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Finance Bill update: Yvette Cooper – Keeping her head while all those around her lose theirs

If you have read any of my other blog posts you will be in no doubt of where my loyalties lie in the all consuming Brexit debate.

Given my fiercely pro EU outlook I was relieved to see yesterday that Yvette Cooper’s amendment to the Finance Bill had been passed by Parliament. I understood that this amendment would frustrate Theresa May’s, and by extension the government’s, attempt to play a game of brinkmanship with a ‘no deal’ Brexit, but I wanted to understand why. Given that it is an amendment to the Finance Bill that has resulted in a no deal Brexit becoming less likely, I thought it justified a blog update!

Background - a 'meaningful vote' and a game of chicken

If I might take a step back and remind you of the days prior to Christmas. May was supposed to allow Parliament its 'meaningful vote' (admirably fought for by Dominic Grieve and enshrined in law by virtue of section 13 of the EU Withdrawal Act) on her agreement with the EU (in summary – the UK will remain subject to the laws and institutions of the EU, but it will have no say on them. However, blue passports! And those pesky Europeans will no-longer be able to come to the UK and staff our NHS and save our lives – veni, vidi, vici). As an aside, if Grieve had not fought for and won the right for Parliament to have a meaningful vote, it is conceivable that May’s agreement with the EU would have taken effect without the possibility of challenge.

In any event, the meaningful vote was to happen on 11 December. May could see that she and her agreement would suffer a humiliating defeat in the Commons and consequently she called it off (I refer to this as her ‘I’m not playing with you and I am taking my ball home too’ moment). She re-scheduled the meaningful vote to take place on 15 January, ostensibly to use the time to persuade dissenting Tory MPs to fall into line and to obtain ‘assurances’ from the EU (I have no idea what she was looking for – how many times do Tusk, Junkcer and co need to say the agreement is what it is and there can be no renegotiations? Perhaps someone should also mention this to Corbyn and chums?). My view on this was that May had in actual fact decided on a tactic of brinkmanship and in delaying the vote by another month, and constantly reiterating that it was her deal or nothing, she was attempting to force Parliament into voting for the lesser of two evils. This is where Yvette Cooper and a handful of other MPs (cross party – Nicky Morgan, Hilary Benn and Oliver Letwin) played a spectacular hand.

Not all Yvettes wear cloaks

Section 89 of the Finance Bill allows for the treasury to make amendments to the Taxes Acts in consequence of EU withdrawal for the purpose of (inter alia) ‘maintaining the effect of any relevant tax legislation on the withdrawal of the UK from the EU’. The policy objective behind this section was said to be:

“This measure provides for minor consequential amendments to the Taxes Acts which will be needed if the UK leaves the EU without a deal.

It ensures that tax law can continue to have the effect intended by Parliament in the case of a no deal exit. It does not introduce changes in tax policy.

This measure will ensure that tax legislation continues to keep it [sic] working in the same way as it does now in preparation for the possibility of a no deal exit from the EU.”

Yvette Cooper’s amendment, approved by Parliament yesterday and now subsection 89(7), states that the provisions of section 89 will only come into force if

  • a ‘negotiated withdrawal agreement and a framework for the future relationship’ have been approved by the Commons, or

  • the Prime Minister has notified the President of the European Council of the UK’s request to extend the period in which the Treaties shall still apply to the UK; or

  • the UK leaves the EU without a withdrawal agreement and a framework for the future relationship with the EU has been approved by the Commons.

So, if the UK were to crash out of the EU without an agreement approved by Parliament, section 89 would not come into force. Meaning that the Treasury would be unable to make the relevant amendments to maintain ‘the effect of any relevant tax legislation on the withdrawal’ of the UK from the EU. This could potentially have significant ramifications on government’s ability to tax.

The upshot of this is that a no-deal Brexit becomes extremely undesirable, unless government is willing to potentially lose its ability to amend tax legislation to ensure it continues to have the same or broadly the same effect that it has now. So perhaps May’s game of chicken with the fast approaching withdrawal deadline has back fired. If it were not before, a no deal Brexit is now simply not an option. Let’s all hope that despite her ‘there is no plan B’ protestations, that her government does indeed have a plan B. If there is no plan B – despite the clear warning signs from Parliament that her withdrawal agreement would not pass a Commons vote – then I would argue that this government is guilty of gross negligence. The only sensible thing to do now is to withdraw the Article 50 notice (the ECJ’s advocate general has confirmed that the UK can unilaterally withdraw the Article 50 notice). In the best-case scenario matters could be left there and we could forget the nightmare of the past two years and continue as fully paid up members of the greatest international club in the world. More realistically it would give the UK the chance for a second referendum to hopefully right the wrong of 2016. The government is clearly incapable of resolving this mess so perhaps it is now time to let the people decide.

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