European Union (Withdrawal) Bill

Lord O'Donnell Excerpts

2nd reading (Hansard - continued): House of Lords
Wednesday 31st January 2018 Lords Chamber

[Lord O'Donnell (CB)]

My Lords, this Bill started life as an oxymoron—let us be honest. The great repeal Bill repeals some EU law but transposes it back into UK legislation, and what we have heard today has made it clear that it is not that great either. As many have already pointed out, it has numerous technical and constitutional defects. As a former head of the Treasury, I salivate at the prospect of raising tax via statutory instruments, but that is probably best avoided, as the noble and learned Lord, Lord Judge, pointed out.

The Constitution Committee’s points seem broadly sensible and I hope that the Government can accept them. The treatment of Scotland, Wales and Northern Ireland in the Bill leaves me very puzzled. It is indefensible. I assume that we will be coming up with a new version of Clause 11 and that that will be cleared with the devolved authorities; otherwise, we will be completely stuck on that.

The Bill’s origin dates back to then Prime Minister Cameron’s decision to hold a referendum, which, in my opinion and to misquote him, was a disaster, not a mistake. I am a believer in parliamentary democracy, not government by referendum. However, given where we are now, the only question, to which I will return, is whether two wrongs would make a right. Today, I want to make some points in my role as a former Cabinet Secretary and head of the Civil Service, and in other roles as an economist. I declare various economic affiliations as listed in the register of interests.

I admire, but do not envy, my successor, who is trying to implement the Government’s policy on Brexit, whatever that is. Although there has been an inevitable and much-needed increase in the number of civil servants working on Brexit, Civil Service numbers overall continue to fall as efficiency improvements are delivered. But Brexit is inevitably squeezing out almost everything else.

Despite these challenges, morale in the Civil Service, as measured by the annual engagement surveys—and I like evidence—is at an all-time high. So it is particularly disappointing—I was very grateful to hear the support expressed by the noble Baroness, Lady Blackstone—to see a divided Cabinet resorting to attacking the civil servants who simply want to implement whatever policy Cabinet finally decides upon. The progress made to date and the fact that we have successfully moved on to the next stage of talks is witness to the hard work that is going on behind the scenes. Civil servants across a range of departments are delivering detailed analysis. Businesses, trade unions—as the noble Lord, Lord Monks pointed out—and think tanks have provided their input. The bickering and blaming of civil servants needs to stop. Cabinet needs to formulate a policy for the next crucial stage. The EU 27, and we should learn from them, have been strengthened by having a clear, public negotiating position—we need one as well.

For the next stage, I would say, now is the time for experts. We need Ministers to stay in post for long enough to master their briefs. Listening to the noble Lords, Lord Hill and Lord Bridges, makes me realise how much expertise has been lost. Cabinet should abide by the principle—that very old principle—of collective responsibility. By all means argue in private, but please present a united front in negotiations.

On the economic aspects, I hope that Ministers and civil servants will study the wealth of analyses that is now being undertaken by a number of groups, such as the Trade Knowledge Exchange, which I am involved in, which are all committed to helping us get the best deal possible. Their analysis highlights that the benefits of a good trade deal with the EU are worth far more than the amounts discussed in the first stage talks and, I would argue, far more than deals with third countries. As Pascal Lamy, the former head of the WTO, has pointed out, the big costs in trade terms come from regulatory divergence. Yet the ability to diverge from EU rules is regarded as a big benefit by some. It is also true that trade deals with third countries will require similar regulations. Such deals will be governed by what I would call the tug of regulatory gravity, meaning that the bigger partners, such as the US, China or India, have the biggest say in determining the rules.

The right reverend Prelate the Bishop of Leeds reminded us that there is more to a good life than just prosperity. It is very interesting that those parts of the country with the greatest inequality in self-reported levels of well-being were the areas where the leave vote was strongest, and we should really analyse why this vote took place. We do not have the time to go into that here, but it is a very important point.

Jobs matter for well-being and the recently leaked document on various scenarios backs up most of the public research that has been available for months. It is not new; it has been around for a long time. It has shown that growth will be significantly lower outside the EU than it would otherwise have been. I know counterfactuals do not make for slick soundbites, but the time for those has gone, as the noble Baroness, Lady Smith, has said. Fortunately, the world is going through a period of strong growth, including in our number one trading partner, the EU, so our headline growth figures will not look bad—unless, of course, you compare them with the rest of the world. Lower growth means lower tax revenue and lower public spending, and that has implications for the NHS.

So, assuming this Bill is amended sensibly, I will hold my nose and join my esteemed predecessors, including the noble Lords, Lord Butler, Lord Armstrong and Lord Wilson, who have spoken in this debate, in supporting it. By the autumn we should know more about the kind of deal that is on offer. The noble Lord, Lord Lisvane, gave us that brilliant analogy last night. Will it be more “The Texas Chain Saw Massacre” or “Reservoir Dogs”? We do not know yet.

For me, the issue of how Northern Ireland is treated will be a determining factor. I have absolutely no idea how you reconcile regulatory alignment and no hard border with leaving the single market and the customs union. Whatever is decided, peace must be preserved. When we have all the details of that proposed deal—in the autumn I hope, but I am not really expecting that—then, and only then, should Parliament consider whether the result of the negotiations is so far away from what was promised that the people should be consulted again. But this time we must give the people a clear choice between the terms on which we should remain and leave so that they know exactly what the terms are in both cases.

To conclude, this is, as the noble and learned Lord, Lord Judge, pointed out, an essential Bill—there is chaos without it. But this House can improve it substantially. That will take time, which is running out for the Government, the country and me, so I will sit down.