Further Discussions with the European Union under Article 50 of the Treaty on European Union

Lord Davies of Stamford Excerpts

Wednesday 27th February 2019 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, it is a great pleasure to follow my fellow Lincolnshireman, the noble Lord, Lord Cormack. He is a man I have known for many years—decades, really—and I find the two proposals that he has just made rather alluring. They are very characteristic of his continual commitment to finding consensus in our national affairs wherever it is possible to do so. I also thought that his quotation from TS Eliot was the most apt literary quotation that I have heard in the course of these debates—indeed, in all these years that we have been discussing Brexit.

I begin by correcting the noble Lord, Lord Callanan, on a point of constitutional convention. He criticised the Labour Party for resiling from its commitments in the last Labour election manifesto. I have to tell him that we cannot have resiled from those commitments because they disappeared the day we were defeated in the general election. If a party wins an election, it has a contract with the electorate and must fulfil that contract—that is how our democracy works—but if a party is defeated, it has no such obligation, and not only is it free to find other policies if it wishes to do so but, indeed, it is encouraged to do so. Not only constitutional principle but common sense leads in that direction. If the noble Lord thinks about this for a moment, and I hope he might, he will realise that on his approach the Labour Party would still be committed to the nationalisation of the means of production, distribution and exchange, while he and his party would still be committed to opposing Catholic emancipation or the abolition of the Corn Laws, although maybe the noble Lord opposes those things retrospectively. The only reason things move on is that when you are defeated in an election your commitment at that election disappears and you have to think anew. That is a vital part of the process of progress and renewal in a democracy.

Anyone who has been involved in negotiations knows, or ought to know, that your greatest enemy is complacency, self-delusion and a tendency to underestimate the challenges and obstacles you face, to underestimate the strength of the bargaining power of the counterparty with which you are dealing and to overestimate your own. This Government have always believed that, in the immortal words of Mr Gove at the time of the referendum:

“The day after we vote to leave, we hold all the cards”.


They have proceeded on the basis that that was true. They have fundamentally and systematically under- estimated the bargaining strength of the people they were dealing with. They thought that because the EU sells more to us than we do to it, and the Germans sell more than anyone else, the Germans would be running the show and would more or less instruct the Commission to be gentle with us and make whatever concessions were necessary because that would be in the interests of their own firms. The idea that the EU would take a permanent stand on behalf of the Irish, who are rightly defending their right not to have their country divided in half by a hideous permanent border, will not have occurred to them. They will have said, “Oh no. There’s no way that the EU, with 500 million people, will allow a country of 2 million or 3 million to stand in its way”. They were completely wrong on all those points—disastrously wrong. What is more, they were wrong for the wrong reasons, coming back to the TS Eliot quotation given by the noble Lord, Lord Cormack.

I am afraid the British have underestimated the Irish for 800 years. I am sorry that that dreadful tradition still continues in the Tory party of today. The Tory party has never understood the moral force or the genuine idealism behind the European Union, or its genuine commitment to the concept of solidarity. It does not understand those things at all. I suppose this is what Castlereagh called,

“a piece of sublime mysticism and nonsense”.

But it is not mysticism and nonsense; it is a fact that the Tory party should take into account. It will go on making this mistake. The continental countries will not abandon the Irish or ban the backstop. The sooner the Government realise that, the better.

The Government’s capacity for self-delusion does not end there. It goes right across the board and is an extremely worrying facet of the present Administration. It stretches into the economy. I do not want to be seen to be unduly critical of the noble Lord, Lord Bates, first, because I am very fond of him—in common with the rest of the House, I think—and secondly, because he is not in his place today. I regret that, but of course it is totally understandable and that is not a criticism of him either. Nevertheless, he is a government Minister and if he says something before the House, he is accountable for it and it is reasonable for us to continue to say what we need to say on the subject, whether the Minister is present at that moment or not.

I will quote what the noble Lord, Lord Bates, said last week in the debate we had on the same subject. We had been speaking about the economic cost of Brexit, a matter which has naturally come up this afternoon, and on which I want to say something else as well. The noble Lord said:

“What was not given was any potential up side to leaving the European Union”—


he was talking about an economic up side—

“and the ability to have our own trade deals and set our own economic and trade policy. That needs to be factored in, and we remain confident that we have a bright future outside the European Union”.—[Official Report, 20/2/19; col. 2280.]

The Government have now, at last, released their impact assessment of Brexit. It is frightening and appalling. As the noble Lord, Lord Callanan, must know, in the case of his part of the world, the north-east, it predicts that GDP will be 10.5% lower than it otherwise would be, as a result of Brexit. The average decrease throughout the country is between 6.3% and 9%. That is pretty horrific. If you say, “You have not taken the good things and the positive economic return into account,” I have to say: what is the positive economic return? No one has mentioned it. We have had these debates for months and years now, but I am yet to hear about it.

We are now told that we will have trade deals with a lot of countries around the world. However, the day we leave the European Union, we lose 40 trade deals, as we know. Dr Fox said, “Don’t worry, I’ll negotiate the 40 trade deals and have them ready for you by March or April 2019”. What has actually happened? We have five trade deals, I think. In aggregate, they represent about 2% of British exports. Even if he had got all 40 trade deals, it would not have made a penny’s contribution to offset the economic costs of Brexit. It would merely have meant that there would not have been any further costs from losing trade deals. I do not know whether he will get to 40; he is 12.5% of the way there. That is not particularly encouraging.

The big issue is whether we could ever have a trade deal with the United States, which represents 25% of our exports. Does any noble Lord in the House think that is a feasible possibility? That would mean we would have to accept from the United States beef impregnated with antibiotics—a serious and long-term threat to public health. We would have to accept our own beef producers being undercut by incredibly cruel methods of cultivation—such as zero grazing—in the United States. We would also have to accept chlorinated chicken, and so it goes on. Are we going to accept that? I do not think so.

The European Union had discussions with the United States on these features, which broke down, and discussions on the investment guarantee, which might also be a problem. Does any noble Lord believe that the United States would sign a free trade agreement with us, leaving aside agricultural products? No one who knows the United States could possibly believe that for a moment. The enormous influence of the farm states in the Senate is one of the first things that hits you about Congress. It has been the case for a long time. So it is out of the question. We are not going to do it—it is not going to happen. It is fairyland, dreamland.

What about China? Now we are moving a long way down the scale, because we are talking about people who receive a much smaller proportion of our exports, although that proportion could increase rapidly over time. But who, of those who know China, is not aware of the Chinese sensitivity to unequal treaties? Who could imagine suggesting to Mr Xi Jinping an unequal treaty under which we have free trade with China but place quotas on the import of Chinese steel? Do you suppose that any British Government could abolish those quotas and see the end of the steel industry in south Wales and elsewhere? Of course, the Government are committed to not abolishing those steel quotas. So, is there a realistic possibility of a free trade deal with China? No, there is not.

What about India? We know, from the noble Lord, Lord Bilimoria, during previous discussions on these matters, that Mr Modi—and India generally—has a tradition of not signing free trade agreements with developed countries, which is unlikely to change. Mr Modi has said that the one thing he really wants is more visas. Since a major factor in the result of the referendum was probably immigration, how are we going to turn around and say that now, as a result of that referendum, we are going to give many more visas to India on special terms? That is not likely to happen.

This is rubbish. That is the point: this is total rubbish. We are buying hot air. There is nothing in it at all. There are no countervailing economic benefits from Brexit, no economic gains or economic revenues. Not one has been mentioned in the months of discussion here, and not one exists. None exists outside the fantasies of the Government. It is a very serious matter. I do not know whether the Government have deceived themselves, but they must not be allowed to deceive the British people. Above all, the Government must not be allowed to deceive the British people and, as a result, lead them into a situation in which 10% of their wealth will be destroyed.