EU: Transition Deal

Baroness Kramer Excerpts

Thursday 19th October 2017 Lords Chamber

[Baroness Kramer (LD)]

My Lords, first, I congratulate the noble Baroness, Lady McIntosh, both on obtaining this debate and on her speech. With so few minutes in which to speak, I shall focus on just one or two areas that I think illustrate the underlying problem and the need to get absolute certainty, with a transition arrangement being agreed by both sides before the end of this year.

I work extensively with the financial services community, about a third of whose business is EU domestic only. It has as its priority a smooth arrangement for its clients, with no disruption in contracts or in the flow of work. That is its absolute priority, as indeed is appropriate. Because of the complexity of licensing, contract movements, moving people and operations and so on, these businesses have been working on contingency plans for transferring business out of the UK efficiently against a worst-case scenario of no deal and no transition for months. Those plans are now complete. At board meetings in October, November and December, different institutions will make the decision on whether to press the button so that implementation can begin in the new year. As I said, this is likely to be concentrated around business for clients based in the EU, but eventually it will bleed over into the global financial services, which are absolutely crucial to the ongoing future of London and of which about a third is domestic, a third global and a third EU regional. Therefore, the Government have to focus. We need absolute certainty for those institutions not to press that button in the next several weeks.

Frankly, however, it is not just in that arena that all these issues are critical. I was in Brussels for two days a couple of weeks ago and came away with the understanding that, if we do not wish to have clearance requirements at our ports for manufactured goods, we have to remain in “the” customs union, not in “a” customs union, otherwise WTO and treaty rules will require the establishment of borders and customs clearance arrangements. Noble Lords will know that many of our major manufacturers—those in the car industry and many others—work on a just-in-time basis. With some car manufacturers, the phone call goes over to the European factory at eight in the morning and goods need to be provided to go into the production line in the UK three hours later. For others, it is as much as six hours later, but that is about the outer limit of just-in-time arrangements, which will fail completely if any clearance process is in existence at the borders. I have listened to the head of the British International Freight Association. As this House will know, a two-minute delay will back lorries at Dover up to Ashford, and a six-minute delay will push them back to the M25. There are critical issues of this calibre all across which require a transitional arrangement, and it must be one with certainty—and soon.