Commons statement on EU Exit: End of Transition Period - July 13

The Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office (Michael Gove)

With permission, Mr Speaker, I would like to make a statement on our preparations for the end of the transition period.

Before I do, may I place on record my thanks—and, I am sure, those of the whole House—for the 20 years of service that Dave Prentis, the general secretary of Unison, has given? Mr Prentis announced today that he will be standing down at the end of this year. He has been an exemplary trade union leader. We have all been reminded during the covid pandemic of how much we depend on the public sector workers he speaks up for. I would like to extend my best wishes to him on his retirement.

On 31 January this year, the United Kingdom left the European Union, and last month we confirmed to our European Union partners that there would be no extension of the transition period beyond 31 December. My counterpart as co-chair of the Joint Committee confirmed that this marked “a definite conclusion” to the matter, and the deadline for extension has now passed. As a consequence, from 1 January 2021 we will embark on the next chapter in our history as a fully independent United Kingdom. With control of our economy, we can continue to put in place the right measures for covid recovery. With control over the money that we send to Brussels, we can spend it on our priorities—investing in the NHS, spreading opportunity more equally across the UK, and strengthening our Union. We are also able to build a trading relationship with our neighbours in Europe that serves all our interests, while also developing new economic partnerships across the world, including opportunities for new and better trade deals with the US, Japan, New Zealand, Australia and many other nations.

The deal the Prime Minister struck last year, which the country backed in the general election, means that we can look forward with confidence to the end of the transition period on 31 December, but of course there is still work to do to prepare. Regardless of the outcome of negotiations with the EU over our future relationship, whether or not we have a Canada-style deal or an Australian model, we will be leaving the single market and the customs union. This will herald changes, and significant opportunities, for which we all need to prepare—Government, business and individual citizens.

So I am announcing today two significant new initiatives that will bring financial support, further clarity, and reassurance for business and citizens. We are launching a major new public information campaign to make sure that everyone has the facts they need about the actions that we all need to take in order to be ready. We are also releasing for the first time an operating model for the border that will benefit importers and exporters, and provide information to hauliers, shippers, freight companies and our customs intermediaries. This comprehensive guidance covers every processing system used across all Government Departments and has been developed after extensive consultation with industry partners, operators and, of course, the devolved Administrations. Together with the additional £705 million package of funding for border infrastructure, extra jobs and better technology, this will help to ensure that our new borders will be ready when the UK takes back control on January. It will assist the smooth movement of goods, and it will also help us to lay the foundations for the world’s most effective border by 2025, making our country more secure and our citizens safer.

Turning to the detail of these initiatives, the public information campaign—“The UK’s new start: let’s get going”—will run in the four home nations and internationally, encouraging us all to play our part in preparing for change. The campaign will be supplemented by the deployment of experts in the field, giving one-to-one support to businesses and their supply chains to ensure that they have made arrangements that will help to keep their operations running efficiently.

From January 2021, in order to fulfil the import process, traders will need to have a GB economic operators registration and identification, or EORI, number before moving their goods. They will need to have the commodity codes of their goods, which will be needed to make a customs declaration and, of course, to calculate duties on an import. They will need to know the customs values of their goods, the rules of which are based on the World Trade Organisation valuation agreement. They will also need to have considered whether they are able to use, and would benefit from using, any of the available simplifications or facilitations, including deferring customs declarations for standard goods. Traders who choose not to defer their customs declarations will also need to ensure that they have considered how they will make those declarations to Her Majesty’s Revenue and Customs systems, and, of course, whether or not they will use an intermediary. From January 2021, traders who are exporting goods to the EU will need to make export declarations and ensure that they have the right certificates and licences required for entry. While there is still work to do, substantial progress has been made to ensure that we all fulfil our promise to the British people and take back control.

The freedom to control our own borders brings many benefits. Our plans mean that we can introduce a migration policy that ensures that we are open to the world’s best talent, and my right hon. Friend the Home Secretary has set out further details of that today. A new, points-based immigration system will ensure that we can attract the scientists, innovators and entrepreneurs who can power future economic growth. It will also help us to ensure that our NHS attracts the very best professionals from around the world to our hospitals. The new technology that we are introducing will allow us to monitor with far greater precision exactly who and what is coming into and out of our country, enabling us to deal more effectively with organised crime and other threats.

Control of our borders also means that we can choose the right trade and commercial policies for this country. The border operating model that we have published today provides clarity about the end-to-end journey of goods on the move between Great Britain and the EU, including information about controlled goods and the new Government systems that will support future trade. I place on record the Government’s gratitude to the border sector for the practical knowledge, enthusiasm and expertise it has brought to the development of the operating model, which is the result of extensive consultation and collaboration.

It is important to note that, as the document makes clear, the border operating model does not cover matters relating specifically to the Northern Ireland protocol. I reassure the House that guidance specific to Northern Ireland will be published in the coming weeks and on an ongoing basis throughout the transition period.

With autonomy comes the freedom to be practical and pragmatic in implementation, which is why, in the light of coronavirus and to give business and industry more time to adjust, we announced last month that border controls would be introduced in three stages up to 1 July 2021. In the first phase, from January 2021, traders importing standard goods will need to prepare for basic customs requirements. Full customs declarations will be needed for controlled and excise goods—such as alcohol and tobacco products—but people importing standard goods will have up to six months to make their declaration and to pay tariffs. Traders moving goods using the common transit convention will need to follow all the transit procedures.

In the second phase, from April 2021, we will require all products of animal origin, regulated plants and plant products to have pre-notification and the relevant health documentation. Any physical checks will continue to be conducted at the point of destination.

In the third and final phase, from July 2021, traders moving all goods will have to make full customs declarations at the point of importation and, of course, pay relevant tariffs. Checks for animals, plants and their products will take place at border control posts in Great Britain.

When we announced our approach to controls last month, we also confirmed that we would be building new border facilities in Great Britain to carry out the required checks, as well as providing targeted support to ports to build new infrastructure. The £705 million funding injection that we announced yesterday is on top of an already announced £84 million grant to ensure sufficient capacity in the customs intermediary sector. That money will be used to do just that: to prepare our border infrastructure for all the changes by improving and developing IT systems, recruiting more personnel and building new border posts.

The actions that we are taking today are an important step towards readiness for the new opportunities that Brexit can bring. It is time for our new start—time for us to embrace a new global destiny—and therefore I commend the statement to the House.

4.33 pm

Rachel Reeves (Leeds West) (Lab)

I thank the Minister for advance sight of his statement. I associate myself with his comments about Dave Prentis, a great trade union leader who is always fighting for a better deal for public sector workers.

It is vital that businesses and jobs are supported and that the oven-ready deal that the country was promised is delivered on this year, yet frankly many of us are worried about whether the oven was even turned on. Alarm bells have been ringing in the Cabinet this past week, expressed by the Secretary of State for International Trade in her extraordinary letter to the Minister and the Chancellor of the Exchequer written on 8 July. The letter presents a picture of chaos, complacency and confusion right at the top of government. Let me highlight to the House those concerns.

First, the Trade Secretary expresses concern that the UK will be vulnerable to a World Trade Organisation challenge. Will the Government publish their advice and analysis of risk and cost to the Government of such a challenge?

Secondly, the Trade Secretary highlights that there are EU-facing ports where the infrastructure to implement controls does not currently exist. Will the Minister give the country and, indeed, his Cabinet colleague reassurance by publishing all relevant delivery plans, land purchases and rental agreements, with timescales and risks—and not just for the port of Dover? The Labour party wants to see British firms exporting. We do not want to see their goods stuck at ports or, indeed, in lorry parks.

Thirdly, the Trade Secretary is concerned in her letter that traders from the rest of the world could export their goods to the UK through the EU and, in her words,

“undermine the effective operation of our trade policy”

and undermine the collection of tariffs due. How will the Government prevent smugglers from exploiting the phased-in approach to the border? What is the estimated loss to tariffs as a result of the six-month delay to UK border checks on imports travelling through the European Union?

Fourthly, on Northern Ireland, the Trade Secretary said that the digital delivery of the dual tariff system in Northern Ireland is a high risk and that HMRC is planning to apply the EU tariff as a default from 1 January. She adds:

“This is very concerning as this may call into question NI’s place in the UK’s customs territory.”

Those are her words. What risk do the Government attach to that? What reassurance can the Minister provide that the commitments made in the Government’s command paper on Northern Ireland will be fully honoured, and why do we have to wait until the end of this month for the details on Northern Ireland to be published? It is all very well announcing a multi-million pound advertising campaign, but if the right hon. Gentleman cannot persuade his bestest friend in Cabinet that everything is going according to plan, it is hardly surprising that the country is anxious and confused.

A month ago, the Prime Minister said that there was “no reason” that a deal could not be reached by the end of this month. Will the Minister update us on where we are in terms of being on track to meet that deadline, with a deal agreed in the next fortnight? The Government have previously estimated that there will be up to 400 million customs declarations per year. HMRC said that they would cost £32 each, adding up to a staggering £12.8 billion bill for business. Does the Minister have any updated assessment of those numbers and the cost to UK firms?

It is also reported that HMRC is not planning to test the systems until November—a handful of weeks before they are needed. Will the Minister explain why those checks are not taking place sooner, and will he outline what recent engagement the Government have had with Scottish and Welsh Governments on state aid policy prior to the announcements today? More than half of UK trade will experience greater delays, costs and barriers, so what percentage of UK trade will enjoy easier trading terms on 1 January next year?

The best way to help all businesses to prepare is, of course, to agree a deal with the European Union on the terms that we were told to expect. That means no fees, charges, tariffs or quantitative restrictions across all sectors. It does not mean, as we heard in the statement today, customs, physical checks, export declarations, a commodity code, and economic operator restrictions and identification, and it certainly does not mean a living document with guidance that changes day by day.

I am sure the Minister will agree that we should never make promises that we cannot keep, so will he guarantee that the promises made to UK businesses and workers in the Conservative party manifesto in December last year will be honoured, because they are not consistent with the statement that he has delivered this afternoon? Last week, the Chancellor of the Exchequer stood at that Dispatch Box and said that he will do all he can to support British business. Today, the Chancellor of the Duchy of Lancaster stands at the same Dispatch Box and is wrapping those businesses in red tape and sending them to a super-sized lorry park in Dover. For the sake of all workers worried about their jobs and all business owners anxious about their future, we need the Government to get this right. I am not convinced that today’s statement does that.

Michael Gove

May I thank the hon. Lady for her questions and also for her commitment to working collaboratively to ensure that we get the best possible deal in our negotiations with the European Union. Progress has been made, but there are still significant differences between ourselves and the European Union. None the less, I did think it was significant and welcome that, for example, in the Joint Committee, Vice-President MaroÅ¡ Å efÄ