My Lords, the Explanatory Notes of the Subsidy Control Bill say, in very grand words, that the Bill is to
“implement a domestic subsidy control regime in the United Kingdom that reflects the UK’s strategic interests and particular national circumstances, providing a legal framework within which public authorities make subsidy decisions.”
Here we go again. Under Article 10 of the Northern Ireland protocol, EU state aid rules continue to apply to subsidies related to trade in goods and the single electricity market that affect trade between Northern
Ireland and the EU. The Bill would not apply to subsidies that are subject to Article 10, so why do we even bother saying “the United Kingdom” in the Bill? It is not the United Kingdom.
In their Command Paper, the Government maintained that the provisions of Article 10 are
“redundant in their current form.”
The noble Lord, Lord Frost, said in December 2021 that businesses in Northern Ireland were
“facing unjustified burdens and complexity”
and that the Government could not deliver aid,
“for example for Covid recovery support, without asking for the EU’s permission.”
What kind of Government leave part of the United Kingdom outside the advantages of breaking away from EU state aid rules? What kind of country allows this to happen and has to go cap in hand to beg the EU to be able to give help to its own citizens?
It is very disappointing that, despite what the Minister has said, there is absolutely no confidence that in these negotiations the EU is simply going to roll over and allow us to take back control of our economic situation in Northern Ireland. Northern Ireland will be significantly disadvantaged in goods yet again.
I want to read something from a very big manufacturing company in Northern Ireland which told me how it will affect the company in reality. The company said that in May 2020, Liz Truss, who was then the Secretary of State at the Department for International Trade, announced the most favoured nation tariff regime, the UK global tariff, which replaced the EU common external tariffs. Then, in January 2021, it reduced or removed rest of the world customs duties on thousands of products—compared to those imposed by the EU—that the UK no longer produced, or not in significant quantities. The EU, of course, retains those duties to protect its manufacturing industries from competition. Liz Truss stated:
“It supports the country by making it easier and cheaper for businesses to import goods from overseas … It is a simpler, easier to use and lower tariff regime than the EU’s … CET … It will scrap red tape and other unnecessary barriers to trade, reduce cost pressures and increase choice for consumers … It backs UK manufacturing and production by dropping tariffs to zero across a … range of products used in UK production”.
However, there should have been a footnote which said, “Not applicable in Northern Ireland”.
The company continued by saying that Northern Ireland, as part of the EU for goods, will be subject to EU custom duties and pay higher prices than its GB counterparts for the same goods, irrespective of how they arrive in Northern Ireland. That is all before the rules of origin are taken into consideration. Typically, a product requires 50% originating content based on its ex-works price to qualify for country of origin and allow it to be exported, even to Northern Ireland, under a free trade agreement using preferential rates of duty. If not, standard rates of duty apply. In future, GB exporters to Northern Ireland must hold evidence that the exported goods meet the relevant rules, which will involve HMRC audit procedures, production records, invoicing and accounting details and supplier declarations. The fact that a product is in free circulation in GB does not prove originating status.
They concluded by saying that today there appears to be little or no validation of origin and the current system is open to abuse. Why? This will not be the case in the future as customs issues are black or white and false declarations are fraudulent. Will some GB suppliers be bothered with the Northern Ireland market due to the compliance costs that they do not incur on the mainland? This will all push Northern Ireland manufacturers towards sourcing from EU suppliers. The protocol is unworkable and no amount of sticking plasters will ever fix it.
It is really disappointing that, despite Minister after Minister visiting Northern Ireland, they all get taken round to see the same businesspeople by the Northern Ireland Office. They do not get out there and talk to people who are really being affected. I support what the noble Lord, Lord Forsyth, and others have said: there is no real detail in the Bill. I hope that, by the time we get to Committee, there will be a lot more and that the negotiations that everyone in government seems to think are going to be so successful are actually seen to be successful. If not, then the Government have to do what they said they would: get out of the protocol, go for Article 16 to be invoked and tell the EU, “Sorry, we made a mistake and shouldn’t have signed it. We’re going back on it.”
8.10 pm