I rise to speak to amendment 73, tabled in my name and the names of my right hon. and hon. Friends, and which I wish to move at the appropriate time.
It now has to be a settled will that in future we are not going to be in the, or a, customs union with the European Union. That became clear during the hours of debate on the European Union (Withdrawal) Bill in this place and the other place, and that Bill became an Act. It is clear in the Chequers deal and the White Paper on the future relationship. The statement “We will not be in the customs union” has passed through the Prime Minister’s Lancaster House and Mansion House speeches, and through her statements on the Floor of the House on occasions far too numerous to mention.
We are not to be in a customs union. That was clearly the compact with the public made by the Conservatives and the Labour party in their manifestos last year. It is clearly the will of the people, as expressed in the June 2016 referendum. I do not think there can be any doubt as to the clarity, because it was mentioned by all involved in that debate, no matter what side they supported. It is clearly the will of the people, of the Prime Minister and of the Cabinet. Similarly, when we negotiated and passed the European Union (Withdrawal) Bill, it was the will expressed by a majority of this place.
My hon. Friend the Member for North East Somerset (Mr Rees-Mogg) said earlier in an intervention that, were it necessary for there to be a customs union with some part of the world, there would need to be, at the right time, primary legislation that would also incorporate any requirements in the Government’s proposed new section 16A, which I am trying to nullify with amendment 73. I certainly hope that, given those settled wills, my amendment will be supported by the Government because anything else does not square with the manifesto on which we were elected and it certainly does not square with the manifesto on which the Labour party was elected either.
7.30 pm
We must examine this question: why on earth, under any circumstance—putting customs union aside—would we want to stay in the arrangements for the administration of VAT that the EU has? It is quite odd. It actually encourages buying from the EU in preference to buying from domestic markets. Let me put that into context.
Let us say an imaginary widget sells for £100 in the UK from a UK supplier, £100 from an EU supplier, and £100 from a US supplier. In the case of the purchase from a UK supplier, depending on the trade terms—one might have to pay within 30 days and there is a three-monthly VAT cycle—one would have to have a cash flow of £120 to buy it. Some months later, depending on the timing of one’s VAT return, one would get the £20 back. If one were to buy from a US trader, one would have to pay the £20 input VAT upfront as it crossed the border. But in the case of buying from an EU supplier, an imaginary VAT on the acquisition is created—one self-charges and there is an output later when it is sold in the UK. However, the cash flow is to spend only £100 with the EU supplier. Therefore, by being in the EU VAT system, we have created, perversely, a requirement, almost a push, towards competition that favours buying from abroad.
I really hope that Labour Members take this next point on board this evening. If we were to adopt the VAT directives in perpetuity—it seems that, now, many Labour Members would like us to adopt as part of our staying in the customs union—I really wonder how, following their campaign against the tampon tax, the hon. Members for Walthamstow (Stella Creasy), for Dewsbury (Paula Sherriff) and for Birmingham, Yardley (Jess Phillips)—I did alert them to the fact that I would mention them this evening—would stand up in public and say, “Oh, by the way, I have abandoned that idea.” I took part in that debate in this House and the proposal was supported across the Chamber. Are Labour Members really going to say to the electorate, “I am sorry, but that has all gone now, because we are actually in favour of customs union and of staying in the VAT directives” which are the reason why, in all of these years of EU membership, we have been unable to do anything about these hated taxes?
I would extend that to things such as solar panels and insulation products. Would any rational person in this House put VAT on solar panels and insulation products? I do not think that they would, but we have to do it because the EU requires it. Would we not rather like to reduce VAT on domestic heating and fuel? I think we would generally—