Sir Mel Stride
MP for Central Devon · Conservative · United Kingdom
“May I welcome the Chancellor to his position and thank him for his kind remarks earlier? May I also wish him every success, because I am afraid that under this Government we need some? He will know that if we are to fix the economy, we have to fix the welfare bill.”
“Given all that is going on, this could be the last time. The legacy of this Chancellor has been the highest taxes on record, a benefits bill spiralling out of control, and unemployment 300,000 higher than it was at the last general election. The right hon.”
“The right hon. Lady cannot bring herself to answer the simple question I asked. I will tell her: she is borrowing one quarter of a trillion pounds more than the plans that she inherited—that is her legacy. We hear that the right hon. Member for Makerfield (Andy Burnham) is considering borrowing even more.”
“May I begin by agreeing with you, Mr Speaker, and saying how disrespectful it is that this U-turn on fuel duty has already been released to the media earlier this week?”
“Today’s announcements will bring little comfort to the hundreds of thousands of people who have lost their jobs, the countless businesses that have folded and the high streets that are now hollowed out.”
“The Conservative party has been campaigning for a fuel duty freeze for months. The Chancellor repeatedly rejected those calls, creating unnecessary uncertainty for motorists and businesses. Why did it take her so long to realise that putting up fuel duty during an energy crisis is a bad idea?”
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“I thank the hon. Gentleman for his question. In the Budget, the Chancellor made it very clear that we will have a full call for evidence and undertake a review of matters relating to both APD and VAT, and their impact on tourism, which we recognise is so vital to the Northern Ireland economy.”
“When we leave the European Union, we will ensure that we have a robust remedies regime in place. It will ensure that we have robust measures to take against dumping, excessive subsidy and import surges. Part of that will be a lesser duty rule, as we have with the European Union at present, to ensure that the measures we take are proportionate in protecting our producers at the same time as protecting the interests of consumers and other downstream businesses.”
“The Government recognise the vital importance of R and D, driving up investment in business and improving our productivity, which is why R and D investment as a proportion of GDP is on the rise, and we will push further towards our target of 2.4%. In the Budget we announced an increase in R and D expenditure tax credits from 11% to 12%.”
“Member for Barking (Dame Margaret Hodge) suggested that our figures were not durable and questioned the veracity of our numbers. We have secured £160 billion through clamping down on tax evasion and non-compliance, and that figure appears in HMRC’s annual report and accounts, which are of course audited by the National Audit Office.”
“It is a pleasure to serve under your chairmanship, Mrs Main, and I thank my hon. Friend the Member for Amber Valley (Nigel Mills) for having secured what I think we all accept is an extremely important debate. I also thank him for the advice he has been able to give me over the months and years on matters as exciting as corporate taxation. I also welcome my hon. Friend’s support for some of the measures in today’s Budget—this is not an area of Government policy that we are going to be neglecting anytime soon; we are going to be all over this space in a very significant manner. He specifically raised measures relating to VAT and the collection of VAT from those who use digital platforms. We are indeed introducing joint and several liability to make sure that we step up the clampdown on, in that instance, VAT fraud. The right hon.”
“I see no reason why any particular business should want to go to a country with that in place as strongly as they would want to go where it is not in place. If it were just us alone, we would also be in the position of not being able to get public disclosure if a UK company had associated non-UK companies in other jurisdictions and not under that company’s control. The big advantage of going multilaterally is the standardisation of the standards that we set and the rules and regulations around each particular step. The Government will continue to work towards bringing in not just country-by-country reporting as we have at the moment, but public country-by-country reporting. I am grateful to my hon. Friend the Member for Amber Valley and all those who have contributed to the debate for helping to inform that discussion.”
“We have those; they are not public, but they are accessible in real time by HMRC and we have a good record in tracking down people who try to stash money away in, for example, overseas trusts. We have raised £2.8 billion in that respect since 2010. I was pleased that the hon. Lady welcomed the measures in today’s Budget that extend to 12 years the time period in which we can go after individuals who have been involved in just that kind of activity. In my final couple of minutes, I want to focus on the principal arguments. We are not against country-by-country reporting. We welcome the opportunity to move to exactly that situation, but to do so unilaterally will not work, for at least three reasons. It would certainly make the UK less competitive than other tax jurisdictions.”
“That is why we announced in the Budget today that we will be looking at introducing the withholding of taxes in respect of royalty payments for IP, where they relate to movements of income between ourselves and very low-tax jurisdictions. We will be looking into that whole area by way of consultation. I was tickled by the suggestion from the right hon. Member for Barking that she could feed me ideas that would make me more popular within my own party. I look forward to hearing as many of those as she cares to pass my way, because I am very interested in being so popular. The hon. Member for Ealing Central and Acton (Dr Huq) raised the issue of registers of beneficial ownership across, particularly, Crown dependencies and overseas territories.”
“Friend the Member for Ochil and South Perthshire (Luke Graham) spoke about the importance of international standards. He also raised the issue of intangible assets, which is one of the common threads running through the issues of companies shifting profits around. If there is clearly economic activity in a particular place, it is much easier to pin the profits to where that activity is occurring than if there are, for example, digital companies that are selling substantially into the United Kingdom but basing their operations elsewhere. That can be through royalty payments on intellectual property charges between companies; it is quite possible to avoid tax as a consequence.”
“In the case of the extraction sector and the financial sector, the information required is significantly less exhaustive than would be the case in country-by-country reporting. The right hon. Lady also asked a very important and pertinent question about how many countries would need to say yes for us to feel that we could go ahead on a multilateral basis. I suppose that gives rise to other questions, such as which countries and what mix of countries. She can rest assured that as and when, as we hope, we reach the point when sufficient countries say they will sign up, we will be pleased to do so. I add my congratulations to her for the hard work that she did, particularly on the Finance Act 2016, to ensure that her amendment reached the statute book. My hon.”
“We had the diverted profits tax in 2015, which addresses a number of the examples we heard in the debate today. We have been in the vanguard of the base erosion and profit shifting project at the OECD. We are benefiting now from the common reporting standards across 50 countries—rising to 100—so account information is available to HMRC in real time. We are engaged with the EU on mandatory disclosure rules to make sure that we can clamp down on schemes, through those who are party to them. The right hon. Member for Don Valley (Caroline Flint) raised the issue of the information required from the extraction sector and the financial sector in comparison with the ask on country-by-country reporting. Those are of course different sets of information.”
“I do not think the right hon. Lady and I are going to agree on that particular point. One point we might agree on is the tax gap, which is 6%—the lowest in our history. That is the difference between that which we should be collecting and that which we are collecting. It is a world-beating figure, also audited by the NAO. According to the International Monetary Fund, it sets a world standard in terms of robustness. As you will know, Mrs Main, we have done a great deal over the years in clamping down on tax avoidance and evasion. In the Finance (No. 2) Act 2017, which has just gone through Parliament, we introduced corporate interest restrictions to stop companies shifting profits around by the ingenious use of intra-company loans.”
“The Taxation (Cross-border Trade) Bill will pave the way for new domestic legislation that will enable the UK to establish a stand-alone customs regime. It will allow the UK to charge customs duty on goods, including those imported from the EU. It will allow the Government to set out how and in what form customs declarations should be made. It will also give the UK the freedom to vary rates of import duty as necessary, in particular in the case of trade remedies investigations and for developing countries.”
“Since the British people took the decision to leave the European Union in June last year, the Government have taken a number of significant steps to put that decision into action, including triggering article 50, taking forward the European Union (Withdrawal) Bill and, of course, undertaking the extensive consultation and planning that inform our negotiation objectives. The motions before us today represent another essential step in that process. We are here to debate legislation that will allow a new customs regime to be in place by the time the UK leaves the EU and its customs union and, in doing so, allow the UK to respond to the outcome of the negotiations. I do not need to tell the House how important that is.”
“I beg to move, That— (a) provision may be made imposing and regulating a duty of customs chargeable by reference to the importation of goods into the United Kingdom, (b) provision may be made conferring power to impose and regulate a duty of customs chargeable by reference to the export of goods from the United Kingdom, (c) other provision may be made in relation to any duty of customs in connection with the withdrawal of the United Kingdom from the European Union, and (d) provision may be made dealing with subordinate matters incidental to any provision within any of paragraphs (a) to (c).”
“In exercising article 50, the Government’s consideration was the decision taken by the British people in June last year to leave the European Union. On the hon. Gentleman’s specific point about the Northern Ireland-Ireland border, we are of the same mind as the European Union and the Irish Republic that there should be no return to the hard borders of the past. We are committed to as frictionless a solution as possible for the border between Northern Ireland and the Irish Republic.”
“We have made it clear on numerous occasions that we have no intention of reverting to the hard borders of the past, and that we will ensure that we fully take into account the unique political and cultural circumstances of Northern Ireland and the Irish Republic. In addition, the Bill will modify elements of our VAT and excise legislation to ensure that it functions effectively upon our EU exit. In doing so, the Bill will give the UK the power to implement new arrangements that will ensure that trade is as frictionless as possible.”
“The hon. Lady raises an extremely important point, particularly in relation to roll-on/roll-off ports. I have been to Dover to meet the port’s chief executive and other staff, and Her Majesty’s Revenue and Customs is closely engaged through various roundtable exercises with all the UK’s ports. We recognise the paramount importance of ensuring that we have fluid trade flows through those ports. The hon. Lady will know that the White Paper set out clearly the sorts of approaches that we will be taking, if necessary, to ensure that those flows are rapid and effective, and that trade is kept moving.”
“As the hon. Lady knows, at the point at which we leave the European Union, we will gain further control over VAT, although that depends on the precise nature of the deal that is negotiated. It might be that we move from acquisition VAT to import VAT depending on where that negotiation lands, which remains to be seen. The general principle is that the Government are entirely committed to ensuring that burdens on businesses are kept to an absolute minimum and that trade flows are maintained.”
“The bulk of the measures to which the hon. Gentleman refers will be in the Taxation (Cross-border Trade) Bill, including trade remedy measures on dumping, excessive subsidy and safeguarding. He will know that we take those issues extremely seriously. In the event that there is evidence of dumping or the other things to which I have referred, there will be a trade remedies authority, the details of which have already been disclosed to the House in the Trade Bill. That body and the Secretary of State for International Trade will be able to work together to ensure that, when there are problems due to activities such as dumping, we will be able to take appropriate action in the normal manner.”
“My hon. Friend raises an important point that goes to the heart of the Bill. This is a framework Bill, so it will allow us to make sure that we can deliver wherever the negotiations land. It does not presuppose any particular outcome from the negotiations; its purpose is to enable the outcome of the negotiations to be put into effect.”
“The Bill deals with our leaving the European Union, which means, as a simple matter of law, that we will be leaving the customs union. However, it does indeed allow for a transition period in which there could be a very close customs association with the European Union.”
“The Bill will be presented this evening. When the hon. Gentleman reads it tomorrow, he will be more enlightened as to how it can facilitate a period of transition.”
“We will be guided by HMRC on the number of staff required, and we are working closely with it on this issue. As the hon. Gentleman will know, Jon Thompson, the head of HMRC, has suggested that between 3,000 and 5,000 staff will be needed in a day one contingency scenario, if that is where we end up, and he and HMRC are in discussions with us about both the timing of the pressing of the buttons on these issues and the costs involved. The hon. Gentleman can rest assured that HMRC will be provided with whatever resources it requires to ensure that we are ready on day one.”
“The hon. Gentleman makes it sound as though the fact that we do not have the Bill available right now is in some way inappropriate or not right, but he will know that this Bill is a finance Bill—a taxation Bill—and it is coming in under Ways and Means. I will introduce the Bill at the end of this debate, having the opportunity to walk the Floor accordingly and to be admired by many Members on both sides of the House when I do so. He will also be aware that HMRC is involved in our ongoing negotiations on the issues he has raised, and these things will come out of those discussions in the normal manner.”
“My hon. Friend raises an important point: our nation is quite capable of ensuring that wherever the negotiation lands, we will be able to have the resources, talents and wherewithal to go out and make a success of Brexit, getting out and engaging in our future trading arrangements. The important thing is that this Bill does not presuppose any particular outcome, but facilitates whatever outcome we finally arrive at.”
“My hon. Friend has put the point very clearly and effectively, and nothing in this Bill acts counter to our ability to act in the way he has suggested.”
“My hon. Friend raises a crucial point for ro-ro—roll on, roll off—ports, and these are just the kinds of issue that I discussed with the personnel and the chief executive at Dover when I visited. I have regular discussions with HMRC on these matters, and it in turn has regular roundtable events and a particularly close association with the port of Dover. He is absolutely right to say that we must ensure that trade is fluid and moves quickly across that border. He will have noted the suggestions set out in the White Paper of the pre-lodging of customs declarations away from the port—from Calais, in this instance—and making sure we have the right inventory software in the port so we can match up those goods coming in against those declarations to make sure we keep the flow going.”
“If I may, I will finish the point. As to my hon. Friend’s specific question about whether I believe we are ready, let me say that I believe we will be ready. I believe that the customs declaration system—the IT system that is coming into place—will be ready by January 2019, that we will start seeing businesses and traders migrating to that system around August next year, and that we will be in the position we want to be in come day one.”
“As the right hon. Gentleman will know, the figure is very low. I think it is a matter of a couple of minutes—if the whole system stopped for more than a couple of minutes we would start to see major problems, which is why we are placing such an extremely high priority on making sure that our ro-ro ports continue to move as effectively as they should.”
“Yes, absolutely. In the case of Dover, most of the traffic is intra-EU trade, whereas a high proportion of the traffic going into Heathrow is more international than simply the EU, so there is already greater engagement with third-country trading. We are therefore confident that Heathrow will be ready.”
“I thank my hon. Friend for his intervention and, before I address his specific question, I also thank him for his insights and the fairly powerful lobbying he has quite rightly done on behalf of the Port of Dover and his constituents. On his specific question about infrastructure being ready, we certainly recognise that we need to have infrastructure there and that the port itself would generally not be able to handle a large number of stoppages at any one time. As I say, I have been down to the port to inspect the facilities there, so I certainly appreciate that. That is an issue that is receiving ongoing consideration.”
“Of course, Operation Stack arose not because of a general deficiency in the customs arrangements but because of the specifics of what occurred on the French side of the channel. If that situation occurred again, which I suppose it could do irrespective of the arrangements we have for customs, the Government would clearly make sure that we had sufficient resource to deal with that eventuality. As I have said, though, in terms of the customs arrangements themselves, the resourcing of the facilities and the arrangements that we need to put into place, we are confident that they will be there to keep the traffic moving on day one.”
“The UK has long been a great trading nation. Today, the UK’s trade with non-EU countries is equivalent to more than half of our exports by value, so getting our customs, VAT and excise arrangements right to support that—as well as continued trade with EU countries—is vital. We need to be able to pursue trade deals with partners across the world, while, at the same time, keeping our trade with the EU as frictionless as possible, and avoiding a hard border between Northern Ireland and Ireland. This Bill is a crucial stepping stone to the new arrangements that will allow us to meet those objectives.”
“This will allow the Government to give effect to a range of outcomes from the negotiations, including an implementation period. Businesses have called for certainty and continuity, and this Bill will, as far as possible, allow us to replicate the effect of existing EU customs laws. It is only prudent that the Government should prepare for all eventualities, so this Bill will also allow the Government to operate effective customs, VAT and excise regimes even if a deal with the EU is not reached, although, as I have set out, a negotiated settlement is in the interest of all parties. That is exactly what the Government hope and expect to achieve. Just as with the European Union (Withdrawal) Bill, this Bill is about laying the groundwork for our successful future outside the European Union. Trade is clearly going to be a key part of that.”
“It is for that reason that we are proposing an implementation period, during which businesses and Governments in both the UK and the European Union would have time to adapt. How long that period lasts and the form that it takes will be a matter for the negotiations, and it would of course cover issues beyond customs. However, as the Prime Minister has set out, the duration should be linked to the amount of time required to prepare for our future relationship with the EU. Current evidence points to the need for an implementation period of around two years. Although the precise nature of the relationship that we will end up with on customs is a subject for the negotiations, there are sensible steps that we can take now to prepare for the future. This Bill is one of those steps, providing, as it does, a framework for a new customs regime.”
“That approach includes a number of measures to help minimise barriers to trade: negotiating continued access to some facilitations that our traders currently enjoy; introducing innovative new-technology-based solutions to reduce the risk of delays; and simplifying and streamlining the administrative demands on businesses. The other is a new customs partnership. It is an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world, removing a need for the formal customs border between the UK and the EU. Both of those options would take time to put in place. We are clear that “cliff-edge” changes are in no one’s interests. Businesses should have to adjust only once to a new customs relationship.”
“We welcome the recognition from our European partners that this is a point of absolute importance, by which I mean their commitment to the Good Friday agreement and their focus on flexible and creative solutions to avoid a hard border. We look forward to making progress on that issue. To meet those core objectives—establishing an independent international trade policy, ensuring UK-EU trade that is as frictionless as possible and avoiding a hard border on the island of Ireland—the Government have set out two options for our future customs regime. One is a highly streamlined customs arrangement.”
“We will also want to ensure that we have an ambitious new customs arrangement with the EU that will allow us to keep trade between the UK and EU member states as free and as frictionless as possible. As the Prime Minister has made clear, although we are leaving the EU, we are not leaving Europe. Having mutually beneficial customs, VAT and excise arrangements is clearly in the interests of businesses on both sides—a resounding message that we have been hearing from the hundreds of businesses that we have consulted on this matter since the referendum. Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland.”
“I have taken a rather large number of interventions, so in the interests of making progress I shall do as my hon. Friend suggests and write to him on that specific point. Working in tandem with the Trade Bill, which was introduced to Parliament earlier this month, this legislation will help to provide the continuity and smooth transition that everybody wishes to see. Let me be clear to the House that, by virtue of leaving the EU, the UK will also leave its customs union—that is a legal fact. It is also a critical part of allowing the UK to forge a new relationship with new partners around the world. Leaving the EU customs union will allow the UK to negotiate its own trade agreements. Those trade agreements will be based solely around the UK’s national interests and needs.”
“I have patiently listened to what the hon. Gentleman has had to say. He has referred to the powers in the European Union (Withdrawal) Bill and to the operation, setting-up and independence or otherwise of the TRA. Neither of those items is actually included in this Bill, so what is it in this Bill that he wants to make a point about?”
“I urge the House to reject both amendments, and I commend the motions to the House. Question put , That the amendment be made.”
“Moreover, in the absence of a deal, if we offered those arrangements to European countries, we would find that, under the most favoured nation rules, we would have to offer the same duty arrangements to all the other countries with which we were trading, which would of course be an absurdity, and they would not necessarily have to reciprocate. My right hon. Friend the Member for Broxtowe (Anna Soubry) talked of our jumping off a cliff into no deal. The Government have no intention of going anywhere near any cliffs or jumping off them. We are pushing for a good deal, we are negotiating hard, and I am confident that we will get a deal that is in our interests and also in those of the European Union. The Bill is an enabling Bill that allows opportunities, whereas the amendment is disabling in the way I have described.”
“That is a perfectly reasonable aspiration, but it overlooks the fact that we have voted to leave the European Union, and that we will therefore, of necessity, be leaving the customs union. We want to be able to go out and put together our own trade deals across the world. My hon. Friend the Member for Gloucester (Richard Graham) said that the amendments closed off options. He is entirely right, but it is worse than that: they introduce options that are deeply unattractive. If we passed the amendments, we could find ourselves in a position whereby we unilaterally offered the same terms to European countries, but did not receive the same duty arrangements in return, which would be hugely to our disadvantage.”
“I urge her to wait until she sees the Bill and the opportunities in it for the Government to provide that scrutiny. The hon. Member for Aberdeen North (Kirsty Blackman) said she was not clear what we wanted from these negotiations. We have in our White Paper made clear the direction of travel we foresee in these negotiations. She also raised a point about the customs declaration service computer system, suggesting that we had allowed just three months for testing—that being, I assume, the date between January 2019 and our exit from the European Union. In fact, the full system will be up and running in about August next year, and companies and traders will be migrating to it between August and January 2019. The hon. Member for Edinburgh South (Ian Murray) says that he wants to stay in the customs union.”
“We have had a full and good debate this evening on an extremely important matter. I do not think that anybody on either side of the House would suggest that these matters are not of the utmost importance. Perhaps I could run through some of the points raised. My hon. Friend the Member for Yeovil (Mr Fysh) rightly raised with me, as he has done on many occasions, the importance of HMRC being appropriately resourced. He will know that to date we have provided more than £40 million to HMRC and that we will provide it with such funds and resources as it needs going forward. The hon. Member for Oxford East (Anneliese Dodds) bemoaned the fact that the Government would be able to change duties as a consequence of the Bill through secondary powers without parliamentary scrutiny.”
“They are wrong for the reasons that the right hon. Lady has given: those who pay their tax fairly should not be penalised by virtue of the fact that some do not pay their tax fairly. We also know, as the right hon. Lady pointed out, that tax is necessary to fund our vital public services. It is therefore entirely wrong that those who aggressively evade or avoid tax put pressure on our public services—on our NHS, our doctors and our nurses.”
“I congratulate the right hon. Member for Barking (Dame Margaret Hodge) on securing this important debate. She has been a vigorous campaigner on these issues over many years, and has certainly been very active in the last week; I responded to an urgent question and there was an Adjournment debate in respect of the Isle of Man last week, and now we have this debate as well. The right hon. Lady said that tax and tax avoidance was one of those matters that should not divide us. I agree, and it seems to me that in the various iterations of this debate that she and I have held across this Dispatch Box there is a great deal on which we can be united rather than divided; I am thinking not least of the shared view across this House—certainly on my side of the House—that aggressive tax avoidance and evasion are utterly wrong.”
“Lady is rightly critical of the performance of the last Labour Government; she raised that this afternoon and raised the same point in last week’s Adjournment debate. The tax gap is the difference between what we could potentially bring in by way of tax and what we actually bring in, and it currently stands at 6%, which is a historical low—a world-beating figure. If the average tax gap today was the same as under the last Labour Government, there would be £45 billion less in our Exchequer—£45 billion not there for those vital public services that the right hon. Lady is keen to discuss.”
“I will get back to the hon. Lady on that. We know that tax is important for our public services, and we know, as the right hon. Member for Barking rightly stressed, that it is important that the Government act, and be seen to act, when we come across aggressive tax avoidance and evasion. As my hon. Friends on this side of the House have eloquently pointed out, we have a very strong track record in that respect. We have raised £160 billion in additional revenues as a consequence of clamping down on tax avoidance, evasion and non-compliance since 2010. We have also brought in £2.8 billion by tracking down those who have sought to inappropriately hide their finances in overseas tax jurisdictions. We have brought in £28.9 billion in additional compliance yield in the last 12 months alone, too. The right hon.”