Brexit: Trade in Non-financial Services (EUC Report)

Lord Berkeley Excerpts

Monday 18th December 2017 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, I, too, welcome this report. It sets out a number of options and consequences for the non-financial services industries and gives a great deal more information than was contained in the 58 sector reports that I went to see last week. The security around that reading room was a bit of a joke. I sent two emails to try to get an appointment and did not get a reply, so I turned up. They said, “Well, I suppose you can come”, but they then confiscated my mobile, so I had to rely on my photographic memory. But, frankly, there is nothing in them apart from a load of statistics, which are quite interesting but say nothing about the consequences of different options for Brexit—hard, soft or whatever.

So perhaps I can help noble Lords with a set of figures which I have received from MDS Transmodal on the value of trade in non-financial services; in fact, just-in-time deliveries, which are the most important ones between the UK and various member states. The total was $282 billion in 2016, which is quite a lot of valuable trade going backwards and forwards. As it is just-in-time, these people do not want cargoes to be held up at the frontiers. The most interesting breakdown of the figures is the $3.6 billion of trade between the Irish Republic and the United Kingdom. A lot of people welcomed the Prime Minister’s fudge last week of saying that the single market will still apply to the Republic of Ireland, that Northern Ireland will be a kind of halfway house with no frontier, and that there will be no frontier across the sea between Northern Ireland and the rest of the UK. Somebody needs to explain—perhaps the Minister can do that tonight—how that will work, because $3.6 billion of trade is not to be sniffed at.

The other member state with which we do the largest amount of trade is the Netherlands, at $4.5 billion, followed by Germany, Spain and France. Some $30 billion of all that is temperature controlled. If there were delays at the frontiers, as I am sure there will be—the head of customs has said that it will take five years to introduce a computerised system which might minimise delay—one must surmise that some companies such as the major motor manufacturers will say, “Well, we’ve had enough of this”. Some parts go three or four times between the UK and other member states. How many jobs would be at risk? If we were to take half the trade as being at risk and divide it by, let us say, £50,000 per year for a job, we would end up with a figure of about 25,000 jobs being at risk in the UK and probably a similar number across other member states. I can see why business sees no good reason for wanting change. Why throw all this away? As chairman of the Rail Freight Group I had a meeting with people around Mr Barnier’s transport team in September, and maybe because he saw the inability of the UK Government to know what they want and to negotiate it, he advised the whole industry very strongly to plan for the cliff edge—it might not happen but it could happen. I think that that is a good piece of advice.

Several noble Lords have talked about the free movement of people. I remind the House that in many other member states there is no free movement of people unless you have the right papers. I have friends in Belgium who have British passports and before they are allowed to stay in Belgium and have a residence permit they have to justify to the local authorities that they have enough money to live on and some suitable accommodation. When I asked what would happen if you cannot persuade the authorities of this, my friend said, “I would be put on the next train out of Belgium”. Quite simple. There is no reason why we could not do the same thing here if we wanted to, but there is this obsession with not having identity cards, which I believe is a wonderful excuse for saying we cannot have free movement of people. We could perfectly well control it by everybody having ID cards and that would sort the problem out.

I come to my last point. My noble friend Lord Whitty, in introducing this excellent report, mentioned the problem with air services if we do not get agreement, because of the inability of UK registered airlines to operate on the continent. A similar thing would apply to the European railway agency, which is just as important for the railway sector. To have the same standards across Europe reduces costs of operation and manufacture dramatically. Of course, it relies on experts to deal with this who know what they are talking about, with professional qualifications that are reciprocally recognised. It is not bureaucracy. Everybody talks about European bureaucracy, but we have bureaucracy here—in fact, the European Commission in many ways is more efficient than our Government, I think. The US and Japan all have their own bureaucracy and it is all to do with, “Do you like what we have or do you not like what we have?”.

We will have a big worry in the future because people in the Commission have told me that they want no cherry picking, that they will fight cherry picking to the bitter end. I do not know what is going to happen with the negotiations, but if there is no cherry picking and we go down the route that we seem to be going on at the moment, I see a cliff edge looming. It is time that the Government listened to industry. Industry gave a lot of evidence to this report a year ago and nothing seems to have happened since then, except that they are getting more and more worried. It is time that the Government put their minds at rest.