European Union (Notification of Withdrawal) Bill

Debate between Lord Howell of Guildford and Lord Monks

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

[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.