Update on the Progress of EU Exit Negotiations

Baroness Ludford Excerpts

Tuesday 5th September 2017 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I thank the Minister for repeating the Statement. In fact, I welcome her back from what has been a busy summer for her—but as nothing to what is to come over the next 18 months. While any progress, however limited, with regard to EU citizens is welcome, how much better it would have been if the Government had heeded our call 12 months ago, made clear our commitment to those living here and got down to the details at that stage, rather than recently. The matter needs to be resolved urgently.

More broadly, however, the overall Statement is rather like a piece of lace trying to protect the Government’s modesty but with rather more gaps than fabric. The Minister’s office kindly sent me the future partnership papers over the summer and at times I wondered whether those rather bland papers—almost non-papers—really represented the true extent of the Government’s thinking, or simply the very least they dare get away with without waking the slumbering Rees-Mogg.

Just yesterday, the Irish Foreign Minister said that the Secretary of State’s plan for the Irish border,

“needs a lot more work”,

and that,

“unless there is progress on that issue, we are not going to get to phase two”.

The mood music from Brussels and across the capitals tells us it is very unlikely that the EU will decide in October that “sufficient progress” has been made to move on to the all-important talks on our future relationship with the EU—our nearest and largest market. So while David Davis claims he remains optimistic that a seamless trade deal can be struck with the EU, Michel Barnier speaks of “no decisive progress” and says that “frictionless trade” is not possible outside the single market and customs union.

Even the Government are unclear on how trade outside a customs union could be frictionless. They have dropped after just a few weeks their untested blue-sky thinking—it sounded more psychedelic to me—for a track-and-trace system, using technology and trust to replace customs controls. Anyway, we understand that the IT for any new customs checks is not anticipated until January 2019, just two months before our supposed departure date. We all know about government procurement of that size.

Looking beyond the EU, Liam Fox now seems to be saying that he is turning down free trade deals because we do not have the capacity to negotiate them, and that instead we should try to duplicate the EU’s trade relations with third countries, with a sort of rollover of existing deals. This cut-and-paste job is, I would have thought, hardly worth the efforts of a Fox negotiator, who is now without his Minister here in the Lords. In January, the Secretary of State claimed to be aiming for,

“a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have”.—[Official Report, Commons, 24/1/17; col. 169.]

Can the Minister let us have the Government’s current thinking on this?

Can the Minister also tell us where we are on a transitional agreement and whether the words she just used about not having to negotiate twice suggest that the transitional agreement will be on the same terms as now? I hope she and her colleagues have finally come to accept that there can be no bespoke transitional arrangement. There will be no time to negotiate that and the sensible thing is to remain in a customs union with the EU and operate single market rules, which are key to our vital industries, while the long-term relationship is agreed and given time to bed in. Can she also tell the House whether the Government will publish the Treasury’s analysis, which reportedly shows that the economic benefits of future free trade agreements will be less than the economic costs of leaving the customs union and single market?

Can the Minister also update the House on the involvement of the devolved authorities? The JMC, which brings together Scottish and Welsh Governments and, in theory, the Northern Ireland Government, has not met since February and will not convene again until mid-October, There has been no substantial response to the joint letters of 14 June and 23 June from the relevant Ministers, Mark Drakeford and Mike Russell. Despite the terms of reference for that JMC committee being to seek to agree a UK approach to Article 50 negotiations and to provide oversight of negotiations with the EU, the Government published their summer papers with absolutely no consultation and little advance warning. This means that the Scottish and Welsh Governments have had no opportunity to provide any oversight of the negotiations.

The clock is ticking. Industry, farmers, supermarkets, airlines, road haulage, lawyers and accountants are all coming to me; I am sure they are going to the Government as well. They are all concerned about the lack of clarity and certainty, while consumer representatives are getting virtually no access to Ministers and fear that their interests are being overlooked. It is not just the EU that has to decide whether “sufficient progress” has been made. This House and Parliament must do so, too, and question whether the direction of the Government’s thinking, as well as its speed, is up to the task ahead. I fear that this Statement offers little reassurance.

[Baroness Ludford (LD)]

My Lords, I also thank the Minister for repeating the Statement. I am afraid the Government have shown themselves to be insufficiently prepared and, at times, even undisciplined and undignified in throwing insults at Brussels. They have rather squandered the 14 months since the referendum, including an unnecessary court battle to prevent parliamentary accountability and three months on an unnecessary general election.

There have been some steps forward, with the useful publication of the position papers—albeit in recess and given to the media several hours before they were made available to members of the public, including parliamentarians—and the acceptance of a transitional period, although without specifying how long the Government want that to be and with no acceptance of whether it would mean being in the customs union and the single market. Like the noble Baroness, Lady Hayter, I was intrigued by the reference in the Statement to it not being in either of our interests to run aspects of the negotiations twice. The only way I can see that happening, unless the Minister can contradict me, is if we stay in the customs union and single market during the transitional period and in the long term. There has also been some progress on EU citizens and an acceptance of some role for the European Court of Justice. In July, there was an acceptance of financial obligations from commitments made while we are a member state. These acceptances, however, were all inevitable. It would have been better if they had not had to be dragged out of the Government.

There are still, however, several impractical red lines and there have been some rather backward steps. The Home Office has sent letters to a significant number of EU nationals threatening them with immediate deportation, which hardly makes for good mood music for the negotiations, apart from being obviously distressing for those individuals. We have had a repeat from the Prime Minister of the “no deal is better than a bad deal” mantra, which we had hoped had been put to bed. There was an agreement on the sequencing of the talks; now that acceptance is put up in the air again by the Government. We understood that the Government had accepted the principle of the financial liabilities; now all that is also being challenged.

This fickleness and lack of reliability is fomenting some distrust of the Government. It makes it much harder for the EU to agree a linkage between the elements of the Article 50 divorce arrangements and the future relationship. For instance, if the Government would state the period of transition they seek, the status, in terms of the customs union and the single market, and what continuing contributions they propose to make in respect of that status, that might facilitate an agreement on the liabilities or the existing commitments. If the Government said that they wanted to stay in the customs union and the single market, that would at a stroke resolve many of the worries over Ireland we are in the course of debating this afternoon.

While the Government rather go round in circles, businesses are having to make relocation decisions now, affecting jobs, the pound drops and the economy slows. The Government keep reproaching the EU for not coming up with concrete suggestions for flexible solutions, but if the Government cannot specify what end goal they are seeking, how can we expect Brussels to come up with flexibility to fit what the Government want? It is Catch-22.

It was suggested that the customs solutions put forward in the paper about three weeks ago were innovative, but they were not practical or thought through, and even the Secretary of State called them blue-sky thinking a mere couple of weeks after the paper was published. That hardly gives a good solid basis on which Brussels can engage with those suggestions. If the Government have a strategy, as opposed to a series of delays, reactive statements and outbursts, will they share that strategy with Parliament and the British public? Are we not secondary to an audience of the ideologically obsessed hard Brexiteers in the Tory party’s ranks and outside them who are not happy? I see that Arron Banks is trying to unseat Tory MPs, including Amber Rudd. Perhaps that accounts for the Prime Minister repeating the “no deal” mantra. It is unhelpful and petulant to raise, even as a possibility, a chaotic, “falling off a cliff-edge” Brexit. Will the Government level with Parliament and the public and be honest about the fact that, as we are proposing to leave the EU club, the UK cannot expect to retain the full benefits of club membership? We cannot have our cake while eating it. The fact that they need us as much as we need them is untrue, and we need to compromise. It is up to Britain to set out in detail its preferred destination and how to get there. As one journalist put it:

“The departing ship is watched”—


by the EU—

“with both sadness and concern, but there is no rush to take on its navigation problems”.

Will the Government please tell us their proposed destination and how they are going to navigate?

[Baroness Anelay of St Johns]

The strategy of this Government is clear, straightforward and pragmatic. It is to ensure that we build a deep and special partnership with our closest neighbours and allies which is of benefit to the people of the EU 27 and the UK after we leave. This is the most momentous form of negotiation that I have experienced in my lifetime. It is a privilege to be at the Department for Exiting the European Union and to see the hard work that has been going on to deliver that path towards a successful legal decoupling while still remaining closest friends. Considerable progress has been made. I thank both noble Baronesses for their contributions and their questions and I will seek to amalgamate my answers to cover them.

The nature of negotiation which has been carried on by this country over centuries has varied from being on the battlefield in Tudor times against some who are now our dearest neighbours, Portugal and Spain, to negotiations, a matter of finding methods of agreement of convergence—not dictating, saying that we will agree to this only, but setting out reasoned proposals. That is work that has been done. There is going to be no delay. The department has been working with other departments across Whitehall to look at the ways in which we can publish our proposals and give options for the negotiations. That is clear in the customs paper, which proposes two options, one a highly streamlined approach which would ensure that the customs arrangement works as well as can be done with modern technology, and the other a new customs partnership with the EU. I heard what the noble Baronesses said about the fact that the Secretary of State has pointed out that there are problems in some of those, because there are always problems in finding new ways to deliver customs agreements, but they are not insuperable. That is why the pace of the negotiations has been deep and fast. Michel Barnier and we have made it clear that we are ready to make even more dates available for negotiations, if that is helpful, because we want to continue to make the progress that has already been achieved.

There is more to be done; that is absolutely right. The noble Baroness, Lady Hayter, referred to the Irish Minister saying that the Northern Ireland paper needs a lot of work. We agree, but we also say that we have made great progress, and Ireland agrees. We have received congratulations from Ireland about the progress that has been made. The summer papers are not vague. They provide a basis for negotiation, not for dictation.

The noble Baroness, Lady Hayter, asked about our position on a transitional agreement and implementation. Our position is set out clearly. From having carried out all the consultation with business—not only those businesses based here but international businesses—and consumers, we appreciate that there could be different lengths of time that different organisations and businesses need to achieve movement to a new relationship with the EU. Therefore, it is only by carrying out our negotiations with the European Union on our future relationship that we can finalise how long that implementation period would be. We have been clear that it will not go beyond the date of the next election.

With regard to the question asked by the noble Baroness, Lady Hayter, about publishing Treasury analysis, I say that it is not usually published. It is for government use, but I have made it clear before that we have carried out analysis of more than 50 sectors, and we will publish the list of what those sectors comprise. We continue to consult business and consumers, and I am very pleased that I am able to be part of that.

With regard to the devolved Administrations, we have throughout made it clear that it is essential that they are engaged at every stage. Whether it is the JMC—the next one is in October—person-to-person phone calls or visits, as carried out by my honourable friend Robin Walker this summer, they continue. He visited the Crown dependencies as well. It is not a matter of leaving it for meetings; it is a continuing conversation.

Throughout all this process we want to be in a position where, by setting out in our papers the implications of leaving the European Union but maintaining a strong trading relationship, we enable us and the EU 27 to avoid running negotiations twice. The noble Baroness, Lady Ludford, referred to this and asked whether this would mean that we would be staying in the customs union and the single market in the implementation period. That is not the answer to having a transition and implementation period. We are seeking a negotiation to see what that period would look like. It is does not mean that we stay in the single market with all the ceding to others the right to make decisions about our destiny.

I believe that the noble Baroness, Lady Ludford, said that we had challenged the principle of financial liabilities. No, we have not. In fact, we have maintained that we accept that there is not only a legal basis for the EU and us having to ensure that there are liabilities that need to be met but also a moral responsibility. My right honourable friend the Secretary of State made that absolutely clear in his press conference last week with Michel Barnier. But we do not hand the keys of the Treasury to the Commission. What we do, on a friendly but rigorous basis, is to work through with it, challenging the legal basis but also beyond that, the calculation of what should be paid and how and when. That, again, is woven into the nature of our future relationship with the European Union.

This has been a hard-working summer for all. I do not believe that Peers simply disappear into the ether and do nothing, and I know that many noble Lords have already read the papers and discussed them. I put on record my particular thanks to the noble Baronesses, Lady Hayter and Lady Ludford, and the Convenor of the Cross Benches, the noble and learned Lord, Lord Hope of Craighead, for agreeing to have conversations with me during the Summer Recess on these matters. It is only by doing that that we can deliver what this country needs.