MPs reject sweeping Treasury Brexit powers

The government’s no-deal Brexit preparations suffered a blow as a clause in Finance Bill 2018-19 (FB 2018-19) giving the Treasury broad powers in the event of a no-deal Brexit was narrowly defeated by rebels and opposition members

The critical vote on FB 2018-19 was seen as an indicator of parliament’s support for a no-deal Brexit. The cross-party amendment, tabled by Labour MP Yvette Cooper, was supported by the opposition party as well as 20 Conservative MPs, including former cabinet ministers Ken Clarke, Michael Fallon, Justine Greening and Sir Oliver Letwin. 303 MPs supported the amendment, with 296 opposing.

Clause 89, ‘minor amendments in consequence of EU withdrawal’, would have allowed the Treasury to make ‘such provisions as they consider appropriate for the purpose of maintaining the effect of any tax legislation (other than VAT, Customs or Excise duties)’, in order to maintain the operations of the tax system. The regulations would amend any enactment or make ‘different provision for different purposes’.

This clause would have given executive powers to the Treasury to allow any changes to be made in order to preserve the effectiveness of the present tax system. Existing legislation making reference to the EU could be amended without parliamentary approval.

MPs called for an amendment to the effect of preventing the government ‘implementing the “no deal” provisions of Clause 89 without the explicit consent of Parliament for such an outcome’.

Under the amendment, the clause would only come into effect if parliament has approved a negotiated withdrawal agreement and a framework for the future relationship; if the government has sought an extension of the Article 50 period; or parliament has approved leaving the EU without a withdrawal agreement.

Arguing against the opinion that the amendment was ‘holding the government to ransom on powers that it needs’, Cooper said that ‘The irresponsible thing to do would be just to stand back and hope for the best, or to stand back and allow the government to drift towards no deal without any attempt to put the safeguards in place to prevent from that happening’.

MP Nicky Morgan noted that ‘many of those who have put their names to amendment 7 are chairs of select committees’. She said that while chairing the Treasury committee she had heard evidence that a no-deal Brexit would impact the GDP of the UK by 7.7%, ‘greater than the impact of the 2008 financial crisis’, and that this had prompted her to support the amendment.

Robert Jenrick MP, Exchequer secretary to the Treasury, defended the clause, saying that it 'would give the government the ability to provide certainty to taxpayers now' and called it 'unwise and irresponsible' to diminish that certainty.

Letwin, who described Clause 89 as ‘an “abundance of caution” clause’, said that he supported the Prime Minister’s deal but that the clause was a government response to the possibility that it ‘would be a good idea to have some unspecified powers in case the lack of unspecified powers turned out to be important’. He said that parliament ‘will not allow a no-deal exit to occur at the end of March’.

Report by James Bunney

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