Brexit: Preparations and Negotiations

Baroness Hayter of Kentish Town Excerpts

Monday 23rd July 2018 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

Well, my Lords, it is all going so well, is it not? Actually, I do not think even the Minister thinks so.

We are delighted to hear that the other White Paper will appear tomorrow. It was, of course, promised for last week, but we are delighted that it will be appearing. It would indeed be churlish not to welcome the appearance of this White Paper, albeit perhaps a year after it was needed, since it has to be reflected in the political declaration which describes the framework for future relations within the withdrawal agreement.

However, it is a White Paper that is: unacceptable to two Cabinet Ministers who had agreed it; unacceptable to the EU, which rubbished it; unacceptable to the Government, who accepted the ERG amendments that undermined it; unacceptable to much of industry, the City and business; unacceptable—I am sort of guessing—to this House; unacceptable to the Commons without DUP votes, Lib Dem no-shows, a handful of rogue Labour—

[Noble Lords]

Oh!

[Baroness Hayter of Kentish Town]

Have a bit of humour. I am saying, a handful of rogue Labour votes, and some dubious—

[Lord Wallace of Tankerness (LD)]

It is very clear that those Lib Dem votes would not have made a difference. How many Labour Members voted with the Government?

[Baroness Hayter of Kentish Town]

That is what I have just said. I called them rogue Labour votes. Clearly, the Minister did not help here. There was also some dubious government whipping—just in case noble Lords think anyone was left out.

And it is a White Paper unacceptable to the Opposition, being grounded on flawed facilitated customs arrangements, an absence of migration clarity, inadequate plans for services and a failure to guarantee the Good Friday agreement. Apart from that, it is pretty good.

Why is it so unacceptable? First, of course, it is based on a fallacy; secondly, it is devised to satisfy a divided Conservative Party rather than satisfy UK plc; and, thirdly, because some think that the talk of no deal will somehow bring everyone on board, yet pretending to threaten a no deal, which could cost households £1,000 and see an 8% drop in GDP—twice that in the north-east—is nonsensical if the Conservatives ever want to win an election again. Crashing the economy would never be forgiven, not just by workers and consumers but by business, the City and manufacturing, which have of course traditionally trusted the Tories to manage the economy in the national interest. Borrowing the words of a former Prime Minister from the party that took us into Europe and who herself wanted the single market, “No, no, no”—no deal is not an option, so we should stop being diverted by it.

For all the positives—and there are some, in the common rulebook, a role for the ECJ, which the noble Lord, Lord Campbell, has just mentioned, and a catalogue of issues almost lifted from the reports of our EU committees—the White Paper is based on the fallacy that there are profitable and exciting markets across the globe, currently closed to us, which would magically open the moment we left the EU. The notion that we are leaving in favour of some wondrous US trade deal better than we have with our nearest 500-million strong market, as well as the 57 agreements that we have through the EU, just does not hold water. It is a fantasy that we 60 million can negotiate better than the EU’s half a billion.

[Lord Anderson of Swansea (Lab)]

Is my noble friend aware that the European Union as a whole agreed a trade deal with Japan? Is it feasible that Britain on her own could improve on that deal?

[Baroness Hayter of Kentish Town]

It does not seem to have the evidence to support the idea that we could. Indeed, the trade policy experts, of which of course my noble friend is one, think that our status as a supplicant means that we will struggle to secure good deals, especially from the US, China and India—and, no doubt, Japan as well.

Furthermore, we face a highly protectionist President. What is his catchphrase? America First. He is a President who is unleashing trade wars with China, the EU, Canada and Mexico. He has filed five WTO complaints against his own trading partners and even queried the future of the WTO. He has imposed import tariffs on solar panels, washing machines, steel and aluminium. What does he want from the UK? When he is not calling the EU a “foe”, he claims that the EU has treated the US unfairly, so he wants more access to our market, not opening up their market to us. It is a predatory policy towards a Brexit Britain, designed to take advantage of our need for trade deals. He wants America to sell us more agriculture and cars—and I see that Liam Fox is offering to reduce tariffs on US cars imported here. I am not sure that that will help our automotive industry. Trump is not interested in a deal if we maintain EU standards. He says that the Prime Minister has probably killed off hopes of a deal by staying close to those EU standards.

And what of business? The CBI president says that, without a customs union, sectors of manufacturing risk becoming extinct. Following Chequers, more than 100 entrepreneurs and business leaders wrote:

“The cost, complexity and bureaucracy created by crashing out of the customs union and adopting alternative arrangements is the last thing that our businesses need as we seek to grow and employ more people”.


Your Lordships have often heard in this House from Airbus, Rolls-Royce, the Freight Transport Association and others, but there is a new example in UK publishing, the world’s largest exporter of books, one-third of them going to the European Union. The Publishers Association fears that Brexit could damage this, as:

“It’s not just tariffs … It’s the non-tariff barriers, customs checks and delays … That means having books sat in a customs warehouse in Calais rather than in a bookshop in Duesseldorf”.


Services are even more alarmed, not only as it is often impossible to distinguish goods from services, as complex manufactured products—for example, aircraft engines—combine servicing, design, IT, training and marketing into the physical components which get screwed together. Even more, banking, medicine, leisure, law, accountancy and IT comprise 80% of our economy and an even higher proportion of employment. Their healthy trade surplus helps to offset a deficit on manufactures and agriculture. Yet services drew the short straw in the White Paper, causing alarm to financial organisations and companies, which describe it as a,

“real blow for the UK’s financial and related professional services”.

The financial sector had anticipated a deal based on “mutual recognition”, with the EU accepting that its and our financial regulations were equally robust. The City was therefore deeply disappointed that this was abandoned in favour of an “expanded” equivalence, which is patchy and unilateral. The White Paper itself admits that we,

“will not have current levels of access”,

to EU markets, yet it is vague on how services and millions of jobs will be protected, and on how our competitive advantage will not be shipped to New York or the continent.

What do our partners think? The plan has yet to find favour with the Commission, which insists that the four freedoms are indivisible, added to which, we seem to want only the EU’s most talented citizens, apparently putting the rest in the queue with Koreans and others with whom we trade. The Commission doubts that the facilitated customs arrangement, which is hardly business-friendly, could be made to work, and has yet to be convinced that we have sorted out the Irish border.

As for the public, only 13% think that the Prime Minister is handling Brexit well, 75% judging that she is making a mess of it. They may be right about that. But it is not just remainers. The Labour Brexiteer John Mills reckons that the negotiations could hardly have been worse handled. Indeed, he goes further and says it is not clear that there is now a good Brexit solution available. Yesterday’s poll must make hard reading for the Government. They must know that the more they pretend that no deal is viable, the harder it will be to sell a negotiated deal as satisfactory. So all their dancing around a band of irreconcilable anti-Europeans itself undermines navigating a realistic way forward.

For Labour, the absence of a deal for services is a major shortcoming. This is not a “nice to have” add-on but key to our future prosperity. Both for Ireland and across the borders, the facilitated customs drivel is simply impractical. IT cannot check the safety of food in vans or the composition of manufactured goods to assure compliance with rules of origin, let alone the imposition and forward allocation of tariffs, which I think the noble Lord, Lord Forsyth, was querying.

The truth is that the Prime Minister is stranded in a mire of her own making. She tried to escape the clasp of the ERG, only to retreat at the first whiff of gunfire. She must now complete the task of facing it down, move away from its impossibilist demands, discard red or blue lines and step towards the majority opinion in Parliament—indeed, along the lines that Labour has long sketched out—embracing a customs union and a single market deal. The Prime Minister must unite the Commons and the country by prioritising the economy, jobs, agriculture and the environment, peace in Ireland, and the national interest.

Another former Conservative Prime Minister, Sir John Major, said yesterday that every Tory should prioritise “People, people, people”. That means negotiating a deal which is in their interests, and putting a good deal ahead of the Conservative party’s civil war. If the Prime Minister changes course, she can deliver a majority for that deal—a majority that this White Paper will not create.