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Customs Clearance Arrangements at UK Ports

Volume 790: debated on Monday 19 March 2018


My Lords, with the leave of the House, I will repeat the response to an Urgent Question given by the Financial Secretary to the Treasury in the other place earlier this afternoon. The Statement is as follows:

“Mr Speaker, the Government have been clear that in leaving the European Union the UK will also leave its customs union, allowing us to establish and enhance our trading relationships with old allies and new friends around the world. The Government have also set out that in leaving the EU customs union, we will be guided by what delivers the greatest economic advantage to the United Kingdom and by three strategic objectives: first, continued UK-EU trade that is as frictionless as possible; secondly, avoiding a hard border on the island of Ireland; and thirdly, establishing an independent international trade policy.

Looking forward, as we implement the decision of the British people to leave the European Union at the end of March 2019, we want a deep and special partnership with the European Union. The Government have already set out in their future partnership paper last summer two options for our future customs arrangements—two options that most closely meet these objectives. One is a highly streamlined customs arrangement. That approach comprises a number of measures to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new technology-based solutions. The other is a new customs partnership, which is an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU. Those models were detailed again in the Government’s White Paper last October, and by the Prime Minister in her speech at Mansion House earlier this year and in her subsequent Statement to this House. We look forward to discussing both these options with our European partners and with businesses in both the UK and the European Union as the negotiations progress”.

My Lords, I thank the Minister for repeating the Answer to the Urgent Question. According to the Guardian, Chris Grayling said:

“We will maintain a free-flowing border at Dover. We will not impose checks in the port … We don’t check lorries now; we’re not going to be checking lorries in Dover in the future. The only reason we would have queues at the border is if we put in place restrictions that created those queues. We are not going to do that. We will manage trade electronically. Trucks will move through the border without stopping”.

Does the Minister accept that it is both reckless and misleading for his colleague, the Transport Secretary, to imply that there will be no checks at Dover in the case of a hard Brexit? Can the Minister point out to the House other examples of countries that allow goods to flow through their borders unchecked without some form of customs agreement? Can he also explain to the House how HMRC will be able to implement customs checks post Brexit while the Government continue to close HMRC offices and when they have cut staffing levels by 17% since 2010? Finally, given the Government’s track record of delivering computer systems, does he honestly think that delivery of an upgraded system by March 2019 is in any way realistic?

In response to the first question, what the Secretary of State for Transport described is pretty similar to what I said in the Answer to the Urgent Question about our desiring a frictionless border between ourselves and the European Union and a deep and ongoing partnership. Clearly, “frictionless” has connotations relating to particular checks which could be undertaken at roll-on, roll-off ferry terminals such as Dover, which are important to the economy.

On the second point, the noble Lord invites me to think about whether there are other examples which could be pointed to in this regard. But again, we are looking for something unique, innovative and different. We believe that it is possible; the fact that we are seeing agreement on the implementation period just today shows that it is possible with good will on both sides.

Finally, the noble Lord asked about HMRC and computer systems. That was one of the reasons why the Chancellor announced in his Autumn Budget that a total of £3 billion will be made available and, specifically, that £260 million will be made available to HMRC to prepare itself for the outcome. Therefore the resources are there. To touch on the point the noble Lord made about technology, that is interesting, because it is not as if at the moment the UK does not have any expertise in trading with the rest of the world. It does so quite frequently, and if you go down to Felixstowe or other places, you will see significant amounts of imports that come through and are dealt with in an incredibly efficient and effective way, using technology. We are seeking simply to take that technology and to give it wider usage so that it achieves our objective of a frictionless border that enhances both trade in the EU and for the UK.

My Lords, does the Minister understand that even companies that have obtained trusted trader status—it is expensive—do not use it, because it is so complicated and expensive that they have found that it is not worth while? Secondly, he will know that in the container ports he cites, goods coming long distance are on ships for days and even weeks, which is why trusted trader status can be used in those situations; it takes so long that it cannot be used at an equivalent of Dover, where you have a roll-on, roll-off situation. Does the Minister also recognise that coming through the Dover port, and intermingled with the kinds of operations that could perhaps seek trusted trader status, are vans that have the accumulated goods for 12 small companies, Amazon delivery vans, and so on? The traffic is so completely mixed, and because there is no space at Dover or any capacity to pull out any of the trucks, the mechanism he describes is in effect one of turning a blind eye.

Picking up the Government proposals for dealing with the Irish border, where essentially small businesses, which account for 80% of cross-border traffic, would not be checked, that, again, is the blind-eye strategy. Does the noble Lord understand the implications for smuggling and for abuse of the system of what he is talking about? We already have extensive fuel smuggling at the Irish border and extensive abuse of the VAT tariff differential. He is now creating an opportunity in not just Ireland but at the UK ports, especially the ro-ros, for criminal activity on a scale which this country has fought deeply in the past.

The noble Baroness takes a very pessimistic view of this matter. We believe that we are taking a realistic and optimistic view of the potential agreements. For example, we believe that it is in everybody’s interest to ensure that this process takes place. If we look at the balance of trade between ourselves and the EU, there is a deficit of £96 billion on trade in goods, which suggests that it is very much in the enlightened self-interest of our European friends to ensure that that border is as frictionless as possible so that this trade can take place.

The noble Baroness referred to the situation in Northern Ireland. Of course, there is a difference in duty on certain goods between the two countries, as she alluded to, and they have introduced mechanisms for dealing with that. They have a variety of means of doing so, not just technology. They use some physical checks, particularly to clamp down on the fuel element of that traffic, so I believe that where there is a political will, there is a way. We believe that a will to make this frictionless border happen has been demonstrated, and that is what we are working towards.

My Lords, will my noble friend draw the attention of noble Lords opposite who are so sceptical about the use of technology to the evidence given to the House of Commons Select Committee on Exiting the European Union on 29 November 2017, when the chief executive of HMRC, Jon Thompson, said that,

“this has been our consistent advice to ministers, we do not believe we require any infrastructure at the border between Northern Ireland and Ireland under any circumstances”,

whatever the outcome of the talks? In the same session of the committee, the Defra policy director for animal and plant health, John Bourne, replied, when he was asked how he could achieve no border and no infrastructure,

“the risk post-Brexit does not change … Is there a problem … No”.

Whatever we say, those are very profound statements made by people who are in the front line of protecting our borders and ensuring that we collect the duties and taxes due to us. That shows that it is possible. Moreover, we say that the whole trajectory of global trade is heading in a digital direction. We also believe that our approach as a Government is moving towards a digital tax system. We believe that this necessity will force further invention, which will mean that we can deliver this process to the benefit of our economy and productivity as a whole.

If the Government are so confident that this arrangement in Northern Ireland will work, why do they not apply exactly the same arrangement to Dover? When the Minister talks about the system being frictionless at the moment and goods can go through, of course that is the case because there are no tariff requirements. When tariff requirements apply, the whole regime changes. What controls will exist in the case of trucks that come through this border that is proposed for Dover, where it might well be possible, because the entry is from the destination point, to unload the truck or the container en route, having already come through Dover, where the entry does not truly reflect the goods that are on the truck or in the container?

The noble Lord raises a technical point. I am not in the front line of dealing with these issues. The people to whom my noble friend referred, who gave evidence to the Select Committee, are, and they seem to think that it is possible to do this and achieve these objectives. We should have confidence in them and in ourselves.