European Union Referendum Bill

Baroness Morgan of Ely Excerpts

Monday 2nd November 2015 Lords Chamber

[Lord Hannay of Chiswick]

My Lords, we have been on an extraordinary, lengthy digression which bore not the slightest relationship—the noble Lord, Lord Forsyth, might like to listen to this as I am referring to his speech—to the amendment we are discussing.

I would like to go back and simply make two points. First, it is not sufficiently recognised that if the electorate were to vote to leave the European Union a decision would have to be taken by the Government—not by the leave campaign—as to what the future relationship they would wish to have should be. The purpose of the amendment is to ask the Government what relationship they would envisage in those circumstances. Is that an unreasonable thing to ask? I do not think so. Every time that the basic issue about Britain being in or not in the European Union has come up, every government White Paper and document has reviewed the alternatives. That was true in the times of Harold Macmillan and Edward Heath, and it was true in both attempts when Harold Wilson sought to join and when he had a referendum. It is a perfectly reasonable thing to do.

Judging from the speech of the noble Lord, Lord Forsyth, I have the impression that he would hate what the Government said they would envisage doing if there was a no vote. He would have every right to riddle it through with bullets as he has riddled everything through with bullets this evening. However, surely it is right that the British people, the electorate, should be told what relationship the Government would envisage if they chose to vote to leave. That is a reasonable thing to ask, is it not?

[Baroness Morgan of Ely (Lab)]

My Lords, the noble Lord, Lord Kerr, with his vast experience of working within EU institutions, knows better than us how the EU works and what the various alternatives to membership might be. No one here disputes the fact that we would wish to continue in some kind of trade relationship with the EU. To those who ask for figures, I cite IMF figures that state that 51% of our trade in goods is with the EU, as is 41% of our trade in goods and services. We would undoubtedly wish to have some kind of trading relationship with it.

[Lord Kilclooney (CB)]

When I asked a question about that figure last year, I was told that it included United Kingdom exports going to the rest of the world through Antwerp and Rotterdam. Does the noble Baroness have figures that refer only to the European Union?

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[Baroness Morgan of Ely]

These are the figures from the IMF. My understanding is that they refer to the EU. I will check them, but I have not heard the noble Lord’s point made before. We will look at that, but I think these figures make a lot more sense. We will examine that.

Let me talk now about the winning side. How well do we do within the Council? As it happens, an article in today’s Guardian states that,

“the UK voted on the winning side 97.4% of the time in 2004-09 and 86.7% of the time in 2009-15”.

That tells me that this Government are not such good negotiators as the Labour Government were.

We have heard about several models tonight, but I should like to dwell a little on what Article 50 means and on what its implications are. There is a strong likelihood that, were we to vote to leave, we would need transitional measures to cover the period between the notification of the European Council by the UK of its decision to withdraw and the conclusion of the withdrawal treaty that sets out what our future relationship would look like. If that is not concluded within two years, it may be possible to extend it for a short period if both sides so decide. However, if we could not come to a conclusion—and, let us face it, it would be an incredibly complicated negotiation—then we would be out, with no formal relationship whatever. So this is very serious, and we have to understand that we should be discussing it now. We are having the referendum pretty soon and we need some idea of what the alternative might look like.

There a few other things that I should like to touch on. First, we know that the Prime Minister does not like the Norwegian model—

[Lord Forsyth of Drumlean]

I wonder whether the noble Baroness might comment on what the noble Lord, Lord Rose, said about what would happen. He said:

“Nothing is going to happen if we come out of Europe in the first five years, probably. There will be absolutely no change. Then, if you look back ten years later, there will have been some change, and if you look back 15 years later there will have been some.

It’s not until you get to 20 years later that there’s probably going to be some movement if we came out which says ‘Please can we come back into Europe again’”.

Would she like to comment on those remarks by the leader of the “stay in” campaign?

[Baroness Morgan of Ely]

I think the noble Lord probably needs to study Article 50 to understand that if the negotiation is not concluded, there will be repercussions that will come fast and be quite dramatic. Everyone in this country who exports to the EU needs to take note of that.

[Lord Stoddart of Swindon]

Perhaps I may put this to the noble Baroness. Is it not the situation that if the people voted to come out, the next thing that would have to be done is that Parliament would have to repeal the European Communities Act 1972? If it does not repeal that Act, it will be bound by its provisions, which of course give powers and instructions to Parliament to pass regulations, and the European Court of Justice would still operate in this country. A sensible Government would repeal that Act before they even started negotiations under Article 50 of the Lisbon treaty.

[Baroness Morgan of Ely]

If we were leaving the EU, obviously we would have to repeal a whole raft of policies. That is something we referred to earlier.

[Lord Stoddart of Swindon]

Everything that has happened since 1972 depends on that treaty, and every other treaty is an amendment to that treaty. The treaty would have to be abandoned before you could even embark on a negotiation.

[Baroness Morgan of Ely]

These are the kind of questions to which we need answers from the Government. That is precisely what we are asking: what would it look like and what would we need to do? What would the administrative consequences be? Does the Foreign Office have the capacity to deal with this?

Let us look at the Swiss model, where each negotiation is done bilaterally and on a piece-by-piece basis. You would need an army to start renegotiating that model if we were interested in pursuing that kind of thing. Let us not forget that the Swiss model does not allow access to financial services, which is something that should concern the City of London. The fact is that the City would be locked out. I am absolutely sure of that because if the Swiss financial services sector is locked out, I am quite sure that the Germans would be eyeing up the financial services sector very happily in terms of the opportunities for them. The City of London commissioned a report by the University of Kent looking specifically at the Swiss relationship and financial services. It found that Swiss financial services do not have unfettered access to the EU and that Switzerland—listen to this—currently uses London as a staging post to get access to the EU. We need to take note of that.

We could rely on WTO rules, of course, but again let us be clear that services, particularly financial services, would not be covered. Let us face it, the WTO is not an organisation that exactly moves fast. I think the last massive deal was done in 1994. When we are pressing the button and knowing that we need to get a negotiation done within two years, that is not something we could rely on. We also have to understand that if we wanted access to EU markets, WTO rules mean that British car manufacturers would face a 9.8% tariff on the export of cars, 5% on car components, 15% on food and 11% on clothing. Those are the rules of the WTO. If you want a loose relationship, that is what you would be looking at.

[Lord Hamilton of Epsom]

I am grateful to the noble Baroness for giving way. Has she considered the number of luxury cars that Germany sells to the United Kingdom?

[Baroness Morgan of Ely]

Absolutely, that is fine, and of course we would negotiate a deal with the Germans. But we come back to the point that we would not be holding all the cards. Exports to the UK account for 2.5% of their GDP, while it is 14% of our GDP. The other thing we should bear in mind is that the people who trade with us are, on the whole, Germany and the Netherlands. A lot of other countries do not do massive trade with us, quite frankly, and they would not have much interest in negotiating a great deal for the UK. Moreover, each of them would have a say in what that deal says.

Some have suggested that we have special links with the Commonwealth and with emerging markets around the world, so that is where we should be focusing our efforts. Really? How come Germany’s trade with China is three times greater than ours? The Germans also export more to India than we do. How come France finds it easier to land defence contracts with India than we do? That is the special relationship that we have with our Commonwealth friends. We cannot rely on historic relationships when 50% of our market in goods is with the EU.

Whatever deal is agreed, we know that each of the other 27 member states will be given a say in addition to the three members of the EEA, while Switzerland might have something to say if the UK managed to negotiate better terms than it. Some member states would be more generous than others and some would feel betrayed by a UK exit. The European Parliament would also have to ratify the agreement. So we have to be absolutely clear: the UK would not be holding very strong cards and it would not be an easy negotiation. Moreover, let us face it, negotiation is not exactly our Prime Minister’s strongest suit. The Prime Minister found it difficult to negotiate changes to the treaty from the inside but that will be nothing compared to trying to negotiate a new trade relationship with the EU from the outside.

[The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)]

My Lords, Amendment 24 moved by the noble Lord, Lord Kerr, calls for the Government to set out the relationship that it envisages having with the European Union in the event of a vote to leave. The amendment states that this report would have to be published 12 weeks before the date of the referendum and goes even further than that. It requires the Government to provide detail on the acceptability of hypothetical arrangements from the point of view of the 27 other member states. That seems unrealistic. I have just been listening to the noble Baroness, Lady Morgan, give details of some of the implications of Article 50. Amendment 24 seems to be asking the Government to put the cart before the horse before the horse has even bolted.

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[Lord Hamilton of Epsom]

Yes, indeed, that is a very significant part of it.

[Baroness Morgan of Ely]

My Lords, we are all keen to know the outcome of the Prime Minister’s negotiations. Now we have an idea of what he is hoping to achieve and he has promised to write down the UK’s negotiating position in a letter to the President of the Council. I think we are expecting that to happen next week. I am sure that other EU leaders will be happy to see that as well, given the reports we have read of their frustration at the vagueness of the UK’s negotiating position.

We know the broad themes—sovereignty, economic governance and what the meaning is of “ever-closer union”—but I would take issue with one point brought up in relation to the report written by the European Committee of this House. In relation to restrictions on free movement of labour, we would warn the Government not to talk up the problem of benefit tourism, as they did in their response to the European Committee on its report assessing the reform process. They said in their response that they want to reform,

“welfare to reduce the incentives which have led to mass immigration from Europe”.

I am afraid that the facts simply do not match up to that proposition. Last year, a European Commission report found there was no evidence of systematic or widespread benefit tourism by EU nationals migrating within the EU, including to the UK. In fact, the UK is the only EU member state where there were fewer beneficiaries among EU migrants than among nationals.

We are expecting the first substantive discussions on reform at the December summit. Let us hope that they are given a bit more of an airing than in June, when I think the Prime Minister was lucky to have had 10 minutes. Of course, it would make sense if the outcomes of the negotiations were made clear to the public. We would endorse the idea of the production of a report to this effect.

[Baroness Anelay of St Johns]

My Lords, we are coming towards the end of a long, thorough and well-considered debate on the issue of public information. As I explained earlier, I agree that the public will expect Ministers to set out the results of the renegotiation, how the relationship with Europe has been changed and if, and how, those changes address their concerns.

My noble friend Lord Forsyth’s amendment would create a statutory requirement for the Secretary of State to publish and lay before both Houses a report on the renegotiation outcome, and any resulting changes in the relationship between the United Kingdom and the European Union. He stipulates that this must be done four months before the referendum poll date. I am sympathetic with the aim behind the amendment: to ensure that the British people understand the outcome of the renegotiations. However, because of my earlier comments about deadlines, I do not think my noble friend will be surprised to hear that the four-month period imposed by this amendment between publication of a report and the poll is not necessarily going to be helpful to having a fair and even campaign. As I explained earlier, there could be unnecessary complications with regard to legal challenges if there were a prescriptive date. We need to think very carefully about the most appropriate timeframe for the delivery of public information. I think it would be unwise to commit to an arbitrary deadline at this stage.