Outcome of the European Union Referendum

Lord Davies of Stamford Excerpts

Tuesday 5th July 2016 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I suppose it is a pleasure to follow my old friend the noble Lord, Lord Flight, but as usual, I disagree with almost everything he has said. However, it has been a revealing and worthwhile debate and I was particularly struck by the analyses of the noble Lords, Lord Butler, Lord Kerr and Lord Carlile, all three of whom have a higher regard than I for the result of the referendum. I consider it to have all the legitimacy of a transaction based on a false prospectus. Of all the deeply depressing aspects of our country’s current prospects, the one that I find saddest and most disturbing is that we have chosen to commemorate the 100th anniversary of the Battle of the Somme by rekindling the fires of nationalism. What a horrible message to send externally or internally—and internally, we have already seen some of its results.

A lot has been said about the economic damage of Brexit, and I will come on to that, but not much has been said about the non-economic assets that we shall lose if we proceed to Brexit. They are very important and I want to say a couple of words about them. We in this country essentially have two citizenships: our own and that of the European Union. The latter gives us the right to be treated as a citizen by 27 other countries, and to work and study abroad. At an earlier stage of my life, I had the wonderful experience of working and living in Paris for three years. All I needed to do was to put my things in the back of my car, drive over to Paris, turn up at an office the next day and start working. I did not have to apply for a work permit, to go through an Australian-style points system or to report to the police every three months; I did not have to deal with any bureaucracy at all. The younger generation will not have that benefit and their interests have been seriously betrayed in this matter.

Part of what EU citizenship gives us is the right to free medical treatment on the continent. Elderly people and those with existing medical conditions might not be able to travel on the continent at all without that assurance. That would be a very severe change in their quality of life, and a rather horrific prospect. There are all sorts of smaller things, too. If you are having a wedding or other major celebration you will not be able to go over to Calais and buy some drink at French prices. As a result a lot of those celebrations will not take place, or not in the same way. That will be very sad. We should think about these things now because within the next few years we will miss them very much when, if we are not careful, it is too late to do so.

I do not want to repeat what has been said on the economic impact. I think it will come home to people in the next few weeks. They will notice an increase in prices when they go to the supermarket, fill up with petrol or pay their fuel bills. Incidentally, the Brexit campaign told people that fuel costs would fall if people voted for Brexit because fuel duty would be reduced. In fact, the reverse is happening. People have been lied to, hoodwinked and cheated—no other words in the English language more accurately describe the situation.

The uncertainty being created is particularly damaging but over the long term, as the noble Lord, Lord Flight, himself acknowledged, it will be a very serious matter if we lose the banking and insurance licences on which some of the highest-value aspects of the City and London’s position as the capital of the single market are based. I think the noble Lord underestimated those important points.

The Brexiters and the Government say, “That’s all right, we’ll have a negotiation and everything will be fine”. We will get the best of all possible worlds, we hear: we will have full access to the single market as we do today, we will not need to pay anything to Brussels and we will not have freedom of movement. It is most unlikely that we could make such a deal. First, the Brexiters, including the noble Lord, Lord Flight, are completely wrong about the balance of advantage and disadvantage in the prospective negotiation. At stake in our trade within the single market is 14% of our GDP in exports. No country, other than the Republic of Ireland, has exports to the UK that are more than 3% of its GDP. We shall in fact have a discrepancy of four or five times our relative bargaining power in those negotiations. Why would the continentals agree the deal known colloquially as Norway-plus? I can think of at least five reasons why they would not, and there may be others.

The first is a matter of elementary logic: the Prime Minister was unable to negotiate such a deal in February when there was presumably an incentive for the continentals to make concessions, in so far as they wanted us to stay in the European Union, as I believe they genuinely did. Why would they not make such a deal when there is an incentive but make one when there is none? Secondly, the European Union as a whole has made it clear for many years that it is not interested in bespoke deals. It did one with Switzerland but that has not had a happy outcome and it is not going to do it again. It will want to maintain the credibility of that position and is unlikely to change it.

Thirdly, I do not think that the European Union will want to make a concession to us which will cause a precedent for other countries which might want to leave it. Fourthly, to give us a better deal or Norway-plus is an insult to Norway. I cannot imagine why in heaven it would want to do that at all. It makes no sense to me. Fifthly, any bespoke deal would take years and years to negotiate. At least if we have the Norway deal—the EFTA or EEA deal—the template is already there and the negotiations could be shorter.

We will find ourselves with a choice of three regimes: the status quo; the EEA deal that Norway has, which involves freedom of movement and financial contributions to Brussels; and the Lawson approach. The third of those would cut the ropes altogether, leaving us to sail away and deal with the European Union rather on the same basis that Paraguay does. Faced with that choice, what would a rational man or woman decide? The public can make a rational choice only when faced with the actual alternatives, which may be those that I have set out. But if others can be negotiated contrary to my expectation, so much the better. The public cannot make a rational and fair choice unless they honestly see the alternatives, just as you cannot go into a store and make a fair choice unless you see the range of goods available. The same holds for when you buy a house or make any other decision, such as an investment decision about going into gilts or equities. Of course you would want to look at the options separately, and the British public must be given that opportunity. On that, I agree with the noble Lords, Lord Butler, Lord Kerr and Lord Carlile.

It would be a denigration of democracy to deny the British public a say when we know what the real possibilities are from which they might want to choose. We can then be absolutely straight with them, and I hope there could be an honest campaign in which they look at the advantages and disadvantages of all those regimes. It may well be that when they actually look into the abyss, they will decide they do not want to jump in. But if they do decide to do so knowing what it is, at least that decision will have democratic legitimacy.