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Leaving the EU: Tax Revenues

Volume 648: debated on Tuesday 6 November 2018

The Government will be coming forward with a full and appropriate analysis of the impact of the deal we negotiate with the European Union well in time for the meaningful vote.

The Government’s own figures demonstrate between a 2% and 8% hit on the broader economy after Brexit. Is it not the case that there is no form of Brexit that will not have a massive impact on the public finances and, therefore, on public services?

We are in the middle of a negotiation. At the appropriate moment, when we know exactly what the deal is—the deal that is available and that we have negotiated—we will of course come forward with a full and comprehensive analysis of both the fiscal and the economic impacts of that deal.

Is it not important that the public and Parliament are able to scrutinise not just the Treasury assumptions on tax as we leave the European Union but the Treasury assumptions on all aspects of the economy under the Treasury’s CGE—computable general equilibrium—model? Will the Treasury publish that model as soon as possible?

As I say, we will come forward with a full and appropriate analysis. Of course, prior to the meaningful vote, the Government will ensure that there is appropriate time to fully debate all these matters.

Our country already suffers from brutal inequality, so will the Minister say whether that analysis will be broken down by region and sub-region so we can see exactly what the impact of Brexit will be on the communities we represent?

As the hon. Lady will know, under this Government income inequality is far lower than it was under Labour. I am not going to start getting involved in a running commentary on the negotiations and the various impacts thereof, as that would not be helpful, other than to restate that a full and appropriate analysis will be provided to the House prior to the meaningful vote.

Will Ministers consider moving the trigger point for the application of the zero rate of VAT for new build dwellings as defined in the Town and Country Planning Act 1990, which would end the unintended discrimination, both before and after we leave the EU, against self-build and custom house building projects, while not harming Government revenue?

That is possibly the most ingenious question I have ever heard in this House, and it is indicative of my hon. Friend’s passion for and commitment to this matter. I recognise the issue he raises on the zero-rating of new builds, on which he wishes to extend the scope somewhat. I believe that my office has now arranged a meeting with him, and I look forward to it taking place within the coming days and weeks.

Will the Minister ensure that both he and the Chancellor take steps in advance of the next Budget to ensure that thousands of jobs can be created, particularly in Northern Ireland, by looking at air passenger duty and at VAT in the hospitality sector?

As the hon. Gentleman will know, we have consulted on APD and VAT on tourism in Northern Ireland, and we have now reported back on that consultation. We are setting up a technical working group to look specifically at the issue of short-haul APD to see whether there is some way in which that could be addressed.

Even before that great day, what reassurance can the Minister give to those of us who hold on to the quaint belief that Budgets should balance?

We take a very balanced approach to the economy, which of course includes ensuring that we stick rigorously to our fiscal rules. We have met the two intermediate rules a full three years early. We continue to bear down on the deficit, and debt as a percentage of GDP will continue to fall throughout every year of this Parliament.

Each additional EU citizen working in Scotland contributes £10,400 to Government revenue. What assessment has the Minister made of the reduction in tax revenue as a result of the ending of free movement?

I am sorry to keep reverting to the same answer, but it is effectively the same question that I keep being asked: “What will the analysis look like when the deal is concluded?” Of course that prompts the question of what exactly the deal will be. In the fullness of time, when the deal is agreed, we will come back to the House with a full analysis.

Her Majesty’s Revenue and Customs can collect customs duties only if it has a working customs system, so how is the roll-out of the customs declaration service going? How is HMRC going to achieve the Government’s commitment in the Red Book to halve the time it takes to apply for customs trusted trader status?

The hon. Lady raises the issue of the CDS system. The current expectation is that that will be fully functioning by the end of March next year, which means we therefore have a robust back-up in the extension of the CHIEF—Customs Handling of Import and Export Freight—system. This is to make sure that that gears up for the huge increase in the number of customs declarations that will need to be made in a no-deal situation. We will of course continue to work hard on that matter.

Further to the answer the Financial Secretary gave to my hon. Friend the Member for Dover (Charlie Elphicke), will he publish, when he is publishing the CGE analysis, the assumptions underlying all potential EU exit scenarios, including those on World Trade Organisation terms and with a free trade agreement?

The commitment we have made is that the deal agreed between us and the EU—we are confident we will achieve exactly that—will be fully analysed in an appropriate way and delivered to this House so that during the days in the run-up to the meaningful vote all Members of the House will have an opportunity to properly study that analysis.

Last week’s Budget certainly did not end austerity, but we all heard that things could be even worse in the event that the Government fail to get a good Brexit deal. In the Chancellor’s own words, that would necessitate a new Budget entirely, so may I ask the Financial Secretary an entirely straight question: how will the Government react to the loss of even 10% of our tax revenues from financial services in the now likely event that our market access is diminished?

The hon. Gentleman raises the issue of financial services, and of course he will be aware that recent progress has been made on that issue with our European partners in the negotiation. As for the impact of an actual deal, as I say, we do not know exactly what that deal will look like at this stage. When we do, we will come forward to the House with an appropriate announcement.

The reason the Minister keeps having to give the same answer is that the Government’s answer is woefully inadequate. Business needs certainty and the Government have run out of time, so will he at least acknowledge that securing no more than equivalence to what is already available to third countries would be insufficient? Is it not the case that if people want a Brexit deal that really protects jobs and tax revenues, and they want to end austerity, the only way they can have both is with a Labour Government?

It was all going so well—not that well, actually, but it got a sight worse towards the end. Government Members know that we are taking the responsible decisions to move forward a very difficult and detailed negotiation. At the appropriate time, when we have a deal—we are confident we will do that—we will present it to the House, and the House will then be able to express its view on it.