(7 years, 5 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
I beg to move,
That this House has considered Exiting the European Union and global trade.
This is an important debate, not only because it is our first full debate on global Britain, but because this debate was originally timetabled for the day on which the tragic terrorist attack on Westminster bridge took place. The thoughts of everyone in this House are, as ever, with the families of those who were killed and injured. None of us will ever forget the outstanding bravery of the emergency services and all those who helped to restore law and order, and who work tirelessly to keep us safe at all times.
We stand at a vital juncture for this country, ready to write a new chapter in our history. As we begin the process of withdrawing from the European Union, the Government have promised that we will hold a series of debates to allow the House to have its say on the future of the United Kingdom. I welcome that commitment and look forward to Government and Opposition colleagues being able to engage fully with the proposals of my Department and the Government.
The Department for International Trade was created as a result of the change of Government that followed the country’s vote to leave the European Union in June last year. It has enabled us to take a fresh look at our national approach to trade and investment. Trade is vital to our country’s economic wellbeing, and as we leave the EU we will be able to shape trade policy according to our own national interests. Leaving the EU represents an unprecedented opportunity for the United Kingdom. The EU Commission’s own website on trade states that 90% of global growth in the next 20 years will come from outside the EU. As one of the world’s largest economies, we have the chance to work with old and new partners to build a truly global Britain at the heart of international trade.
We will of course support the conclusion of all the EU’s ongoing free trade agreement negotiations while we are still a member, and seek to transitionally adopt all those existing third-party free trade agreements before we leave. As the Prime Minister has said, we want a deep and special partnership with the EU as we negotiate our exit.
The Department for International Trade will ensure that the promotion of British goods and services abroad is complemented by a continuing effort to keep the United Kingdom as a top destination for inward investment, and will help British companies abroad to make the right investment decisions that will grow our global footprint. As I indicated to the House earlier, figures published this morning showed record foreign direct investment into the UK in 2016-17, proving beyond doubt that Britain has the necessary economic fundamentals to attract investment from all around the world.
Foreign direct investment, as well as trade, creates prosperity and jobs throughout Britain. Free trade increases consumer choice, raises standards of living and makes wages go further, as global competition drives down prices on everyday goods—a point to which I shall return later. In this task, our own history is on our side. For more than a century, our country was the commercial capital of the world, and we were among the first nations to recognise the benefits of free trade and economic liberty.
Kate Hoey (Vauxhall) (Lab)
I share the Secretary of State’s optimism about the future of our country once we leave the European Union. Does he agree that we should break the myth that we need trade deals to trade? Of course trade deals are important, but we can trade without them.
Dr Fox
I would distinguish between trade deals and trade rules. We of course need rules to govern the global trade environment, which is why we are committed to the World Trade Organisation—a subject to which I shall return later—but we do not explicitly need free trade agreements in order to trade. The trading environment is regulated in lots of other ways, such as mutual co-operation agreements. The hon. Lady is quite right that we can use several tools to shape the global environment.
Sir Edward Leigh (Gainsborough) (Con)
My right hon. Friend is right that, even if there is no free trade deal, we will be no worse off than the USA or Japan. May I ask him a direct question? The Lancaster House speech was admirably clear, and I am sure he can confirm that we are leaving the EU and the single market, but there was some doubt and comment about our status inside the customs union. Is he happy to confirm today that we are leaving the customs union?
Dr Fox
Our manifesto talked about what would happen when we had left the customs union. That was the basis on which I was elected, and, I assume, on which all Conservatives were elected.
Most of us in this House and, according to the polls, in this country believe in the principles of free trade and the benefits that it brings, yet in today’s world free trade is in need of a champion. For the first time in decades, the established order of fair, free and open global commerce, which has done so much to enrich and empower the world’s nations, is under threat. In April, the World Trade Organisation noted that, in 2016, world trade in goods grew by only 1.3%—the first time since 2001 that trade has grown more slowly than GDP. Yet the threat to growth and prosperity is going largely unrecognised. Globally, there are signs of an increasing tendency towards protectionism. Barriers to trade are going up across the world. A particularly worrying report by the WTO highlighted the acceleration in protectionist measures since the 2008 financial crash. Some of the worst culprits are the countries of the G7 and G20. The nations, including our own, that have gained the most from free trade are at risk of forgetting their own principles, yet protectionism hurts those whom it purports to help. That is especially important as the expansion of global production chains sees intermediate goods cross multiple borders before a final product is made. It means that barriers on imports damage a nation’s exports.
Hannah Bardell (Livingston) (SNP)
The right hon. Gentleman speaks about the customs union and the Lancaster House speech, but does he not share my concern, and the concern of the Scotch whisky industry, that the customs processes as they stand are creaking under pressure? I should declare an interest as the chair of the all-party group on Scotch whisky, which met for the first time last night. Those processes are being transformed into a new digital process, but there is little confidence that it will be able to cope with the process of Brexit. What guarantees can he give that industry that those issues will be solved?
Dr Fox
The hon. Lady raises a fair point about global trade facilitation. We have just signed the trade facilitation agreement, which aims to reduce border friction across the world. It is estimated that that is worth about £70 billion in the global economy. One of the biggest barriers facing Scotch whisky, however, is tariff barriers. The Department has been trying to talk to Governments such as India’s who have very high tariffs against Scotch whisky, which is not good for their own consumers because it encourages an illicit trade. I encourage all those Governments to indulge liberally in the pleasures of single malt—as I do myself.
By 2010, G7 and G20 countries were estimated to be operating some 300 non-tariff barriers to trade. By 2015, that number had mushroomed to more than 1,200. There are those who, having accrued great wealth, would pull up the drawbridge behind them. We cannot let that happen. This country’s own commitment to free trade was perhaps most clearly illustrated by the repeal of the Corn Laws in 1846. The Conservative Prime Minister Sir Robert Peel rightly saw protectionism as an attempt to preserve the wealth of a privileged few at the expense of the many. Import tariffs were all but abolished and Britain’s free trade principles were created to put bread into the mouths of the hungry majority. Now, as then, it is free trade and competition that will do most to address inequality and safeguard the interests of working people. More than ever, it is up to nations that possess the economic and diplomatic means to reassert the rationale of free trade to do so.
Rishi Sunak (Richmond (Yorks)) (Con)
I thank my right hon. Friend for giving way and for his powerful and optimistic speech on free trade. On reducing protectionism, does he agree that leaving the customs union will give us the ability to reduce import tariffs on many goods that we do not produce here at home, which will reduce costs for ordinary working families and benefit many developing countries by helping them trade into prosperity?
Dr Fox
That is an important point. At this morning’s International Trade questions, we made the argument that being outside the common external tariff will give us freedoms to help many developing countries in a way that we are currently unable to. I hope that that will act as a spur to others taking similar measures, because we will encourage poorer countries to trade their way out of poverty and become less dependent on international aid programmes. I do not think that that is a party political issue, but the question is how best to achieve it in practice.
On the progress that has been made, we have reduced poverty levels to their lowest in history. As the world’s emerging economies have liberalised trade practices, prosperity has spread across the globe, bringing industry, jobs and wealth where once there was only deprivation. According to the World Bank, the three decades between 1981 and 2011 witnessed the single greatest decrease in material deprivation in human history. It was a truly remarkable achievement.
The Leader of the Opposition has accused the Prime Minister of following “free trade dogma”. He went on to say that this has often been pursued at the expense of the world’s most fragile economies. In fact, any economist worth their salt can see that free trade has been one of the most potent liberators of the world’s poor. Let us take India as a specific example. In 1993, about 45% of India’s population sat below the poverty line as defined by the World Bank. By 2011, it was 22%—too many, but a phenomenal achievement. It is no coincidence that, in the intervening period, India had embraced globalisation and started to liberalise its economy. It is hard to imagine an international aid programme—even one as generous as our own—that would or could have been so effective on its own.
Sadly, it is also easy to find examples of where a lack of free trade has harmed the most vulnerable. If we want to see the contrasting results of open and closed economies, we should look across from China to the Korean peninsula, where so much attention is focused today. In 1945, both North and South Korea began from a very similar base, but while South Korea was more embracing of open trade and free markets, despite any shortcomings, Pyongyang turned inwards, with the tragic consequences for its citizens that we see to this day. [Interruption.] I am happy to give way to the hon. Member for Bishop Auckland (Helen Goodman) if she thinks that North and South Korea enjoy the same living standards today.
Helen Goodman (Bishop Auckland) (Lab)
Of course what the right hon. Gentleman says about the situation in those two countries today is absolutely right. The point I was chuntering about was that what he described was not actually happening in South Korea in the 1960s and 1970s. A lot of the south-east Asian economies did have protection in those two decades in order to modernise and build up.
Dr Fox
I accept what the hon. Lady says, but that is why I specifically used the words “more embracing” of free trade and open markets. Despite the shortcomings, South Korea none the less created a far better standard of living for its people. Seoul is now at the heart of a thriving economy and, consequently, a dynamic democracy where freedom and prosperity are shared among its people. It should come as no surprise that, while 80% of South Koreans have access to the internet, less than 0.1% of North Koreans enjoy the same access. Perhaps most tragically, there is a greater than 10-year discrepancy in the life expectancy of those north and south of the demilitarised zone. That is why we recognise that trade and development form a fundamental and synergistic partnership. Trade flourishes where there are high levels of education, developed financial sectors and, hugely importantly, sound governance and minimal corruption. There is still much to do, but we would be both foolish and irresponsible to abandon the direction of travel. An open and free trading system is part of the global and national prosperity agenda.
Jeremy Lefroy (Stafford) (Con)
As always, my right hon. Friend presents a powerful case for free trade, but does he not agree that, sometimes, there is too narrow a vision of it? We tend to think about free trade in goods, because they are visible, and to talk about the problems and opportunities that exist, but we forget about the free trade in services, which are by far the largest part of what the UK has to offer to the rest of the world.
Dr Fox
My hon. Friend makes an excellent—and key—point. Getting the global economy moving requires the major liberalisation of services in the same way as we had the liberalisation of goods as the focus of the Uruguay round. One thing that comes from that is that countries such as the United Kingdom, where about 80% of the economy is service-driven, are less dependent on being part of a geographical bloc for trade. When it comes to trade in services, what matters is that we are dealing and trading with countries that are functionally similar rather than geographically proximate. That is a change in globalisation we would do well to understand in the debate as we leave the European Union.
It is not just about raising living standards in developing and developed countries. There is, I think, an even more compelling case for free trade. The prosperity it can create is the basis of a social stability that underpins political stability. We have seen that around the world. That political stability, in turn, underpins our security. In other words, they are all part of the same continuum, and we cannot disrupt one element without disrupting the whole. That is why Governments of both colours in this country have tended to see development, prosperity and security as a single policy objective. It is a truth that we need to understand in this interdependent, globalised era.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
It is not just us making this case. In the discussions with those who are involved in the World Trade Organisation—even though we are a member, we want to get back our voting rights—they have made it pretty clear that they celebrate the re-arrival of the UK as a voting member of the WTO for one vital reason: they feel that globally it has begun to stall and the UK is the single biggest exponent of free trade. It always has been, and they want to welcome us back for that reason alone, if nothing else.
Dr Fox
My right hon. Friend is absolutely right. It is important that we can show our trading partners globally that whatever our differences in the mechanics through which we go about the task, there is an overwhelming belief in the concept of free trade in this country. As I said at the outset, the global trading environment needs someone to champion free trade at a time when many countries feel that we are rolling backwards, away from the progress that we have made. If we as a country can speak with a strong voice about the principles of free trade, citing examples from history as to why it has benefited some of the poorest people in the world, we will make a moral as well as an economic case.
Kelvin Hopkins (Luton North) (Lab)
I am listening with interest to what the Secretary of State is saying, but one point that he has not touched on yet is exchange rates. Is it not absolutely essential that appropriate exchange rates should be arranged between nations so that trade can operate fairly? If a country depreciates massively, it can develop a big trade surplus, and China has done precisely that in recent decades. Does the Secretary of State not agree that exchange rates are crucial?
Dr Fox
That is an important point, but I would distinguish between artificial and intentional currency manipulation and a free market with floating currencies. I happen to believe that floating currencies are one of the ways in which we allow our economies to have shock absorption so that we do not take all the economic pain through unemployment. One of the problems with the existence of the euro is that some of the countries of southern Europe that might have chosen other mechanisms to adapt to the process of change had, in the end, to opt for high levels of structural unemployment because they were unable to do so. The hon. Gentleman’s point is correct, however. Artificial manipulation of currency is different from the workings of the general economy and floating currencies.
Such is the power of free trade that even if we ignore the social and humanitarian benefits that it has brought to the developing world, it would still be indispensable from a purely economic standpoint. During the 1990s, per capita income grew three times faster in the developing countries that lowered trade barriers than in those that did not. That effect is not confined to the developing world, either. Analysis by the OECD has indicated that a 10% increase in economic openness is associated with a 4% increase in output per head of the working population. In other words, free trade works.
Globalisation has been of huge and sustainable benefit to the world economy, through trade, migration, specialisation and innovation. Those advantages exist at every level, from macroeconomics right down to individual firms. Increased competition, economies of scale and global value chains have all contributed to a productivity revolution, boosting the output of firms across the globe. Although it might not always be noticed, the wider benefits of a liberal trade policy have spread to consumers and households by providing a wider choice of goods at a lower price.
In the decade to 2006, the real import price of clothing fell by 38%. In the same period, the price of consumer electronics, as we all know, fell by 50%, despite the rapid technological improvements that saw mobile phones go from a $4,000 brick that was hard to carry to computers no bigger than the palm of one hand. Those are the tangible benefits of trade, and their importance in improving the lives of the people of Britain must not be underestimated. Of course, in any rapidly changing economic environment, we should ensure that the country’s growing prosperity spreads to all corners of the United Kingdom. It is therefore not only right but important that Governments can mitigate the effects of globalisation and provide the tools through which individuals and economies can adapt and prosper. That is how we provide both economic opportunity and security in an era of sometimes bewildering change.
Deidre Brock (Edinburgh North and Leith) (SNP)
The Secretary of State talks about the interdependent global world. The British Ports Association warned that a hard Brexit could hurt small and medium ports, which rely on short sea trade. Its members, including Forth Ports in my constituency, are very worried about the hurdles of new customs requirements and costly tariff regimes. Given that 95% of international trade by tonnage goes through our ports, what action is being taken to address those concerns and ensure that Brexit will not damage vital industries trading through them?
Dr Fox
The first service we can do is not to add adjectives to the word Brexit, because what the Government intend to achieve is as open a trading relationship as possible. If we think about it, the free trade agreement that we will go on to negotiate with the European Union ought to be the easiest FTA in global history. We are starting in a zero-tariff environment and from absolute 100% regulatory and legal equivalence. The only way we would not reach a free and open trading environment would be if the politics of the process took precedence over the economics, prosperity and wellbeing of the people. That is the challenge.
I will give the hon. Member for Edinburgh North and Leith (Deidre Brock) a second challenge, as this is not just about Europe. The decisions we take will reverberate through the global economy. If we put trade and investment impediments into the European economy that do not exist today, that will cause ripples across the global economy that will be felt well beyond our borders.
Sir William Cash (Stone) (Con)
My right hon. Friend knows that all 47 ports in this country opposed the European Union port regulation, which was inimical to our national interest and the lifeblood of our trading relationships. Ports are central to this whole question, and that is another good reason for our leaving the EU.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Could the Government make it clearer that we want an open trading relationship with our European partners and that it is up to the European Union to decide whether they want that or not? Will the Secretary of State also ask who is arguing for protectionist measures against an independent United Kingdom? I do not hear many voices in the EU arguing for that, and I think that that is just a fear put about by people who want us to stay in the European Union.
Dr Fox
Our debates are watched beyond our shores, so perhaps the first point to make is that we are leaving the European Union. There is not any chance that we will not leave the European Union. The British people have spoken and the process, including the parliamentary process, has begun to make that happen. As we do this, we have to look beyond our membership of the EU and determine what sort of global trading environment we want to live in. We are very clear about the model we want, I have travelled to other countries, and we are encouraging Governments beyond the EU to say to our European partners that it is in everybody’s interests— including in Europe and in the wider global trading environment—that we maintain as open a global trading basis as we possibly can.
At a time when the direction of travel in the rest of the world is towards greater liberalisation, it would make no sense for Europe, for internal political reasons, to introduce impediments to that trading environment in the way some have suggested. I do not believe that that is in the interests of the citizens of Europe, whether in the United Kingdom or on the European continent. If we are guided not by abstraction but by the prosperity and wellbeing of our people in the negotiation, we are likely to come to the right outcomes.
To build a free trading world, the UK must continue to support, strengthen and promote the existing global trading structures. The World Trade Organisation is the home of the rules-based international trading system, as the shadow Secretary of State and I agreed earlier this morning, and we unequivocally support it. Its predecessor, the general agreement on tariffs and trade, was established in 1948 to offer a war-torn world stability, security and prosperity through international trade co-operation. The United Kingdom was there from the beginning, and for half a century we worked with our international partners in a series of ministerial rounds dedicated to removing barriers to trade and liberalising the global economy.
The WTO was established in 1994, following the success of the Uruguay round. For the first time, we had an international body with truly global reach that existed to regulate trade and to encourage nations to adhere to the principle of ever-greater trading freedom. If the WTO did not exist today, we would need to invent it. Britain is a founding member, and we are a member in our own right, but on leaving the EU we will need to update the terms of our WTO membership; at present all our commitments are applied through the EU as a whole. Constancy and continuity will be a key to our approach.
As I set out in the recent ministerial statement, we anticipate that our rights and obligations to other WTO members, as provided under the WTO agreements, will remain largely unchanged. We will achieve that through a process of replicating our current commitments, which will cause the minimum disruption to trade and the maximum certainty and confidence. I am grateful to the secretary-general of the WTO, Roberto Azevêdo, for confirming that the WTO fully supports this aim for stability. I thank him and his staff for the support they have given the United Kingdom in Geneva.
Let me also be clear that replicating the EU-WTO schedules for the UK’s independent use in no way prejudges the outcome of the article 50 negotiations with the EU. The process is largely technical and reflects the close ties of trade and commerce that we will continue to share with the EU, even after our exit. Throughout the process, it is imperative that we maintain transparency both with this House and with our fellow WTO members. I reiterate the offer that I made in private to the Opposition Front-Bench team: should they wish to visit Geneva and get a high-level briefing with our ambassador and the secretary-general, the Government will happily facilitate that. The better informed we all are in the House in these discussions, the better.
James Duddridge (Rochford and Southend East) (Con)
Quite often one hears in the press, and sometimes erroneously in this House, talk of “falling back” on WTO rules. Is that not a falsehood? WTO rules form the basis of any agreement going forward; they are not something to fall back on if there is no deal.
Dr Fox
Indeed, WTO rules are the basis on which the world trades. On top of the basic WTO rules and the most favoured nation status that they represent, we have a number of agreements that give us, in effect, exemptions. However, we trade freely with countries where we do not have a specific free trade agreement. At the present time, the United States is worth just under 20% of our exports—we do not have a specific free trade agreement, but we can trade very freely. That is not to say that through FTAs or mutual recognition agreements, mutual co-operation agreements and the other tools available to us, we cannot improve the functioning of the global trading system. We need to do so, and the Department for International Trade has a highly skilled team dedicated to the technical rectification of our WTO schedules. We are collaborating with businesses and officials within Whitehall and the WTO to ensure that our transition to independent membership is both smooth and fully understood by our trading partners.
James Cartlidge (South Suffolk) (Con)
My right hon. Friend is generous in giving way. He mentioned the word “transition”, which many have now mentioned—including those who supported the vote to leave—in smoothing the process of Britain leaving the EU. Does he support consideration of transitional arrangements in leaving the EU? Is he concerned about Michel Barnier’s comments today that any negotiations on transition will have to be in late 2018 at the earliest, which does not leave us much time?
Dr Fox
If we require a transition to a new environment, it would be common sense to do so, but it would not be acceptable for any of the elements that, in leaving the European Union, we sought to leave to be binding on that transitional agreement. However, that is part of the negotiation. It is a negotiation, and at any point in that I would not take too seriously or literally anything that the negotiators were saying in the public domain.
After we leave the European Union, we will uphold our principles as we negotiate free trade agreements with new partners around the world. Although we cannot negotiate and conclude FTAs while we remain in the EU, the Department has instigated 10 trade working groups with 15 different countries as well as a high-level dialogue with the United States, which will develop into a fully fledged trade working group later this month. Going forward, as I said to the hon. Member for Vauxhall (Kate Hoey), we may find that a new FTA may not be the correct solution for every partner, but we will look at all the measures available to us to ensure the best outcomes for citizens and businesses across the UK. Our dedication to free trade will be constant. With every nation, we will work to remove barriers, liberalise trade and secure market access for British businesses. As we move forward towards ever greater trade liberalisation, we will ensure that our trade remedies continue to protect and promote Britain’s producers.
If the first duty of Government is the protection of its citizens, the Department for International Trade must extend that obligation to our businesses and work to defend the drivers of our prosperity from rule-breaking and anti-competitive measures. Free trade is not a free-for-all; that is why we have the WTO. If we support a rules-based system, we must ensure that those rules are respected and rigorously enforced.
Robert Neill (Bromley and Chislehurst) (Con)
I understand and take on board everything my right hon. Friend says about the WTO and a rules-based system, but, as he observed earlier in his speech, the bulk of our economy, and the bulk of our competitive advantage, lies in the services sector, which in the case of the financial sector is not particularly covered by WTO rules. Will the Government be equally committed to making sure that we have global liberalisation of the services sector, which is so critical to us?
Dr Fox
I think I said that earlier, and I also said that this morning in questions. If there is a real cause for us to champion beyond the basic case for free trade, it is liberalisation of the services sector. That is the way in which we will unlock the potential of many economies around the world—and, incidentally, it is the best way to unlock Britain’s economic potential in trade.
In my discussions around the world I have been struck by the way in which products—either goods or services—that originate in the United Kingdom are regarded as being at the top end of the quality market. That is where we are best able to compete. There are those who would make the case for a Britain with lower regulatory standards and fewer protections in place across the economy for the environment, for workers and for consumers. Let me tell the House that Britain will not put itself at the low-cost, low-quality end of the spectrum, as it would make no sense for this country economically to do so, nor morally would it give us the leadership we seek. I believe there is no place for bargain-basement Britain. High standards and high quality are what our global customers demand, and that is what we should provide. From our food and drink industry to our technological expertise and our financial services, people across the world buy British because they see the Union flag as a kitemark of quality. The key to our long-term prosperity lies not in abandoning our values and standards but in reinforcing them. High-quality, high-reputation goods and services are the route to highly skilled, highly paid jobs and future prosperity in this country.
This Government’s highest ambition is to build a Britain that works for everyone, not just for a privileged few. It must also be a global Britain, willing to support a rules-based trading system and champion the cause of free trade itself. We do not pretend that the era of globalisation is without its challenges, but we must never cease to show our citizens the benefits that free trade brings to their lives and to this country. We realise that the challenges and opportunities of globalisation, allied to the rapid change in technology, can produce their share of problems and insecurity. We must strive to address the negative aspects of globalisation and ensure that no one is left behind by the pace of change, while harnessing the power of the global economy to spread prosperity across Britain and our trading partners. We must ensure that we equip our country with the skills necessary to navigate those challenges and that those who are disadvantaged are given the appropriate support. We must unfailingly uphold the principles of free trade across the world, nurturing prosperity and banishing poverty to the pages of history.
I believe that the vast benefits that global trade can bring to Britain and the world and the way in which my Department is working to secure those benefits across the whole of the UK are the key to success in the future. The Leader of the Opposition has wrongly dismissed free trade as political dogma, but to do so is to betray the very people the Labour party claims to represent. To attack free trade and to undermine our nation’s proud tradition will deny prosperity to those who need it most. I hope that all Members of this House, regardless of their political persuasion, want the benefits to be bestowed on this country and back our vision of Britain as a champion of global free trade and the benefits it brings.
Two centuries ago, Thomas Babington Macaulay described free trade as
“one of the greatest blessings which a government can confer on a people”.
We intend to do just that. It is in our power to build a better and fairer Britain for future generations. We require courage and conviction to do that, particularly at a time when protectionism is rearing its ugly head. Prosperity, stability and security are the prizes for a strong, rules-based international trading order, and that is what we seek to achieve.
Barry Gardiner (Brent North) (Lab)
First, I join the Secretary of State in paying tribute to PC Keith Palmer and all the other victims who suffered on that fateful day in March when this debate was last scheduled.
The Secretary of State is at the Dispatch Box fielding for the first time since the creation of his Department almost a year ago a debate on Government trade policy in Government time. It is not exactly normal practice for Trade Ministers to hasten to the Dispatch Box when the country has just posted one of the worst sets of balance of payments figures in its recorded history. Although I admire the right hon. Gentleman’s chutzpah, I am not entirely convinced about his timing. The figures released just last week by the Office for National Statistics show that in quarter 1, the UK’s current account deficit was £16.9 billion—a widening of £4.8 billion from a deficit of £12.1 billion in the previous quarter—most of which is due to the widening of the trade deficit. Despite sterling being so low, exports increased by only £1.7 billion, whereas imported goods increased by £4.3 billion—a widening of £2.6 billion.
James Duddridge
When we are importing more than we are exporting, surely it is easier to get a deal with our European colleagues, whose interest appears to be in continuing to export to us.
Barry Gardiner
I want us to get a deal. Of course we want the best deal for this country, but the hon. Gentleman has to take on board the fact that since the referendum decision our country’s currency has depreciated by 12%. I trust that that is not something that he feels sanguine about.
Dr Fox
Some sectors will respond quickly to devaluation. For example, in food and drink there has been a 7.3% increase in our exports in this quarter. Why, in the light of the uncertainty the hon. Gentleman describes, does he think the figure for foreign direct investment in Britain has been at an all-time record in the past year?
Barry Gardiner
Let me be absolutely clear: we welcome foreign direct investment in this country—of course we do. We want people to be investing in our jobs, our economy and our future—
Barry Gardiner
Perhaps if I can finish responding to the Secretary of State’s intervention, at an appropriate juncture the hon. Gentleman might catch my eye.
There is no difference between the Secretary of State and me on those matters. In fairness, I will say that in the past 50 years there have been 15 sets of quarterly balance of payments figures that have been worse than last week’s, and one of them was under a Labour Government, just after the global financial crisis. The other 14 have all been in the past five years, under the Conservatives.
It would be mean of me to give the right hon. Gentleman too hard a slapdown because the Chancellor has been doing it so effectively on behalf of us all. Only yesterday, we read that the Chancellor is demanding that the Secretary of State prove the case that our ability to strike trade deals after Brexit will make up for losing tariff-free access to the EU. In other words, the right hon. Gentleman is being asked to justify his job as the Secretary of State for International Trade once leaving the customs union gives us the competence—perhaps in this case I should say the right—to negotiate our own independent trade agreements.
Barry Gardiner
I will, in a little while.
A year on from the referendum, a year on from the Government’s announcement that they were taking back competence in international trade negotiations, the Cabinet is still divided on what it has all been about. That is extraordinary. The country is crying out for leadership, and all its current leaders can do is sit around the Cabinet table plotting who amongst them should be their next leader. A year on, what has been achieved?
Mr Duncan Smith
The hon. Gentleman is busy asking the Government what their position is. We have set that out very clearly: out of the single market, out of the customs union, and making trade deals. As he speaks for the Opposition, perhaps he can now clarify what their position is. After the election, having fought on a manifesto containing a clear commitment to leave the European Union, Labour’s leader and shadow Chancellor said, “We are leaving the single market. We are leaving the customs union.” The right hon. and learned Member for Camberwell and Peckham (Ms Harman) said, “We are leaving the single market. We are leaving the customs union.” But when the hon. Member for Brent North (Barry Gardiner) and his colleague the shadow Brexit Secretary, the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), were interviewed, they never confirmed what their leader and the shadow Chancellor said. They have been doing an intricate dance around the matter, so I ask the hon. Gentleman a simple question: is the Labour party’s position to leave the single market, to leave the customs union and to make trade deals?
Barry Gardiner
I urge the right hon. Gentleman to read precisely what our manifesto says. We have made our position on those points extremely clear: we are leaving the European Union; that means that we want to secure the best benefits, and we will look to secure exactly what the Secretary of State for Exiting the European Union said he would achieve, which is the exact same benefit benefits as we currently have inside the European Union.
Barry Gardiner
The right hon. Gentleman really must allow me to respond to his first intervention before seeking to follow it up with a second. The trouble with the right hon. Gentleman is that he does not want to listen to the answer. [Interruption.] Is he quite calm?
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I am sure that Mr Gardiner will take the intervention when he wants to.
Barry Gardiner
As I was saying before I was persistently—and, I must say, quite rudely—interrupted, we have set out very clearly that we will try to secure exactly the same benefits that the Secretary of State for Exiting the European Union claimed would be procured in the negotiations, but we are not fixated on the structures; we are fixated on the outcomes. But we will be leaving the European Union. The right hon. Gentleman can be assured that we are committed to honouring that manifesto commitment.
Barry Gardiner
No, the right hon. Gentleman has had his chance.
A year on, what has been achieved? It took Donald Trump’s Administration seven weeks to produce a trade policy paper. This maladministration has failed to do so in an entire year. I have now been asking the Secretary of State to produce a trade White Paper for seven months. How extraordinary it is that the Department for International Trade has existed for a year but has completely failed to set out its mission and vision in a White Paper so that British businesses can have some clarity about their future.
Nor was there any clarity in the Conservative manifesto. It was scant on detail and peppered with vague promises, such as:
“We will work to forge a new culture of exporting”
and
“We will take a more active role in supporting British consortia to win…contracts”.
Of course, we were promised a trade Bill, which has now been confirmed in the Queen’s Speech. The accompanying notes actually state that one of the main benefits of the trade Bill will be:
“To meet the manifesto commitment to ‘introduce a Trade Bill”.
Well, yes, but it is something of a tautology.
I am heartened to note that the Secretary of State clearly read our manifesto, because since the general election his Department has adopted Labour’s manifesto pledge to guarantee market access for the least developed countries to the same level they currently have with the EU. Since the general election the Government have also agreed with Labour’s manifesto pledge to address trade remedies. If only they would agree to publish a trade White Paper that integrates industrial strategy with international trade policy, that creates a network of regional trade and investment champions to promote exports, that promises full transparency and scrutiny of future trade deals, and that builds human rights and social justice as a key strand in trade policy, perhaps our encounters at the Dispatch Box would become a lot more consensual.
The challenges we face in leaving the EU are not insurmountable. Ours is a great and proud country and we are an enterprising people. Our goods and services are among the best in the world, our economy is a dynamic and attractive marketplace for investment, and we will be a thought leader in the next wave of industrial growth. However, if we are to rise to these challenges, we need more than the patriotic flag-waving we have seen from the Government Front Bench; we need clarity and careful planning, which we have not had.
We are setting out to leave our major trading partner. Where is the road map? There is no White Paper. Where is the estimate of costs? That appears to be what the Chancellor has now started demanding. Government Ministers appear incapable of presenting anything approaching a unified view on the matter. The Prime Minister repeatedly tells us that
“no deal is better than a bad deal”,
and her Chancellor says that actually
“no deal would be a very, very bad outcome for Britain”,
while her Brexit Secretary tells us that he is “pretty sure”, but “not certain” and “not 100% sure”, that there will ever be a deal.
The truth is that no deal is not a trump card to be thrown on the negotiating table in some macho gesture; it is actually the procedural outcome of article 50, because if we fail to negotiate a deal within the two-year period, we will be ejected from the single market of the European Union and put on World Trade Organisation terms. Far from being a trump card to be played, no deal is actually a cliff edge over which we would be pushed.
Kelvin Hopkins
My hon. Friend quite rightly focuses on the trade deficit, which with the rest of the European Union is gigantic, but actually we have a trade surplus with the rest of the world, so the problem is essentially with our trade with the EU. Does that not put us in a very strong position to negotiate with the rest of the EU about whatever happens afterwards?
Barry Gardiner
I have absolutely said that I want us to be in a strong position in these negotiations, but what I also want is clarity from the Government about what the future will mean for our businesses.
Christian Matheson (City of Chester) (Lab)
My hon. Friend talks about the possibility of crashing out of Europe without a deal. If we do not achieve a deal in those negotiations, who will be responsible for not having achieved a deal?
Barry Gardiner
We must all hope that we will ensure that we get a deal, and that it will absolutely provide us with friction-free access for our goods and services.
Andrew Bridgen (North West Leicestershire) (Con)
We talk about whether no deal is better than a bad deal, and it is a card that we can play. I put it to the hon. Gentleman that not accepting that does not mean that we will get a good deal, but if we do not accept that no deal is an option, we are guaranteed not to get an exceptional deal. For example, if he was to go and buy a car and said, “I have to buy a car today”, or if he said, “I would like to buy a car, but I don’t have to buy it today”, which would he get a better deal for? And would he like to buy a car?
Barry Gardiner
The point I would make to the hon. Gentleman is that the triggering of article 50 was setting precisely the timeframe in which he was to buy the car. It said that within two years either we had to negotiate a deal, or we would be trading on World Trade Organisation terms. He makes my point precisely.
Barry Gardiner
I am sorry, but I will not give way again, because I have given way many times and I am conscious that more than 20 Members wish to participate in the debate, and we have to be fair to colleagues.
My party has consistently said that economic logic should dictate the outcomes of the Brexit negotiations. Certainly we must not jeopardise a positive new trade deal for some arbitrary immigration targets set for political reasons. We need a new trade deal with the EU. It must maintain the supply chains and business relationships that link us to the EU and that are so critical for jobs and economic wellbeing.
Let us remind ourselves just what is at stake. The European Union currently accounts for 44% of our exports. The EU remains our closest trading partner, in terms of the volume of trade and geographical proximity. The top 10 Commonwealth trading partners combined account for just 8% of our exports, and the entire Commonwealth—all 52 countries—accounts for just 9%. The Secretary of State once referred to protectionism as a class A drug. If he really thinks that his current round of trade dialogues could possibly make up for the shortfall in goods exports of leaving the EU without a new free trade agreement in place, then protectionism is not the only class A drug he has been smoking.
Labour, business and the trade unions are united in prioritising the best possible access to the single market once we have left the EU. That means continued tariff-free access, no new non-tariff barriers to goods or services and, if necessary, a transitional arrangement to avoid any cliff edge.
It seems that we might lately have recruited the Chancellor to our cause. His Mansion House speech certainly seemed to have swallowed the Labour party playbook whole: fair and managed migration; a Brexit for jobs; and no deal being a very, very bad deal. Securing a trade agreement with the EU must remain the Government’s No. 1 priority. Leaving the EU without a trade agreement would be a significant failure by the Government, and the British public will remember that they were repeatedly told—we heard it repeated today—that it could not happen because the EU countries traded with us more than we did with them. Without an early and comprehensive deal with the EU, there will be substantive tariff and non-tariff measures, which will cause friction in trade between the UK and the EU, whether in customs duties, customs checks, visa processes for service providers or renewed VAT procedures.
The Government are to bring in the great repeal Bill to get rid of the European Communities Act 1972, which incorporates European legislation into domestic law and grants it supremacy over domestic law. Therefore, European legislation currently in place will be converted into ordinary repealable legislation. On the face of it, that appears to mean that the UK will be able to legislate without any regard to EU law. However, if we are to maintain a high level of access into the single market and preserve the supply chains currently in place, our exports will still have to meet European standards and requirements.
Much of the current legislation will have to remain as is. Our future legislative framework will need to be aligned to that of the EU in order to maintain the mutual recognition and equivalence necessary to trade into the European market. This is something that many British and foreign companies, including Toyota, BMW and the Confederation of British Industry, have been calling for. We will no longer have a seat around the negotiating table that decides on product and other standards, but we will be forced to accept them if we wish to continue trading into the single market. People might think that this is a rather hollow way of returning sovereignty to the UK.
In any free trade agreement that the UK negotiates after we have left the EU, we will have to make some compromises on our sovereignty. The UK will continue to be subject to some supranational court system—if not the European Court of Justice, we will be subject at least to the World Trade Organisation dispute settlement procedures. Importantly, modern free trade agreements often involve the harmonisation of national standards to match those of the partner country in order to be able to trade freely. This is not necessarily negative. International trade agreements provide an opportunity to promote higher standards across the world, rather than a race to the bottom, if they are negotiated correctly.
There is no dichotomy between trade with the EU and trade with the rest of the world—that is simply absurd—but our global trade opportunities will be shaped by our future relationship with the EU, whatever that is. Prospective trade agreement partners will want to know what trading bilaterally with the UK will mean for access onwards into the EU.
Kelvin Hopkins
I want to be helpful to my hon. Friend. There is a constant emphasis on access to EU markets, when they have a gigantic surplus in our markets. At Bretton Woods, John Maynard Keynes was concerned about gross trade imbalances between nations, and the conference tried to sort out a system that would avoid that in future. We have a gigantic trade distortion with the rest of the EU, which has to be sorted out one way or another. Does my hon. Friend accept that?
Barry Gardiner
My hon. Friend does not want to see a decline in jobs in any sector of this country. It is really not right simply to dismiss the fact that, if we do not secure friction-free, tariff-free arrangements with the European market, those jobs could be prejudiced in this country. I am sure that he would want to take cognisance of that.
Cross-border data flows are a key cornerstone of the digital economy. They help to drive UK innovation, economic growth and business efficiency through facilitating data transfers between organisations located in different countries. To help our economy grow and create jobs in the UK, we need to create a trade environment that drives innovation and positions the UK as a leader in the digital economy. techUK speaks for business when it says that the Government need to facilitate access to both the European market and the rest of the world, but this requires appropriate cross-border data flow arrangements with our different trading partners. It sounds simple. It is not.
The Transatlantic Trade and Investment Partnership negotiations on the EU’s privacy shield framework to replace the safe harbour privacy principles demonstrated that facilitating cross-border data flows between the European system and the American system is a genuine challenge that will not be addressed overnight in future free trade agreements. We cannot simply create a separate trade policy on this issue for the EU and a different one for non-EU countries. The direction we take on one influences our options on the other. Will the Minister set out what discussions he has had with industry on this and what decision, if any, he has taken about the appropriate way to go forward? He will appreciate that the issue of cross-border data flows is not just about facilitating market access. It is also about the regulatory framework to provide data protection for privacy and human rights.
The second example of the inseparability of EU trade and our policy for trade with the rest of the world relates to the future support that we provide our agricultural industry. The UK’s food and farming industry is not only important to our national identity; agriculture also contributed £9.7 billion to the UK economy in 2016. Our food and farming industry is the product of decades of shaping by the European single market and the £3 billion-plus of support from the common agricultural policy.
The EU’s combined rights and shared obligations under the WTO include a specified limit on the amount of agricultural subsidies that the EU may utilise. The UK is entitled to a share of these as part of the Brexit divorce and could, in theory, continue with a modified version of the CAP. But the Secretary of State will know that there are rumours that his Government are considering a deal whereby the UK would give up a share of its agricultural subsidies to the EU in order to secure a more favourable deal for other sectors of our economy. Will he guarantee today that our future trading relationships will not be based upon the sacrificing of British farmers and their livelihoods?
It is not just the EU that will be pressurising the UK to drop its share of agricultural subsidies. A number of countries have already expressed interest in free trade agreements with the UK on the basis of liberalising our agricultural market. Countries such as Australia, Canada, New Zealand and South Africa are active members of the Cairns Group, which is a WTO negotiating group precisely for agricultural trade liberalisation and the reduction of subsidies. Does the Secretary of State regard this liberalisation as positive for our farmers?
Helen Goodman
I am extremely concerned to hear what my hon. Friend is saying given that there are 400 sheep farmers in my constituency, who would be very badly affected were we to have a flood of cheap lamb imports from Australia and New Zealand. Does he agree that there can be no virtue in our destroying the hill farmers in our country to benefit the sheep farmers in wealthy countries such as Australia and New Zealand?
Barry Gardiner
My hon. Friend is absolutely right to point out that, were we to go on to WTO terms—from memory, the tariff rate for sheepmeat is about 44%—we would absolutely destroy the capacity of our hill farmers in particular to compete with foreign imports.
The Government need to come clean and give clarity to the British food and farming industry on our future trade policy options and what that means for the industry. It is not good enough to tell farmers that the status quo will be maintained until 2020 and then leave an abyss as to what options are available for their future. These people need a comprehensive international trade policy, and they need to know what it is.
Beyond Brexit, as the United Kingdom once again assumes competence for its own independent trade agreements, the Secretary of State must set out how he is pursuing agreements that share the benefits of globalisation more equitably. One can only wonder that this Government thought it sensible to embark upon a new industrial strategy without first publishing a White Paper on trade, so will he publish a trade White Paper? He has introduced a trade Bill in the Queen’s Speech but, as of this moment, he has not set out to Parliament or to business any policy on which to base it.
The Secretary of State has been travelling around the world holding preliminary talks with his counterparts. In fact, he has recently returned from a visit to the USA. When the Prime Minister first announced the start of preliminary talks with the USA, the American Farm Bureau Federation wasted no time in confirming that it would seek food hygiene changes in any UK-US deal, namely to end restrictions on US exports of chlorine-washed chicken and hormone-grown beef. Will the Secretary of State confirm to us that, in any talks about future trade deals, the sovereignty of our food safety and environmental protection standards will be not be sacrificed in the name of regulatory harmonisation?
An industrial strategy and international trade White Paper should have come together precisely because of the interdependence of trade, job creation, and economic growth. That makes Labour Members fearful that the Government have not done the proper assessment of the danger that future trade arrangements could pose for job losses and wage depression. The Government have put the cart before the horse. A trade White Paper should set out what the UK’s future policy on trade defence instruments will be. The EU currently has in place a series of trade defence measures, such as anti-dumping measures against China—and, to a lesser degree, India and Malaysia—on steel, other metals, and solar panels. The UK has famously opposed such measures at the EU. Now that we will be able to set our own trade policy, the Government must tell us whether they will stick to that line. If they do not plan to introduce trade defence measures, they need to set out whether and how they will protect and support sensitive sectors such as the steel industry and the solar panel industry from cheap imports.
The Government must also weigh whether they can afford to take a tough stance with countries like China and India with which they will be looking to conclude trade deals—or will they sell out our steel sector and others? The UK steel sector is in an existential crisis. My hon. Friend the Member for Middlesbrough South and East Cleveland, who chaired the all-party parliamentary group on steel, and my hon. Friend the Member for Aberavon (Stephen Kinnock), who launched the “Steel 2020” report earlier this year alongside my hon. Friend the Member for Redcar (Anna Turley), expressed outrage at the Government’s leaked memo that suggested steel would not be a priority industry post Brexit, threatening to destroy the very livelihoods of communities across England and south Wales. Similar concerns were raised by my hon. Friend the Member for Stoke-on-Trent Central, as the ceramics industry in the Potteries faces increasing competition from Chinese dumping on world markets. The British Government have for the past number of years been blocking efforts by the EU to introduce the sort of anti-dumping measures employed by the US by repeatedly exercising a veto and actively encouraging a blocking group of other nations. One official in Brussels is reported as saying:
“The British are sacrificing an entire European industry to say thank you to China for signing up to the nuclear power project at Hinkley Point, and pretending it is about free trade.”
It is right that we reach out to our international counterparts, but travelling around the world to hold “pre-negotiations” is no substitute for clear policy that sets out what our negotiating armoury is. An international trade White Paper should set out the Government’s principles—a clear plan of what the UK intends to achieve through future trade negotiations.
Barry Gardiner
No, I am about to conclude.
To that end, I ask the Minister to respond to the following questions about the Government’s international trade policy. What are their principal trade policy objectives? What will be their guiding principles for our future negotiations? How will they seek further liberalisation from our current tariff levels, and in which sectors? What transparency and parliamentary scrutiny will be given over our future trade negotiations? Will they commit to disclosing whether any obligations in trade agreements, both those in negotiation and finalised, are the motivation for legislative amendments before the House or regulatory changes by the Government? How will they ensure that our future trade agreements benefit British small and medium-sized enterprises as well as big business? How do they propose to protect and enhance workers’ rights? How will they address human rights within the context of new trade agreements? How will sustainable development be a guiding principle for our trade policy? How will they ensure that current environmental protections are maintained and enhanced in future trade agreements? What investment dispute resolution model, or models, are the Government willing to adopt?
The Department’s recruitment advertisements suggest that the priority trade sectors are healthcare, financial services, and education; clearly, food and farming do not feature among its priorities. How will trade policy address the sectors that do not appear to have been identified as a priority? Will the Government be excluding devolved Administrations and local government agencies from trade agreement commitments on Government procurement? How will they ensure that British businesses maintain access both to European markets and the markets of other trading partners, especially where there is considerable regulatory divergence between these markets? Will the UK be adopting any non-conforming measures for investment and service commitments in its future trade agreements?
By providing comprehensive answers to all these questions and publishing an international trade White Paper, the Government may be able to restore business confidence in the fact that they are holding current trade dialogues and working groups that are backed by a clear and strategic plan. If not, it will reinforce the sense that the Government are blundering into this process without a clear endgame and lacking a strategic understanding of the issues at stake for the UK economy and for jobs in this country.
Sir William Cash (Stone) (Con)
I would like to quote what Angela Merkel has said quite recently, but first I would like to say that I entirely endorse every single word that my right hon. Friend the Secretary of State said—not to flatter him, but because it is practical. He has shown a command of the subject that completely belies the tittle-tattle that the hon. Member for Brent North (Barry Gardiner) talked about. It has been my happy experience to notice that my right hon. Friend has a complete command of the subject.
What my right hon. Friend said is enormously important. That includes, in particular, the historical—but not nostalgic—background to his remarks. This country has, for the past 400 years, built up a policy of external, global trading, right the way through from the Elizabethan period—in fact, even earlier than that, in the late 15th century. He mentioned Robert Peel. I hope he will not mind my mentioning the fact that Peel was driven into the repeal of the corn laws by no less than Richard Cobden and John Bright during the massive battle over that issue. That liberalised the whole trading system. Indeed, the French commercial treaty of 1860—the first ever free-trade treaty in the world—was negotiated on the initiative of John Bright by Richard Cobden, with Michel Chevalier, who was the president of the French board of trade at the time. This is the basis on which our history has been developed. We have been right all the time that we have stuck with free trade.
I have been much encouraged by the attitude of other countries, including in my right hon. Friend’s meeting with Mr Ross in the United States only a few days ago. With regard to the United States, only one and a half hours ago I watched a live speech by Donald Trump from Poland. Among other things, he said that we must get rid of Government bureaucracy, deal with over-regulation and insist on sovereignty. He said that is the basis of freedom for sovereign nations. My right hon. Friend spoke about our ability to conclude our own trade agreements. That is why we have to unshackle ourselves, by virtue of leaving the customs union, from the fact that the European Commission determines our trade policies—there is no getting away from that.
The hon. Member for Brent North is in a bit of a pickle because, as he knows perfectly well, only last week the hon. Member for Streatham (Chuka Umunna) tabled an amendment on the single market, and it was defeated by the Opposition themselves—they were not prepared to go along with it. I have heard similar remarks made with regard to the noble Lord Adonis’s debate in the House of Lords. There is a kind of schizophrenia on these questions among Labour Members. They do not really know where they stand, and they are completely confused, but I think that a sense of realism is coming into it. I pay tribute to the extremely sensible Opposition Members who are beginning to realise that we cannot stay in the single market and the customs union and leave the European Union, because the two things are completely inconsistent. I know that the hon. Member for Brent North accepts that now.
Sir William Cash
I will not give way just yet.
The speech by Mr Barnier today is extremely relevant, and I have the benefit of having the full text here. I will not go through every detail of it, I can assure you, Madam Deputy Speaker, but I note that some of the things that he said are highly relevant to what my right hon. Friend the Secretary of State rightly pointed out in his speech. On the question of what happens if there is no deal, Mr Barnier said:
“Here also, I want to be very clear: in a classic negotiation, ‘no deal’ means a return to the status quo. In the case of Brexit, ‘no deal'”,
he claimed,
“would be a return to a distant past.”
He is wrong—that is not the case. I think the hon. Member for Brent North said that under the World Trade Organisation tariffs, there would be a 40% tariff on lamb, but even Mr Barnier says that custom duties would include
“an average of 12% on lamb and also fish”,
which is very different from what the hon. Gentleman asserted. I do not blame him—he was speaking from memory, so I am not criticising him—but I am just pointing out what Mr Barnier said.
Mr Barnier also made the extraordinary assumption:
“In practice, ‘no deal’ would worsen the ‘lose-lose’ situation which is bound to result from Brexit.”
Again, he is wrong. He went on to say:
“And I think, objectively, that the UK would have more to lose than its partners.”
That is just not so. He then went on to reveal what is really going on at the EU and with his negotiating position:
“I therefore want to be very clear: to my mind there is no reasonable justification for the ‘no deal’ scenario. There is no sense in making the consequences of Brexit even worse. That is why we want an agreement.”
They want an agreement because they know, just as Allister Heath, the distinguished editor of The Sunday Telegraph, pointed out in an article two weeks ago, that German car makers are getting really worried about the idea that there will not be an agreement, because that is not in their interests either.
On trading relationships, it is absolutely essential to remember that, while we will continue to have some 40% of our trade—although the figure is declining—with the internal market, or the framework of the remaining 27 member states, we run a monumental deficit of £71 billion a year with the EU, as the hon. Member for Luton North (Kelvin Hopkins) has said. That figure went up by £10 billion last year alone, and we do not even have this year’s figures, which will be even greater. The Office for National Statistics may have indicated to my right hon. Friend the Secretary of State how much worse they will be by this time next year.
By the same token, our global trade surplus with the rest of the world, in goods and services, imports and exports—that is the golden thread and the parameter that international trade statistics rely on—is expanding at an enormous, accelerating rate. That is the basis of our future prosperity. I say with respect to Opposition Members that more effective trade with the rest of the world, including taxing companies, will result in greater profitability. Out of that enormously growing prosperity zone, we will be able to pay for the public services that the public want and we want. The national health service will actually have more money at its disposal as a result of our successful international trading relationship with the rest of the world.
Mr Barnier went on to make an interesting observation:
“To my British partners I say: a fair deal is far better than no deal.”
That may be how it looks, but the truth is that they have to be very careful that they do not put us in the position of having to accept the idea of no deal. If that happens, as my right hon. Friend the Secretary of State has said, the advantages to us of trading on WTO terms are simply not unsatisfactory at all—quite the opposite. We all need to be realistic.
Interestingly, Mr Barnier then referred to the great port of Zeebrugge, which he said he will visit shortly,
“and for which the UK is the primary market with 17 million tonnes of roll-on roll-off traffic in 2016”.
He went on to say that he could not imagine, in the interests of the UK, Flanders and Belgium, that it would be a good idea to have
“an interruption of supply or a highly efficient organisation being called into question.”
We do not want a trade war over ports with the rest of the European Union. As I pointed out in an intervention, it was the EU that introduced the ports regulation. We had a massive row in the House of Commons, including in Committee, and I have been dealing with the issue as Chairman of the European Scrutiny Committee for the past two years. It is, however, going ahead, and the reason for that is that there is no way we can stop it. That is the response to the questions that have been asked. The reality is that until we get our sovereignty back and get the ability to run our own ports system on our own terms, we will be subjected to things like the ports regulation, which was put through by a majority vote behind closed doors. Nobody really knows who decided what. I tried to find out, but we could not make any serious progress in discovering who was making decisions. A lot of it, I think, was coming from Hamburg, because it has an enormous interest in preserving its own position.
The imposed rules were rejected by every single one of our 47 ports—not just the employers but the trade unions, which all piled in and said, “We can’t tolerate this new ports regulation.” Yet there it is, going through, if it has not gone through already while we were away for the general election. The bottom line is that our ports are the arteries for the lifeblood of our international trade, and they have been such for four centuries, as my right hon. Friend the Secretary of State said.
Mr Jenkin
I remind my hon. Friend and the House that the reason it is a ports regulation is that when it was a directive it was blocked by the European Parliament. So undemocratic is the EU’s legislative system that the Commission can force it through as a regulation, so even the European Parliament cannot block it. What kind of democracy is that, and is it not a good thing that we are getting back control over our laws?
Sir William Cash
My hon. Friend and I have been battling on these questions for 30 years, including since Maastricht. He hits the nail on the head. Democracy is lacking in the European Union. The freedom of choice to which Donald Trump referred today—the freedom of sovereign nations to decide their own democratic decision-making processes, including the right to determine their own trade policies—does not mean that there is anything negative about our ability to deliver what is in our national interest. All our history, and every single aspect of our life in this Parliament for centuries, has depended on our ability to make up our own minds about what is in the interests of our own electorate, based on the general elections at which they exercise their freedom of choice. That freedom of choice is based on the word “freedom”.
The key point is that, as the likes of John Bright and Richard Cobden understood, freedom includes freedom of choice—freedom of choice in the marketplace and economics, and freedom of choice to make electoral decisions in the ballot box. That is why they worked towards giving working people the right to vote in 1867. It is all about freedom; when we have that freedom, we will be able to make decisions in our own national interest. My right hon. Friend the Secretary of State is right to say that we have done so successfully for centuries.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Gentleman complains that the European Union is not democratic, while at the same time worrying about it being a superstate. The reality is that the European Union is a regional trade agreement, of which there are many in the world. One hundred and eighty-eight states of the United Nations are in regional trade agreements. Only five are not in regional trade agreements, and thus have the type of sovereignty that he has been talking about. The hon. Gentleman is taking the UK towards the type of sovereignty enjoyed by East Timor, Somalia, South Sudan, Mauritania and São Tomé and Príncipe, and many people wonder whether he really understands what he is doing.
Sir William Cash
I know where the hon. Gentleman is coming from, but I simply say that even the leader of his party has more or less had to abandon the pursuit of the independence of Scotland, which is what underpins that question. [Interruption.] That is the bottom line. Comparisons between our great country and Somalia and Sudan are simply absurd, because this is a great country that has been making its own laws for centuries.
We went into the European Community with hope, and I voted yes in the 1975 referendum because I wanted to see whether it could work. My 30 years in the European Scrutiny Committee have proven absolutely that it does not. It is undemocratic and operates behind closed doors, and I doubt whether even that applies in some of the countries to which the hon. Gentleman has referred.
I now want to conclude—
Sir William Cash
I always know that I am making an impact when the hon. Member for Wantage starts wanting to get to his feet.
Sir William Cash
He is my right hon. Friend—my very good friend. [Laughter.] I have great respect for him, although we do not always agree about everything. The same is true of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who is, I suspect, on much the same track as him.
We enjoy a trade surplus of £34.4 billion with the rest of the world. As I said, yes, 44% of our trade is with the EU—
James Cartlidge
Is the surplus to which my hon. Friend has referred not smaller than our surplus in services with the EU?
Sir William Cash
It is the aggregate of goods and services. When we consider whether we are making a deficit or a surplus, we have to look at the totality of the position.
Mr Crawford Falconer, the chief trade negotiation adviser, has an enormous amount of experience, and I am extremely glad to hear that he has been given the job of negotiating with countries such as the USA, Canada and Australia. Last year, our trade surplus with the USA was £39.6 billion and our trade surplus with Canada was £1.3 billion. In 2015, we had a trade surplus of £3.7 billion with Australia. They have all said that they want to trade bilaterally with us. It is absolutely right that we should go into those negotiations on the basis that they will lead to greater prosperity for everybody, including ourselves.
Such trading arrangements are the means by which our economic growth and our prosperity will increase exponentially. They will provide security and stability, which will allow us to deliver an effective economy and public services from the taxation of the companies involved. It is a virtuous circle and we are dedicated to it not out of ideology or from any sense of anti-Europeanism, but simply because it works. It is a good policy. The Prime Minister has put her will behind it, and my right hon. Friend the Secretary of State has explained it thoroughly and well today.
Whatever the circumstances, and whether we were remainers or leavers, we must continue with our current policy. Angela Merkel says that what matters is the future of Europe, not Brexit. That is the policy of the German Chancellor. Let us seize the opportunity to make Brexit work in our national interest.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. After the next speaker, I will be setting a six-minute time limit. A lot of Members have put in to speak, and it may have to be reduced further.
Hannah Bardell (Livingston) (SNP)
I associate myself and other SNP Members with the Secretary of State’s comments about PC Keith Palmer—this debate was due to take place on the day of the attack on Parliament—and our thoughts continue to be with him, his family and his friends.
I welcome you to the Chair, Madam Deputy Speaker. It is nice to see that we have gender balance among the Speaker and Deputy Speakers.
I rise to speak for the first time in a substantive debate since my re-election as the MP for Livingston—I am grateful to the people of Livingston for re-electing me—and since my appointment as SNP spokesperson on international trade and investment.
I pay tribute to my former colleague and Member for Ochil and South Perthshire, Tasmina Ahmed-Sheikh, our previous spokesperson on international trade and investment. She was one of the hardest working MPs this Parliament has ever seen, and she was a doughty champion for the people of Ochil and South Perthshire. She pursued many matters—from international trade to the plight of the people of war-torn Syria and the UK Government’s involvement in the Yemen conflict—and her dogged work ensured that, time and again, UK Ministers were dragged to the Dispatch Box to answer the questions of SNP Members. We will continue to pursue such issues with vigour and passion.
My former colleague was a far cry from some of the Conservative Members who, sadly, have replaced her and other SNP colleagues. I do not mean to be entirely unkind—they are not in their places today—but they have been here for only a few weeks, and they have already rolled over on a distasteful deal with the DUP, failing to stand up for Scotland and their constituents. This Tory Government have found £1.5 billion to do a deal so that they can vote down pay increases for emergency service workers and public servants. In recent weeks and months, we have come to rely very heavily on those emergency workers and public servants, and the Scottish Conservatives should hang their heads in shame.
The Scottish Conservatives now have a choice: they can choose to do what is in the best interests of Scotland and of the constituents who voted them in, or they can fall into line with the rest of their party in support of a hard Brexit. I challenge them to use the opportunities that lie ahead to make sure that the Prime Minister reconsiders her position and joins us, and other Members in other parties, in defending Scotland’s place in the single market and the customs union.
The trade and customs Bills will seek to put in place a legislative framework to allow the UK to operate its own trade policy and provide new domestic legislation to replace EU customs legislation. The problem is that, despite all the bluff and bluster from the Tories, the UK had to cave in on the first day of Brexit talks and agree that the divorce deal will have to be established before any trade deals are agreed, leaving business, the economy and workers across our country in limbo. Michel Barnier said earlier today that frictionless trade in goods and services “is not possible” outside the single market and the customs union. We need to know from the Secretary of State and colleagues whether there will be transitional arrangements for our economy in relation to goods and services.
We know the track record of this Government on scrutiny and process: they avoid it at all costs. They had to be dragged through the courts even to give Parliament a say on the triggering of article 50, so what hope can we have that we will get to scrutinise properly the many laws and regulations that will be coming back from the EU? The Government’s plans for the great repeal Bill include so-called Henry VIII powers to avoid any scrutiny, as well as antiquated and back-door measures through the use of delegated legislation. What guarantees are the Government offering to ensure they will not abuse such powers? What guarantees are they offering to ensure they will not use antiquated and back-door measures to avoid scrutiny by and the need to obtain the consent of the devolved Administrations?
The public rejected the Prime Minister’s call at the last election to strengthen her hand in the Brexit negotiations, and she cannot carry on as if the election result has not happened. It would serve her and this Government’s flailing credibility better to build a much more consensual approach, because leaving the single market would be an unprecedented act of self-harm.
Joanna Cherry (Edinburgh South West) (SNP)
Does my hon. Friend agree that that would in particular be an act of self-harm for Scotland? At present, EU trade deals with the likes of South Korea mean that the tariff on our major export of Scotch whisky has been reduced to nil, whereas a 20% tariff has to be paid on other whisky entering South Korea. Are we not much more likely to get such favourable deals for Scotch whisky if we have the whole weight of the EU behind us, rather than if we are negotiating just as the UK?
Hannah Bardell
I absolutely agree with everything my hon. and learned Friend says.
The Secretary of State alluded in his opening comments to trade deals with countries such as India, particularly on whisky. Are he and his colleagues not concerned that when the Foreign Secretary visited India recently he was advised that:
“Mobility issues are of importance to us; we cannot separate free movement of people from the free flow of goods, services and investments”
Trade agreements are about give and take. The Government, the Ministers on the Front Bench and others who have spoken do not seem to understand that concept.
The plans for a hard Tory Brexit have already immersed the UK economy in uncertainty, with inflation escalating and companies preparing to move their operations outside the UK. [Interruption.] Conservative Members chunter from a sedentary position, but they only need to open the papers every day to see examples of that. Figures from the National Institute of Economic and Social Research suggest that Scotland’s exports could be cut by more than £5 billion if we fail to retain full membership of the single market. The research also shows that trade in goods could decline by 35% to 44%. If exports of Scottish goods were to fall by a similar amount, the additional cost would be about £3 billion. According to the UK Government’s own analysis, leaving the single market could reduce Scotland’s GDP by more than £10 billion.
At the end of this process, when we have clarity on whether there is a deal or no deal, if the Government have not taken on board Scotland’s position, which I will come on to later, we must have an insurance policy. We must have a say over our own future and be able to decide whether we want to be an independent nation within Europe. That is why Scotland’s main business organisations issued a joint statement on 8 July last year, confirming that Scotland’s businesses need continued access to the single market and free movement of labour.
Since then, those organisations have all repeatedly raised concerns about the impact of Brexit on business, including on access to labour, both skilled and non-skilled. For example, the loss of EU nationals will seriously harm our rural economy. About 8,000 EU nationals come to live in Scotland and work in the food and drink industry, and 15,000 seasonal migrant workers harvest our world-class fruit and vegetables. We cannot put their futures or the future of our vital sectors at risk. EU nationals also make a huge contribution to our NHS. One in 20 NHS doctors in Scotland comes from the EU. More than 1,000 companies owned in the EU employ over 127,000 people in Scotland and about 181,000 EU citizens live in Scotland, bringing vital skills and expertise. We heard only last week that the rate of applicants for nursing posts from the EU has dropped by 96%. That will be devastating across the UK.
Scotland is an open and modern economy. Our exports of goods and services account for about 50% of our GDP. That is why our membership of the single market is so crucial to our economy. Through the EU, Scotland trades with the world. The EU has signed free trade agreements with nearly 90 non-EU countries. Free trade agreements are already in place with 62 countries and the agreements with 28 countries are still to be applied. The Secretary of State said in his comments that he hoped they would be ratified soon. Those agreements are driving growth in Scotland’s trade with the rest of the world, which increased by 55% between 2007 and 2015.
If we are not able to continue with those trade agreements—we know how long many of them may take—then cumulatively it could be decades before we even reach the position we now have with full access to the single market. Scotland’s businesses are well placed to take advantage of the opportunities to sell their products across Europe and the world. If we leave the single market, we gamble with a market of 500 million people and free trade deals with 90 countries around the world.
The Tory manifesto contained a pledge to leave the single market and the customs union. Given that the Tories failed to gain a clear majority, they must think again, put those options back on the table and make them central to their negotiating position. It just went to show the contempt the UK Government have for Scotland when we heard the Brexit Secretary admitting to the Exiting the European Union Committee and, indeed, the rest of the UK in March 2017 that no economic analysis—none—had been done to address the impact of Brexit on the UK economy. How can we have been in a position whereby not only was an impact study not done before we went into the referendum, but in all of the time between then and coming to that Committee no work had been done? This was compounded by comments on “The Andrew Marr Show” recently, where the right hon. Gentleman, who is opening negotiations for the UK, was unable to confirm that the UK would get a free trade agreement with the EU; it was very much a case of, “Mebbe’s aye, mebbe’s no.” The Secretary of State’s comments show just how disorganised he and the Tory party are on Brexit and our future trading relationship with the EU.
Just this week, the Financial Times reported that the City of London was sending a delegation to Brussels to present a secret blueprint for a post-Brexit free trade deal on financial services. The City is left to do the work of the Government for itself.
Concern mounts over the damage facing employers if they are forced to move operations to the continent. Not every sector is able to do that, or should do that. We should have a Government who are listening to the devolved nations and all those sectors. This is just the latest indication that businesses do not trust the Tory Government.
The SNP Scottish Government put forward a very sensible compromise agreement on Scotland’s place in Europe, respecting the results in 2014 and of the EU referendum. It laid out a sensible and pragmatic approach to the situation we now find ourselves in: that Scotland could retain its membership of the single market and remain within the UK.
In Scotland, we are working hard to support SMEs and corporates with initiatives like the Borders enterprise agency, which was just launched, with a focus on meeting the region’s distinctive economic needs. We have also launched the Scottish-European Growth Co-investment Programme, the first part of the Scottish growth scheme, with £50 million from Scottish Enterprise and £50 million from the European Investment Fund, which will leverage at least £100 million from private sector fund managers. Evidence of the fruits of the Scottish Government’s labours were borne out by yesterday’s GDP data, which showed the Scottish economy defying recession concerns and growing at 0.8%, compared with the UK average of 0.2%.
But this is set against a backdrop of Brexit uncertainty giving businesses much pause for thought in investment decisions. The Chancellor has conceded that a “large amount” of UK business investment is being postponed, and urged early agreement with the EU on transitional arrangements. Our growth is under threat, and we need to hear more than warm words from the Government Benches. The Governor of the Bank of England, Mark Carney, spoke of “anaemic wage growth” and said he would like in coming months to see
“whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.”
Scotland’s voice is being ignored. That is not democratic, and it is not acceptable. Scotland is the top destination in Europe for exports from the rest of the UK, so it is in everybody’s interests to have a close trading relationship, because the European single market is Scotland’s real growth market, and is eight times bigger than the UK market alone.
The Secretary of State for Exiting the European Union said on a recent visit to Ireland:
“Ireland will not have to choose between having a strong commitment to the EU or to the UK—it can and should have both.”
Why, then, can that not apply to Scotland?
In a press conference in Dublin on 30 January 2017, the Prime Minister said that the UK would maintain
“the common travel area and excellent economic links with Ireland.”
Again, I ask why that cannot apply to Scotland?
There must be a meeting of the UK and devolved Governments to decide objectives before the next cycle of negotiations with the EU this month, and there must be a commitment to take seriously, and act upon, the interests of Scottish businesses, universities and a range of other groups becoming increasingly alarmed at the way Brexit is being handled.
Scotland’s voice must be heard during the Brexit negotiations. Only recently we heard from a surprise supporter of that long-held SNP view. The Labour party leader, the right hon. Member for Islington North (Jeremy Corbyn), took time out from partying at Glastonbury to write for the Sunday Herald saying that Scotland needs a clear input into the Brexit negotiating process. He said:
“The Scottish Government must have regular and systematic access to the British negotiating team so that the Scottish perspective, especially in those areas for which the Scottish Parliament is responsible, is fully taken into account.”
That is very welcome; it is just a shame that his party cannot be united on access to the single market and the customs union. Will this Government finally acknowledge the overwhelming support for a Scottish seat at the Brexit table and extend the hand of friendship to all the devolved nations to enable them to take part in these negotiations, which will affect their people, their economies and their future?
This Conservative Government are cowed and reduced; they failed resolutely to start negotiating a trade deal with the EU at the same time as the exit deal. We in the SNP believe that it is important to maintain our international development goals and ensure an ethical trade policy. To ensure that our international development goals are maintained, the Scottish Parliament must have a real say on any trade deal that is negotiated. ActionAid has ranked the UK joint worst in the world for having the largest number of treaties with developing countries that most restrict the rights of poor countries to tax UK companies operating there. That is not acceptable and it does the UK’s reputation no good on the world stage. The SNP will continue to defend Scotland’s interests and prioritise maintaining Scotland’s membership of the single market and the customs union in the Brexit negotiations.
Patrick Grady (Glasgow North) (SNP)
My hon. Friend mentions our relationships with developing countries. Resolving the tax treaty with Malawi was a priority for many Members in the last Parliament. Malawi is neither too small nor too poor to be independent, despite its many challenges. Today is its independence day, and I am sure that we all wish it a happy independence day.
Hannah Bardell
I share my hon. Friend’s sentiment in wishing Malawi a happy independence day. I note the work that many Members across many different parties have done on Malawi, not least the former Labour First Minister, Jack McConnell, who I know continues to champion that work in the other place.
It is vital that the Brexit negotiations are carried out alongside a firm commitment to developing an ethical trade policy. I say to the Prime Minister and her Government that they will not get any kind of unity or agreement by ignoring the issues that they find in front of them. It is time to take their heads out of the sand, face the music and work with the devolved Administrations and other Members across the House so that we can get the best possible deal.
Mr Edward Vaizey (Wantage) (Con)
I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests. This is the first time I have had the chance to speak in this new Parliament and the first time I have spoken with you in the Chair, Madam Deputy Speaker. It is a great honour.
Let me begin by praising the incredible work being undertaken by the Department for International Trade. I read the Secretary of State’s brilliant article on ConservativeHome this morning, and I know that everyone in the Chamber will have availed themselves of it. Ministers have travelled to 50 countries—the number of air miles accumulated boggles the mind—and 10 trade groups have been set up. We have an international trade adviser, and we took the shrewd decision to make the brilliant Antonia Romeo the permanent secretary. And we now have a Minister on the Front Bench who is fluent in German—
Mr Vaizey
And Russian. So everything is now in place for progress to be made.
I have to say that I am sceptical about the future. May I quickly add that I do not work for the BBC? However, I want to use this opportunity to say that I am a huge supporter of the BBC and of BBC news, which is respected all around the world. Those people who question the BBC’s patriotism or declare that it is somehow biased in this debate are absurd. You can see me on YouTube, when I defended George Osborne’s Brexit emergency Budget debate, being torn apart by Andrew Neil. He cut me no slack as a remainer coming on his programme. The BBC is not biased or partial, and people who claim that it is have simply lost the argument.
Let me get back to the main point of the debate, which is trade. I confess that I find this country in a confusing position. We are leaving the European Union free trade area that gives us access to 500 million consumers in order to trade with them on the basis of the World Trade Organisation rules. That seems to be the only position that we are taking. At the same time, we will negotiate a free trade deal with the United States because we do not like trading with that country on a WTO basis, so I am completely unclear as to what our position is on free trade and why we are walking away from 500 million consumers. I also find it odd that we want to have no deal rather than a bad deal.
It is quite clear from Michel Barnier’s speech this morning that we cannot pick and choose which sectors might benefit from access to the single market. It is also clear that having access to the single market and being a member of the European Union enables us to have free trade. The European Union has negotiated 60 free trade deals. The House approved a free trade deal with Canada this week, and another has seen exports to Korea rise by 54%. The EU has just started negotiations with Japan, and it is through no fault of the EU that we do not have a trade deal with the United States.
Trade deals are not necessarily nirvana. Ministers and others say that we will be able to have free trade deals from the day we leave the European Union, but I caution them as to the nature of those free trade deals. My hon. Friend the Member for Stone (Sir William Cash) talked about the virtues of free trade, with which I agree, and the opportunity to reduce import tariffs, but he has to be aware of the reaction of the British public and different sectors of the British economy if we simply reduce tariffs against their competitors. Not every free trade deal will be plain sailing, which is why it has taken seven years to negotiate the free trade deal with Canada.
Hannah Bardell
Is the right hon. Gentleman aware of the research by the University of California, Berkeley showing that the average time taken to negotiate a free trade agreement is 28 months? That means it would take the UK 91 years of cumulative negotiation to get to where we are. Does he think that will be a problem?
Mr Vaizey
That is the point. The idea that we can take free trade deals off the shelf and not face lobbying from different sectors of our economy on the possible threats to their position from a free trade deal—the idea that all sectors of our economy are crying out for free trade deals—is a misconception. These are extremely complicated arrangements. [Interruption.] My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) says that we do not have a free trade deal with the EU, but at least we have access to the market without quotas, tariffs or non-tariff barriers.
Remember that free trade deals are constructed by human beings. This week I met a former US trade negotiator who is well plugged into the entire scene and who told me that the US trade representative organisation is already at full stretch and is demoralised by President Trump canning the Trans-Pacific Partnership. It has to renegotiate the North American Free Trade Agreement, and the Transatlantic Trade and Investment Partnership has been put back on the agenda. When President Obama said that we were at the back of the queue, the language may have been unfortunate but we should be realistic about where we are in the line with the US and realistic about the capacity of the US Administration to negotiate with us.
I have a few asks of the Minister, who is free to reply in German or Russian, as he sees fit, to show his capacity, for which I have nothing but admiration. Which countries are we targeting, and why have we chosen them? I know that we have 10 trade groups. I would like to hear his thoughts on a timetable for free trade deals with those countries. Is there any economic analysis of what the growth of GDP will be once those free trade deals have been negotiated?
I am a great supporter of the work of the Secretary of State for International Trade, who mentioned the welcome inward investment we have seen in the past year or so. As a former Minister with responsibility for the digital industries, I particularly welcome the investment by companies such as Facebook and Google. There are many, many issues, but we welcome their inward investment. Does the Minister agree that that inward investment is predicated on their ability to recruit people with specialist abilities?
Mr Vaizey
Will the Minister assure us that companies that want to invest in the UK will, as my hon. Friend the Member for Rochford and Southend East (James Duddridge) says, be able to continue recruiting people with the right skills both from the European Union and from across the world? One of the benefits of the single market is that for a person recruited from the European Union, having their partner and family members able to come here to work is a huge incentive.
Vicky Ford (Chelmsford) (Con)
I fully respect that we will be leaving the single market and will need a new deal. At the moment, a company selling, say, a cancer scanner to a Spanish hospital needs to have a maintenance service contract. It can send an engineer to service the scanner under a posting of workers arrangement, and there is mutual recognition of the engineer’s professional qualifications. Does my right hon. Friend agree that, in our new trade agreement, it is important to be able to easily trade not only goods but services, with the ability to send workers flexibly from one jurisdiction to another?
Mr Vaizey
My hon. Friend makes a fantastic point. She was an incredibly effective MEP and she certainly would have turned up to Juncker’s speech in the European Parliament; she worked tirelessly and I very much hope the Government will listen to her as we negotiate Brexit, because she has experience that is unparalleled in this House. The point she makes is pertinent to my constituency, where MRI scanners are made at Oxford Instruments.
I was going to talk about Euratom, but I have run out of time—luckily we have a Westminster Hall debate on Wednesday. I do not know whether my hon. Friend the Member for Stone (Sir William Cash) will be speaking in that debate, but we all want to make our points on Euratom then.
Mr Vaizey
I will on Wednesday morning, because I have run out of time now—I have only 30 seconds left. I wish to conclude with a plea. I know that we have this two-year timetable under article 50, but, as the Secretary of State said, this is a political process. He is hoping that the European Union will do a deal because their politicians will want to do what is right for their people. Why are we wedded to a two-year cliff-edge process, given that even in a brief, six-minute speech I have been able to highlight some of the extraordinary complexities we are facing? If only I had had longer, perhaps 12 or 18 minutes, I could have expanded on this.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
It is a pleasure to follow the right hon. Member for Wantage (Mr Vaizey), as, perhaps unusually, I agreed with almost everything he said. It is a year since the referendum and three months or so since we triggered article 50. We wasted two months on a general election that has left the Prime Minister enfeebled and the Front-Bench team confused. The impact on our economy is potentially hugely serious, and we are running out of time. The public services are in crisis. We need the sort of confident direction that is necessary to attract investment in our economy, to enable growth and the taxation receipts necessary to bolster our services.
When I participated in the EU referendum debate a year ago, one argument I heard regularly was, “Because of the trading imbalance between us and the EU, they need us more than we need them so they are going to be very favourably inclined to a generous settlement.” I have heard similar sentiments reiterated in today’s debate. If that is the case, I cannot understand why there is a problem with saying that we want to remain part of the single market and the customs union, and we will go for a transitional arrangement until we get it. Somehow we do not seem to be getting that from Ministers, but that it is what is needed to give investors the confidence to invest in our country.
I make it clear that I have a constituency interest: there are more foundries in my constituency than in any other in the country. They are tied into the manufacturing supply chain, particularly that of the car industry. The future welfare of that industry is essential for the future jobs and employment prospects of my constituents. We must be clear about the role the car industry plays in the national economy: 77% of cars manufactured in Britain are exported, 56% of them to Europe. Our overall trading statistics by value show that the contribution of the car industry is huge and significant. It is no coincidence that what I articulated as our objectives earlier are exactly what the Society of Motor Manufacturers and Traders wants.
This idea that no deal is better than a bad deal and that we can fall back on World Trade Organisation tariffs is nonsense. That would add 10% to car prices, and 2.5% to 4.5% for parts. Given the to-ing and fro-ing of car parts in the supply chain in the industry, the potential cost is £2.6 billion for imports and £1.86 billion for exports. The cost of an average car could increase by £1,500.
The Government’s mixed messaging and hostile rhetoric has caused damage. In business questions, my hon. Friend the Member for Bridgend (Mrs Moon) mentioned recent figures on investment in the car industry, which has dropped from £2.56 billion in 2015 to only £322 million in the first half of this year. That is hugely significant for the future of a manufacturing industry that is crucial for our export performance.
In the time I have left, I wish to comment on the approach and potential of some of the alternative scenarios I have heard outlined. To be clear: I am as in favour of trading with other countries as anybody is. Implicit in a lot of the arguments I have heard is that the EU is somehow a barrier to our having good trading relations with other countries.
Anna McMorrin (Cardiff North) (Lab)
I agree with what my hon. Friend is saying. Our markets and economy are on a cliff edge because of the Government’s irresponsible behaviour.
May I correct the comments by the hon. Member for Stone (Sir William Cash) on sheep market imports? He misquoted Michel Barnier’s remarks about 12% tariffs. Actually, sheep market imports from outside the EU are subject to tariffs of 12% plus a fixed amount ranging from €900—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I have been lenient with the hon. Lady because I appreciate that she has been in the House only for a matter of days. Nevertheless, she should be intervening on the hon. Member for West Bromwich West (Mr Bailey), not making a speech about something said earlier by someone else. I am sure she will get the hang of it, but I cannot let her go on any longer. I am sorry.
Mr Bailey
The ability of my hon. Friend the Member for Cardiff North (Anna McMorrin) to make a speech while intervening demonstrates that she is rapidly acquiring the skills of Parliament.
To return to the point I was making, if being a member of the EU is an impediment to trading with other countries, why do some of our key EU rivals, such as Germany and France, manage to trade far more successfully with other markets than we do? Could it be that, notwithstanding their EU membership, they are doing something right that we are not doing? Our approach should take that into account; we should not blame the EU for the deficiencies in our ability to get the maximum from our trading potential with countries outside the EU.
There is a rather naive and totally fallacious belief that somehow it is going to be easy to trade with other countries when we come out of the EU. If we look at the World Bank ratings on the ease of doing business in the expanding markets of China, India and Brazil, we see that China is ranked 96th, India 149th and Brazil 143rd. The idea that they will become any easier to trade with if we come out of the EU is, quite frankly, self-delusion. The right hon. Member for Wantage outlined some of the practical difficulties in setting up any trade negotiations with other countries, and they will still be alive.
The fact is that by coming out of the EU, we are moving from a trading bloc that is relatively easy to deal with to one that is not. We need to make it clear, at this point, that we want to remain in the EU single market and customs union.
Julia Dockerill (Hornchurch and Upminster) (Con)
I thank the hon. Member for West Bromwich West (Mr Bailey) for his contribution. I am grateful to you, Madam Deputy Speaker, for calling me to make my maiden speech in this important debate about trade. I am also thankful to my hon. Friends for gathering around me like a protective huddle of penguins; I very much appreciate it.
We must be realistic, pragmatic and determined about how we best shape this country as we leave the European Union. Too often, debate on how we do that is infected by a corrosive pessimism that betrays a lack of confidence in our nation and in what we can offer the world. Now is a time for resilience, resourcefulness and self-belief. We need not a crowing self-regard but an appreciation that our people and what we have created together have value. I want to talk today about why I believe that to be so.
First, let me pay tribute to my predecessor, Dame Angela Watkinson, a lady of grace and a lady whose service leaves a proud legacy. Dame Angela’s story embodies the essence of Conservatism. From humble working class roots in Leytonstone, she built not only a flourishing career through hard work and talent, but a record of public service in this place and beyond, particularly through her church and on behalf of children with disabilities. I offer her my profound gratitude on behalf of the people of Hornchurch and Upminster, whom I so proudly represent here today.
Rather like me, Hornchurch and Upminster may now be in London, but it will always and forever have an Essex heart. Both Hornchurch and Upminster were agricultural parishes of the county, and the vestiges of a simpler past are scattered across the seat like antique jewels—whether Upminster’s beautiful tithe barn, our Grade II listed windmill or the charming churches of St Laurence and St Andrew. From the mid-17th century onwards, the area attracted successful merchants from the City of London looking to build their country pads. By 1885, Upminster was first formally connected to the metropolis by rail. None the less, its population remained modest right up until 1906, when developer Peter Griggs spotted a chance to turn the area into a new garden suburb for aspirant workers. Hornchurch was similarly swept up in the wave of suburban growth. By 1965, both were formally incorporated into the London borough of Havering.
The area’s role in defending London during the war was played out from RAF Hornchurch, just outside my constituency. My constituency later helped to revive London and its war-weary people by providing land for a large new housing estate on Harold Hill to alleviate inner-city housing shortages, particularly among eastenders who sought better lives for their families—what more fitting location for the first sale of a council home to a tenant by the Greater London Council? For aspiration, hard work and a deep sense of family, community and nationhood flow through the veins of my constituents. Ours is a seat where an agrarian Englishness and sense of stability mixes with the upward mobility of the metropolis, and where the brash thrust of the centre breaks into something gentler, almost nostalgic. It is a place where taxis, vans and the tools of tradespeople rest on driveways after a hard day’s work; where doorways are swept and homes taken pride in; and where people hold straightforward, honest hopes for good schools, jobs, public services and homes. My constituents contribute to and believe in what this nation has to offer but they expect our nation’s politicians to hold that belief as well.
I began my career in this place working for the Minister for Asia and the Pacific, my right hon. Friend the Member for Cities of London and Westminster (Mark Field). A person with a hugely generous spirit, he gave me the space and confidence to flourish in my own right, and it fills me with enormous joy to see him promoted to serve this country with his immense talent. Those were deceptively sunny days for our country, yet in quick succession I was to witness at close quarters the expenses crisis, the financial crisis and then a seemingly unending series of scandals that systematically undermined public trust in nearly every institution within our nation. I shared in the national mood of disillusionment. Not long afterwards, I attended a town hall meeting in Tower Hamlets where I saw councillors physically attack and issue death threats to one another. I felt a profound sense of horror over what had happened in the borough. The divisive identity politics of race, religion and class had turned out to breed only a culture of grotesque corruption, incivility and isolation, while local politicians’ self-congratulatory mantra of “fairness”, “community” and “justice” were used only as a cloak to retain power. That night inspired me to became one of five feisty Conservative councillors who fought alongside others to expose what was going on. Tower Hamlets is now a byword for what can go wrong when we fail to uphold the systems, institutions and values that make Britain work.
Later I spent time working with European and developing nations on governance issues. Witnessing developing nations battle with endemic corruption, it became ever clearer to me that without decent governance, all other efforts to raise living standards and increase prosperity will struggle. Meanwhile, seeing the EU at close quarters, I reluctantly came to the view that it was divorced from the reality of those whom it purports to represent. It is now time to return accountability to our own politicians. Indeed, I should like to see post-Brexit Britain as one of a group of modern, open nations pursuing close co-operation in matters of security and defence, and an ambitious agenda on free trade, covering goods and services, on economic prosperity and on the creation of international standards for the new technologies shaping our lives. That must sit alongside a restatement of the importance of the nation state, with a new focus on intergovernmental co-operation rather than collective decision making via costly and cumbersome bureaucracies.
Our parliamentary democracy is a precious and delicate gift, the sum of the toil, sacrifice, disagreements and compromises that generations before us have made. Its principles have proved a template for governance across the globe and provided the space for millions of individuals, institutions and enterprises to flourish. It is a dynamic system that works because it is lubricated by trust and because each generation of parliamentarians tries its best to fine-tune it to reflect the needs and wants of the citizens they represent. The past decade may have undermined trust in our economy, in our politicians and in our media, but crises and scandals can also drive improvements, and should not be taken as a reason to give up or dismiss our nation with a relentless, virulent negativity. Quite the opposite. It is the duty of our generation of politicians to learn, to reform and to lasso the hopes, ambitions and talents of British people of every background as we enter this challenging but enormously exciting new era.
Helen Goodman (Bishop Auckland) (Lab)
I begin, of course, by congratulating the hon. Member for Hornchurch and Upminster (Julia Dockerill) on her maiden speech. She demonstrated how attached she feels to her constituency, and that really is the best start for being an effective Member of Parliament. It also shows what progress we are making when a Member can stand up and say that they are the second woman Member in their constituency.
This is the first time I have spoken since the general election and, of course, I want to begin by thanking my constituents for taking part in the election—especially those who voted Labour. The majority of my constituents voted to leave the European Union in the referendum last year, and when I discuss that with them they tell me that they want a Brexit that controls immigration but boosts exports and secures long-term jobs, particularly in manufacturing. What they like about the European Union is the social chapter, the common market—what we call the customs union—the environmental protections, co-operation on research and development, and the European arrest warrant.
Their views on migration mean that I have to say that I think that it is inevitable that as part of leaving the European Union, we will have to leave the single market, but I think the issues on the customs union are rather different. I was pleased by the speech made by my hon. Friend the Member for Brent North (Barry Gardiner) and the remarks made by my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) about keeping the customs union on the table. I do not know why the Chancellor was suggesting the other day that there are legal difficulties with that; Turkey belongs to the customs union and not the European Union and that was the position that this country was in between 1975 and 1992. It offers not just tariff-free trade but barrier-free trade.
When I went to talk to the North East England chamber of commerce, its members were particularly worried about how firms would handle the rules of origin if we were to leave the customs union. It is not enough for HMRC to have a computer system. That does not deal with the bureaucracy, because each individual firm has to apply to get the status they need to use the system. That is immensely bureaucratic and time-consuming, and the OECD has found that that increases costs by about 25%.
Another very important thing is what we will do about all the European agencies—the Government have not been clear about that at all. In my constituency there is a Glaxo plant that employs 1,000 people and produces half a million packs of drugs a day. I have been working with Glaxo, both locally and nationally, on what kind of Brexit deal would be good for the pharmaceutical industry. It wants a level playing field with the other drugs manufacturers across Europe, and that means staying inside the European Medicines Agency. The agency has been located in London because Britain is one of the best producers of pharmaceuticals, and we helped to draft almost all the rules that the agency applies. Glaxo has sent me its paper on priorities for the UK’s exit, in which it said:
“Any UK withdrawal from the EU that ends or damages the UK’s ability to benefit from the EU framework”—
the medicines agency framework—
“could significantly impact patients, and hinder GSK’s operations in the UK and across the EU. Any future regulatory processes…must avoid introducing delays, significant new costs or unpredictable outcomes.
It is critical that an agreement is reached early in negotiations between the UK and EU that the European regulatory framework will continue to apply to medicines, vaccines, medical devices and cosmetics that are already authorised or undergoing clinical trials, to ensure that supply or development of these products is maintained without disruption.”
Vicky Ford
I am interested in what the hon. Lady says about medicines and vaccines. Yes, the mutual recognition principle is extremely helpful in allowing British companies to work with others across Europe and a single market for medicines, but I understand there are issues that make it more difficult for those same pharmaceutical developers to share data with, say, American counterparts. Under the comprehensive economic and trade agreement, which as I have said before in the House is not perfect for the UK, there are potential benefits to mutual recognition not only with Europe but with other countries. Does she not agree that we want both types of agreement if possible?
Helen Goodman
What we really want is minimal regulatory costs on businesses. That means that we should stay in the European Medicines Agency. If we leave and have to set up our own, we will be imposing a third regulatory system on them, and as I am sure the hon. Lady knows, that would be immensely expensive. We have a lot of exports and jobs in the sector. I tabled a lot of parliamentary questions to the Department before the general election and got content-free answers. I now want Ministers to be clear about what they will do not just about the European Medicines Agency but about the 40 other agencies we belong to, ranging from aviation safety to plant health, all of which facilitate trade on a level playing field for British businesses.
The second group of people I am concerned about, as I pointed out in my intervention, are hill farmers—I have 400 hill farmers. After Brexit, it seems that three things will matter for them: the new trade rules; the support systems; and the regulations on food safety and the environment. Again, we have had no clarity from Ministers. If they agree to the import of meat with lower animal welfare and consumer safety standards and lower prices, they could decimate British agriculture, which would be a disaster for farmers and a disaster for the environment.
James Duddridge (Rochford and Southend East) (Con)
I will shock the Front Benchers by saying that I agree with absolutely everything the hon. Member for Bishop Auckland (Helen Goodman) said—about my hon. Friend the Member for Hornchurch and Upminster (Julia Dockerill), who is indeed truly fabulous. Hon. Friends and new friends, we all cuddled around her in what is now known as doughnut. I am used to being part of a doughnut, but never before have I been called a penguin. None the less, I have waddled back to my usual place and am happy to have caught your eye in this Brexit debate, Madam Deputy Speaker.
I am proud to have supported Brexit. Although there were many reasons to support Brexit, and for many of my constituents the principal one was about taking back control of our laws, mine was a different one—the economic future of Britain. Before being elected to this place, I was a banker in Africa and the City. I ran banks in various African countries, and I saw that the backbone of those countries and the banks was commodities and trade in goods. I therefore have some experience with trade finance, letters of credit, debt financing, raising finance, export guarantees and doing business and trading across different territories. As such, I think it is quite good that this Parliament is not to be jam-packed full of detailed legislation beyond Brexit. Brexit will be complicated enough.
I believe we will look back with a degree of selective memory and not see Brexit as a great revolution. It feels problematic at the moment, and I feel for the Minister for Trade and Investment, who has day-to-day responsibility for delivering Brexit. In many ways I am grateful to be on the Back Benches, having campaigned for Brexit, so that I can let him do some of the detailed lifting, but over the next 18 months I would like to do more on trade and customs-related Bills, both in the Chamber and in Committee.
My hon. Friend the Member for Stone (Sir William Cash) gave us a history lesson, but an A-level history student might be confused by some of the debates we have here. A student looking at the corn laws and gunboat diplomacy—attempts to build up trade and markets—and reading Adam Smith would see a trajectory of ever more open free trade and that being seen as a good thing, separate from capitalism and sometimes having its wings clipped. In a time of global uncertainty about quantitative easing, sub-prime lending, eurozone collapse and so on, perhaps my greatest concern is Donald Trump’s comments on trade. The big nation states, the G7 or G20, need to take responsibility and look at free trade not only for our own benefit but for the benefit of others, particularly in the Commonwealth and Africa, which I will discuss if there is time.
Since 2005, when I became an MP, the proportion of our goods exported to places outside Europe has increased from 48% to 56%. As speakers on both sides of the House have noted, the growth areas are outside the Europe Union. In an intervention on the hon. Member for Brent North (Barry Gardiner), I highlighted the fact that we import more than we export. Understandably, we in the UK look at Brexit from our own standpoint, because it was we who voted on it and we who wanted it as a nation, although there were clearly a lot of debates across all the parties. If we look at it more from the perspective of continental Europe—from the point of view of exporters of German BMWs, or of prosecco and champagne, which the Foreign Secretary discussed—Brexit could seem a lot closer to being delivered.
I welcome the Department’s meeting of Commonwealth Trade Ministers. I was fortunate enough to attend some of the earlier meetings. There is a real appetite for refreshing relationships with the Commonwealth. It should have been happening anyway, but Brexit gives us a further opportunity. I am glad that in Africa more generally, we are taking a step back from the European partnership agreements. I encourage the Government, especially the Department for International Trade, to pursue policies to grow countries out of poverty. That has a great impact on us by cutting migration and terrorism, as well on the people who escape poverty. To be frank, that is as important, if not more so, than getting the short-term benefit of export trade. There is a good opportunity there.
I have some concerns about how the Department is organised, at a time when the Foreign Office is joining up with the Department for International Development at ministerial level to encourage a united regional and country-by-country approach. The trade envoys will have a country approach, but Ministers are taking a more sectoral approach. When I was a banker in Ivory Coast, gold miners would come to me and ask about the country. Oil producers would ask me about the country and how easy it was to do business. Tech companies would come to me, but not to ask about technology; they would ask about regional issues and how easy it was to do business. Perhaps the Government can provide those services in the round. I would love to see more of Lord Price’s high value opportunities study, which we can really leverage. I think that the blockage in Downing Street on the trade envoys should be freed up and we should appoint more trade envoys as soon as possible.
Ms Karen Lee (Lincoln) (Lab)
Thank you, Madam Deputy Speaker, for allowing me this opportunity to make my maiden speech on behalf of the people of my constituency, which covers not only the city of Lincoln but the surrounding villages of Skellingthorpe, Waddington East and Bracebridge Heath. I am proud to have been elected and to have the chance to serve my city. I am Lincoln through and through, so in electing me as their Member of Parliament, the people of Lincoln have truly elected one of their own. I assure them that, as promised, I will be their voice in Westminster.
Until just a few weeks ago, I was an NHS nurse. Having worked in the NHS since 2003, I am all too aware of the challenges that the current privatisation and running down of the service means for health workers and for my constituents. I am also proud to have been a part of Lincoln’s Labour-led city council and to have watched its many positive achievements, including the new transport hub currently under construction in the city centre. But as a local councillor I have also witnessed the impact of cuts to local council budgets, and how austerity for some has caused untold misery for the many, not the few.
At the beginning of the general election campaign, it was unclear whether I would be standing here today to make this speech, but Lincoln and its citizens have a history of defying the odds. From the development of the first tank during world war one by a determined group of engineers, to the recent runaway success of Lincoln City football club—the Imps—who took the fight for the FA cup to the Emirates stadium last season, Lincoln has a proud history of going the extra mile. Who would have thought just a few weeks ago that Lincoln would elect one of its own born-and-bred, working-class citizens as its MP?
One of the less-known facts about Lincoln is that Henry VIII looted Lincoln cathedral of its treasures in 1538. Over the past seven years, the Tories’ austerity programme has seen a similar looting of health and education services in Lincoln and an increase in social inequality. Our public services, including the local hospital where I worked as a nurse, are under tremendous pressure because of the current “austerity for some.” Likewise, local GP services are under huge pressure, especially since the recent closure of local GP practices. Since my first day in Parliament, I have been inundated with messages of concern from residents worried about the possible closure of our local walk-in centre. Every day that I went to work, I witnessed at first hand the strain that Lincoln’s A&E department was under. In-patient wards are chronically short of nurses and doctors, and nurses can no longer afford to train because bursaries are being withdrawn. As a single parent in 2000, I relied upon the nursing bursary to undertake my training.
During my election campaign I visited some of the city’s food banks, which again are a testament to the stark poverty found in some parts of Lincoln. Surely in 2017 the need for food banks in the world’s fifth richest country is absolute proof of the inequality present in our society today. Homelessness, people sleeping rough on the streets and hard-working people just about managing by working long hours for low wages are just as much the norm in Lincoln as in many other parts of the country. Over a quarter of all children in some areas of Lincoln live in poverty, yet the Prime Minister has found the key to the magic money tree, enabling her to find over £1 billion to keep her Government in power, proving that austerity is indeed an ideological choice, not a necessity.
Lincoln has two great universities, which we are very proud of, both of which recently achieved the highest rating possible in a new national assessment for the quality of teaching, learning and student achievement in UK higher education. Yet many of the students who live in our city struggle with mountains of debt after paying the huge cost of tuition fees. They live in privately rented homes that are often poorly maintained, paying high rents, which increases the amount of debt they accumulate. How can that be fair?
During my time in this House, I will strive to represent Lincoln and all that is good about it, but I will also champion the cause of those who have been left behind without a voice. I hope that Lincoln is a fairer and more equal place for all its residents when my time here is done.
Members may know that Lincoln boasts a stunning gothic cathedral, a medieval castle and a significant historical quarter, and they may be aware that Lincoln proudly displays a copy of Magna Carta in its castle. However, perhaps fewer Members know that 2017—the year of my election—marks the 800th anniversary of the Charter of the Forest, which was signed in Lincoln and is on display in Lincoln Castle.
Tradition has it that I mention my predecessor, Karl MᶜCartney, who was a strong advocate for transport and its infrastructure in the city and surrounding area. Lincoln is still struggling to cope with the heavy demands placed on a modern and developing city against a backdrop of more traditional and historical infrastructure. As part of my election pledges, I will continue the work that Karl contributed to. I look forward to positive and effective relationships with the county and city councils, and other stakeholders, to find the solutions to keep Lincoln moving. I also pay tribute to my great friend and colleague, Gillian Merron—Lincoln’s MP from 1997 until 2010—who worked incredibly hard for Lincoln and duly achieved much for our city.
Turning to Brexit, Lincoln, like many other places, voted overwhelmingly to leave the EU. Although there will be significant implications for trade, employment and services in Lincoln, the decision to leave the EU was democratic, and our task now is to ensure that we get the best possible deal for everyone. Lincoln has a large European community living and working around the constituency, and we need to ensure that EU nationals are protected.
In closing, I restate my hope and aspirations for Lincoln as its MP. I will campaign hard to get a medical school in Lincoln, which will attract the doctors we so desperately need to start to address the crisis in our local NHS. I will work with local councils, and business and community stakeholders to attract the funding for transport networks and infrastructure that will bring the jobs and training my constituents so badly need after seven years of Tory austerity. I will campaign for extra housing to be built, in addition to that planned by Lincoln’s Labour-led city council, which will benefit local families and those unfortunate enough to be homeless in Lincoln. Finally—this comes from the heart—I hope that by the end of this Parliament, however long it lasts, the indignity and suffering endured by those who have to use one of Lincoln’s many food banks is just a bad memory, not a fact of daily life.
Richard Graham (Gloucester) (Con)
It is a pleasure to follow the hon. Member for Lincoln (Ms Lee). I congratulate her on her passionate maiden speech. Many of us will also remember her predecessor fondly.
This debate is at the heart of the challenge for us all in this Parliament, for although leaving the EU is by no means the only task before us—many of our constituents may have a clearer focus on seeing their local school and hospital well-funded, and their own standard of living gradually increasing—if we lose our access and tariff-free trade with the EU and fail to grow our global business enough to compensate, much else is at risk, because business generates, directly and indirectly, 75% of the total tax revenue that funds vital services. That also means that there is a particular responsibility on all of us here who voted against leaving the EU not to sit back in our chairs and say, “I told you it would be a disaster”, but rather to do our best in making sure that the process works and succeeds because jobs, the economy and, ultimately, the lives of our constituents are at stake. But if I ask remainers to be pragmatic in seeking the opportunities and not overplaying the risks, I would also ask leavers to be pragmatic in their approach. Let me give one example.
The Prime Minister did not commit us in her Lancaster House speech to a position on the customs union. She said that
“I want Britain to be able to negotiate its own trade agreements. But I also want tariff-free trade with Europe…Whether that means we must reach a completely new customs agreement, become an associate member…or remain a signatory to some elements…I have an open mind…It is not the means that matter, but the ends.”
So the Secretary of State was right earlier to focus on prosperity as his guiding light. What works best for business is what will be best for us, because it is business that has delivered the 2.9 million new jobs since 2010—more than all the other 27 EU nations put together.
Today we should all rejoice that exports are up sharply and inward investment is at record highs from 2016’s results. It is a far cry from the prediction made by some of 800,000 unemployed, a deep recession, and real economic hardship by now. But nor should we be complacent, for the figures show a strong surplus of exports and services but a continued deficit in traded goods. In a year of significant currency depreciation, that means we have to do much more. This implies success in retaining the more than 40% of our trade with the EU, and success, too, in exporting to high-growth markets.
As chairman of the all-party parliamentary group on China, let me touch on China, and south-east Asia.
James Duddridge
I compliment my hon. Friend on his work as chair of the all-party group and in facilitating greater knowledge of Hong Kong. I urge him to touch on the trading relationships between mainland China and Hong Kong, and how the latter can be seen as setting the pace for the former.
Richard Graham
I thank my hon. Friend for his comments. I am not going to talk too much today about the differences between, and indeed the closeness of, Hong Kong and China.
Our exports to China doubled between 2010 and 2016, but they are very dependent on the success of a handful of companies, especially Jaguar Land Rover. What holds us back, and where we have to make much greater progress, is market access. With an excellent new director general of trade and investment in Beijing, recruited from industry, I hope that Ministers will drive real progress in this strategic partnership to deliver greater access for British services, in particular.
Catherine West (Hornsey and Wood Green) (Lab)
Does the hon. Gentleman accept that we should be focusing on the role of innovation, universities, science and technology in the context of Brexit?
Richard Graham
Yes. The hon. Lady is absolutely right in general. I was going to touch on the importance of education as one of our high-growth exports, and that has to be innovation-led. FinTech, but also lots of other techs, is an area where we can do much more. She is right on that.
Meanwhile, in ASEAN—the Association of Southeast Asian Nations—total exports in the last year for which for we have complete figures were up by 4%. Exports to two of my markets—Indonesia and the Philippines—were up strongly, while Malaysian exports dropped slightly, but from a much higher starting point. Goods exports in the past six months rose by 8.3%, demonstrating that this progress was not just a flash in the wok. We have real success, particularly with business services and insurance, but also with FinTech, MedTech, and even EdTech—not to be confused with EdStone. It is worth noting that we now sell more in education than in insurance. Our partnerships on education in Malaysia are a strong example of what can be done. It remains a strong goal for us as a nation, but also a dream of mine, to establish a British university in the Philippines and in Indonesia.
This matters, because one of the joys of being in business in Asia in general is that long relationships and trust drive business as much as the quality of the product and the transaction itself, and those relationships start early, at schools and universities. In the long term, our education presence and links will enable us to catch up with our main European competitors—Germany and France—in exports of goods, while retaining our advantages in services. This is why we should not include students in our immigration figures, as it leaves an impression of not welcoming foreign students. Moreover, our universities’ growth in foreign student numbers has been well below the growth realised by other Anglo-Saxon countries such as the US, Canada and Australia. This is an opportunity that we can seize, and I hope that the Minister will refer to it.
The prosperity fund will play a key role in growing our bilateral business opportunities. I encourage Ministers to ask that trade envoys be involved at an early stage of any proposal. The Minister knows that not long ago we had three trade envoys in ASEAN, but now only myself. I hope he will encourage the Prime Minister to consider appointing additional bilateral trade envoys to ASEAN nations, which, in turn, can help take forward the bilateral trade relationships by including the business of business in the annual high-level Government-to-Government meetings.
In recent years, British businesses have made great strides in ASEAN markets. For example, we partner with Indonesians to win airport refuelling contracts. We have developed a biogas bus service in Bali from recycled cooking oil. We provide teacher training in Borneo. We advise on air traffic management, engineering consultancy services, rail projects, and public-private partnership structures for hospitals. We equip their airlines with engines and supply most of the exciting parts of their Airbus aircraft, and we are setting up a toothpaste factory and emergency power generation, as well as a new velodrome, and much more besides, to help make the 2018 Jakarta-based Asian games a great success. From museums to marine energy, there is much that we are doing in the world’s fifth largest country. It has been described by The Guardian as the “Biggest invisible thing on earth”, but it is not remotely unknown to us.
What we do in Indonesia is one example of realising the great opportunities in Asia and in ASEAN in its 50th anniversary year. It is a region where the GREAT campaign is well recognised and the Union Jack a strong brand, and London is the best showcase for its international growth and aspirations. As I have indicated, we can do much more, but we build on strong foundations. Let us not be shy to tell our story and do more.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Thank you for calling me to speak, Madam Deputy Speaker, and may I congratulate you on your appointment?
It is a great honour to speak in this House. I am the first member of my Stone family ever to be elected as an MP, and standing here I like to think of my mother and father looking down on me with pride. I also owe sincere thanks to my wife Flora and my three children. Without their support and great help, the likelihood of my being elected to this place would have been rather smaller.
It is customary for new Members to mention their predecessors. Dr Paul Monaghan is a passionate nationalist and while here he took a close interest in middle east matters, the welfare of former inhabitants of the Chagos islands and, in particular, animal welfare. That is his record. I acknowledge it and thank him for it.
In addition, I really must mention my great friend who once represented part of my constituency, the late Charles Kennedy. He is much missed and will never be forgotten, by me in particular. I was for a time his constituency chairman.
Caithness, Sutherland and Easter Ross is the second largest and most remote constituency on the UK mainland. For that reason it presents special challenges to the Scottish and UK Governments. Sparsity of population, distance and severe winter weather all necessitate taking a different approach to the delivery of vital services. What works in Surrey or Glasgow is not necessarily going to work at all where I come from.
For that reason, recent changes to local maternity services in my constituency, which involve greatly increased numbers of pregnant mothers having to make a 200-mile round trip to Inverness, are causing great concern. Therefore, within the rules of this House pertaining to devolved Scottish Government matters such as health, I give notice that that issue is of the greatest importance to me and that I shall use my role as an MP to do everything in my power to address it.
Equally, lack of access to suitably fast broadband is proving to be a drag anchor to many local businesses in my constituency. That is particularly unfortunate when we are trying to promote tourism in this most beautiful area. The importance of operating efficiently online cannot be over-exaggerated. If local tourist businesses are to compete in a global market, they depend on that type of service. Again, I give notice of the importance of the subject to me and, given the opportunity, I will have much to say about it in the future.
My constituency and its constituent parts have an interesting history. For instance, I am absolutely prepared to bet that Members do not know that he whose portrait hangs among others in the Strangers’ Dining Room—the Whig leader, Charles James Fox—was the Member for my hometown of Tain in Easter Ross. In the 1784 general election, Fox fought a particularly energetic campaign to win his seat here, by which I mean Westminster, which he represented. He was helped by the great beauty of her age, Georgiana, Duchess of Devonshire, who was strongly suspected to have been his lover at the time, but it was absolutely to no electoral avail. Owing to a legal challenge, the result lay unconfirmed for over a year. Fox strongly suspected that his distant cousin George III and Pitt the Younger lay behind this evil stratagem, and it served only to deepen his dislike for George III. But Fox had cunning friends, who dreamed up a wheeze. They made him a burgess of Kirkwall in Orkney—a burgess is a freeman—and because of that he was very quickly duly elected to the pocket burgh of Tain and the Northern Burghs. And so he represented my home town until his Westminster result was ultimately cleared, after which he resigned.
Would that my own efforts to be elected to represent my home town had been as easy of those of Charles James Fox. I could elaborate on the fact that Malcolm MacDonald stood for my constituency. Indeed, the uncle of the right hon. Member for Mid Sussex (Sir Nicholas Soames), one Randolph Churchill, also contested the seat. Given the time available, however, I will save that for another day.
I am sorry that the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) is not here today, because I want to quote some Gaelic to amuse your good self, Madam Deputy Speaker, and to test Hansard. We have a saying:
“Togar càrn mòr de chlachan beaga”,
which means:
“The mighty cairn is built of little stones”.
I do hope that this particular stone—myself—may play a suitable part in the mighty cairn that is democracy in this special place.
Robert Neill (Bromley and Chislehurst) (Con)
It is a particular pleasure to follow the maiden speech of the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone). It was impressive, elegant and informative all at the same time. I particularly enjoyed it as a descendant myself of “Barra men”, who found their way further south via Inverness-shire. They unfortunately left out Caithness, Sutherland and Easter Ross, skirting it a bit to the south. I know that the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) will be pleased with that reference. All of us in the House look forward to hearing a great deal more from the hon. Member for Caithness, Sutherland and Easter Ross in the future.
I turn to the comments made by my hon. Friend the Member for Gloucester (Richard Graham), who is still here. I take the same approach as he did. I believed that it was right for this country to remain in the European Union, but the decision has been taken and our job is to be pragmatic about how we deliver the result. The need for give and take on both sides must be firmly recognised. This must be a Brexit that works for the 48% just as much as for the 52%. I am sure that the Ministers on the Treasury Bench will bear that in mind. In practical terms, it involves our being open-minded about the nature of the deals that we reach as we leave. No one party’s manifesto vision attained a majority in the House, so the House itself has a particular right to seek to shape the nature of our leaving and of our future relationship with the EU.
I endorse and agree with what my hon. Friend the Member for Gloucester has said about the customs union. It seems to me illogical that we should put ourselves in a worse position than Turkey by ruling out membership of it. On the position of foreign students, as a London MP I see the great benefit of the talent that comes into our universities and into the financial services provided by the City of London, which is a wellspring of our economy and our public services. I hope that we will see some flexibility there.
Because my right hon. Friend the Member for Wantage (Mr Vaizey)—my very good friend—was not able to get this in, I will add that we need to look afresh at Euratom. It seems illogical to exclude ourselves from something that is very much to our technological advantage. Israel is a member of Euratom, so it is perfectly possible to participate in it without being a member of the EU. We should not put artificial obstacles of a rather theoretical and almost theological kind in the way of a good, practical deal, where one can be done.
That brings me to the meat of what I wanted to say, which concerns the financial services sector. I refer to my entry in the Register of Members’ Financial Interests. Some 36% of my constituents work in or around the financial services sector and its supply chain. The sector is critical to them and to the economy: some £45 billion is generated for our economy by the City of London alone, never mind the broader financial services sector across the whole UK, which employs some 2.2 million people. The total tax contribution of the financial services sector for our public services is some £71.4 billion, so I have no truck with Opposition Members who criticise or carp at the work of the City of London and the financial services sector.
The financial services sector is a strategic national interest, and it must be a primary duty of our Government, as we seek to leave the European Union, to safeguard it. In particular, that will require a proper deal to deliver mutual market access. If some compromise on the form of the adjudication or arbitration arrangements is therefore necessary, so be it. At the end of the day, it is much more important for the welfare of this country that we have full and proper access for our financial services sector than that we argue—as with angels on the head of a needle—about different courts of justice and elements of jurisdiction. Modern countries with a global outlook sometimes recognise the need to collaborate and to share jurisdictions in areas of mutual advantage, and we should not rule that out in this case.
This process must also involve meaningful and early transitional arrangements, not ones set to an arbitrary timescale of two years, three years or whatever. The transitional arrangements must apply for as long as it takes to do the job for the financial services sector. The deal we made with the British people was to respect the outcome of the referendum; it was not a vote about how long the process would take or about the manner of our leaving. It is well established from the evidence that for some elements of the financial services sector—derivatives, say, as opposed to insurance or euro clearing—different lengths of transitional arrangements may well be necessary, and we should be flexible in that respect.
Finally, we must continue to have access to global talent. The issue of students has already been mentioned, and one of my hon. Friends referred to the issue of posted workers, which is also very important. The same applies to London’s position as a great international law centre, because the ability of lawyers to move between multinational firms is absolutely critical. Those are the practical things we need to deliver. I say to the Government that they have my support in doing so, but this must all be done in a way that puts the business outcome and the prosperity of this country above any “ologies”, “isms” or any other kind of academic consideration.
Danielle Rowley (Midlothian) (Lab)
Thank you, Madam Deputy Speaker, for calling me to make my maiden speech. First, I congratulate my hon. Friend the Member for Lincoln (Ms Lee) on her fantastic maiden speech. I share her passion for representing our constituents. I also congratulate my fellow Scot, the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), on his speech, and I echo his sentiments on the legacy of Charles Kennedy.
We have heard passionate contributions from hon. Members today. During the Brexit process, we must get the best deal for our economy, protect jobs and defend the rights of EU nationals. I will be fighting for that on behalf of my constituents in Midlothian, and I thank them for sending me here to do that.
I must pay tribute to my predecessor, Owen Thompson, who I know worked hard to represent Midlothian, and I am sure his contribution to the community will be remembered well. I thank him for his congratulations, and for the warm and friendly way in which we conducted our campaign. In his maiden speech, Owen, who was wearing his Midlothian tartan tie, spoke about the green representing the landscape, the blue representing the reservoirs and the black representing the coal in Midlothian.
Owen remarked that he was the first non-miner in a long time—since the second world war, in fact—to be elected to represent Midlothian, and I want to make two points about that. I have another first: I am the first woman to be elected to serve Midlothian, and of that I am very proud indeed. Secondly, although you can see that I myself am not a miner, Madam Deputy Speaker, I am proud to come from good mining stock—both my grandfathers, Willie Rowley and Ron Curran, worked down the mine—so I am keeping that strong Midlothian tradition alive, and I was honoured to receive the endorsement of and support from my local retired miners group.
Speaking of former miners to represent Midlothian, I would also like to pay tribute to two former Members for Midlothian whom I have the honour of knowing and have learned from, Sir David Hamilton and Eric Clarke. Eric said in his maiden speech:
“I am proud to be a socialist and a trade unionist”.—[Official Report, 11 May 1992; Vol. 207, c. 430.]
I am very glad to be carrying on that mantle, and I am very grateful to David for helping me with my campaign. I must say that I have run out of paper with the list of people from all parts of the House who have asked me to pass on their warm wishes to Eric and David.
It is traditional to talk about the history of one’s constituency in a maiden speech, but I feel that those who have come before me have done a fantastic job of highlighting our rich history of Gladstone, of our proud industry—or once proud industry—of Dolly the sheep, of Dalkeith Palace and of Rosslyn chapel, so I would like to talk about the people of Midlothian and what I hope to do for our future.
On 9 June, the day after I was elected to serve here, I spoke at a local food bank, the Food Facts Friends Project in Penicuik. I talked to Mark, who told me his personal story. He told me that when he found himself having to rely on a food bank, it did not just give him the food he needed, but gave him friendship and support and helped him to develop a network. He then helped set up and run the Penicuik food bank himself.
Mark’s story reminded me of an ethos that is central to charity and to the idea behind food banks, and that should be central to the work we carry out here when we talk about helping people in need: a hand up, not a handout. It is essential that we give people the tools that they need to live their lives to the full. When I have worked with people in various jobs who are receiving benefits or support from charity, that is what they want. They want support to do things for themselves, not a handout, as some Members of this House and the media might have us believe.
I am sad to say that Mark had to report last week that demand for the food bank had gone up again, with more than 20 families a week using the service. He said that people who come to the foodbank because they cannot afford to feed their families may have been sanctioned or suffered from the benefit cap and welfare reform. Others simply cannot feed their family on the income of low wages and inadequate help from the Government. That is an absolute disgrace and something I will spend my time here fighting. I will fight for good jobs, for good wages, for support for our young, our elderly and people with disabilities, and for a hand up for those who fall on hard times, because it can happen to any of us.
Midlothian is a strong and proud community. Yes, we come together in solidarity in times of hardship—we did it during the miners’ strike, we do it when there are job losses and we have done it again now—but we also have many fantastic ways of coming together to celebrate and enjoy our community. There is the youth project that Councillor Margot Russell runs; our community radio, Black Diamond FM; and the Cousland community coffee morning, where I share a roll and a cup of tea at the weekend with members of the community. Since being elected, I have attended many children’s gala days. On polling day, I gratefully received some nice soup and a roll from the Grassy Riggs café for older people and their carers. That is to name just a few. I want projects like that which bring the community together to flourish.
I started my speech by paying tribute to Labour Members Eric Clarke and David Hamilton, and I will end on their wise words too. Eric ended his maiden speech by talking about
“the double standards of having a few who are rich and the vast majority who are poor.”—[Official Report, 11 May 1992; Vol. 207, c. 431.]
David ended his speech by talking about Labour standing up for vulnerable people, saying that
“those people will benefit, along with all of us, and not just a few.”—[Official Report, 12 July 2001; Vol. 371, c. 1015.]
Although the phrase may have been stolen today by Government Members, I am going to reclaim it. I end by echoing those sentiments in saying that I am proud to have been elected here to represent the people of Midlothian on a platform of hope and with the message that I am joining my friends on these Benches to fight for the many, not the few.
Madam Deputy Speaker (Mrs Eleanor Laing)
I have given as much time as possible to the many excellent maiden speeches this afternoon, but I now have to reduce the time limit to five minutes.
James Cartlidge (South Suffolk) (Con)
It is a pleasure to follow the hon. Member for Midlothian (Danielle Rowley). I congratulate her on her very fine maiden speech. She speaks with great passion, which shines through, and I am sure she will be a huge asset to the people of Midlothian by representing them in the way she set out.
I am also pleased to follow my hon. Friend the Member for Bromley and Chislehurst (Robert Neill). Some of the points that I make will be very similar to his, particularly on the issue of the transition, on which I agree with him strongly.
I will start by setting that in the context of my constituency of South Suffolk. I am optimistic about this country being outside the EU once it has secured a comprehensive trade agreement, which must at all costs include services. We must not forget that we have a £20 billion surplus in services with the EU.
In the immediate term, when I go around my constituency, I find that companies are optimistic. There is a company called Challs International, which I will be visiting next Friday, and which is opening a new plant. The company is not a household name, but it has a product that is one: Buster Sink Unblocker, which some Members might have seen in the supermarkets. Its boss is optimistic, as are other companies, if they have trade deals, about selling in countries outside the EU, and I think there is a great future for this country when we get to that stage.
There are concerns in my constituency, however. Our biggest manufacturing employer, certainly in Sudbury, is Delphi Diesel Systems, a major exporter to the EU, which is currently consulting on its plant closure. That would result in the loss of 520 full-time skilled jobs in Sudbury. I am grateful to the Under-Secretary of State for International Trade, my hon. Friend the Member for Wyre Forest (Mark Garnier)—who is in his place—for the help he is giving me to work with the company to try to find a way forward. I look forward to meeting his officials to talk about that.
If that firm closes—I hope that does not happen—we will then have to talk about how we get in new business and inward investment to replace it. My right hon. Friend the Secretary of State is right that we have fantastic figures on inward investment, but if we want to attract new inward investment, I agree with other hon. Members that we must avoid this cliff edge at all costs.
The hon. Member for West Bromwich West (Mr Bailey) referred to the automotive industry, which, of course, includes my company Delphi. Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, says:
“We accept that we are leaving the European Union. But our biggest fear is that, in two years’ time, we fall off a cliff edge—no deal, outside the single market and customs union and trading on inferior World Trade Organisation terms.”
His worry is that that will hit our ability to attract the investment that is critical to future growth, and that is my concern.
My concern is that we are not taking seriously enough the threat of leaving the EU without a deal. In my opinion, we should look for cross-party support on the whole issue of a transitional deal. We should realise that the national interest is best served by trying to reach a transitional deal in the event that we do not have our new trade deal arranged in time.
I strongly agree with my hon. Friend the Member for Bromley and Chislehurst that we must not move from one cliff edge to set up another. To have a transitional deal with another arbitrary time limit would be potentially foolish. It is my understanding that that is what the EU would at present want from any transition. However, we start by talking about our interests, and the best thing for this country would be to have a transitional deal that lasts from when we leave until a new deal is signed. That is common sense and sensible.
I have two more points to make on the issue of transition, because, understandably, there has been a lot of talk about that in recent weeks. Any deal must be a trusted transitional deal. We must not use transition as some kind of Trojan horse for remaining or as a way of fudging the issue of securing a good long-term deal. A transition must be precisely that—covering from where we are now until we have a new comprehensive deal in place. It must be trusted by those on both sides of the argument—those of us who argued to remain and those of us who argued to leave.
I noticed today that Mr Barnier said that there would be no negotiation on transition until at least late 2018. I raised this point in an intervention on the Secretary of State earlier, because that is extremely worrying. As a Parliament, we should be trying to come together around a position we can agree on, and the transitional deal is part of that. We should look at how we can press perhaps even for a parallel process, so that in the event that this country does not secure a deal by March 2019, it has an insurance policy in place to ensure that business stability and confidence is maintained and we do not crash out with the effect that would have on our economic future.
Tom Brake (Carshalton and Wallington) (LD)
I also congratulate the hon. Member for Midlothian (Danielle Rowley) on her excellent speech and the priorities she has set for herself and her constituents. I also congratulate my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on making a confident and polished maiden speech; clearly that particular Stone will be playing a significant role in the cairn of democracy.
I am disappointed that the Secretary of State is not here, because I would have liked to point out to him that the business of attacking national broadcasters is something that Putin and Trump do, and that it is not something that our Secretary of State should be doing.
Tom Brake
I am sure that there will be some excellent cross-fertilisation going on there. Of course I congratulate Robbie Gibb on his new role.
As the Minister will know, the Liberal Democrats favour staying in the single market and the customs union, and we are disappointed that the Government made no attempt to secure that while talking to the other EU countries about freedom of movement. We need to hear the Minister’s assessment of the cost of leaving the single market and the customs union. What would be the cost of reaching no deal? What would be the cost of a bad deal or a good deal? The Secretary of State for Exiting the European Union has said that he cannot tell us what these costs are because we do not know what the deal is, yet we hear successive Ministers saying that leaving the European Union is going to be absolutely brilliant and a bonanza for British business. They can tell us that, yet they cannot say what the cost of leaving the European Union with either no deal or a bad deal would be. Will the Minister tell us what those costs would be, or is there a cover-up going on?
We also need to hear how many deals the Minister expects to be struck when we leave the European Union. How many does he expect to be secured in the first, second, third and fifth years after our departure? We have heard from other Members what the average time is for securing a trade deal. I would also like some feedback from the Minister on the countries with which the European Union has already struck a deal or is about to finalise one. Canada and South Korea are examples, and I understand that Japan is now close to securing such a deal. I would like to know how long those countries think it would take to secure a new deal with the UK at some point in the future. Given that informal discussions have started, I also think we are entitled to know what countries such as China, India and Brazil have been saying to the British Government about their expectations of how many more Chinese, Indian and Brazilian citizens will be able to come to the UK on the back of any trade deals. People will be interested to know those facts.
The Minister has heard from many contributors this afternoon about the importance of freedom of movement. He will have been lobbied by a series of companies and organisations across the board about their concerns over the impact of restricting freedom of movement. He will have heard from companies that innovate, and from companies similar to the one in my constituency that is worried that it cannot gain access to engineers from the UK, because we simply do not have enough of them, and that the number of engineers from the European Union, on whom it relies, is already decreasing because those people are seeking opportunities elsewhere. Such companies know that it will cost them more to secure engineers from outside the European Union because they will have to pay visa costs. That is already happening with the recruitment of nurses. My local hospital is no longer recruiting nurses from the European Union because they do not want to come here, partly because of the fall in the value of the pound. Instead, it is securing nurses from India and the Philippines. However, it is now having to pay roughly £1,000 per visa for each of those nurses—a cost that it did not have to meet for nurses from the EU.
We also need to hear what the Government are trying to embed in these trade deals. We have heard the Secretary of State for International Trade talk about the shared values he has with President Duterte of the Philippines. I do not have that many shared values with someone who is on record as saying that he has gone around his country using extrajudicial killings to dispose of drug dealers, but maybe the Secretary of State does share values with him. We need to hear from the Minister how he is going to embed issues such as human rights and environmental rules into the trade deals. We need to be sure that they will be decent deals and that they will not simply be secured at any cost.
Earlier today I asked the Leader of the House to confirm whether the Government will release the report on the funding of extremists in the United Kingdom. I am worried that the report may not be published simply because it might jeopardise the trade deals we have secured with Saudi Arabia.
Madam Deputy Speaker (Mrs Eleanor Laing)
The final two speakers have been very patient and very courteous. They are left with only four minutes each.
Bim Afolami (Hitchin and Harpenden) (Con)
I start by declaring an interest. Before entering the House, I worked as a corporate lawyer in the City for Freshfields Bruckhaus Deringer and for Simpson Thacher & Bartlett, and as a senior executive at HSBC.
I will specifically address financial services post Brexit. I echo my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) on how much of an asset financial services are to our country. I will not repeat the statistics he outlined, but they are all accurate and true.
It is worth considering why our financial services sector is such a world leader, which is not just because it has been around for a long time but because the in-depth, unique infrastructure surrounding financial services—whether it be the lawyers, accountants, consultants or the like—makes Britain such a good place for this industry. Those advantages are not going to change.
It is true that business never likes uncertainty, and there is undoubtedly uncertainty in certain areas of our regulatory and legal frameworks surrounding financial services. If the House will indulge me, I will address two of those areas. First, as Members will fully appreciate, a key area that has been highlighted is this country’s desire to continue benefiting from the single passport for financial services that operates within member states of the European Union, whereby a firm that obtains authorisation to carry out a particular activity in one state can carry out such activity in other member states without further authorisation or regulation. It would be good to hear from the Minister and the Secretary of State whether we intend to try to maintain that position.
Another area of real uncertainty is the principle of equivalence. At the immediate point of exit, EU law will form part of UK law and, therefore, as a matter of fact will be equivalent. However, it should not be controversial for the United Kingdom to keep the bulk of EU financial regulation then in force as, frankly, much of it was either largely driven or written by the United Kingdom or derives from international accords of one kind or another. That is another area where certainty for business would be appreciated. In particular, the clearing of euros in the City of London is attracting a lot of concern.
Having said that, we need to ensure that our reasonable concerns about this uncertainty do not lead us in the long term, post Brexit, to try to keep everything the same as now. Why should that be? It would mean accepting wholesale a European regulatory framework that we would no longer have a role in shaping, and which would consequently allow the European Union—if, perish the thought, it wished to cause us difficulty—to stifle the activity of our financial services sector.
I do not have time to go into what I think the vision for financial services should be post Brexit. [Interruption.] That is a shame for everybody. We need a transition in order to get there, but our financial services sector has a bright future after Brexit. I look forward to the Minister’s response.
Christian Matheson (City of Chester) (Lab)
It has been a great pleasure to be in the Chamber this afternoon to hear some excellent maiden speeches, and if the House will indulge me, I would like to single out those of my hon. Friends the Members for Lincoln (Ms Lee) and for Midlothian (Danielle Rowley). It was also a great pleasure to be here to hear the Secretary of State enthusiastically extol the virtues of free trade, on much of which I agreed with him. He rightly said that fair free trade engenders and develops prosperity, and of course it also develops peace. If we are trading with somebody, we are not fighting them. The irony of that statement is that that was precisely why the EU—the European Economic Community—was founded in the first place, and he now wishes to move away from it.
At the risk of getting my wrist slapped by the hon. Member for Gloucester (Richard Graham), who is no longer in his place, let me say that I think Brexit is going to be a disaster. However, I voted for article 50, because my side lost the referendum and I recognise that. I also stood on a manifesto promise to get the best form of Brexit possible in the circumstances. For me, that is a people’s Brexit that promotes prosperity and jobs, environmental protections, workplace protections, which I know some right hon. and hon. Conservative Members have suggested might be watered down, and consumer protections. I say to the House that although we will try to get the best Brexit deal for the UK, we cannot bind future generations, which may wish to get a different relationship, including rejoining the EU at some point. As hon. Members throughout the House have said, we have to resist the ideological push to get the hardest deal come what may, which to an extent is being led by some of the more hard-right Brexiteers in the Conservative party. I do not think it is acceptable that we leave the EU with no deal, and if we do that, it will be down to the Ministers who are negotiating.
There is concern in the private sector about the uncertainty being generated by the current circumstances, and there is an absurdity in the current position. The automotive sector wants a sector deal, and we know that some companies, such as Nissan, have a company-specific deal. The aerospace sector wants a special deal, as do the pharmaceuticals industry, the nuclear industry and the chemical industry, which is tussling with the REACH— registration, evaluation and authorisation of chemicals—regulations. We heard from the Secretary of State that the Scotch whisky sector wants a separate deal. The hon. Member for Bromley and Chislehurst (Robert Neill) told us about the City of London and the legal sector needing a special deal, and he was absolutely right. Higher education, which depends on funding, academic collaboration and the Erasmus programme, wants a special deal, as does agriculture, particularly in relation to seasonal workers. Hospitality also wants a sector deal. We heard from Ministers today in a statement on health and social care that social care wants a sector deal. I cannot help but wonder when the lightbulb will come on in the national consciousness and instead of having so many different sector deals, we will see that one deal might be more appropriate. There is a problem with the single market—we know that free movement has caused difficulties—but that can be addressed.
Finally, let me make a plea. The Government are currently in a weak position, and because of their desperation to sign a free trade deal—any free trade deal, with anybody—we are not able to stand up for the values that I thought we all shared. The right hon. Member for Carshalton and Wallington (Tom Brake) referred to that. It means that we are not condemning President Trump over his walking away from the Paris deal, and we are getting into bed with people such as Duterte of the Philippines. This failure to achieve decent terms for our trade deal, or even understand what those terms would be, is affecting our foreign policy position as well, and making us a weaker nation as a result.
Bill Esterson (Sefton Central) (Lab)
Labour’s manifesto stated:
“Labour is pro-trade and pro-investment. The UK’s future prosperity depends on minimising tariff and non-tariff barriers that prevent us from exporting and creating the jobs and economic growth we need.”
The negotiations for the UK’s exit from the EU have already begun, and our future prosperity as a nation is vitally dependent on our international trading relationships. Of those relationships, the UK-EU trade deal must be the Government’s priority. A no-deal with the EU is the worst possible deal and must be ruled out. Anyone who has run a business knows that you look after your existing business relationships first—if you do anything else, you do so at your peril.
We have heard many speeches today. The hon. Member for Livingston (Hannah Bardell) spoke about the transitional arrangements and the question of how to deliver frictionless trade.
The right hon. Member for Wantage (Mr Vaizey) gave the first of the many speeches that we could call pro-Chancellor, given the interesting interrelationship between the Chancellor and the Secretary of State for Exiting the European Union.
My hon. Friend the Member for West Bromwich West (Mr Bailey) spoke about the car industry’s importance to the UK economy and the need to ensure that we continue to support car exports. He also spoke of the damage that no deal would do to that industry.
The hon. Member for Hornchurch and Upminster (Julia Dockerill) made her maiden speech; I congratulate her on the enthusiastic way she spoke about her constituency.
My hon. Friend the Member for Bishop Auckland (Helen Goodman) spoke about her commitment to her constituents and their need for a Brexit that supports exports and jobs. She also spoke about the importance of the European Medicines Agency to this country and about the need to support the hill farmers in her constituency.
I think the hon. Member for Rochford and Southend East (James Duddridge) spoke in support of the Secretary of State for Exiting the European Union.
My hon. Friend the Member for Lincoln (Ms Lee) made an excellent and passionate speech and spoke about the importance of the transport hub delivered by the Labour council of which she was part. Support for transport infrastructure is of course crucial to backing the businesses and jobs of her constituents, including those involved in international trade.
The hon. Member for Gloucester (Richard Graham) clearly backed the Chancellor.
The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) reminded us of his late friend, Charlie Kennedy, who was much respected by Members from all parties. I congratulate him on his confident maiden speech; I enjoyed his story about his predecessor, Charles James Fox.
The hon. Member for Bromley and Chislehurst (Robert Neill) was with the Chancellor.
My hon. Friend the Member for Midlothian (Danielle Rowley) made an excellent maiden speech in which she reminded us that she is the first woman to represent her constituency. She comes from a family of miners and is keeping that Midlothian tradition going. I was pleased to hear her remind us that she was elected, as I was, on a platform of hope for the many, not the few.
The hon. Member for South Suffolk (James Cartlidge) was clearly with the Chancellor—[Interruption.] I think he was, anyway. He gave a good example from his constituency of the dangers of a cliff-edge exit and spoke about the importance of transitional arrangements.
The right hon. Member for Carshalton and Wallington (Tom Brake) made a good speech, and the hon. Member for Hitchin and Harpenden (Bim Afolami), who I think was backing the Chancellor, gave another good short speech.
The debate finished with a great speech by my hon. Friend the Member for City of Chester (Christian Matheson), who reminded us of the importance of fair and free trade and how it engenders prosperity and peace. He, like me, will be supporting a Brexit that promotes jobs and retains environmental and consumer protections—
Bill Esterson
I thank the Minister for the correction. No doubt the fee note will be in the post.
The Government have promised to deliver the “exact same benefits” as we currently have inside the single market and customs union, and Labour will hold them to account on that commitment. We recognise that once we leave the EU a transitional period is vital to avoid a cliff-edge for the UK economy.
The Government have still failed to set out a coherent international trade strategy for when the UK has formally left the EU. We have called on them to publish an international trade White Paper. The UK needs clarity on this issue as never before. It is unacceptable to take the country into an uncertain future that includes our exiting the EU without a comprehensive plan on international trade. Such a plan must be presented to and properly scrutinised by the British people and their elected representatives in Parliament.
A White Paper must set out what the Government’s plans are for future international trade, outlining negotiating principles and trade policy objectives, including which industry sectors will be prioritised and which will not. Clarification of what was meant in the Lancaster House speech by hybrid customs arrangements needs to be set out. The Government say that they intend to pursue closer trade links with Commonwealth partners to make up for any lost trade with the EU, which currently accounts for 44% of our exports. However, none of the UK’s top 10 export partners is a Commonwealth country.
The spring Budget statement revealed that this Government are out of ideas when it comes to boosting exports and tackling the productivity slump forecast by the Office for Budget Responsibility. This is a Government who talk big on trade and Brexit, but who have failed to provide the support for British businesses wishing to export and grow into new markets.
The latest Office for National Statistics figures show that the UK’s trade in goods deficit has increased by £2.6 billion. Our imports are on the rise while our exports are failing to catch up. Despite the Government’s bombastic talk of Britain leading the world as a trading nation, our trade performance on their watch has been weak.
British small and medium-sized enterprises and trade bodies have repeatedly called on the Government to do more to deliver real support to potential exporters. The Government have ignored them, focusing instead on the big corporations and on arms sales. They have systematically delayed SME funding for overseas trade shows and have, over the years, decreased the budget for such funding. They should be maintaining the tradeshow access programme and, crucially, delivering it on time—not delaying it by four months as has just happened.
The Government need to maximise support for those wishing to export and make it clear what their mission is and what their vision of trade is. They need to bring forward the White Paper and say what their view is of transitional arrangements, how they will deliver frictionless trade outside the EU with the EU and, above all, to put forward the priority of jobs and British businesses first.
The Minister for Trade and Investment (Greg Hands)
May I thank Members for what has been a very useful debate? I think that 17 Members have spoken in the first general trade debate since the formation of the Department last summer. Let us consider for a moment the significance of this new Department of State. It was 10 years ago, almost to this month, that Labour abolished the word “trade” from the name of every Government Department. One of Gordon Brown’s very first decisions was to eliminate entirely the word “trade”. The creation of this new Department shows the determination of our Prime Minister to put trade at the heart of Government. May I praise the free trade vision that my right hon. Friend the Secretary of State outlined earlier today?
First, let me say a few words on today’s foreign direct investment data, showing a record-breaking number of FDI projects coming into the UK in the financial year just finished. Inward investment into the UK is estimated to have safeguarded nearly 108,000 jobs last year. Our trade officials have helped to secure more deals than ever before—up 7%—so a big thank you to all our staff around the world.
May I just remind Labour Members that the trade deficit, which they talked about at one or two points today, is down considerably since we inherited the position in 2010—down a considerable £5.6 billion? At the same time, exports to the EU have increased by 11.3%, but exports outside the European Union have increased by 34.6%, which is a very significant figure.
We had calls from the Labour Opposition for clarity from the Government—this from a party whose leader calls free trade a dogma. The hon. Member for Brent North (Barry Gardiner) says that Labour Members are “principled free traders”. We remember his clarity on the comprehensive economic and trade agreement. On the Monday in Committee, he supported CETA, but on the Tuesday, he called for a Commons vote on it on a deferred Division. Then on the Wednesday, he urged his party to vote down CETA, but it rebelled against him by a margin of 85 to 67. He says he is in favour of free trade but he seems to be against all free trade deals.
There is one final point that the hon. Gentleman might want to note. He talked about his hon. Friend for Middlesbrough South and East Cleveland. Now, he might not have been watching on 8 June, but the Member for Middlesbrough South and East Cleveland is now on the Conservative Benches and is now my hon. Friend, not the hon. Gentleman’s.
We had some excellent maiden speeches, including a first-class maiden speech from my hon. Friend the Member for Hornchurch and Upminster (Julia Dockerill). She spoke with limited notes, which was welcome, and paid tribute to Dame Angela Watkinson, a friend of mine and many others. My hon. Friend talked eloquently about Upminster, a place I know well as its name is on the front of every single train I take each morning on the District line. I rarely get there, but I am looking forward to visiting one day. She mentioned the sale of council homes in London and how important that still is today, and she presented a positive and uplifting vision for the future of this great country. We thank her and welcome her.
The hon. Member for Lincoln (Ms Lee) talked about her predecessors, whom I knew well, Gillian Merron and Karl MᶜCartney. She did not mention another predecessor, Dick Taverne, who of course left Labour to join the Social Democratic party. From the content of her speech, it sounded like there is little chance of that happening in her case. I congratulate her on her speech and welcome her to this place.
We heard from the new hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone)—one of the longest constituency names and the second largest constituency, too. He clearly knows it well and I am sure that his predecessor but one, the late Charles Kennedy, would have been very proud of his speech in this House today.
We heard from the new hon. Member for Midlothian (Danielle Rowley), who made an accomplished maiden speech. It is refreshing to hear Scottish accents coming back to the Labour Benches. She made some good points on welfare and I think we would all agree that people need a hand up, not a handout.
We heard from my hon. Friend the Member for Stone (Sir William Cash), my right hon. Friend the Member for Wantage (Mr Vaizey) and my hon. Friends the Members for Rochford and Southend East (James Duddridge) and for Gloucester (Richard Graham). My hon. Friend the Member for Stone mentioned the Labour split on the single market. I have seen 11 Queen’s Speeches in this House, and although I have occasionally seen a Government rebellion on an Opposition amendment, I have to say that I have never seen an Opposition rebellion on an Opposition amendment—
Greg Hands
I will not take an intervention, as there is no time.
We heard an entertaining speech from my right hon. Friend the Member for Wantage, who praised me for my language skills—so vielen Dank. He asked in particular about countries—we have 10 working groups covering 15 countries. He talked about the timetable and the analysis of the increase of GDP, and it is impossible to tell at the moment, as it is impossible to know what will be in those agreements.
My hon. Friend the Member for Rochford and Southend East rightly pointed out the increase in value of our exports outside the EU since he and I were first elected in 2005, rising from 48% to 56%. He is also right on the trade deficit.
My hon. Friend the Member for Gloucester was right to say that, whether we campaigned for leave or remain, what is important is to seek the best outcome for the UK as regards success in the negotiations. I praise him for the work he does as our trade envoy in south-east Asia, as well as on the question of the importance of China.
My hon. Friends the Members for Bromley and Chislehurst (Robert Neill) and for Hitchin and Harpenden (Bim Afolami) mentioned the importance of financial services. They are absolutely right, but here we are in a strong position. The City needs access to European customers, but European borrowers and investors also need access to the largest capital market in the European time zone, which is the City of London. That is very important to remember.
From the Opposition Benches, we have heard from the right hon. Member for Carshalton and Wallington (Tom Brake) and the hon. Members for Bishop Auckland (Helen Goodman), for West Bromwich West (Mr Bailey) and for City of Chester (Christian Matheson). They were all good speeches.
Trade is now back at the heart of Government policy making and I hope that all Members will agree that it is back where it belongs. For the first time, the three pillars of trade, finance promotion and policy fall under one roof, allowing us to approach trade in the most co-ordinated way possible. Our three objectives are worth reiterating and their simplicity should not detract from their significance. We will promote British exports the world over, encourage both inward and outward investment and build the strongest possible trading framework for the UK post-Brexit.
Finally, this country has a great free trading future. I am optimistic about a good outcome for the Brexit negotiations and I and the whole Department are looking forward to growing trade and investment in the years to come.
Question put and agreed to.
Resolved,
That this House has considered Exiting the European Union and global trade.