The Government's Plan for Brexit

Lord Lilley Excerpts

Wednesday 7th December 2016 Commons Chamber

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

I want to make two main points. The first is that the Government’s position is much clearer than many Opposition Members are willing to believe and that it narrows the range of outcomes very considerably. The second is that what matters as much as, if not more than, the Government’s position is the position of our partners in Europe, yet no one on the Opposition Benches has mentioned that—there seems to be a sort of arrogance in suggesting that we can say, “We want this and we’ll get it.” Or perhaps it is subservience in saying, “We want this and we’ll, give any concession in order to obtain it.”

The Government’s position has ruled out three options. First, we will not be part of the internal market of the European Union. I use the term “internal market” because that is what it is called in European law. There is no such thing in European law as the single market. To be a member of the internal market, we would have to be a member state subject to all the laws of the European Union, and the Prime Minister and the Secretary of State today have said that we will not be subject to the European Court of Justice.

Secondly, we will not be members of the European economic area, because all members of the European economic area have to accept free movement, and the Government have ruled that out. On top of that, we cannot negotiate service deals because we do not have control over the laws governing all our service industries. This was described during the referendum campaign by the current Chancellor of the Exchequer as the worst of all possible worlds, and many others on that side of the argument supported him. Now, however, they suddenly want to be part of that worst of all possible worlds.

Thirdly, we cannot be subject to the common external tariff of the EU because we are champions of free trade, according to the Prime Minister. We set up a Department for International Trade that has to be able to negotiate tariffs. We also want to cut the tariffs on products that we do not produce—including food and clothing products on which the EU imposes very high tariffs—because those tariffs are damaging to the just-about-managing people in this country. So those three options are ruled out, which leaves two realistic options.

[Mr Iain Duncan Smith]

May I give my right hon. Friend one good example of this? It relates to the import of oranges. Very recently, the customs union has slapped on a tariff increase from 3% to 16%, solely to protect some producers in Spain. That raises the cost of buying the products here in the United Kingdom, so food is now more expensive as a direct result of interventions in the customs union that Opposition Members want to be part of.

[Mr Lilley]

My right hon. Friend makes a good point, and I would add that we do not easily manufacture oranges at scale in this country.

There are two realistic options. The first is that we continue with roughly the status quo: tariff-free trade and no new barriers to service trade. The EU already has free trade agreements that do not require free movement with 50 countries. The second is that we trade with them on WTO terms and they might try to make trade in our service and financial services industries a bit more difficult. The important thing is that both options are actually very simple to negotiate. Going from zero tariffs to zero tariffs is much easier than negotiating a trade agreement between Canada and the European Union, where each side has 5,000 or 10,000 different tariff lines and must trade them off against each other. We also have exactly the same rules on products and so on as our partners in Europe. The status quo would therefore be simple to negotiate. The WTO option does not even require negotiation; it is what happens if the negotiations have no successful outcome. Both are simple and could be done quickly.

I also believe that both options are acceptable to the UK. In the view of most people, retaining the status quo would obviously be the superior option if we could get it immediately, but if we go to trading on WTO terms, the average tariff would be about 4%—much less than that on average on manufactured products, but the 4% includes agricultural products. We have just experienced a 15% devaluation against the euro, so our exporters will, on balance, be much better off even with those tariffs, whereas exporters to us will have to face a 15% hurdle plus that 4% average tariff, so they will be much worse off.

It is important that we emphasise to our negotiating partners that although we might prefer to continue with the status quo, if they do not want it, we are willing to walk away and trade on WTO terms. Quite a few Opposition Members have been trade unionists and are used to negotiating, but not many people in this House are. We cannot successfully negotiate unless we are prepared to walk away with no deal. Ultimately, however, it will be our partners in Europe—the EU 27—that will choose between whether we continue with roughly the status quo or whether we move to WTO terms and some obstacles.

[George Kerevan]

Will the right hon. Gentleman give way?

[Mr Lilley]

I am sorry, but I will not.

Our EU partners will choose. If their primary concern is the economic wellbeing of their people, they will choose to continue with free trade. If their overriding primary concern is political and if they want to punish us and be seen to punish us, they will go with WTO terms. In practice, they will punish themselves far more, and we should make that clear. We cannot negotiate our way into making them choose one option over the other. We can perhaps try to persuade them, their industries and their electorates that they will be much better off if they continue to trade with us on roughly the current basis than if they move to WTO terms, under which they will be the principal losers. We are their single biggest market. A fifth of all German cars come here, much French wine comes here, and so on. Let us go to them and say, “It is a simple choice, make that choice”—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

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[Heidi Alexander (Lewisham East) (Lab)]

It is a genuine pleasure to follow the right hon. and learned Member for Beaconsfield (Mr Grieve), who has made a characteristically thoughtful and informed speech.

This is the first occasion on which I have made a speech on the subject of the EU since the referendum. I have stayed away from previous debates in this Chamber because I felt conflicted—conflicted by my personal views and political instincts, and conflicted by my constituency’s large vote to remain and my country’s narrow vote to leave. I was a fervent campaigner for remain, and I believe that the British public were failed in the referendum by an exaggerated and embarrassing debate. I deeply regret my own failure as the then shadow Health Secretary to expose the lie that Brexit would automatically mean more cash for the NHS. But we are where we are: 16 million people voted to remain, 17 million voted to leave, and 13 million people who could have voted chose not to do so.

I stand by my long-held view that leaving the EU will be economically harmful, socially divisive and fundamentally detrimental to our country’s relationships with its closest neighbours. If I could see a positive way through this that would respect the referendum result and leave our country economically and socially stronger, I would grasp it, but at the moment I cannot. On that basis, I cannot see how I could vote to trigger article 50 without a credible plan setting out the Government’s approach to the negotiations, their high-level aspirations and the process that will be in place thereafter. The strength of the plan is critical, and I will not sign up to an arbitrary timetable set by the Government to placate their own Back Benchers.

We need basic answers to basic questions. Is the Government’s ultimate priority continued tariff-free access to the single market or an end to freedom of movement? They might wish to keep up the pretence that they can have both, but the mood music from Europe suggests otherwise. Tariff-free trade with the EU has to be the priority, and if that means we have to accept immigration from within the EU, so be it.

[Mr Lilley]

Will the hon. Lady give way?

[Heidi Alexander]

I will not give way. I have come here to set out my position, and that is what I will do. If retaining tariff-free trade with the EU means that we have to pay significant sums to access the single market, so be it. Would this be a better arrangement than we have at present? Good question. So yes, I support a second referendum on the terms of leaving the EU.

The reason that we are trying to conjure up a positive economic future for our country outside the EU is to deal with the issue of immigration. I accept that a good number of the people who voted in June to leave the EU did so because they wanted to control or reduce immigration. I understand that when decent jobs and decent homes are scarce and public services are under pressure, some people look around for someone to blame, but although it might be unpopular, I say that we are going to need immigration for some time to come. We are not having enough babies, and we have not been for decades. I am a 41-year-old woman without children. Babies grow up to be taxpayers who fund public services. Who will contributing to my pension and my care in 30 years’ time? The answer is immigrants and their children. I have no fixation with freedom of movement, and if other EU states were up for modifying it, I would be up for the conversation, but it makes no sense to take the economic hit of leaving the single market to curb immigration when we have a basic need for it.

I would also say that if anyone thinks we should extend the system we apply to immigrants from outside the EU to those from within it, we should be honest and admit that we would be expanding a broken system that causes sclerosis in the economy because of the turgid way in which immigration applications are processed and that exerts no control over people who overstay their visas. However, my fundamental concern about prioritising immigration over all else is that we run the risk of whipping up even more of the intolerance, division and—let us be honest—hatred that we saw in the referendum campaign.

Next Steps in Leaving the European Union

Lord Lilley Excerpts

Monday 10th October 2016 Commons Chamber

[Mr Davis]

I will answer that shout from the Front Bench. The answer is as soon as I can get that negotiation concluded with the European Union—full stop. Individuals should not worry people unnecessarily or get them concerned. Bear in mind, five out of six migrants who are here either already have indefinite leave to remain or will have it by the time we depart the Union. It is an important question that I take seriously, and I am determined that we get an outcome that is successful for everyone.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

Did my right hon. Friend note the comments by President Hollande that the United Kingdom should be made to pay a price for leaving the EU, presumably by having tariffs imposed on our trade with it? Did he respond to the President that clearly he feels that, in the absence of such punishment, leaving the EU would leave the UK manifestly better off? Such punishment would fall primarily on French exporters, as they export far more to us, whereas our exporters are benefiting from a 14% improvement in their competitiveness—three times the likely tariffs, on average, that may be imposed on them.

[Mr Davis]

My right hon. Friend—and erstwhile Trade Secretary, if I remember correctly—is exactly right. The damage done by a supposed punishment strategy would be primarily to the industries and farmers on the continent who export to this country. I am afraid that Mr Hollande, Mrs Merkel and others will experience pressure from their own constituents that says, “This is not a good strategy to pursue.” In this country, we believe in free trade because it is beneficial to both sides. I do not see the logic in exercising a punishment strategy against one of their strongest and most loyal allies.

Exiting the European Union

Lord Lilley Excerpts

Monday 5th September 2016 Commons Chamber

[Mr Davis]

Sadly, I did not make that commitment. The Chancellor made the commitment and—[Interruption.] With great respect, it is not for me to make commitments on behalf of the Treasury. We will place in the Library a copy of the letter in which the Chancellor laid out the underpinning of the CAP, structural and science funds and so on. He made it clear that that was effectively his decision until the autumn statement. I will report to him what the hon. Lady said so that he is at least aware of her concerns before that statement.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

A legitimate concern of many remain voters, and one which many of us on the leave side can well understand, is that an unduly long period of uncertainty while negotiations are ongoing would be damaging to the British economy. Will my right hon. Friend therefore confirm that it will be his priority to complete the process as soon as possible, that the two-year limit set down in article 50 is an arbitrary maximum, not a necessary minimum, and that most countries that have obtained independence or left a political union—India, Canada and Australia or the Czech Republic and Slovakia—have done so in far less than two years?

[Mr Davis]

I defer to my right hon. Friend’s knowledge of the history of those other countries. The Prime Minister has said that we will not trigger article 50 until the new year. The reason is not unnecessary delay or the wasting of time; it is to ensure that we get all the decisions absolutely right. Mr right hon. Friend has heard over the past few minutes about some of the complexities involved in the acquis communautaire alone. We will trigger article 50 as soon as is reasonably possible. I would rather be a month late and get it right than be a month early and get it wrong. We will do it as expeditiously as possible. The Prime Minister has said clearly that she thinks the British people expect us to get on with it.

EU Referendum Rules

Lord Lilley Excerpts

Monday 5th September 2016 Westminster Hall

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

I apologise to you, Mr Gray, and to the Chamber for not being here at the beginning of the debate. I was in the main Chamber questioning the Secretary of State for Exiting the European Union about his statement on this very subject.

I doubt if any Member today has taken or actually will take the words of this petition literally. It would condemn us to go on having referendums so long as neither side gets 60% of the vote or, even if one side does, the turnout is less than 75%. It is a recipe not for a second referendum but for a neverendum. It is essentially an emotional call by an unprecedented number of our fellow citizens to set aside the result of the referendum. They back that up with a number of arguments.

First, they argue—we have heard it argued today—that the leave side won by lying. Accusations of lying are, of course, a feature of all election campaigns, but free elections provide us with an opportunity to rebut contentious points made by the other side. In particular, the remain campaign, with the frequent help of the BBC, repeatedly rubbished the slogan on the leave battle bus that highlighted our gross EU contribution of £350 million a week and implied we could spend it on the NHS. I personally never used that figure. I always referred to Britain’s net contribution of nearly £10 billion—some £200 million a week. I did not meet a single voter who changed their mind and decided not to vote leave on finding that the net contribution was only £200 million, rather than £350 million.

[Mr Umunna]

May I assure the right hon. Gentleman, to whom I am grateful for giving way, that an untold number of Labour voters in this country voted for us to leave the European Union on the basis that they believed £350 million extra per week would go into the NHS? There is no getting away from the commitment that was made and no wriggling around—“It was an aspiration,” or, “It was a mistake.” That was the commitment that many, many Labour voters believed would be delivered on if we left the European Union.

[Mr Lilley]

In that case, let me say two things. First, the hon. Gentleman and the remain side were singularly ineffective in rubbishing that claim, despite the fact that I heard it being rubbished many times. Secondly, he says that working-class voters—Labour voters—would have voted to stay if they had known it was only £200 million a week, but were prepared to vote to leave for £350 million. He has put a price on their vote of the difference between those two sums, which I do not find true.

[Peter Grant]

Will the right hon. Gentleman give way?

[Mr Lilley]

I will continue, if I may.

If it was a lie for the leave side to refer to our gross contribution without netting off the money we get back, were not remain campaigners just as dishonest to focus on money we get back without mentioning the contribution we make? Remainers frequently claimed, with no rebuttal from the BBC, that the EU gives millions of pounds to universities, researchers, farmers, regions and so on, with no mention that British taxpayers contribute £2 or £3 for every £1 returned to us. They cannot have it both ways and say it is wrong for one side to mention the gross figure, but not for the other. I doubt if the outcome would have been any different if the leave battle bus had painted £200 million per week on its side, rather than £350 million. I met countless voters who said, “My heart is for leave, but my pocket says stay.” They were convinced by “Project Fear” that they would be worse off if we left the EU.

The Treasury analysis of the immediate economic impact of leaving the EU said that

“a vote to leave would represent an immediate and profound shock to our economy. That shock would push our economy into a recession and lead to an increase in unemployment of around 500,000, GDP would be 3.6% smaller, average real wages would be lower, inflation higher, sterling weaker, house prices would be hit and public borrowing would rise compared with a vote to remain.”

On top of that, we were promised a punishment Budget that would take away benefits from the sick, the disabled and the elderly. None of those things, I am happy to say, have occurred. There has been some hope from one or two Opposition Members that they will occur in due course.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Does not the suggestion of a punishment Budget prove that the former Chancellor was a bluffer? He bluffed; he did not have a punishment Budget. By extension, his threat to Scotland of not sharing a currency was further evidence of yet another bluff.

[Mr James Gray (in the Chair)]

On the subject of a second referendum, Mr Peter Lilley.

[Mr Lilley]

The Scottish nationalists want to refer to the previous referendum, which they lost, but I will not be tempted down that path.

“Project Fear” could have become a self-fulfilling prophecy: I was rather afraid it might. In fact, in the month or two since the referendum, job listings are up 8% on last year; consumer spending is up 1.4%; manufacturing orders are at the highest they have been for 10 months; house builders have reported strong demand; and Moody’s is confident the UK will avoid a recession. That is clearly a disappointment to one or two Opposition Members, who were hoping for bad news to justify their “Project Fear”.

In one respect, they were right: sterling is, indeed, lower. However, the IMF—whose boss was famously once a member of the French national synchronised swimming team—joined in a synchronised campaign of gloom, saying that a leave vote would be bad to very, very bad. The IMF now welcomes the fact that the exchange rate move has removed some, but not all, of sterling’s previous overvaluation. Had the whole establishment of this country and of international unelected bureaucracies forecast what has occurred rather than what they predicted would occur, I cannot help feeling that the result would have been even more emphatically to leave than was the case.

The second argument for a second referendum is that the leave campaign had no plan for Brexit. That is a bit like saying that countries such as India, Canada, Australia and even the American colonies had no plan for independence. Of course they did, and we are the same. It is to take back control of our laws, our money and our borders. That is what countries do when they become independent. That is the purpose and that is the plan. By definition, that means we will not be part of the EU internal market. The precise trading arrangements we may have with the EU will depend on what it wants to arrange in its interests as well as ours.

There are only two realistic outcomes, both of which are perfectly acceptable to the UK. We could trade with the EU on WTO terms and the same basis as the EU’s three biggest trading partners—the US, China and Russia trade very successfully with the EU—which would mean facing tariffs averaging 4% on our exports, but that would be more than offset by the 12% improvement in competitiveness as a result of the change in sterling; or we could continue to trade on the current tariff-free basis. Neither option should require complex negotiations. To go from zero tariffs to zero tariffs is quite simple. To go from zero tariffs to WTO tariffs is quite simple. We should not be in for a prolonged and unnecessary delay in reaching agreement on one of those two options.

The final argument I want to deal with is that the referendum was only advisory. I debated daily with remainers—sometimes three times a day—but not once did a remain opponent say to the audience, “Oh by the way, this referendum is just advisory. If you give us the wrong advice we will ignore the result and remain in the EU anyway or perhaps call another referendum or vote against application of article 50 and the referendum result until we get the right result.” Did any Opposition Member say that to an audience and can they give me chapter and verse of them saying that they would treat the result as advisory and ignore it if they did not like it? Not one of them did. Now they are pretending that the whole thing was advisory. I forget which hon. Member said that was made clear during the debate.

On the contrary, the then Foreign Secretary, who introduced the Referendum Bill, said that it was giving the decision to the British people. When launching the campaign, the Prime Minister said:

“This is a straight democratic decision—staying in or leaving—and no Government can ignore that. Having a second renegotiation followed by a second referendum is not on the ballot paper. For a Prime Minister to ignore the express will of the British people to leave the EU would be not just wrong, but undemocratic.”—[Official Report, 22 February 2016; Vol. 606, c. 24.]

It was spelled out at the beginning of the referendum debate and again and again during it that this was a decisive choice for the British people. If we ignore that choice now and treat the British people with contempt, we will undermine their respect for democracy and prove how little faith we have in it.

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[Caroline Lucas (Brighton, Pavilion) (Green)]

I am happy to follow the hon. Member for Streatham (Mr Umunna) because he made some very powerful points.

The petition that we are discussing has more than 4 million signatures. To me at least, it is an understandable expression of pain and anger in response to a bitterly fought EU referendum campaign that has left this country, as the hon. Gentleman said, deeply divided. Pain and anger is certainly felt in my constituency of Brighton, Pavilion. It had one of the highest rates of people voting to remain—about 69%—and one of the highest numbers of people signing this petition: about 19,500 at the last count. But however much many of us might wish the outcome of the referendum had been different—I certainly do—and however much we might argue that the level of lies and misinformation during the campaign undermines the legitimacy of the outcome, I agree with those who have said clearly that trying to impose a retrospective threshold and in effect rerun the referendum is bad politics and worse democracy. Indeed, what better way would there be to reinforce the perception that the so-called metropolitan elites care nothing for those in more distant and perhaps disconnected communities than simply ignoring everything that they have said?

Instead, the anger and alienation felt by many who voted leave needs urgently to be addressed. For many, it was a howl of rage against exclusion and powerlessness. Their voices have to be heard, not just in the referendum but all year round. A crucial way to ensure that is to crack open the current political system, which encourages the main parties to listen almost exclusively to swing voters in marginal seats at general elections and ignore everybody else. If we are to set about healing the deep divisions in society that the referendum has laid bare, one task must be urgently to build a more representative, inclusive democracy, and that can be brought about only through electoral reform. If the Brexit campaigners were serious about giving people back control, a good place to start would be democratic control. A political system that delivers government on the basis of just 24% of the eligible vote clearly does not give us that.

Brexit means Brexit, so we are told. I believe that we need a second referendum on the terms of any Brexit deal because we have absolutely no idea what is on the other side of the door marked Brexit. We might have chosen to open that door, but even now, two months after the vote, we have no idea—not even the dimmest shape—of what on earth is on the other side.

The Government’s paper on alternatives to EU membership gave four options. The BBC lists five. The Centre for European Reform sets out seven. Which of those was voted for by those voting leave? None of them. How many will we end up with? Well, one of them. What parliamentary or, indeed, public scrutiny have we had of an actual plan to leave the EU? Absolutely none because there was not one and there is not one. That is why I strongly support not just maximum parliamentary scrutiny but calls for a further referendum on the terms of Brexit once they are clear, and on our future relationship with the EU, so that we can all assess what that looks like in the real world. During the campaign, when pressed on the alternative to EU membership, leave campaigners would squeal that they could not possibly be expected to answer those questions because they were not a Government in waiting, but rather they wanted the British people to be in control. What would fulfil that promise more thoroughly than ensuring that the public get the opportunity to cast a positive vote for what a potential Brexit looks like, in addition to their vote against remaining part of the EU?

Before a referendum on the terms of Brexit takes place, lessons must be learned and the Government need to take a long hard look at the Electoral Reform Society report called “Doing referendums differently”. Let me give just a few quotes from it. It says:

“There were glaring democratic deficiencies in the run-up to the vote, with previously unreleased polling showing that far too many people felt they were ill-informed about the issues…the top-down, personality-based nature of the debate failed to address major policies and subjects, leaving the public in the dark…misleading claims could be made with impunity.”

The Electoral Reform Society calls for

“a root and branch review of referendums, learning the lessons of the EU campaign to make sure the mistakes that were made in terms of regulation, tone and conduct are never repeated.”

I echo that call, because it is clear that there was so much misinformation; yes, it was on all sides, but I believe that on the leave side it was particularly egregious. We were told that we could end freedom of movement and keep full access to the single market. We were told that we could continue to benefit from being part of the single market, yet somehow take back control, make all our rules here in the UK and cease having to follow EU rules. Then there was the famous £350 million a week for the NHS; the truth is that we will not have any extra money, let alone an amount anywhere near the lie of all lies that disgraced the side of a perfectly innocent bus for months on end.

[Sir David Amess in the Chair]

[Mr Lilley]

Is the hon. Lady aware that the EU has free trade agreements with some 50 countries, only three of which have in return granted free movement of labour and made a contribution to the EU because their Governments were planning to enter the EU? The other 47 have free trade agreements with no free movement and no contribution. Why should we be different?

[Caroline Lucas]

Is the right hon. Gentleman aware that there is a wealth of difference between free trade and being part of the single market? He has talked at length about tariff barriers. The big issue about membership of the WTO is non-tariff barriers. He really should keep up with where the debate is at. That is where it is at right now. All this focus on tariffs was a very clever red herring for people who do not know about trade agreements, but I have actually studied them, I have worked on them for years, and I can tell him that there is a wealth of difference between trade agreements and membership of the single market. That was yet another lie perpetrated during the referendum campaign.

We need people to be given a say and to have real control over the terms of any Brexit deal. We need maximum public engagement and parliamentary scrutiny. That means that the Government must set out their plan for what they want Brexit to look like. They need to present that to the people in an early general election to secure a mandate that currently they do not have, then they need to ensure full and proper parliamentary debate and scrutiny, and only then allow MPs to vote on whether to invoke article 50 and set in train the formal process of leaving, so that we know what direction that train is going in. In addition, we should argue for wider public engagement, giving opportunities for meaningful input throughout the process, as well as maximising input from civil society organisations, NGOs, charities, businesses, local authorities and other stakeholders. To claim that we want to take back control of the UK’s future, but refuse measures to maximise parliamentary and public scrutiny, is unforgiveable, contradictory and harmful.

The Greens argued during the referendum campaign that outside the EU there is a very real danger that the UK will seek to compete with other countries by weakening social and environmental protections and by becoming, in effect, a tax haven. That is still the case. In the debate running up to a second referendum on the terms of a Brexit, some of the key issues that we will want to keep in mind, in terms of how we might vote in that second referendum, are, for example, whether we can maintain freedom of movement and full rights of EU citizens in the UK, whether we can continue to have full access to single market and, crucially, whether we can have the important environmental protections that we currently enjoy thanks to our EU membership—whether on air, water, or wildlife. It is not just keeping what we have; we should improve that and absolutely lock it down in law. One big concern that people have right now is about what will happen to the habitats directive and the birds directive; those are the gold standards for environmental protection and we need them to be preserved in any new environmental settlement. Perhaps that needs to be in a new environmental Act, but whatever happens, there must not be a race to the bottom on standards. We need to retain EU-derived workers’ rights, social and consumer protections and human rights, again, as a bare minimum that we should seek to build on. We should be putting young people first.

Finally, we should ask the Government right now to give a guarantee to EU nationals who have made this country their home in good faith; the Government should say right now that they are welcome to stay and that they have an absolute right to stay. Anything less is simply using people’s lives cynically as chips in a bargaining negotiation, and that is neither right nor moral.