Considered in Grand Committee
My Lords, these regulations will provide an exemption from paying vehicle excise duty to a specific group of specialist events hauliers in Great Britain. Specialist events hauliers are a small but important subsector of hauliers that transport equipment for touring cultural events. This includes concert tours, art exhibitions and sporting events. They typically undertake a significant number of internal movements, or tour stops, in the UK and the EU. Prior to the end of the EU transition period, UK hauliers operating in the EU were able to undertake unrestricted cross-trade movements—that is, the movement of goods between two other countries—and up to three cabotage movements: the movement of goods within a single country.
Under the EU-UK Trade and Cooperation Agreement, UK hauliers are now restricted to one cabotage and one cross-trade or two cross-trade movements within the EU. As such, specialist event hauliers’ business models have been significantly affected. That is why the Government are taking action to support this part of the haulage sector in adapting to the changes via a dual registration measure. Specialist events hauliers which are able to establish an international base in the EU or beyond while maintaining their UK base will be able temporarily to transfer their EU-registered vehicles to their GB operator licence while they operate in GB without the need for paying UK vehicle excise duty.
Dual registration will allow operators that wish to operate in the EU to function as an EU operator, benefiting from single market access rights, and to operate in the UK as GB operators, benefiting from their status as a domestic GB operator, all of this without the need to swap their specialist vehicles in the middle of a tour. Overseas haulage companies that set up a base in GB can also benefit from this approach. The main function of this SI is to provide an exemption from VED for hauliers which wish to utilise the dual registration arrangements. Without this VED exemption, this approach would not be viable.
This change will provide an efficient process when operators switch the vehicles from their EU operator’s licence to their GB operator’s licence. To utilise the dual registration a number of criteria will need to be met, which are set out fully in the draft statutory instrument. The haulier must be operating under a hire or reward model; the haulier must also establish and maintain an operating base in Great Britain as well as another base abroad, as I mentioned; the vehicle being used must be specifically designed or substantially modified in order to carry the goods needed for cultural tours; the specific goods that the haulier may carry are property, equipment or animals being transported to specific venues or events; and the goods being carried from place to place during a tour should remain unaltered. In line with existing rules on the temporary import of vehicles, the vehicle may be registered in Great Britain for up to a maximum of six months in any given 12-month period.
Unfortunately, there are unavoidable limitations on what is possible here. This is a complex issue for which there are no simple solutions that will meet the needs of all parts of a fairly diverse sector. The proposed dual registration measure will go some way to meet the challenges that the sector is facing, but we acknowledge that some specialist event hauliers will be unable to utilise these proposals for a number of reasons. For example, smaller specialist haulage firms or own-account operators may not have the resources needed to set up overseas. Also, an own-account operator’s business model would need to change to hire or reward, and in certain circumstances that is not going to be viable.
However, this instrument is of vital importance to a large number of companies operating as specialist events hauliers, and therefore I beg to move.
My Lords, I thank the Minister for explaining so clearly how this will work. The Government launched this SI with much fanfare early last month—fanfare and the obligatory swipe at the unacceptable nature of EU bureaucracy that necessitated the SI. That is called Brexit, and those of us who opposed Brexit pointed out that if you do not belong to the club, you cannot benefit from the rules and, unfortunately, that lesson is becoming all too clear. Hence, we have this measure, which is one of a long line of complex, awkward fixes that we have discussed here in this Committee, over the months and years, to try to defray the damage that we are suffering from as a result of no longer being a member of the EU.
Of course, this order is very welcome as far as it goes, but it has taken a long time to get to this point. Since we left the EU, our specialist hauliers have been limited to, I think, three EU stops per tour, and many of them have already established bases in the EU to overcome this, with a resulting loss to the UK economy. It is not as if the firms in this sector did not warn us that this would happen. I was a member of the EU Internal Market Sub-Committee, and back in 2018, we took evidence from an organiser of major exhibitions who predicted exactly these problems.
One of the phrases the Government like to use frequently is “world-beating”. Often, it is a sad exaggeration, but in relation to the cultural sector it is very accurate. I would prefer to say “world-leading”, but the point is that our soft power through the cultural sector has been immense and is sadly diminished as a result of the constraints on touring in Europe. I have a number of questions for the Minister. It is 18 months since we left the EU. Can she perhaps explain why it has taken this long to get to this important measure? Ideally, it should have come in smoothly and immediately after we left the EU.
Paragraph 7.6 of the Explanatory Memorandum refers to a maximum period of transfer for a vehicle to a British operator licence as being
“six months in a twelve month period.”
I understand the concept of “temporary”, but why is six months the definition of “temporary”? Why not eight months or any other number of months within 12 months? Is there a legal basis, or is this something that was just added on?
Paragraph 7.4 says:
“This Instrument does not permit transportation of any item of goods for the intention of being sold on (such as merchandise).”
That is actually a very prescriptive limitation. I was part of a music group many years ago touring in Europe, and we took CDs with us. There would not be CDs now, but we also took t-shirts and souvenir programmes to be sold. It would appear that we would not be allowed to do that now. Such items are, very often, marginal. They are just part of giving that little extra edge to the operator. They are an important part of spreading our soft power, getting the name of the group known abroad.
So why is it that they are excluded? It seems it could incur considerable or disproportionate expense to carry them separately—a whole separate vehicle or separate haulage charges in some other way. It does not, to my mind, seem necessary. Was any consideration given to allowing goods of that type to a certain limited amount—maybe limited in total value or limited as a proportion of the total?
The net result of this SI is that some foreign-registered vehicles will be operating in the UK on British operator licences. This in itself presents enforcement challenges, which I am sure the Minister will have gone through, but could she give us some idea of the numbers expected to be affected by this? Is it hundreds, tens or thousands? What estimate has been given? There is a lack of impact assessment once again. The words used are that there is no significant impact on business. I had hoped that there will be a significant impact on business and therefore I am surprised that an assessment was not made.
Of course, I welcome this hope it does the trick, although the Minister has reminded us that it might not work for everyone. Sadly, we have heard of a number of artists who have stopped touring already and, unfortunately, they will not all return as a result of this. We have lost stature as a result of this situation.
My Lords, I was expecting a very dry debate on this relatively straightforward SI, but one of the joys of this place is that you are allowed to discover fellow Members meeting by meeting. The idea of the noble Baroness, Lady Randerson, leading a life previously as a groupie—though I hope not quite at that level—adds a little excitement to this debate, which it perhaps needs.
I welcome the introduction of this instrument to support British touring overseas. The House is aware that, since the UK left the European Union, companies which tour Europe have faced new obstacles in continuing their work and we all hope that this order will help them overcome this. The Government are right to bring forward these new provisions to allow certain hauliers to operate both in the UK and EU without having to pay vehicle excise duty—in effect, benefitting from the single market access rights.
I will not detain the Committee for long but there are three issues on which I would appreciate clarification. First, can the Minister explain why the measures are coming into force in August rather than earlier, especially given that the industry is particularly busy during the summer season? Secondly, the department has estimated that up to 50 specialist events hauliers, which in total have 1,000 vehicles, may decide to use this measure. How was this figure calculated and what proportion of specialist events hauliers does it represent? Finally, what steps will the Minister take to make the industry aware of these changes and to monitor their effectiveness? I hope the Minister can provide clarification on these points.
My Lords, that was relatively brief and moderately pain-free, but I will certainly answer as many questions as I can—and will write, as I can spot at least two I am feeling a little bit dubious about.
I think it is worth scooping up comments made by the noble Baroness, Lady Randerson, and the noble Lord, Lord Tunnicliffe, about what the timelines for this look like, how we ended up where we are now, why it was not done earlier, et cetera. Eighteen months ago, when we finally left the EU, there were all sorts of other things going on. There were not that many tours going on at the time, but we were aware that there was this potential issue with specialist events hauliers. As noble Lords may be aware, we explicitly requested bespoke arrangements for this sector when we were discussing the TCA, but the EU rejected those proposals so we have had to develop from there. It is the case that we went back and 100% checked with the EU whether it was absolutely sure that it could not think of some way for it to proceed. DfT officials raised that matter at the specialised committee on road transport in November 2021, noting that this sector had been disproportionately affected by the TCA and that this would have knock-on effects on artists affecting future cultural exchange for both sides.
We did not get far on that—I am not going to lie—and therefore realised that we would have to speak to the sector, as we would normally do in these circumstances, to understand exactly how we could help it. We did the consultation in February 2022. I cannot remember exactly how many people responded; I think it was something like 28. It was not a huge number, reflecting the relative size of the sector, which is not massive. After the consultation closed, we had to analyse the responses and shape the final policy position because, as I noted in my opening remarks, this does not help everybody and we wanted to make sure that we could help as quickly as possible. That is a very long-winded way of saying—the noble Lord, Lord Tunnicliffe, looked at his watch there—that the earliest we can get this into force is in August 2022.
However, I have positive news because we have done an interim measure. It is an exceptional administrative process which basically allows what we are proposing in the statutory instrument to happen now. That means that we have managed to safeguard the process over this summer. If differs from dual registration in that no legislative changes are required and it is instead implemented through an administrative arrangement with the Office of the Traffic Commissioner, but we recognise that that is quite temporary and we do not want to continue that arrangement without a firm legal footing. That is where we are with that.
The noble Baroness, Lady Randerson, asked why six months, and I am afraid I do not have the answer. I think there is a broader issue about vehicles coming into the UK in general, in that they can come in for six months before something has to happen. I will write to the noble Baroness because I do not think that is a good enough answer.
The noble Baroness raised an important point about merchandise, which I thought was very interesting. However, the goal of what we are trying to do today is to focus on certain specialised vehicles. The reason we have this problem is that you load your cultural objects or your things relating to your event into your truck, which itself is specialised for transporting specialised equipment. That is why we are very clear that that equipment must not be amended, altered or sold, otherwise it becomes something entirely different. When it comes to merchandise, you do not need a specialist truck to transport CDs, brochures or whatever; they can be transported by any good courier company. I shall see whether I can find anything more about that. The whole point of this order is to focus on these trucks, which are simply not available to meet the needs of the artist or whoever across the EU, and you would not want to change them.
I am grateful to the Minister for giving way. My point is that if you are transporting an orchestra, you have specially adapted pantechnicons full of specialised equipment and instruments—you shove a few boxes of programmes and merchandise in the bottom as you go. Because they would have to send them separately, orchestras will print their programmes in Europe rather than printing them in the UK and taking them, and they will print their t-shirts in Europe rather than in the UK. We are losing business that way. I am making what I think is a simple point: something that is clearly ancillary to the main purpose of the truck should be allowed.
I think the noble Baroness summed it up very well in that last comment: if it is “clearly ancillary” to the main purpose of the truck, other arrangements could well be found. I will write if I can find out anything slightly more positive to ease her mind. Otherwise, I am fairly sure that orchestras will be shoving boxes of brochures under violins anyway, but let us not worry about that right now.
On the impact assessment question from the noble Lord, Lord Tunnicliffe, this SI does not amend or impose requirements on business practice, excluding a tax measure; this is really a tax measure rather than a change in regulation per se. A tax information and impact note has therefore been published by HMRC, as this proposal includes tax policy changes.
The noble Lord, Lord Tunnicliffe, also asked how many people would make use of this. The information we have comes from the industry; we think that there are up to 50 specialist events haulage firms that operate, but we of course do not know quite how many will then go on to make use of this. We do know that three possibly larger specialist haulier firms have already set up within the EU and that more have plans to do so once this regulation is in place. I am afraid that I have no more information than that because we simply do not collect data on that sector specifically.
We will publish the guidance associated with these regulations by 15 July on GOV.UK. My officials are in contact with the sector and also working alongside the DCMS, which is also very interested in this area. Between the DfT and DCMS, we will be engaging with the industry to make sure that key stakeholders are aware of the implementation date and their options. I will write to the noble Baroness on the number of foreign-registered overseas trucks that we expect in relation to the specialist events sector. I am afraid I can probably tell her now that we will not know that number. In terms of enforcement challenges, I see no difference from other foreign trucks we have in the UK and the enforcement challenges that the DVSA has for those. I beg to move.