Brexit: Domestic and International

Lord Shipley Excerpts

Thursday 27th October 2016 Lords Chamber

[Lord Shipley (LD)]

My Lords, I pay tribute to the maiden speech of the noble Lord, Lord Gadhia, and his very thoughtful contribution to this debate. I was also impressed by the contribution of the noble Lord, Lord Livingston of Parkhead, particularly in relation to his comments on the media, and his warning about the pace of exiting the EU and the need to buy some time.

We are debating the issue of global free trade, and we are grateful to the noble Lord, Lord Leigh of Hurley, for enabling us to have this debate. The Secretary of State for International Trade said in Manchester a few weeks ago that our departure from the EU would provide an opportunity for the UK to become a world leader in free trade. He said this, which I took directly from the Library briefing for this debate:

“I believe the UK is in a prime position to become a world leader in free trade because of the brave and historic decision of the British people to leave the European Union”.

We should note the words “because of”. They imply that it is our departure from the EU that will enable us to grow our trade across the rest of the world. But, as the noble Lord, Lord Tugendhat, reminded us, we can increase our trade with the rest of the world while being inside the European Union. Exporting to the rest of the world is not a problem for Germany, which exports very successfully—and Germany is not planning to leave the European Union.

I question the assertion that we promote global free trade by leaving the free trade area—the EU—that we are currently in. It will not make it easier for us to promote global free trade; it will reduce our global free trade because it will reduce our free trade access to the European Union and the 35 agreements to which the EU is party. It will stifle our businesses exporting to the EU, to which 44% of our exports go. We will face tariff barriers and customs delays as we comply with complex rules of origin that will increase the cost of exporting—and we will lose the ability to influence the harmonisation of non-tariff barriers.

The Government need to recognise that we are part of integrated European supply chains. Countries outside the EU—not least the USA and Commonwealth countries—invest here to gain access to the EU. Crucially, how can it be helpful to leave the EU in 2019 when securing global free trade could take many years to achieve—if we ever do?

It is undoubtedly the case that there is capacity for growth of exports worldwide, but to make sure that our exporters are making the most of worldwide opportunities, the support provided by the Department for International Trade is key. But I draw your Lordships’ attention to the fact that in the last year, the DIT’s nine English regions saw major cuts in their promotion and support of exporting, with more cuts thought to be pending, perhaps over the lifetime of this Parliament, amounting to some 20%. Will the Minister, in summing up, tell us how we can promote exporting globally if the Government insist on cutting the very budgets that can enable exporting to increase?

I turn now to inward investment. A recent report produced by Nathaniel Lichfield & Partners showed that the amount of foreign direct investment that the north-east of England—where I live—has received declined dramatically from 14.3% of national jobs in 2009 to the current low of 7.8% in 2015: a cut of nearly half. I can suggest one reason why this has happened: the absence of regional targets for inward investment, which were abolished a few years ago. National targets can be achieved by the DIT by promoting London and the south-east, to the disadvantage of other parts of the United Kingdom. Over the last five tax years, the DIT’s own website tells us that London and the south-east received half of all projects and 35% of all jobs. But promoting global trade means promoting all parts of the UK—and their products and their skills—to the world.

Briefly, on overseas students, to stop talented students from overseas coming to study in the UK because the Government insist on counting them as part of net migration fails to understand that overseas students become ambassadors for the UK. Reducing the number who can come undermines our universities and says that we are neither global nor open.

The noble Lord, Lord Leigh, in introducing this debate, said that leaving the EU to promote global free trade was a price worth paying. It is a huge price, which will have a huge impact on all parts of the United Kingdom. I fear that it is not a price worth paying, and I very much hope that those who believe that the noble Lord, Lord Leigh of Hurley, is correct will pay heed to the warnings that we have already heard in this debate from his own Benches.