European Union (Notification of Withdrawal) Bill

Debate between Lord Mandelson and Lord Dykes

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

[Lord Mandelson (Lab)]

My Lords, I am very pleased to follow the noble Baroness because, with her sharpness and clarity, she has brought this debate back to earth with a bump. Yes, whether we stay in the single market goes to the heart of the Brexit debate but, much more importantly, it goes to the heart of our future prosperity as a country—the lives, livelihoods, jobs and standards of living of all our fellow citizens—and therefore we should dwell on it.

In the coming negotiations, Britain should have three primary objectives: first, to secure, as far as possible, the continuity of our existing trade in the European Union; secondly, to be in the best position to attract future supply chain investment in Britain by international companies; and thirdly, to optimise our ability to make future trade agreements with other countries. All these objectives would best be served by our continuing in the single market, through the European Economic Area, as Norway did when, in the 1990s, its public rejected membership of the European Union but, seeking the economic opportunities available to it in Europe, decided instead to join the EEA. I believe this very strongly. I have to say this not only in opposition to the Government’s chosen path—what has rightly been called, “Brexit at all costs”, which is both desperate on their part and potentially very damaging indeed to our economy—but also in disagreement with the argument on grounds of sovereignty, made by Keir Starmer in the other place, that staying in the single market through the EEA would make Britain subject to rules that the rest of the EU has made. That is what lawyers would describe as a piece of Nelsonian knowledge. It is what happens when you intentionally place a telescope to your blind eye.

I accept that, hitherto, the EEA shows what small countries such as Norway, Iceland and Liechtenstein were able to secure when committing to being part of the single market, but Britain is not of the same status, size or type as any of those countries. A British version of membership of the EEA—this is a key point—would retain much more influence and clout in setting the standards for our largest export market. By removing ourselves from the European Union and the single market, we would only theoretically be more sovereign and we would be considerably poorer. I am reminded of what the noble Lord, Lord Heseltine, said:

“A man alone in the desert is sovereign. He is also powerless”.


I respect the result of the referendum, but I part company from the Government in my belief that we now have an absolute duty to obtain the closest and best possible economic relationship with our largest export and investment market after we leave the European Union. Merely seeking a future free trade agreement between Britain and the EU that deals with tariffs and some customs procedures will fall far short of actually being in the single market. Yes, that is the difference between access and actual participation through membership of the single market that the noble Lords, Lord Spicer and Lord Forsyth, drew to our attention. The former—access—we have to beg for; the latter, we have by right. That is a fundamental difference.

If we simply do as the Government are proposing and seek a free trade agreement, I assure noble Lords, as a former Trade Commissioner and this country’s Trade Secretary, that it will give us significantly less trade than we have at the moment, no automatic market rights in Europe and a paltry means of enforcing those rights that we have. Believe me, I have negotiated those things on Europe’s behalf with countries trying to access the European single market. I know how ponderous the European Commission can be when it comes to such negotiations. I know how difficult it is for third countries, which is what we would be, to get access on the terms that they want and need.

A free trade agreement would not cover all trade; it would not cover services as well as goods, which is a fundamental point. The agreement—if we ever get one, given how relations between ourselves and our European partners have gone downhill since the Prime Minister’s October speech to the Conservative Party conference—will take a very long time to obtain and will certainly stretch way beyond the two-year cut-off point of Article 50 itself. That is why John Major was absolutely right to make his speech this evening at Chatham House in which he strongly and in vigorous terms attacked the Government’s approach to Brexit and called, quite rightly, for a little more charm towards our erstwhile partners and a little less cheap rhetoric.

In a number of key national capitals—

[Lord Dykes]

With his distinguished European background, why does the noble Lord not fight to keep us in the European Union, as Kenneth Clarke is doing in the Commons?

[Lord Mandelson]

Why am I not fighting to keep us in the European Union? My word! Judging by my email inbox, the noble Lord must be the only person in the country who does not believe that I am fighting for Britain’s continued membership of the European Union. Of course being a democrat, I respect—oh, there is no point his waving his hand in that Edwardian way.

I am afraid that we have had a referendum, but the point is this: we can now make a choice between leaving the European Union and wrecking our economy, or leaving the European Union and making the best economic job that we can of doing so. There is a huge difference between negotiating our future trade relationship from the safety of being a relative insider, which is what we would be as a member of the EEA, as opposed to being an outsider and jostling for preferential access to Europe’s marketplace like any other country—fighting with many others for access at Europe’s border. Of course the single market is not perfect, notably in its coverage of all services. However, almost half of British trade in goods and services takes place in the European market. It should therefore be an absolute priority for us to secure the continuity of that trade we already have.

There is another crucial issue for us, given the nature of our manufacturing sector in this country. Other noble Lords have touched on that. The point is that the single market is not just a huge trading space: it is also a giant factory floor. Among mature economies trade is now increasingly less in finished goods than in part-finished goods moving back and forth across borders, often many times, as part of increasingly sophisticated value chains.