now vaccinating many more people than in other countries. We have got ahead, and that is very good news. As the Government see the main way out for us to relax the controls as being the vaccination of many more people, we wish everyone every speed and success in rolling out those vaccines.

I also think congratulations are in order for finding two more treatments that can make a difference to the death rate and reduce the length of time people suffer with a severe form of the disease, but what about ivermectin, which some doctors in other countries say can also achieve good results and reduce the death rate? It would be useful to know what progress is being made with the UK tests and whether that might ever be a recommended treatment, because the more treatments we can have to cut the death rate the better.

I would also be interested to know what our experts think about why there have been such differential case rates and death rates around the world. Unfortunately, the UK has now joined the group of countries where the death rate is over 0.1% of the total population, which means quite a lot of deaths, as we know to our sorrow and cost.

We have joined many other countries in that grouping, but why is it that countries like Sweden and Brazil have not yet got to 0.1% when some have been very critical of the way they have handled the virus, and why do many Asian countries seem to have got through with much less damage? What does the international research tell us about the reasons? Why is it, too, that a country such as Belgium has been blighted by such a high death rate and a pretty high case rate? Of course, testing more means that we identify more cases, but our case rate is still not one of the worst in the world, so clearly some of the actions taken are having a beneficial impact.

I also urge the Government to do rather more for the self-employed and small businesses. They are bearing the brunt of the economic damage of the policies being pursued, and more could be done, particularly for those small businesses and the self-employed who have not received any help at all.

Many of them are in business areas in which there have been closures for the best part of a year now, and in which social contact is very important for the business model, meaning their revenues are well down. We are going to need them, and we need a recovery fairly soon.

So I wish every success to those doing the vaccinations, and I hope we can then lift some of the restrictions, because we want to have a vibrant small business and small enterprise sector available to power the recovery we so desperately need.

Sir John Redwood (Wokingham (Con): I am very worried about the loss of liberty. I am very worried about the economic damage. I am very concerned about all those small businesses that have been shut down, and their livelihoods undermined. I want the Government to introduce a more urgent, convincing exit strategy from these measures, and I think that we are owed more debates and more votes long before the end of March. We need to keep this under constant review, and keep up the pressure to take away those measures that are not strictly necessary or which can be superseded by something better.

I hope that the roll-out of the vaccine will go well and will be speeded up. I would like more information from the Government about why they are not currently using pharmacies, why it has taken so long to welcome back to the health service recently retired people who would like to help out, and whether there is going to be a plan to train suitable volunteers so that we can greatly extend the numbers of people administering the vaccine. It would also be helpful to know more about supplies.

We need to get smarter at dealing with the virus because, unfortunately, we will have to live with it for some months to come, however successful vaccination is. Will Ministers provide more information on medical progress with treatments? We had a great breakthrough in Britain with a steroid helping to reduce the death rate. There are many more things in trial—can we know more about that? Are there supplements that people can take to buttress their immune system and make it less likely that they get the virus, or is that a fiction?

Can we get better at isolating patients and protecting staff in isolation units or hospitals? Why do we not use the Nightingales as covid-19 secure specialist units to take away some of the cross-infection dangers from district general hospitals, and so they do not have the intensity of covid-19 treatment? Can we know more about the capacity of the health service, because there are differing views on how many beds could be made available should the covid-19 wave continue to deteriorate? Can we hear more on improving infection control?

What use are we making of intensive UV under suitably controlled conditions? What have we done to try to improve the cleaning of air recycling or air extraction promptly so that we reduce exposure of people in hospitals and other locations that we might wish to use to dirty air that could spread the disease? Above all, we need much more knowledge and information about the energy that is undoubtedly going into alternative treatments and better infection control. I would like to thank all those in Wokingham and the area who have done so much to help us during this difficult period.

The origins of this legislation lie in the negotiations under the previous Prime Minister that introduced the whole idea of a Northern Ireland protocol. I regretted those negotiations very much. I opposed them at the time and did not vote for the deals that my right hon. Friend the Member for Maidenhead (Mrs Theresa May) came forward with, because I thought they were designed by the EU as a lever to try to delay, dilute or damage Brexit.

When the current Government asked me to support their version of the withdrawal agreement, I still had considerable reservations about the Northern Ireland protocol. I put those to Ministers, who reassured me and said, “This is only an outline operation in the withdrawal agreement as currently drafted. None of the detail has been done. We will negotiate very strongly. We will get rid of the offensive features that you don’t like.” They said that they shared some of my concerns and that they would come back with something much better. I am always trusting of colleagues, so I said that that was very good to know but that I did not have the same confidence in the EU.

I thought it was unlikely that the EU would want to facilitate that in the way that I and the Government would like. so with some friends, I backed my hon. Friend the Member for Stone (Sir William Cash) in saying that the way through this was to put clause 38 into the European Union (Withdrawal Agreement) Bill. Under that clause, were the EU to act in bad faith and not come up with a workable solution for Northern Ireland and the other problems, we would have asserted UK sovereignty in our version of the treaty, and so in good law we could use clause 38 to legislate in Britain for what we intend to do, overriding the agreement.

It was quite clear from the drafting of that Bill that we wanted that override, and I would not have dreamt of voting for the thing without the override. The Government were saying that they did not think we would need to use it, but we could use if we had to, which is why I was pleased to support them earlier this week in a very modest override. It is entirely legal; it is the assertion of British sovereignty. We need to keep that in reserve, because without seeing all the detail from the Chancellor of the Duchy of Lancaster, I am not satisfied yet that we have a working operation for the Northern Ireland border and the matters that we are discussing today—more precisely, who controls the taxation.

What I do not like about these proposals is that it is extremely difficult for individuals and businesses to have to respond to two legal jurisdictions on tax in the same place, yet we seem to have both an EU VAT system and a UK VAT system. I hope that the UK VAT system will deviate rather more from the EU one and be friendlier, lower and apply to different things, but the more that that happens, the more difficult it will be if we are trying to enforce two different VAT systems in one part of the United Kingdom.

I am also concerned about the enforcement mechanisms. We are led to believe that it will be handled by HMRC, but we are also told that the ultimate authority on the EU part of VAT and excise will be the European Court, and therefore there are likely to be inspectors and invigilators—electronic or in person—interfering in the process within what should be sovereign United Kingdom territory. I hope the Government will think again and push back again.

We need more of the detail that the Chancellor of the Duchy of Lancaster has so far withheld from the House. It may be that he does not yet know it all or that his agreement is high level, in principle, but there are details that we need to know—indeed, details that it would be better to know before we legislate today. For example, the Chancellor of the Duchy of Lancaster says that delay periods for adjustment will be necessary for supermarkets and some meat products and so forth. Does that not require some kind of recognition in this legislation? Does it not mean that these jurisdictions do not kick in during the period of grace that we are told will be available?

We need to have more detail from the Government on what exactly happens at the border. I have always explained to the House and others who are not very interested that VAT and excise take place electronically across the borders at the moment, so we are talking largely about an electronic border. We need to know how this electronic border will be programmed to deal with the competing jurisdictions and competing incidences of taxation, and how the product codes and shipment codes will correctly identify the products by category that will be suborned by the EU jurisdiction as well as, properly, by the UK jurisdiction, which ideally would be handling the whole thing.

We do not have nearly enough time to discuss the fundamentally big issues of principle that the Bill brings before us and we have had precious little time to go into the detail. It is all very sad that this rush job is being done like this, but I hope before the Government finish the debate today they will have done a better job of explaining to someone like me why we need to have this dual jurisdiction; how the EU control is going to be limited; how it is going to operate; how, in the early days, the “transitional arrangements”, which we are told about, are going to apply; and why they are not reflected in the current text of this rather unfortunate piece of legislation.

Sir John Redwood (Wokingham) (Con): Many of my constituents are very angry that west Berkshire and Wokingham have been placed in tier 2 when we were in tier 1 before the national lockdown and we still have very low figures. On all the evidence that the Government say they look at—case numbers, trends in cases and available hospital capacity—there seems a very clear case that we should not be worse off as we come out of national lockdown than we were when we went in, and my constituents will expect me to reflect their anger in the way that I vote tonight.

I would far rather work with the Government, and I think that on the whole they are doing a very good job in a very difficult circumstance, but they could make life easier for themselves if they identified more policies that both bear down on the virus problem and allow the much-needed economic recovery so that we rescue and encourage more livelihoods.

The first policy is this: why can we not have expanded isolation capacity in the NHS to deal with covid-19, with volunteers properly backed up with all the equipment and safety protocols they need so that we free up many more of the district generals to do the general work that they need to do and free up their staff from the possibility of cross-infection and cross-contamination? One of the problems in the NHS at the moment is that there are too many staff who have had to self-isolate. Can we not do better on infection control, isolation, and specialisation? Money is no longer a problem, I am pleased to see. I am very happy for more money to go into the health service, but it must buy the staff and make sure that the staff are properly looked after, so that we have that extra capacity.

The second issue is the capacity of our hospitality industry. I encouraged the Department for Business, Energy and Industrial Strategy and the Department of Health and Social Care to do work some time ago on safer methods of extracting air quickly from hospitality venues, so that more people can use a hospitality venue safely. I believe that some of that work has shown some fruit, and that experts agree that we can create much safer environments if we reverse overflows and extract air quickly. We are now told by the experts that the main transmission threat is aerial transmission by being in an enclosed space with people with the disease. Can we not have more public prominence for that work? Perhaps we could have some grant systems for small businesses and proper technical assistance from the Government and from those the Government retain so that more venues can trade sensibly and profitably without being threatening in any way.

Can we please also have a proper package for all the self-employed and the small business people? Why do some groups of the self-employed get omitted from the packages every time? These are the people who go the extra distance, provide the flexible service, work all the hours God made, and do not often get much reward for it. These are also the people who have suffered the most from these compulsory closures. If a person works for a large company, they are, in many cases, paid their salary, even if that company cannot operate properly, but if they work for their own business, there is no income coming in. They cannot put food on the table unless they get public support or can trade profitably. I urge the Government to look again at their totally inadequate packages for the self-employed and small businesses and understand just how much we are going to need them when we get into recovery mode proper.

My final point in the brief time allotted is that we desperately need to give people hope about livelihoods and economic growth again. We desperately need to have a full recovery programme sector by sector, including for small businesses and the self-employed, and understand that some people will need to retrain and some will need to go from the employment they have lost into self-employment. Can we not hear a lot more about this and be positive? We need to cheer up the country up as well as control the virus.

I support the idea of Ministers having powers to prevent foreign acquisitions where security matters are of concern. I trust that Ministers will want to ensure that all the other transactions that do not pose those security issues will go through smoothly, easily and quickly for obvious economic reasons.

There is a wider concern. As Ministers have rightly said, this is not the debate to deal with all the other worries we might have about unsuitable foreign investors, but there is concern out there in the public that we do not want asset-strippers, we do not want large companies that come here in order to gradually close down the UK capacity to take out a competitor, and we do not want them to come in under cover of sustaining jobs in Britain only to take away the intellectual property and then later to discover that they are not so keen on the British business after all.

We do need those protections, but where Ministers are checking their defences on competition grounds as well as on security grounds, they need to ask themselves this fundamental question: why are so many of our assets sold to foreigners? There is, of course, one very simple reason: throughout this century, under all three types of Government we have had so far, we have run a massive balance of trade deficit with the EU on trade account, so we need to raise the foreign currency to pay the bills so we can afford to buy the tomatoes, the vegetables and the German cars and all the other things that we have been importing, not matched by an equal volume of exports to pay those foreign currency bills.

We see that it is having a bigger impact now on our long-term balance of payments situation. Before we ran this long series of huge deficits, we had net assets abroad, which meant that there was a big positive line in our balance of payments, which said that as a country we earned a lot more in interest and dividends from our investments overseas than foreigners earned on the investments they had in the UK. That has now been reversed, and every year now we have a very big deficit on the interest and dividends, because there are so many more foreign claims on us than we have claims on foreign assets.

This is a matter of concern. Ministers need to work on a series of economic revival policies that put much more emphasis on British people investing in Britain, so that we recreate more of that wealth in our own national hands and do not have the vulnerability, that need for foreign currency, which has been brought about by the current twin deficits—the trade deficit and now the deficit on investment income account.

I was very pleased to hear Ministers saying, rightly, that there are many great investment opportunities in the United Kingdom, so we need to deal with this paradox: why is it that foreigners can see them and are piling in with all their money to buy our best ideas, our best companies and our best properties, and why are more British people and British companies not able to do just that? The Government need to work with the British investors, British companies and British entrepreneurs to make it an even better climate for them to do the investing, as well as taking advantage of the foreign investors coming in and giving employment opportunities.

We need that entrepreneurial Britain, which grasps this opportunity and understands that we have a huge opportunity here to take out imports—to grow more of our own food, and to produce more of our own cars and more of our own products generally—so that we chip away at the very big balance of trade deficit, and in turn then generate cash that can be reinvested in the United Kingdom.

This Second Reading debate presents an opportunity to make the wider plea to Ministers that, as we recover from covid and the damage, we remember that £100 billion deficit that we were running in 2019 before covid-19 disrupted world trade and say that that is unacceptable: that means too big an increase in claims by foreigners on our country year after year. That is why we need policies to get the investment in, chipping away at the £20 billion deficit in food with the EU and at the fishing deficit and the car deficit, so that we are generating those jobs on British capital, and starting to reverse that net liability position that now disfigures our accounts.