Brexit: Logistics Industry

Lord Howell of Guildford Excerpts

Tuesday 8th May 2018 Lords Chamber

[Lord Callanan]

The “how” is that we will look in detail, using our excellent teams of officials, at all the available options. We will announce in due course what the best solution is for the United Kingdom and then, of course, we will have to discuss those matters with our European partners.

[Lord Howell of Guildford (Con)]

My Lords, is it not worth remembering that most digital traffic does not go through ports or customs anyway so the entire customs union debate, which is quite separate, is completely irrelevant to this question of digital and knowledge product trade. What are relevant are all the regulations and licences, which govern the trade in digital services throughout the European Union, and where—even after 40 years of membership—we have not been very successful in making much progress. Is the real concern not a global one? Are not the real markets where growth is coming in the next 10 years predominantly—90%—outside the European Union, and should we not think in rather wider terms that this petty issue of digital services in Europe?

[Lord Callanan]

My Lords, my noble friend, with his long experience of these matters, makes an extremely good point. Digital products can of course cross the European frontier very easily and cross worldwide frontiers extremely easily. The issue of trying to unify regulations is on a worldwide basis and the EU is a shrinking market in the world.

Brexit: Irish Border

Lord Howell of Guildford Excerpts

Tuesday 5th December 2017 Lords Chamber

[Baroness Evans of Bowes Park]

My Lords, I am afraid, with that kind of approach, we will hear from the Conservative Benches.

[Lord Howell of Guildford (Con)]

My Lords, is there not some confusion here between regulatory alignment and regulatory recognition? Is not the latter principle one on which there is perfect freedom for the whole United Kingdom, including Northern Ireland, to make arrangements for outside trade in due course for continuing the smooth and reasonably frictionless low or non-border controls in Northern Ireland? What is the problem?

[Lord Callanan]

Of course, the wording is very important, but I am very clear that alignment is not the same as having no diversity.

UK and EU Relations

Lord Howell of Guildford Excerpts

Tuesday 12th September 2017 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, unlike the previous speaker, I warmly welcome this stream of partnership and position papers, which I believe reflect rather well on our Civil Service and its creative resources and energies.

I shall confine my comments in my five minutes to one point and plea. The worst and silliest advice ever given to a Prime Minister throughout this whole saga was to avoid seeking fundamental changes in the way the European Union works. That was the advice given by officials close to David Cameron and by think tanks such as the Centre for European Reform. They all said that deep reform is not on and that it should be avoided. They advised sticking to a shopping list of British demands, which is of course what Mr Cameron did, against his earlier judgment and inclination, with absolutely disastrous results. Far from avoiding the fundamental principles of the European Union, we as a major regional power and networker should have opened them up in close alliance with the majority of European peoples who see the overwhelming need for new models of European co-operation. That is where all good Europeans should be turning their efforts.

All along, what is happening to the whole European Union has been the real story, which too many people have avoided. It faces entirely new challenges from unprecedented migrant movements larger than anything in history, from a totally transformed world trade pattern and from the new phase of global digitalisation and networking, which is changing the entire conditions of international relations and trade. That is the point that so many columnists, and the BBC in particular, have completely failed to grasp.

This brings me to my plea: we need one more position paper to add to all that we have had, including the one today. I would like to see this position paper majoring on the following points. First, it should address the whole of Europe’s crying need for new immigration strategies, of which our own wish for stronger border controls is only one aspect. The theoretical principle of free movement of persons, introduced at Maastricht, which is said to be so fundamental, has in reality long since collapsed as country after country adopts border restrictions and job regulations for immigrants, such as France itself and all of the Visegrad countries.

Secondly, there is the need for the old EU economic model to be replaced with arrangements which respond to the powerful decentralising and localising pull of the digital age in all areas, as well as the need to bring a new philosophy not just to trade and industry but to security and all aspects of regional co-operation including energy—although, of course, on quite different lines to the present bankrupt EU energy policy.

Thirdly, there is the need for Europe, which is a fast-shrinking part of the global trade order, to revise its trading provisions fundamentally in the new globalisation phase, and adopt new platforms and blockchain technologies which invalidate the old protectionism and the old customs union concept to which our friends opposite, the Labour Party and others, still cling. That makes them prisoners of the past, one and all.

Fourthly, there is the question of how to reverse out of the blind cul-de-sac of the chronically sick euro system which demands an unattainable, undesirable and unnecessary degree of budgetary tax and political centralisation, and prepare for the fintech age of crypto and virtual currencies and the demise of cash which lies just ahead.

Today there are good Europeans looking forward and vested-interest Europeans clinging to the old hierarchy. A weak, outdated and fractious continental Europe has always been of immense damage and danger to Britain. We just cannot isolate ourselves from it; that way lies disaster. Rather than trying to walk away from what will be a lopsided Europe overdominated by a reluctant Germany, we should be committing our considerable intellectual and diplomatic resources and our huge experience to the design of a more modern European model and the pathway towards it. That would include the deep defence partnership which the latest position paper talks about, and very welcome it is. That is one example of many on how closer co-operation in Europe can be achieved outside the rigid confines of the old EU treaties.

Long before Brexit, we should have been doing this anyway. We should have been afraid of neither treaty change nor allegations that we are somehow heretics challenging the sacred European principles. We are neither. We are, or should be, realists who want, and always have wanted, our region to be stable and to prosper—and continue to be so—in utterly changed conditions. It is a different world from the one in which the EU was conceived 60 years ago. We can argue endlessly about exit payments, land borders, citizen status and transition times—where, in my view, it seems a no-brainer that there should be an EEA-type holding pattern. These can all be resolved in due course, as we move to a sensible customs partnership. But the real issue is what is happening in Europe in this age of upheaval and disorder, and how we work hand in glove with our partners in the face of the colossal new challenges. That is the missing frame to our overall approach and we need now to set it out with boldness and foresight. Can we please have another paper on that?

Update on the Progress of EU Exit Negotiations

Lord Howell of Guildford Excerpts

Tuesday 5th September 2017 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I very strongly welcome this Statement and in particular the stream of position papers that have come out throughout July. We have hardly had time to read all of them, the volume has been so great, but they set out extremely clearly—much more clearly than has been given credit in this House or elsewhere—the aims and objectives of Her Majesty’s Government in reaching constructive agreements with the rest of Europe. Would she agree in particular that the concept of customs partnership, which is developed in one of the recent papers, is really a vast improvement on being tied to the outdated customs union, which is a design of the 20th century and hardly fits into the modern pattern of trade at all—but which the Opposition have suddenly decided to cling to, for reasons which I cannot fully understand, although perhaps they can be explained?

I know some more position papers are coming, but I would ask for one more in particular which concentrates on the thoughts and contribution that Britain might make to the overall fundamental reform of European co-operation and the modernisation of the whole EU model, which is so obviously needed as the European continent as a whole faces colossal new challenges—notably, migration and refugees but many others as well. We need an entirely new pattern of co-operation to meet the 20th century in Europe, and through our deep and special relationship we can make that contribution. Could we have that set out as well as the other ideas that have already been presented to us?

[Baroness Anelay of St Johns]

My noble friend, as ever, speaks from great experience in these matters. I am very interested in his proposal about a paper looking at further EU reform and the new pattern of co-operation. I recall in our years in opposition together listening to him examining, in a very intellectual way, how we could change the way that the EU worked for the better of all. I am very interested and will certainly take that idea back.

I agree with my noble friend that a customs partnership is better than a customs union because a customs union means that one is not in a position to carry out trade deals. The Department for International Trade is ready, willing and very able to carry out those deals. Earlier on, the noble Baroness, Lady Hayter, seemed to think that it lacked capacity. However, since its formation, DIT has increased to a global workforce of more than 3,200. The trade policy group has quadrupled in size, and in June 2017 the department appointed a new chief trade negotiations adviser with over 25 years of experience. I was a little bit cheeky there, because what I really wanted to do is add to the record my thanks to my noble friend Lord Price. It has been an absolute joy to be able to work with him over the last year and a quarter. I was very keen on his appointment because before that, for one month only, I am pleased to say, I was Trade Minister while also doing the work at the Foreign and Commonwealth Office. He was super.

Brexit: Trade in Goods (EUC Report)

Lord Howell of Guildford Excerpts

Tuesday 18th July 2017 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I congratulate my noble friend Lady Verma and her team on what is in many ways a profound and eye-opening report. It brings home the staggering complexity of modern trade flows. One listens to the debate raging about whether we should be in or out of the customs union, or in or out of the single market. I sometimes feel we should take a lesson from the electron particle, which, as scientifically minded Members of your Lordships’ House well know, can be in two separate places identically at the same time. It may be, as we analyse exactly what the trade flows are, that some of that is within reach. A little unhelpfully, my speech will be about services, not goods. By services I mean the whole range of provision of service: knowledge, products, data flows and information flows; and not just financial services but services of every conceivable kind—managerial, consultancy and design services—which are a bigger range even than financial services.

The really interesting thing about the report is that it is one of the first I have read in many years which understands that the service sectors are completely intertwined and combined with the manufacturing sector. I know that on the surface 39% of our total service exports go to the EU and 49% of our total goods exports, which is 43% of the total. But box 1 in the report indicates that 37% of so-called goods, as defined, reflect service-sector values. We are dealing here with a world that the statisticians have left us completely muddled in, with the division between goods and services being totally out of date in the digital age. We are an 81% service economy: that is where 81% of our GDP comes from and we are extremely good at it.

Actually, in the digital age all finished products are also largely services. This has been so for the past 20 years. Some 15 to 20 years ago I wrote a book in which I argued that we should change the word from “manufacturing”, meaning made by hand, to “mentafacturing” because every single finished product—the humble screwdriver or even a box of matches—has in it a very large service and knowledge product content. Indeed, if you think about the promotion of sales, the organisation of the labour force, the actual production, the aftersales and the design—every element of every single product you can think of has a huge service element in it. I defy anybody to tell me of a product that is not largely embedded with services.

There is a fascinating bit in the report which brings home what I am saying very vividly. We all know the automotive industry would face troubles if it had to face a lot of tariffs in its constant criss-cross flow of components with continental Europe, as would the Airbus wing-makers in north Wales, as we have heard. But when you start unravelling that situation, you find that of the 815,000 people employed by the automotive industry, only 169,000 are physically in automotive production at all; the rest is entirely services: finance, promotion, advertising, aftersales, connections with retailers—the whole business. That is a good example of how, if those 646,000 people cannot operate properly, that is the end of the automotive industry. There has to be a total union between the two.

Your Lordships may ask: why is he going on about services when surely this is about finished products in containers and container ships sailing from Felixstowe? It is important because the world of services is growing very quickly. Indeed, McKinsey tells us that with digitisation, it overtakes goods in terms of global generated value. It is not a world that is too concerned about tariffs. It has other problems. Non-tariffs, licensing, regulation, standards and a thousand other things, which the noble Lord, Lord Hain, mentioned, are the problems for the service industry. If we look in an absolutely cold-eyed and clear way at our success or failure in our 40 years in the European Union, it has not been a great success for services at all. Professional services throughout Europe are confronted by endless local and national roadblocks—endless difficulties—and the idea of a single market with services flowing freely here, there and everywhere is an illusion. It never existed in that way and does not exist today.

Furthermore, we are on the brink of a further huge development in the service sector through digital fabrication, which is already booming and will bring the whole business of data transmission and data flows right to the centre of international commerce and trade.

This is a world in which being in or out of the single market, or of the customs union, is not really the key thing. The key thing is to find trusted friends in areas where services can be marketed and exchanged, and where there is as much common background and willingness to trade as one can possibly design. The noble Earl, Lord Sandwich, mentioned the Commonwealth and it so happens that the DNA of common language is the ideal fertiliser for the expansion of trade and services. That, frankly, is where we will have to look very much more, whether we like it or not, for the markets in which to trade our gigantic service qualities and differences.

I am not for one moment saying that tariffs or goods are things that can be brushed aside. It would obviously be nice if we could get a free trade agreement with zero tariffs; if we do not, there will certainly be disruption to the endless flow of items and components that criss-cross the channel, as we have all heard described. But even in the worst case, if we do not succeed in getting a zero-tariff agreement, there are simplified customs procedures. The report describes the “Authorised Economic Operator” scheme, which is an interesting way of regular exporters finding that they can operate without the usual delays, hassles and form filling of customs. EU tariffs are anyway remarkably low; they are at zero for 25% of all product lines. So this problem cannot be brushed away completely but it is mitigated by the fact that goods trades have escape routes—ways around the awful prospect of long truck queues, customs delays and all the other horrors that would come with an elaborate tariff wall between us and the European Union.

The truth is that services and the booming area of data transmission were never going to be affected hugely by the EU single market. There never was a single market for services in that sense. The task now is to develop new markets for services, especially in countries using English as a working language and areas where there is vast connectivity, as in the Commonwealth. We have a professional services linkage system there, of a kind that never gets reported on but is vast. To get there, we need not just to go around trying to find free trade area agreements but to use our soft power in entirely new ways to promote myriad services.

I will take one final moment on the EEA type of transition. To me, it is a no-brainer that the transition—of course there has to be one, whatever it is called—should be through an EEA-type agreement, in line with the EEA agreement articles of 2007, to which the noble Lord, Lord Owen, drew our attention the other day. It is obvious that that is the transition area where we will be able to develop certain of the freedoms we want. It is quite untrue to say that it precludes limitations on immigration or FTA deals. It does not; if your Lordships examine the articles, there is plenty of room for intervention by national Governments or border controls, as the noble Lord, Lord Hain, rightly indicated. They are not just for emergencies but when, in the words of the articles, intervention serves a precise public purpose, as ours will certainly do. The idea that one is imprisoned by not failing to move in line with the popular will, and away from the European Union, is false. In the EEA-type scene, we are dealing with far more flexibility than has been acknowledged by lawyers, experts and others so far.

The truth is that Britain is a gigantic generator of knowledge, creative ideas and information resources. It is becoming more and more so and, in or out of the European Union, we will stand or fall by marketing these services to the world.

Brexit: Legislating for the United Kingdom’s Withdrawal from the European Union

Lord Howell of Guildford Excerpts

Thursday 30th March 2017 Lords Chamber

[Lord Bridges of Headley]

On a more serious note, as for the points made by the noble Baronesses about changes that might be made in years hence to EU-derived law once it is in UK law, that is some time off for the very simple reason that we have to get this process through and done in the time that we have. Any changes to EU-derived-law, if they were to be made—I should say more correctly “proposed”—would obviously need to be passed by this Parliament, but that is not for now. As this paper makes very clear, the task before us is to provide for a smooth and orderly exit on day one.

I want to pick up on a point made by the noble Baroness, Lady Ludford. I totally understand the concerns about people’s rights, but we are making it absolutely clear that we do not intend to undermine or erode people’s rights as they are derived from the EU. Furthermore, the noble Baroness suggested that this is a power grab. This is not a power grab. We make very clear in the paper the balance that we are striving to achieve between the need to get appropriate scrutiny from Parliament while, at the same time, having a fully functioning statute book on the day that we leave the EU.

From paragraph 3.16 onwards, we set out a number of constraints that might be taken. As I said in the Statement, we are committed to a time limit. The noble Baroness, Lady Hayter, made some very interesting suggestions about other constraints that are not in the White Paper as such. I draw the House’s attention to paragraph 3.17 on the scope of the power as it is currently considered and the potential that,

“we will consider the constraints placed on the delegated power in section 2 of the ECA to assess whether similar constraints may be suitable for the new power, for example preventing the power from being used to make retrospective provision or impose taxation”.

The noble Baroness made a number of other suggestions. She echoed the points made in the excellent report by this House’s Constitution Committee—and many thanks to those Members who contributed to it—on Explanatory Memorandums, which is a very interesting idea. She referred to consultation on drafts, which again is going to be very important as we move to implementing SIs that touch on sectors of the economy, a comprehensive delegated powers memorandum, which is worth mulling over, draft regulations, strengthened scrutiny procedure and finally triage. These are all thoughts that my door is open to have discussions on with any noble Lord who wishes to do so. I stress the point that is made in paragraph 3.23 of the White Paper:

“This White Paper is the beginning of a discussion between Government and Parliament as to the most pragmatic and effective approach to take in this area”.


The noble Baroness makes a very good point about the monitoring of EU regulations once they are converted into EU law and why those EU regulations are today enforced by EU regulators. I am glad she has raised this point. We are having extensive discussions with UK regulators on how this will work and furthermore, as she alluded to in her opening remarks, the need for consultation and discussion about that process and how we bring them over.

The noble Baroness, Lady Ludford, moved on to the interpretation of case law. I simply say gently to the noble Baroness that we need to have the certainty of the interpretation of case law which underpins a number of significant legal and policy cases—I am thinking in particular of our VAT policy. A large number of CJEU case law precedents shape that policy. We need to have that certainty on day one, hence the approach that we are taking.

As regards the noble Baroness’s point on consultation with the devolved Assemblies, yes, we will need to consult. We are giving Ministers there a power to amend their legislation to ensure that it, too, is going to be fit for purpose on day one. We are having regular meetings and we will continue to do so.

I am very keen to continue to consult with all Members of this House about the measures contained in the White Paper as it is absolutely critical we get this right.

[Lord Howell of Guildford (Con)]

My Lords, I realise that the bulk of this is mainly a conversion exercise, which is very sensible and I greatly welcome that, but when it comes to the powers to correct statutes and make and approve secondary legislation, as the Minister has described, can we assume that there will be some degree of filtration and even removal? Many of these vast numbers of regulations are not only unwanted—that may be a matter for opinion and debate in Parliament—but obsolete and come down to us from a pre-digital age and an era of centralisation which is long past. It would be a real waste of time, effort and space on the statute book merely to place them there when they are redundant.

[Lord Bridges of Headley]

My noble friend is making a good point that the noble Baroness, Lady Hayter, made about the potential for triage and flagging up to Parliament whether an SI is of a very technical nature or of a more substantial policy nature and therefore the level of scrutiny that is required. All I will say at this stage is that I am very keen that we get the balance right between bringing noble Lords and the other place with us as we make these changes, making sure that we get the scrutiny right with the level of speed that we need to proceed with. I am very interested in the point that my noble friend makes and we will certainly look at that.

Brexit: Negotiation Programme

Lord Howell of Guildford Excerpts

Monday 20th March 2017 Lords Chamber

[Lord Bridges of Headley]

My Lords, the noble Lord raises very important points, especially regarding the situation of the island of Ireland. I am not going to get into the structure of the negotiations nor the outcome, but I have to reassure him that we are very focused on that issue.

[Lord Howell of Guildford (Con)]

My Lords, with whom on the other side does the Minister think at this stage we will be negotiating? Will it primarily be with the Commission, with the national capitals or with a mixture of both?

[Lord Bridges of Headley]

My Lords, the negotiations will be with the Commission, but as your Lordships would expect, the Government have ongoing relationships and conversations with national Governments across the European Union.

European Union (Notification of Withdrawal) Bill

Lord Howell of Guildford Excerpts

Report stage (Hansard - continued): House of Lords
Tuesday 7th March 2017 Lords Chamber

[Lord Lawson of Blaby (Con)]

My Lords—

[Lord Howell of Guildford (Con)]

My Lords—

[Lord Taylor of Holbeach]

My noble friend Lord Hailsham is a signatory to this amendment and it is right that the House hear from him. Perhaps we can then hear from the Labour Benches, and then from one of my noble friends on the Conservative Benches.

--- Later in debate ---

The Prime Minister and the Minister in the other place have given a solemn and public undertaking that there will be parliamentary approval for whatever is proposed. I think that that can be trusted and I wonder what the advantage is of putting this proposed new clause in the Bill, particularly as its subsection (4) suggests that Parliament would block the Article 50 process without going back to the people. The referendum was won by only 52% to 48%—that is another conflict that we are handling, I accept that. But it seems that we are not facing up to the fundamental fact of the referendum itself.

[Lord Howell of Guildford]

My Lords, not for the first time I wholly agree with the analysis of my noble friend Lord Heseltine, with whom I think I entered the House of Commons on the same day over 50 years ago—I agree with his analysis but I am afraid I do not agree with his conclusion. The amendments have clearly been tabled with great sincerity and I appreciate all their aims and concerns. They are trying to impose statutory precision on a Bill that happens to be going through this House in order to make provision for a very uncertain future and for events that are completely unforeseeable. As my noble friend and others have said, we have absolutely no grasp of where the world or this issue will be in two years’ time.

Any commentary one looks at from the other side of the channel shows clear uncertainty as to who is taking the lead. There are daily quarrels between national capitals and Brussels, and there is infighting inside the European Commission—the Visegrad four are already talking about a different treaty. This very hour we have a blog saying that Spain and Poland want to join together on a completely different approach to the negotiations from that offered by the European Commission. What will happen is uncertain. The additional point was made by the noble Lord, Lord Kerr, with his usual eloquence, that under certain circumstances—although this is almost inconceivable except under a different Government on this side of the channel—the whole project could be aborted and withdrawn.

The truth, which my noble friend Lord Howard stated with great frankness and eloquence, is that in the Commons the parliamentary majority can do what it likes. I say “majority” and that is different from “Parliament”, which flows from legal lips as though it were an entity—of course, it is not. Parliament is actually the people controlling the majority; that is, the managers of the parties or coalitions that have a majority in the Commons. That is what comes out if you press the button marked “Parliament”.

I say to the noble Lord, Lord Taverne, whose speech I greatly enjoyed, and to the noble Lord, Lord Kerr, that I am certainly more Burke than Brezhnev. But I am also a disciple of Karl Popper, who spent a lot of time warning us—as did Isaiah Berlin and others—about the dangers of making things too inevitable and the poverty of determinism. Telling the Commons what to do by statute law about a situation that may be completely different from anything we presently envisage seems a noble but really futile project. The Commons will decide by parliamentary majority. It has not always been able to do so and in past centuries there have, of course, been fights against the royal prerogative. But since Parliament has won that battle, as it did in our history, the parliamentary majority will decide—if its managers can control it, the Whips can keep it in place and it is big enough then it will be the will of Parliament.

The bundle containing the divorce papers and the mixture of new arrangements will be vastly complex and there will be all sorts of uncompleted aspects. That document will be the work of two years of Ministers slaving away, of vastly difficult negotiations and private deals ensuring mutual equivalence and mutually beneficial arrangements between sectors and industries—and heaven knows what else. If after all that there is a vote in Parliament and the Government lose because the majority moves against them and fails to give its approval, I do not see how there can be any doubt about what will happen. That is a declaration of no confidence. We have a five-year rule for Governments but that would not need to be changed if the no-confidence vote was in ringing terms, as it almost certainly would be. That would mean we would arrive at a general election. That seems so obvious and so certain that I cannot understand those who are talking mysteriously about a world beyond rejection. It is inconceivable that Ministers would be sent back to Brussels saying, “Our Parliament has looked at this and does not like it but we will carry on”—it would not be the same Ministers, it would not be the same Government and it would not be the same deal. It would be a completely different situation, regardless of what is written on any piece of paper and regardless of any statute, however beautifully it had been drafted by all the learned people sitting in this House and however firm it was. In reality, it would make no difference to what would actually happen.

I do not want to stray beyond the confines of Report but I realise that behind the longing to get this into statute—to pin it down on paper—is a real concern. It is the concern of those who fear that the deal, when it comes back, will not include membership of the single market and of the customs union. For them, that will brand it a bad deal and it will lead a lot of people in the Commons, but I suspect not the majority, to think about voting it down—they will not succeed but they will think about it. I say to my noble friends in this House and particularly to the noble Lord, Lord Kerr, that there is room for considerable doubt as to whether being in or out of the single market as it exists today is really the end of the world. In an ocean of digital change, in which there are vast new supply chains travelling in every direction, which are perforated with low tariffs, tariff wars, and special arrangements and regulations on every side, as well as a completely new pattern of trade, totally different in character from even 10 years ago, there is room for doubt as to whether being outside the single market is really a catastrophe. The chief economist of the Bank of England, Mr Haldane, actually said last week that it does not matter and that over the next three years it is of no material difference to the growth of the British economy whether it is in or out of the single market.

I put that in as an aside. I appreciate that it moves away from the amendment, but the amendment expresses a genuine fear about being excluded from the single market. All I say is that if you look at the facts and details of what is actually happening, you will see it is very different from what is being said by those who argue that leaving will be a disaster and that we are bound to pay a colossal price. They say that trade will effectively halve because goods will have to travel double the distance but these sort of generalities belong to the past century and to a world that no longer exists.

The whole idea of sending Ministers back to Brussels to get us back into the single market if the deal arranged takes us out is a fantasy; in reality no such situation could ever arise. It is worthy of an animated cartoon but highly disadvantageous. There is a new pattern emerging—a new world governed by the WTO—which many people feel has all sorts of advantages, which have not been discussed at all by this House.

For this House to tell the House of Commons what to do two years hence, in a completely different situation from anything we presently envisage, is to make fools of ourselves twice over. If that is what noble Lords opposite want, so be it, but it will have to be without me. My hope remains that we in this House can contribute not division but unity to a very difficult challenge and a major new situation emerging for this country in the near future. Perhaps we cannot deliver the unity in this amendment but we can at least agree on the facts. At present the full facts are not being presented to us.

[Lord Taylor of Holbeach]

My Lords, I remind noble Lords that it is Report and we do not want Second Reading speeches. It is not appropriate for Members to give Second Reading speeches. I apologise to my noble friend.

European Union (Notification of Withdrawal) Bill

Lord Howell of Guildford Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 1st March 2017 Lords Chamber

[Lord Hope of Craighead]

I entirely understand the point that the noble Lord is making, but the trouble with subsection (4) is that it does not mention the two-year period—we do not know what period we are talking about. That is one of the problems with it. It does not think through to the factual situation that would arise in the situation that is being addressed.

I do not at all underestimate the importance of finding a solution to the point that this subsection seeks to address; I am in sympathy with it. I just say that it is not suitably worded and it should be rethought. It is for that reason that I suggest that we should not try to struggle to put the two things together. We should separate out subsections (1) to (3) and adopt my solution, which I need not repeat, as to how they might be simplified and made more attractive and then think again about subsection (4). We can find a way to address exactly the particular situation that it seeks—of separating out the unilateral termination from the bilateral situation—and then try to find ways of meeting that. I do not need to elaborate, but these are the points that I wish to make in broad sympathy with what Amendment 17 is seeking to achieve.

[Lord Howell of Guildford (Con)]

My Lords—

[Baroness Goldie]

My Lords, I am aware that we have not heard from the Labour Benches at all in respect of this group of amendments and the noble Baroness, Lady Kennedy, has her name attached to one of the amendments.

--- Later in debate ---

I shall not labour the point at this time of night, but I happen to agree with the noble Lord, Lord Kerr, that Article 50 does not mean that there cannot be a change of heart. We could unilaterally withdraw our triggering of Article 50. I imagine that is very unlikely, but if there came a point when we looked at the World Trade Organization’s trading rules and at the full panoply of what they would mean, we could decide that we did not want to go down that route and would rather remain in the European Union. Unlikely as it may seem, that has to be an option that Parliament could decide on. I urge the House to find the right amendment before next Tuesday morning.

[Lord Howell of Guildford]

My Lords, I shall come at the amendments from a slightly different angle. It seems to me, listening to the debate, that those who have tabled them may not fully understand what goes on in the House of Commons, or what the nature of parliamentary sovereignty really is. As we know, and as Bagehot reminded us 150 years ago, it is actually the majority in Parliament at the time—or whoever can muster a majority—and the managers of the party or parties behind that majority, who seek to maintain the majority, get the Government’s business through and carry out the Government’s intentions.

I am totally in favour of maximum parliamentary involvement in this process, and I have been from the start. I am sorry that it had to go to the Supreme Court; I thought the Government made a mistake in not putting it openly and fully to Parliament from the beginning. I am glad the case went as it did and, peering into the next two or three years or however long it takes, I welcome the fact that all along the way Parliament will be heavily and continuously involved—particularly the Commons, but ourselves as well, of course. That is my forecast.

People say that Parliament should not involve itself in negotiation. I hear my noble friends say that, and it sounds very sensible. In practice, the daily newspapers, the media and Parliament will all involve themselves in negotiations. There will be leaks in every direction and constant debates. Motions will be moved in the House of Commons. The Government may deplore that or try to avoid it; the Whips may manoeuvre to try to suppress it but that will not happen. There will be a massive and continuous debate about this matter over the next two years. When we eventually get to the point where there is some kind of resolution—whether it is the divorce papers; the new relationship; a bundle between the two; or a single core of views with a long trail of dozens of different sectoral views and arrangements and complex and numerous regulations—Parliament will be deeply involved. Whoever has the majority in Parliament will be in a position to assert their will over it, to reject or accept it. It needs no statute law whatever in practice and Parliament will not need to authorise, criticise or reject any arrangements for the divorce and new relationships that Her Majesty’s Government seek to put before it. They will have to do that; the Prime Minister has undertaken to do so and it will happen. The arrangements will be extensive and complex and will have numerous bilateral elements.

This is where the puzzle grows greater. If, at that point, the Government cease to have a majority, lose control or there are too many rebels and a majority is formed against the proposals, which are then rejected, arrangements leading to a general election will be triggered. I am not sure how that works with the five-year rule but the rejection would be a vote of no confidence in the Government and would trigger, one way or another, a general election. So the people would have their say and that is what will happen. The supporters of the amendment seem curiously unaware that MPs, including Back-Benchers in all parties—both official and minor opposition ones—are perfectly capable of bringing whatever the Government agree to the Floor of the House of Commons and voting on it. Votes can be engineered on crucial aspects which, if they were central enough, could destroy the Government. They can bring matters to Parliament by well-tried procedural devices at any time during the negotiating period.

The elaborate amendments, which distinguished lawyers around me are discussing, are totally unnecessary and do not fit in with the way in which Parliament has evolved and worked over the last 200 years. We have the doctrines of Bagehot, the realities of parliamentary manoeuvres and Governments being brought down by people switching sides. All this has happened and may well happen again. To put it on the statute book is to create an absurdity. There is no need for any statutes to tell Parliament how to behave.

[Lord Hope of Craighead]

One of the points made by the Supreme Court is that it is legislation that provides the authority for the kind of exercise we are talking about. It is all very well having Motions on the Floor of the House, but legislation is the key. That is why I suggest the Government need legislation for the protection I mentioned at Second Reading. If it is in the Bill, we get legislative authority.

[Lord Howell of Guildford]

My Lords, if Parliament voted to bring down the process—the whole confection the Government had worked on and negotiated over two years—it would not need a law, just a majority. Three or four years ago, Parliament voted against the Government’s wish to mount military action against Syria. No one wrote a statute saying that we must not fire cruise missiles at Bashar al-Assad and no one needs a statute here. A majority may well move against this. It is quite possible that, over the years, the media view may build up that this is unacceptable, as the noble Lord, Lord Kerr, and others have rightly reminded us. Some reversal may happen half way through. The Governments of France, Germany and Italy are all likely to change and turmoil is about to take place in the European continent. The people we are negotiating with may well change completely in the next 18 months. All this could happen and would change the approach totally. At that point, whoever can muster a majority in Parliament and form a Government—until they are overthrown—can and will have their say. That is called the sovereign role of Parliament. That is the reality. We are moving around ideas of statutes, which belong nicely in the world of law but not in the world of reality—of parliamentary procedure, parliamentary history, parliamentary action or parliamentary will when MPs really get going. It is a different world down there and that should be understood by the supporters of these amendments, which are unnecessary.

[Lord Deben (Con)]

My Lords, this is not a debate which will be solved on the basis of this group of amendments. It is quite clear that we have to make an amendment to ensure parliamentary sovereignty. I remind your Lordships that we are only having this debate now because we had to go to court to insist upon having it. I remind your Lordships that it is not a proper way for Parliament to proceed via the courts. This happens in other countries without our history and without, I am afraid, the intrusion of Parliament. That phrase should be remembered. Parliament does not intrude when it makes a decision about the future of this nation.

We need to say to the Government that they cannot make a decision without it being put before Parliament in circumstances where Parliament is empowered to make that decision. It is perfectly happy for my noble friend to say, “Well, Parliament will do that anyway”, and “My goodness, we have been doing it all over the years” and all the rest of it—but we have not made a decision of this kind in these circumstances which can possibly be brought forward as a parallel. We have for the first time invented a system whereby we have asked the people for their decision. They have made a decision, but we do not really have a system by which we can naturally enforce and carry it through.

It is therefore perfectly proper for this House to seek the way that most defends parliamentary sovereignty. We do not work on the basis of “one man, one vote, once”. We try to accept what happened in the referendum. I admit, as this House knows, that I am a fierce opponent of Brexit—but that is not the point of this debate. The point of this debate is to stand up again for parliamentary sovereignty. My noble friends can say what they like about the details of the law, but they have to accept that we had to go to court to have the discussion. Therefore, they must also accept that this House ought to ensure that there is a copper-bottomed statutory protection for what the Prime Minister has promised in all good faith.

We also have to take seriously the issue of what happens if the Government decide that they do not like the solution that they have come to and therefore want to relapse into a WTO arrangement, or whatever it may be. If that happens, we will have to have a procedure by which both Houses of Parliament are able to make the decision. Why do the Government not want to do it? I do not understand this. I would have thought that the Government would have wanted to make sure that everybody accepts that this very difficult decision, based on a 52-48 vote and a good deal of misunderstanding on both sides, needs to have proper parliamentary procedure.

The only people who really oppose it—it is very difficult for me to say this, because I am always against lawyers, but I am much attracted to the proposals which we have just heard—and are really pressing for this not to happen are those newspapers that are determined to press their case, irrespective of what we will think in two years’ time. All I want to say is that I do not want to reverse, or fight, or stop what was in my view an entirely wrong decision. It has been made. But I remind us all that we are a parliamentary democracy and that it is necessary for Parliament to be sure that it has a proper say.

Finally, if we insist on this, we will also strengthen the hand of those who are trying to reach a solution which we can all accept and win the best solution for Britain, and will strengthen the hand of those who get up in this House and argue the case for it. We strengthen the hand of moderate, sensible people against those who appear to think that it does not matter how you do it as long as you do it. In that sense we will be asserting not only parliamentary sovereignty but the right of Parliament to insist that the case is put to Parliament and that Parliament is enabled to answer it.

European Union (Notification of Withdrawal) Bill

Lord Howell of Guildford Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 27th February 2017 Lords Chamber

[Lord Lester of Herne Hill (LD)]

My Lords, when the Minister replies to this debate he has a choice. He can focus on the amendment and explain why it is unnecessary—which he can probably do fairly easily. If he does that, but does no more than that, the Government will be losing a very important opportunity, which is to reply to the remarkable speech of the noble Lord, Lord Hain, and seek to reassure the inhabitants of Ireland, north and south, about the very real concerns that have been expressed by my noble friend Lord Alderdice and the noble Lords, Lord Hain and Lord Trimble, among others.

I am not Irish, although there are times when I wish that I were; but I have lived in Ireland as a privileged guest of the nation for 44 years. I am a member of the Bar of Northern Ireland and of the Republic. I have been frequently to the north, as well as living in the Republic. I say to the Minister—if he does not know it already—that the concerns expressed by the noble Lord, Lord Hain, are not debating points; they are very real. As the noble Lord, Lord Trimble, said, Ireland joined the European Community when we did. I think that the Irish were always more European than we were; they saw John Bull’s island as between them and Europe and saw their destiny in Europe—and Ireland has benefited enormously from its membership of the European Union, as have we.

The troubles mentioned by the noble Lord, Lord Hain, are acute and I am concerned that, whatever happens with the amendment, which I regard as trivial compared with these issues, both in the debate on Second Reading and in the White Paper the Government have shown a disregard for the seriousness of the issues affecting Ireland as a whole. I urge the Minister, if not today then as soon as he possibly can, to make sure that full reassurance is given to the people of Ireland, north and south, about the concerns that have been expressed by the noble Lord, Lord Hain. That is far more important than the fate of this amendment.

[Lord Howell of Guildford (Con)]

My Lords, I declare two interests as the last surviving member of the Whitelaw commission which led to the Sunningdale agreement in the 1970s and as a long-standing fan of the noble Lord, Lord Alderdice, who in his assessment of the situation in the Republic of Ireland and Northern Ireland speaks for nearly all of us. The only questions for us today are what this has to do with the Bill before us and why this amendment is necessary now. If, as the noble Lord, Lord Lester, has just suggested, we are asking for reassurances, I think that we can give them. As my noble friend Lord Trimble has said, the common travel area has been in place since 1923. The trade interests of the Republic of Ireland with the United Kingdom are overwhelming and growing very fast, not only in goods and agriculture but obviously in services as well. It seems to have been largely overlooked that the services element in international trade is rising much faster than the goods element, leading to more and more of the earnings of both the whole of the United Kingdom and the Republic being expressed through digital and data transformation. Indeed, McKinsey has said that it represents more than half the total earnings of international trade. The whole pattern of trade has changed radically in the past 10 to 15 years with digitalisation and it should come into every assessment of the new relationship.

The noble Lord, Lord Alderdice, is right to say that the problem lies with the European Union. Will it be able, first, to accept the common travel area—it must because it was there long before the European Economic Community was formed—and will it accept that concessions are needed, or bilateral arrangements of the kind that can perfectly well be organised now between the Republic and the United Kingdom, of which Northern Ireland is a part? In the low-tariff world we are moving into, indeed a zero-tariff world more generally with 80% of all industrial goods not covered by tariffs—people talk as though tariffs are a wall, but they are not—I think that we can be assured that a practical solution is possible. I imagine that it has already been discussed by Ministers and many officials in Dublin, Belfast and London.

I am absolutely sure that various elements of gluing the situation together can develop, with one that I cannot resist adding being that Dublin is showing an enormous interest in association with the Commonwealth. One of the most lively branches of the Royal Commonwealth Society—I declare an interest as its president—is in Dublin. It is attracting a great deal of interest because the Republic sees more and more that its future lies in its relations with the rest of the British Isles while working within the reforming European system, which is going to be difficult because the EU is going through vast political, economic and social changes. So I see very little problem—I do not say that there is no problem because the noble Lord, Lord Hain, speaks with authority—and believe that it can be resolved through good will on all sides. I see that good will in place and there is absolutely no necessity for bringing this issue into the Bill before us.

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Of course it is not ideal to stay in the single market without the benefits of being in the European Union and on the central, inner-core decision-making bodies, but it is the best solution, given that we are due to leave the European Union. Turning our backs on the single market could be catastrophic for prosperity and jobs, and especially for the most vulnerable citizens in our country. That is why I will, with the permission of the House, put this amendment to a vote later on.

[Lord Howell of Guildford]

At the outset of this debate, the whole focus is on the concept that we have benefited and will continue to benefit from being members of the single market, and that by being outside and only having access to it—like every other country that exports into the European region—we would be vastly disadvantaged. I am afraid I am going to say something that will probably be unpopular on both sides and which asks your Lordships to look more closely at what is actually happening in the patterns of both European and world trade currently. I am not talking about 1990, or the world of globalisation in the last century, but about the fantastic, revolutionary disruption and transformation of the pattern of trade that has gone on for the last five or 10 years. Unless we understand that, and the impact it is having on trade throughout the region and on the relevance and nature of the single market, which has changed beyond recognition from the single market of a decade or so ago, we will not reach very sensible conclusions.

Lord Keynes was quoted earlier. He said many things, but one of the interesting things he said was that his real quarrel was not with those who disputed his economic theories or arguments but with those who persistently failed to see what was actually going on. That is the theme I want to develop. We can expend enormous indignation on asserting that in the single market everything will be okay but that out of it there will be disaster. Indeed, the noble Lord, Lord Hain, has suggested that with great eloquence and clearly believes it to be the position. But we have to grasp what is going on and understand the nature of the flow of trade to see just what the disadvantages would be if, instead of having membership of the single market, with all the standards, regulations, access, tariff-free areas, co-ordination of regulations and so on, we were outside it, although still obviously able to trade into it like any other country.

I start from a rather remarkable statement made by the chief economist to the Bank of England, I think last week, that from his point of view whether we were inside or outside the single market would have no “material” effect on the UK’s growth over the next three years—he put a time on it. That is rather a remarkable statement from a very high authority, not someone known to be biased one way or the other but someone speaking totally objectively. I had to ask myself how he could come to that conclusion. Have we not been told that outside the single market it will all be disaster and we must somehow stay in as full members? This raises all the other issues we have so vigorously debated, including the problems in the island of Ireland and many other issues. If one begins to look at the detail, the answer is very interesting.

I suspect what he has seen, and what your Lordships might possibly turn their eyes to, is that the whole nature of international trade is shifting at record speed in two directions. First, there is the vast growth in services, digital information, data transmission and information exchange, so much so that McKinsey is telling us that more than half the wealth generated worldwide comes from the transmission of data and information and not from goods trade at all. The old world of trade being dominated by containers or great ships sailing out of Felixstowe, or whatever it was, is rapidly disappearing. Services are the huge growth area in every aspect of international trade, including into the European Union. The noble Lord, Lord Hain, is quite right that sales of services into the European Union have been large—they are about a third of our total export of services throughout the world—but frankly they are not doing very well. In so far as they have got in to Europe’s single market, services have gone through a bit of a struggle, not through tariffs—because you cannot put tariffs on those services—but through all sorts of local and national regulations and control. They have been pretty flat over recent years because there never was a glorious single market in services. We struggled for 40 years to improve one and got nowhere at all, and the chances are that countries outside the European Union have done rather better with our services and imports into the European Union than we have.

It may be that in future, outside the single market—this may be in Mr Haldane’s mind—we can do rather better with services in Europe. If we cannot do better in Europe—it is very difficult because of the all these local restrictions on how things are set up—we should look to the areas where service developments are growing at a very fast pace. This is certainly right across the part of the world that deals in the English language and has common legal, political, social, ethical and cultural practices, which tends to be a Commonwealth network in English-speaking nations, including the United States of America, which is our biggest export market of all. We have no single market and no free trade agreement with America, but it is by far our largest single market of any country.

That is the first point: services are growing at a phenomenal exponential rate and now dominate world trade and are beginning to dominate our own earnings overseas. Secondly, services know no boundary or tariff barrier, so the services we sell into Europe—this, again, may be in Mr Haldane’s mind—will not be very much affected by whether we are in the single market or not. It is a tough area anyway. We export £89 billion, gross, of services of every kind, including financial services, into the European market and that is about a third of the much bigger degree of service exports all around the rest of the world. It is not a question of tariff barriers. The tariff barriers are anyway extremely low, except for one or two things such as car components, which are at 10%. We would have to think about that, but generally we are moving into a zero-tariff world. It is quite different from 1990, when developing southern and eastern countries were taught that they would have to have high tariffs and heavy investment protection.

[Lord Davies of Stamford]

My Lords—

[Lord Howell of Guildford]

I shall just finish this sentence. The culture before 1990 was of high tariffs and protection against foreign investment, which was deemed colonial. The culture of the last 30 years has been the opposite, with low tariffs all around the world and direct investment agreements to encourage more investment. I give way.

[Lord Davies of Stamford]

I am grateful to the noble Lord for giving way. I am listening to him with great attention, as I always do. He is making the case for certain aspects of the digital services market; he does not say much about whether we are part of the single market or not. Does he not agree that for manufacturing, which is about 10% of our GDP, the imposition of tariffs would be extremely serious? Does he also not agree that for financial services—which, as I have already mentioned in a different context, accounts for about 10% of our GDP as well—the loss of the passports which enable us to trade in the single market would be equally catastrophic?

[Lord Howell of Guildford]

Although manufacturing is very important, it is a smaller and diminishing proportion of our export earnings. As I think the government White Paper points out, at least 33% of the value embedded in any manufactural product—I think the figure is 37%—comes from services. When you think about manufacturing, you have to think about something that is really not quite a manufacture or a service; it is a product of a service and high technology. A good example for the noble Lord is the Japanese company Uniqlo, which produces garments—not from Japanese manufacturing but from Japanese technology and services. All around the world, this pattern is developing. What I am trying to bring before your Lordships is the realisation—

[Lord Berkeley (Lab)]

Is the noble Lord aware that chapter 9 of the White Paper shows that the fastest growth in goods and services exported from this country is in Liechtenstein, at 40%? In the first 20 of the only 21 countries shown in the White Paper, the United States does not even get a mention.

[Lord Howell of Guildford]

I am not sure I follow the power or logic of that particular point. I am afraid that only three of the 20 fastest-growing countries in the last 10 years, in terms of exports, are members of the European Union—and we are not one of them.

Without delaying your Lordships further, I point out—in the words of the European Commission and their analysts—that “90% of world demand” over the next ten years,

“will be generated outside the EU”.

I suspect at least half or two-thirds of that will be generated from the fantastic, disruptive explosion in the transfer of know-how, information and digital technology of every conceivable kind. This is the world of the very near future: we may have arrived there already. What it means is that there is this apparent cliff edge, as it has been called, disaster, or dividing point between being inside today’s single market and being outside it, but we are dealing with many things that do not have a tariff on them—our services know no national boundaries and can be transmitted regardless of distance whether to a nearby European region or to the other side of the world—and it is becoming a completely new pattern in which we have to operate. To operate effectively, we must think in terms of a vast improvement in skills and a massive acceleration in innovation, and find our way into the gigantic, new growth markets of the future, which I am afraid are going to be largely outside the European Union.

Europe remains very important to us; the bilateral arrangements we have with European countries remain important to us. We are not all sure at the moment—this outlines the absurdity of trying to tie down the Government—whom we will be negotiating with, how much power Mr Barnier will have or what the 27 capital countries will say. I noticed that the Visegrad group—four at the moment—are coming together and have said they want a separate treaty; they do not agree with the approach of the European Commission in Brussels and they are thinking about separate arrangements because they are not satisfied with the general approach. We all heard the day before yesterday one of Mrs Merkel’s chief spokesmen saying that they disliked the whole aggressive approach of Jean-Claude Juncker and the Brussels Commission. We have no idea what is being brewed up as a position on the other side of the Channel to approach us, or whom we will be dealing with. What we do know is that the trade trends I have described are proceeding at a great pace; they are driven by technology that is growing at an exponential pace, with the development of Moore’s law, Metcalfe’s law and all the other aspects we know about; this is what we should take account of.

All I plead is that before your Lordships express too much indignation about whether we are inside the single market or outside it, we might reflect that, as we proceed in this entirely new pattern of international trade, we can do pretty well in dealing with all the aspects—they will be complex—of all the industries and services that will ensure our survival and prosperity in an extremely competitive world.

[Lord Monks (Lab)]

My Lords, I would like to address the question of the single market, which the noble Lord, Lord Howell, has just been talking about and rather discounted its importance, both currently and in the future. I do not whether he and other noble Lords have noticed but there is rather a tide of protectionism running through the world at present, not least in the United States of America—“America first” has been said a lot of times. Just remember that that is the context in which we are operating. I am not going to bandy too many statistics, but if 42% of our exports are going to the EU, compared with 15% to the United States of America, that is still a lot on both accounts, but you do not throw 42% into some lottery for the future. You hang on to what you have got and you seek to improve elsewhere. I agree with the noble Lord about the need to improve our game and raise our skill level, our innovation level and business investment—which, by the way, is going down because of the uncertainty which surrounds the future of the British economy at the present time, and that is a major worry. We are not innovating to the extent that we should be, and certainly not to the extent that certain other northern European countries are. Chucking that away rather lightly in the hope that we will catch a surfer wave of innovation and become the new silicon whatever-it-is island seems to be a rather fanciful notion.

I am not familiar with what Mr Haldane said—I read it but I did not get the same impression as the noble Lord, Lord Howell—but the Treasury’s most recent forecast is that if we collapse out of the single market, that will cost us 7.5% of GDP after 15 years. I am not an expert and I do not know who is right and who is wrong, but we should bear those facts in mind.

I am not going to speak for very long as my noble friend Lord Hain covered this topic very well and the earlier debate about the EEA, on the amendment moved by my noble friend Lord Lea, covered it too. However, I remind Members of the Conservative Party in particular why they should consider the single market to be important. After all, Mrs Thatcher was, as much as anyone, the originator of the single market. She, with Jacques Delors adding on a social bit, basically came up with the idea of the big single market. I remember, as will my noble friend Lord Lea, Jacques Delors explaining at a TUC conference the conversation that the two of them had had. She said, “I want a big market”, and he said, “You can have one. I’ll do my best”. He added in some helpful social things that the trade unions liked; to be honest, they were about the only reason why we liked the single market. However, we may not like a free-trade agreement that does not have any social protections. A NAFTA-type agreement would certainly not suit us because that becomes a race to the bottom on labour standards, welfare and social considerations.

It was not just Mrs Thatcher, either. My noble friend Lord Hain reminded the other side about the number of people in the referendum campaign who spoke in favour of staying in the single market, not least the current Foreign Secretary, Boris Johnson, who said he would vote for the single market. He differentiated between the single market and EU membership, and that is what we are seeking to do today with this amendment.

The single market is important for inward investment, which is the point that was so important in the 1980s. It is important for companies’ supply chains; we have heard about the milk in Ireland but there are many other examples where things are going backwards and forwards—the car industry, Airbus and so on. Let no one dismiss those as old technology that the digital revolution is going to make redundant; they are not. They are fundamental to who we are and what we are, the kind of country we are and what it is going to be in future.

The tariffs on some goods will be substantial if we collapse into the WTO system. As for the passporting issues in the City of London, there are already signs of banks establishing extra offices and extra staffing within the EU—at the moment, particularly in Paris. Even HSBC, our biggest bank, is doing so, so we should not be complacent about this issue.

Membership of the single market would of course ease the problems in Ireland, as debated earlier, and would perhaps remove at least one reason for another referendum in Scotland. What is at stake here is jobs, living standards and rights. We should bear that in mind; if we go down the Government’s route, we will be playing poker with people’s livelihoods on a big scale. Are we likely to get that comprehensive free- trade agreement within two years? I have not yet met anyone who knows anything about trade negotiations who thinks that is the case. Before we ditch the single market, we should be very careful. I was disappointed when I heard what the Prime Minister said at Lancaster House, and indeed in the government White Paper: that the Government are moving in that direction. I hope they will keep the scope to change direction.

We should also bear in mind the points that my noble friend Lord Liddle made earlier: could this be an issue on which there could be an interim provisional transitional measure while we negotiate a trade agreement? Is there something that we could put in place that we could continue with? In fact we do not have to put anything in place because it is in place already, so why do we have to give it up? It is in place and we should try to hang on to that, pending the negotiations that the Government seem so keen on.

That is my plea today: we should have a look at the amendment and at keeping our membership of the single market. I would like to see us keep it on a permanent basis but, if that is not possible, keeping it on a transitional provisional basis might just be possible. It might in fact be the only game in town when we get to the end of those two years.

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[Baroness Altmann (Con)]

My Lords, I have listened carefully to all the contributions on the amendments so far and I feel that I must intervene. I have been deeply troubled in trying to understand why the Government are so set on the idea that no deal is better than a bad deal and that we can contemplate leaving the single market and the customs union with some kind of equanimity. That was brought home to me by the comment of my noble friend Lord Howell about the failure to see what is going on. It brought to mind his eloquent description of how he sees the future of global trade and global business, which is not in manufacturing but in services. But that vision is not shared on other Benches across the House, and nor indeed by me. Indeed, I would argue that it is not shared by the majority of the people in this country. His remarks imply the destruction of our manufacturing sector and of millions of jobs across the country, and I do not believe that that is what the British people voted for.

[Lord Howell of Guildford]

The implication is not that at all; it is that the patterns and processes of production are now being internationalised on a scale that we have never seen before, so that even different stages in the processes of production are spread through fantastic new value chains right across many nations. Of course production will go on—but it is now very much an international rather than a national affair. That is happening now.