Brexit: Preparations and Negotiations

Lord Razzall Excerpts

Monday 23rd July 2018 Lords Chamber

[Lord Razzall (LD)]

My Lords, it is apparent that, since the publication of the White Paper, all hell has broken loose within the Tory party. It is not for me to intrude on private grief, so I shall concentrate my remarks on a number of concerns where, if we are not careful, withdrawal without agreement will throw a spanner in many works.

I speak for my party on manufacturing, and the concerns of manufacturing industry have been clear since the referendum. Some companies are concerned about tariff barriers, although those may not be the major issue, as they are often simply a function of how a product is priced. In any event, apart from President Trump’s interventions, worldwide tariffs have in recent years been coming down. However, as most noble Lords will have realised by now, the overwhelming concern for manufacturing industry is frictionless borders. We all appreciate that the Government have been going through endless dances to come up with a scheme that provides for frictionless borders, solves the Irish border issue, but does not involve remaining in a customs union. Who knows whether that is achievable, but it is clear that, unless a satisfactory solution is arrived at, we are at risk of losing many major manufacturing companies from the UK. The motor car industry depends on just-in-time delivery of components which often pass two or three times across our borders. Airbus has similar requirements and has made it very clear that unless it can continue with its current arrangements, significant capacity will be moved to France or Germany.

The second major requirement for manufacturing industry is access to skilled labour. I appreciate that this is a concern also in relation to many other sectors, such as care home assistants and workers in the NHS, let alone fruit pickers and restaurant staff, but unless industry can continue to recruit qualified workers from the European Union, the tendency for many manufacturers will be to relocate outside Britain.

As always in international negotiations, the devil is in the detail. My noble friend Lord Newby mentioned more than 60 European bodies in which we would like to participate after Brexit. In the time available, I want to highlight a few of the 62.

The first is Euratom. Last year Theresa May notified the EU of the UK’s intention to leave the EU nuclear safety and research watchdog. As Ken Clarke memorably said on “Question Time”, he did not think his constituents who voted leave had Euratom in mind. I understand that even Vote Leave’s director, Dominic Cummings, has questioned the value of this—he has other problems at the moment, of course. Is this wise? Secondly, there is framework programme 9, the successor to the EU Horizon 2020 science funding programme. We are currently a net recipient of funding from 2020, but will the EU allow this to continue? Should we negotiate associate membership, similar to Norway, with a likely increase in contributions? What do the Government intend?

Thirdly, I want to highlight Copernicus. The European Space Agency’s programme has currently launched six earth observation satellites, with UK companies involved in the manufacture of hardware and instrumentation. The programme is 70% funded by the European Union. What is the Government’s intention regarding the status of these manufacturing contracts? Fourthly, we have the European Medicines Agency. While NICE makes judgments on drugs’ cost effectiveness for the NHS, the European Medicines Agency rules on safety and efficacy. Until now, the EMA has been based in London, but following Brexit it will move to Amsterdam. It is not clear how drugs will be regulated in the United Kingdom following Brexit. Can the Government give an indication?

Fifthly, there is Galileo. This system is a rival to GPS and was commissioned in 2003 for completion in 2020. I understand that there is deadlock, as the European Commission has decided to block the United Kingdom working on the system and we are threatening to demand a £900 million refund of contributions. Will the Minister tell the House the latest position? Lastly, I want to highlight aviation. The Government’s policy is to secure liberal aviation market access arrangements following Brexit, including continuing participation in EASA, but time is running out. Does the Minister believe that this is still achievable, or is there a danger of significant disruption to airline travel after Brexit?

If I had time I would add to the list of issues where decisions are urgently required, as the six I have mentioned are simply the tip of the iceberg. Those of us on the remain side of the argument are terrified that the current government chaos could lead to a no-deal Brexit, producing financial chaos, industrial disruption, planes not flying, queues on either side of the Channel and shortages of medicines and foods. Let us hope and pray that it does not come to that.

European Union (Withdrawal) Bill

Lord Razzall Excerpts

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

[Lord Razzall (LD)]

My Lords, I suspect that I am not alone in your Lordships’ House in having spent the last year being asked what I was going to do about Brexit. People who would be described as leavers have been asking why we are not getting on with it; remainers like me have been asking what I am going to do to stop it. With more than 180 speakers—as the noble Lord, Lord Porter of Spalding, has indicated—it is probably the case that everything has already been said. Unfortunately for noble Lords, however, unlike the noble Lord, Lord Porter, I still want to say it.

Of course, this is not an Act of Parliament to determine whether we leave the EU. Article 50 notice has already been given. However, this is probably the first opportunity that this House has had to try to influence negotiations: in my case, I hope, away from a disastrous hard Brexit. From the remain side, we clearly know what business wants. Banks and financial services companies want their ability to sell their services across Europe to remain unchanged.

I speak for the Liberal Democrats on manufacturing. It is also clear what the overwhelming majority of manufacturing companies want. First, they want a continuation of tariff-free access to Europe. It has been suggested that this is less necessary in the light of the drop in sterling against the euro. While it is true that the drop in the exchange rate, together with the uplift in world trade, has given a boost to our export sales in Europe, it is not the whole story. As noble Lords will be aware, many manufacturing companies import their components from the European Union, so the drop in currency has increased their costs. As yesterday’s figures from the car manufacturers demonstrate, there has been a significant drop in investment in the motor car industry since the referendum. What is clear to those of us on this side of the argument is that the so-called hard Brexit, with us moving to WTO rules, would be a disaster for our manufacturing industry.

Secondly, manufacturers want frictionless borders. Clearly, this is an essential requirement in Ireland, but it is also critical for the many manufacturing companies that employ just-in-time systems for the use of imported components, where pieces of equipment often pass several times across the border with Europe. Any system that involves hold-ups at the border would be disastrous, and industry has no real confidence that any proposed electronic border provisions would work. As we know, the introduction of IT systems by all Governments is not good.

Thirdly, manufacturers want continued immigration from Europe. Other speakers have mentioned the need for nurses, carers and workers in the leisure industry, but industry requires a continuous input of skilled workers. As my noble friend Lord Stunell would say, the construction industry will collapse without skilled workers continuing to come from Europe and there will be no chance of the Government meeting their housing targets. The so-called tech cities springing up throughout Britain require the continued import of skilled workers from Europe. The Government will say that we will soon develop our own skills base, but there is no chance that it will happen on any reasonable timescale. In any event, some skills are no longer taught in the United Kingdom. For example, many engineering SMEs need analogue engineers, but we now teach only digital engineering in our universities.

Fourthly, there must be certainty about how regulatory agencies will continue or be replaced. There are myriad European agencies whose regulations exporters will still have to comply with. Will we be setting up our own agencies at huge cost or will we retain general compliance with European regulations? The standard answer from the Government is of course that we anticipate agreeing continued arrangements, but will Europe agree?

Clearly amendments will be tabled in Committee from across the House to reflect the wishes of business that I have just expressed. Manufacturing industry would certainly support an amendment that said we should stay in the single market and the customs union. I will support an amendment to provide for a further referendum on the terms of any deal, for which a number of noble Lords have indicated their support. As noble Lords have indicated, the ICM poll for the Guardian last week showed that well over 60% of the public now want a further referendum on the terms of leaving. It was noticeable that the only age group against the idea of this referendum is the retired—that is, people who no longer play a role in the business life of the country and have the smallest stake in our future. I hope the Government will now agree to give the electorate what they clearly want.