Brexit: Preparations

Lord Shipley Excerpts

Tuesday 8th October 2019 Lords Chamber

[Lord Callanan]

I answered a question earlier on this business and I fully accept that the challenges of a no-deal exit are particularly acute for various meat and livestock sectors. We are aware of that, we are working closely with them, through the Department for Environment, Food and Rural Affairs, and we stand ready with a package of assistance to aid those sectors.

[Lord Shipley (LD)]

My Lords, in reference to the reply that the Minister gave to the noble Lord, Lord Liddle, page 15 of the report says:

“The Government has prioritised the smooth and continued flow of goods in and out of the UK in the event of the UK leaving without a deal on 31 October 2019”.


The Statement says:

“I want to pay particular tribute to the automotive, retail and transport sectors, including authorities at the Port of Dover and Calais, as well as Eurotunnel, for the extent of their Brexit preparations”.


In view of the doubt the Minister expressed about the position in Calais, will he confirm that this Statement and report mean that traffic will flow smoothly through Dover and Calais in the event of a no-deal Brexit?

[Lord Callanan]

I can certainly confirm that traffic coming into the country will flow smoothly, because we have said we will prioritise flow over checking. We hope that the French authorities will adopt a similar position, but we are doing our best to alert drivers and others, on a reasonable worst-case scenario, about what delays may occur and to advise them to minimise those delays by turning up with the correct paperwork.

Brexit: Withdrawal Agreement and Political Declaration

Lord Shipley Excerpts

Monday 14th January 2019 Lords Chamber

[Lord Shipley (LD)]

My Lords, in the two and a half years since the referendum, debate has continued on the relative merits of possible withdrawal options. That we are still debating these derives from the huge complexity of Brexit, driven in part by the triggering of Article 50 too early, and the Prime Minister’s decision to define unhelpful red lines equally early.

People did not vote in the referendum to become poorer. Nor can it be concluded that because a majority voted to leave the EU, those voting to do so wanted a hard Brexit or no deal. They were repeatedly told that they could have a soft Brexit, and many voted for just that. The result of that referendum was that advice was given to Parliament to negotiate a withdrawal. That advice was for Parliament, not just the Executive. It is, therefore, within the right of MPs to take greater control of the process. They were, after all, elected in 2017, a year after the referendum was held—so they do have that right.

Just before the Christmas Recess, the Government published their immigration White Paper. This is the much-delayed White Paper which was supposedly going to explain how the Government plan to bring down net immigration to the low levels promised by the Prime Minister in response to the referendum result. Yet, as the noble Lord, Lord Green of Deddington, pointed out in this Chamber at the time,

“far from reducing immigration, it is very likely that it will actually increase net migration, and might increase it considerably”.—[Official Report, 19/12/18; col. 1867.]

It seems that reality has dawned on the Government. The need for immigration to this country simply reflects the economic reality of the world we live in. Immigration has driven much of UK growth in recent years, and through that, growth in tax revenues for public spending. We cannot have a strong, entrepreneurial economy, should Brexit go ahead, without immigration and large numbers of international students in our universities.

Then there is the construction industry. The Federation of Master Builders has said that the Government will fail to deliver their commitment to building 300,000 homes per year unless the White Paper is substantially rewritten. While I am at one with those who say that we must invest far more in the training of British workers, rather than simply relying on a labour force from outside the UK, I also acknowledge the economic reality that retirements within the construction industry are significantly outstripping the number of new apprenticeships. If we are to build the homes the country so urgently needs we have to have the labour force to do it.

I will comment briefly on the impact of a no-deal Brexit on the north-east of England, where I live. At the end of November, the Government admitted that the north-east of England will be poorer because of Brexit. With no deal, the economy would be 10% smaller than it would have been. With the deal proposed, growth would be 2% lower. But, for me, the critical issue remains as it was in 2016, relating to the future willingness of overseas investors to invest their money in regions of England—or, indeed, across the whole of the UK—when we are outside the single market. When overseas investors can invest outside the UK to stay inside the single market, why would they choose to be inside the United Kingdom? I have come to the conclusion that a no-deal Brexit would be catastrophic. We know what the Japanese Government’s advice has been in recent days. We know of the Society of Motor Manufacturers and Traders’ warnings in recent weeks.

Then there are the universities. Universities in the north-east of England attract large numbers of EU students, yet the number of EU students registering now seems to be declining across the United Kingdom. Then there is the impact on world-leading research in our universities, often the result of collaboration and partnership across the EU. We must not lose access to this funding. It helps regional economies, as does the £400 million that the north-east of England is receiving in the current period from EU structural funding, for which there are no guarantees of continuation after 2020. Given that 57% of north-east trade goes to the EU compared with only 40% nationally, and given that 140,000 north-east jobs are reliant on EU trade, it matters to the region that we stay in the single market and the customs union—the frictionless trading structure we were promised and need.

The World Bank has warned that no deal would be a risk to economies across the world. The Bank of England has warned that no deal would lead to the worst crash in the UK since the 1930s. Should we believe gung-ho Brexiters who believe that leaving the EU will be easy, or should we listen to the director-general of the CBI, who said in Bristol last week:

“Make no mistake, no-deal cannot be ‘managed’”?


I choose the advice of the CBI.

We might find this week that the House of Commons has no majority for any of the options in front of it. I conclude that that means we should seek to extend Article 50 as a matter of urgency and that we will need a people’s vote, because parliamentary gridlock will have to be overcome.

Brexit: North-East of England

Lord Shipley Excerpts

Wednesday 9th May 2018 Lords Chamber

[Lord Callanan]

It is an excellent idea put forward by Conservative colleagues in the region who are setting the agenda for the north-east becoming a global manufacturing hub exporting to all parts of the world. I think it is an excellent proposal and we are looking at it very closely.

[Lord Shipley (LD)]

My Lords, is the Minister aware that a few days ago the Business Secretary spoke in the north-east of England and said that he favoured,

“a soft Brexit that does not hurt businesses in the region”.

He advocated a trading relationship free of tariffs and free of frictions. Does the Minister agree with the Business Secretary? Will he tell the House how the Government plan to achieve this outside the single market and a customs union?

[Lord Callanan]

Of course, the Business Secretary comes from the north-east of England, as does the noble Lord. I totally agree with him that we want an agreement that brings the lowest possible tariffs—if possible, no tariffs at all—and frictionless free trade. That is good for the north-east, as it is for all parts of the United Kingdom.

Brexit: Sectoral Impact Assessments

Lord Shipley Excerpts

Thursday 2nd November 2017 Lords Chamber

[Lord Callanan]

My previous role—sadly brief—was at the Department for Transport. Of course all these contingencies are being looked at. We will need to consider the full implications of the decision to leave and the negotiations that we are pursuing. Of course that will be one of the pertinent factors.

[Lord Shipley (LD)]

My Lords, the Minister knows the north-east of England extremely well. Have these assessments included an impact assessment for the economy of the north-east of England as a consequence of Brexit? If there is not one, why not? If there is, will he publish it?

[Lord Callanan]

I thank the noble Lord for his question. I have been in the department since Monday. There are hundreds and hundreds of pages of these assessments. I have read some of them. I do not know whether there is a specific reference to the north-east, or indeed any other regions, in the documents. If there is, I have not seen one yet.

Brexit: Trade in Goods (EUC Report)

Lord Shipley Excerpts

Tuesday 18th July 2017 Lords Chamber

[Lord Shipley (LD)]

My Lords, I thank the noble Baroness, Lady Verma, for introducing the report. It was published in March and it has not been replied to, but it has lost none of its relevance. I agree with the comments made by the noble Baronesses, Lady Quin and Lady Armstrong of Hill Top, about the north-east of England, its economy and its export dependency on the European Union and what needs to be done to protect the region’s interests, and in particular its jobs.

Crucially, this report gives ample evidence that a hard Brexit would be damaging to the UK economy with our departure from the single market and the customs union. In January, the Prime Minister announced that we would exit the single market and the customs union and seek a free trade agreement. It was the wrong decision. The result of the referendum did not point to any specific status with the EU—it was a decision to leave the EU, but with no clear destination in mind. So the Government are seeking a free trade agreement with the EU, but that cannot be a replacement for what we have now, since we already have free trade with the other 27 members of the EU. If there is no free trade agreement, we will still have to adopt World Trade Organization rules, which will mean that tariffs will apply, such as 10% on cars. Further, as the report makes clear, both a free trade agreement and following WTO rules would require non-tariff barriers to come into effect such as the rules of origin, of which we heard quite a bit earlier in this afternoon’s debate. However, those rules of origin would require evidence of substantial local content, and there will be a serious negative impact on those sectors which have an integrated European supply chain.

I will say something further about the impact of Brexit on the automotive and chemical industries, both of which were identified by the committee as important—particularly, of course, to the economy of the north-east of England. Paragraph 60 reminds us that:

“International businesses are not structured neatly along sectoral lines or national boundaries”,


and paragraph 61 reminds us that:

“The manufacturing and primary commodities sectors are important employers, particularly in regions outside the South East of England. Ensuring that these industries do not face additional barriers to trade with the EU and beyond will be essential to drive growth across the whole country, as envisaged in the Government’s Green Paper, Building our Industrial Strategy”.


Two issues arise. Some regions are more exposed than others to leaving the single market. Has there been a regional impact assessment of leaving the single market? If not, on what basis was it decided by the Prime Minister that we should leave and not attempt to negotiate staying in the single market? Secondly, do the Government understand that supply chains are international? Paragraph 111 of the report says that the Society of Motor Manufacturers and Traders,

“provided the following summary of the automotive supply chain”,

which is worth quoting:

“One part can, as part of an integrated supply-chain, travel across the Channel multiple times before the final vehicle is completed. If a tariff is applied to parts, whole vehicles and furthermore customs duties and significant compliance costs for inward and outward processing, this could ultimately make UK automotive companies, and their operations unviable”.


That word “unviable” becomes critical.

In January, at Davos, the chairman and chief executive of Nissan said that when the Brexit “package” was made available, Nissan—which accounts for some 28,000 jobs across the north-east of England, directly and indirectly through the supply chain—would,

“have to re-evaluate the situation”,

and ask the question,

“is the competitiveness of your plant preserved or not?”.

That is the key question. Therefore, does the Minister agree that we have to keep tariff-free access to the single market and the customs union to ensure that we are competitive?

Let us take a look at the chemical industry, which is very strong on Teesside. We note at paragraph 87 of the report that:

“Mr Steve Elliott, Chief Executive Officer, Chemical Industries Association … said that tariff-free access to the Single Market was ‘the key priority’. The chemicals sector ‘faces essentially three tariff levels: 0%, 5% or 6.5%’. The volume of cross-border trade made these potentially significant: ‘some 75% of our chemical imports come from the European Union’, and 60% of the UK’s exports went to the EU. This meant that tariffs would apply to ‘both the import … of a raw material … and the export, so there is a potential double whammy if you sit at the 6.5% end’. The CIA concluded that the imposition of tariffs ‘would have a significant impact on the competitiveness of the UK to continue to deliver into EU markets’”.


Therefore, I repeat the question that I asked a moment ago: have the Government assessed the impacts of Brexit by region and by sector? The committee has done a very good job but we have not heard a response from the Government.

One hundred and seventy thousand UK businesses trade with the rest of the EU, and they are able to trade within the single market using fully computerised systems and without going through customs controls. It is reported that the UK will face 350 million customs declarations a year—effectively 1 million a day. The bureaucracy sounds endless. We need to stay in the customs union, and that is particularly vital for those depending on just-in-time delivery systems.

Much has been said about a free trade agreement, and in my view a lot of it is overoptimistic. I was very struck by paragraph 293 of the committee’s report, which says:

“When asked about the feasibility of negotiating the UK’s withdrawal and the new trading relationship within two years, Lord Bridges of Headley … Parliamentary Under-Secretary of State, Department for Exiting the EU …, said the Government was seeking to negotiate ‘an agreement that covers both … within the two years’. Thanks to the UK’s ‘unique position because of the way in which our laws and regulations are so entwined with one another … we see it being technically possible to do this’”.


It is reported that the Minister of State, the noble Lord, Lord Price, agreed with that,

“arguing that there was ‘certainly no reason why an FTA could not be negotiated within that timeframe’”.

Therefore, I ask the Minister: is that still the Government’s position as there are only 18 months to go? I just draw the House’s attention to the fact that the Canada/EU trade agreement took 10 years.

While we are on the subject of free trade agreements, will the Government publish the Treasury paper—described as an internal paper—which says that a hard Brexit would be far more costly than any potential gains from new trade agreements? I ask the Minister whether that unpublished paper will be put into the public domain.

We have heard quite a bit about the need for a transitional agreement. The committee’s previous report, Brexit: The Options for Trade, concluded that a transitional arrangement would be essential, and that is undeniable. I agree entirely with the noble Baroness, Lady Verma, on that point—I recall her saying that that would be necessary.

I think that we are now moving into very dangerous waters. We must aim for an EEA-style agreement. The noble Lord, Lord Livingston of Parkhead, helped us by reminding us that many overseas and UK investors are suspending investment until they know what the position with Brexit will be. This is very bad for growth and jobs, and all the indicators of economic difficulty are now there. Also, as we hear with great regularity, other countries are waiting to take investment and jobs out of the UK. Will the Minister tell us what this uncertainty does for the future of UK jobs, particularly in those parts of the country that are very dependent on exporting to the EU?

Finally, the Government said that they wanted frictionless trade—we all want frictionless trade—but without, it appears, thinking through how that would be delivered. Monsieur Barnier has made it clear that frictionless trade is impossible to achieve outside the single market. We cannot have both outcomes: be outside the single market and have frictionless trade. I have concluded that our national interest is to stay inside the single market, and by that I mean that we need to stay inside the customs union—I have heard a number of speakers this afternoon say exactly the same thing. This is fundamental to the economic prosperity of our country and, in particular, to that of regions like mine.

European Union (Notification of Withdrawal) Bill

Lord Shipley Excerpts

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

[Lord Blencathra]

My Lords—

[Lord Shipley (LD)]

My Lords, I support Amendment 6, moved by the noble Baroness, Lady Quin. I will speak to Amendment 9, which is in my name and refers to all parts of the United Kingdom and not just the north-east of England. This whole group relates to the impacts of Brexit and the need for there to be assessment before the Government go much further.

It is estimated that around 160,000 jobs in the north-east of England are directly linked to our being part of the single market. That is because 58% of north-east exports go to the European Union, against a national figure of 42%. After 2019, with a hard Brexit there will be no automatic access to the single market, which is the largest free trade area in the world. Therefore, what are the economic advantages to the north-east of England or indeed to any part of the United Kingdom of losing that automatic access? I would like the Minister to explain how the Government plan to protect it.

I understand that the Minister met the North East Chamber of Commerce last Friday following an initiative by my noble friend Lord Beith. Will this be the first of many such meetings? I ask that because there are structures in London, Scotland, Wales and Northern Ireland for the Government to relate to, but what about the rest of the United Kingdom—the English regions? Regular meetings must be held with those regions to put them on an equal footing with Scotland, Wales, Northern Ireland and London. For that reason, I think that we need regional impact assessments of leaving the European Union. As an example of the problem, and as the noble Baroness, Lady Quin, emphasised, the north-east of England has a net balance of trade, with total exports amounting to £12.14 billion in 2015. No other region does so well in having such a positive balance of trade. The trade surplus in 2015 was £3.4 billion in the north-east—that is, the north-east local enterprise area and the Tees Valley local enterprise area added together.

It would be a disaster for jobs for this surplus to be lost. Chemicals had a trade surplus of £2 billion and the machinery and transport sector had a trade surplus of £2.3 billion. Some sectors had a trade deficit, which accounts for the overall surplus being £3.4 billion. Such a trade surplus is a very impressive figure for a small region in population terms such as the north-east of England. That is why I have concluded that the Government should establish resilience task forces in each part of the United Kingdom to work with the Government on the problems that will arise if we leave the single market and the customs union.

The abolition of government offices in England has not helped this situation and it has resulted in England being treated as a single entity run out of London. England is not a single entity and its differences should be reflected in the Government’s work on Brexit. In terms of EU funding support, we could look at our universities. The north-east universities are receiving £155 million in EU funding in the current funding period, 2014-20. They stand to lose access to much of that funding once we have left the European Union. Will the Government pick up the bill? Will they guarantee equivalent funding after 2020? In terms of structural funding, the north-east of England, including Tees Valley and the North East LEP, is receiving £590 million in structural funding from the EU in the 2014-20 period. Cornwall will receive £476 million, and Greater Manchester and Leeds City Region will receive more than £300 million each. England will receive £5.6 billion and the UK as a whole more than £8 billion. Will the Minister tell us what the Government’s plan is to make this money available after Brexit?

The question matters because it is the poorer parts of the country that voted more strongly for Brexit, but those are the very parts of the country that are in receipt of much higher levels of EU support. This is the challenge for the Government: have they any plans in place, eight months after the Brexit vote, to make those poorer parts of the United Kingdom resilient in the face of Brexit? The danger is that it is these very areas that will fall yet further behind once we leave the EU in 2019. What are the Government’s plans, in the face of Brexit, to generate growth in the poorer parts of the United Kingdom?

[Lord Blencathra]

I apologise to the noble Lord, Lord Shipley, for attempting to get in before him: I had forgotten that other noble Lords had amendments they might wish to speak on. I must warn my noble friend the Minister that I am very tempted to support these amendments, provided he can give me two firm assurances—first, that these assessments will be carried out by the Bank of England, the IMF and the same geniuses at the Treasury who forecast that by 2030 we would all be £4,322.15 worse off; and secondly, that he will send these assessments to Mr Juncker and Mr Barnier. I can think of nothing more likely to completely mislead those with whom we will be negotiating. Better still, he might get PricewaterhouseCoopers to do it, after its spectacular success at the Oscars last night where it could not count up a few hundred votes correctly.

In all seriousness, when have we ever seen an impact assessment attached to a government Bill which was remotely worth the paper it was written on? They are meaningless rubbish and no one takes them seriously. I did take one seriously when I was asked to chair the joint Select Committee on the original draft so-called snoopers’ charter Bill, which some noble Lords and Members of the Commons served on. We went through that impact assessment in detail and tore it to shreds. It estimated about £900 million as expenditure and our committee calculated that the real figure would be about £2 billion to £3 billion. We all know that impact assessments are not very accurate.

On the other hand, let us suppose that the Government did manage to write a proper impact assessment. We could do that on a sector-by-sector basis for each industry. I suppose that we could get the leaders of all those industries and all the other experts to draw up a proper SWOT analysis where Ministers have a pretty accurate assessment of the strengths, weaknesses, opportunities and threats to that industry from staying in or leaving the EU. Let us say that those SWOTs were spot-on accurate. Does anyone seriously suggest that we should then publish them and hand them straight over to the EU negotiators so that they can spot all the weaknesses in our position and the strengths that we want to exploit? It would be the height of folly to do such a thing. Indeed, it would be barking mad. If we were to do that, why stop there? Let us send Mr Putin a list of all our defence weaknesses and get MI6 to tell ISIL about any gaps in our security. Will Mr Barnier and the EU give us a paper on their strengths and weaknesses? Will they tell us their impact assessment of Britain? Of course not.

I am not being totally facetious. We will embark on negotiations that will determine the future of this country. The EU is reported to be demanding a £50 billion divorce settlement from us. I hope that we will strongly resist that. But if we are so daft as to publish any weaknesses in our arguments against it, we could end up robbing the taxpayer of billions of pounds. Billions of pounds are at stake.

I am not against impact assessments per se, although I prefer the SWOT analysis. Indeed, I hope that our Ministers and the Prime Minister have them. But I also hope and pray that they are keeping them under a top secret cover and keeping them very close to their chest. The last thing we want is to have them published or shared or laid before Parliament, which is probably even worse than publishing them in the press.

--- Later in debate ---

[Lord Forsyth of Drumlean]

I am most grateful to the noble Baroness. I suppose then that she will be withdrawing Amendment 6 and I do not need to argue against it any further. As she has always been a doughty champion for the north-east, I completely understand why that should concern her. I simply point out that this is not the Bill in which to make that argument. I have no doubt that there will be an opportunity to discuss these matters when we get the great repeal Bill, as well as in the intervening period. There is nothing to stop people putting down Motions in either of the Houses of Parliament and pressing the Government on any of these matters.

Amendment 9, in the name of the noble Lord, Lord Shipley, lists every region of the United Kingdom and asks what the impact of withdrawing from the European Union will be. Every penny of regional aid for any of these regions is our money. It is money that we have given to the European Union that comes back. That money is not going to disappear. I remember as Secretary of State being forced into supporting projects that were not priorities for us because we had to get agreement that they were additional and that they represented the prevailing policy at the time of the European Union. The difference will be that we are actually able in this Parliament to decide how our money is spent on our priorities in each of the regions. That is a great step forward. I do not, for the life of me, understand how the noble Lord could expect the Government to come up with an impact assessment of that. It will depend on the negotiations, on how much of our money we get back, and on a whole range of issues.

[Lord Shipley]

The noble Lord said two things that I do not accept. First, he said that the money that comes from the European Union is not going to disappear. There is a real danger that it will disappear because the country is going to be poorer and the Government’s tax income is going to be less. There is no evidence at all that all the money that is currently used in structural funds is going to carry on in the same volume. I do not accept that the money will simply be there and will be redirected again by the UK Government.

The noble Lord also asked who would do the impact assessments. Impact assessments are being done for London, Scotland, Wales and Northern Ireland because there are governance structures in place that can do so. The Government have regular meetings with all those bodies. My point has been that the rest of England is being left out from that process. That is the problem and I hope that the Minister can alleviate my concerns later.

[Lord Forsyth of Drumlean]

I am sure that the Minister in his excellent way will respond to these particular details. I am looking at this amendment, which says that we cannot start the process of leaving the European Union until we have,

“Her Majesty’s Government’s negotiating strategy for withdrawal on the economy, investment and regional funding of”,

all these regions. That is ridiculous—absurd. Perhaps the noble Lord put down the amendment just to have a debate and is not proposing to press the matter, but to say to the Government, “You cannot implement what the people voted for until you have done a set of calculations that are impossible to do until you start the negotiations”, looks to me like a circular argument and yet another device from those Benches to prevent us from getting on with what people voted for.

[Lord Shipley]

Amendment 9 is a probing amendment and I think that the other amendments in this group are similar. There is an issue about whether the Government are prepared to guarantee the levels of funding post-2019 and again post-2020. I very much hope that the Minister will assure this House that the levels of funding will not disappear.

[Lord Forsyth of Drumlean]

That is not what the noble Lord’s amendment says. It is an interesting argument. When he says that the money is going to disappear because we will be poorer, that brings me to the extraordinary Amendment 22, which appears to be supported by a former Cabinet Secretary. It asks for,

“any existing impact assessments or economic forecasts relating to the United Kingdom’s future trading relationship with the European Union conducted by HM Treasury, the Department for Exiting the European Union, the Department for International Trade or the Office for Budget Responsibility”.

As my noble friend Lord Blencathra pointed out, the Treasury and the Office for Budget Responsibility told us that we would have a recession and limited growth and that unemployment, interest rates and mortgages would go up, all of which has not happened. We have turned out to be the most successful economy in the G7. This continuing running down of our economy and telling people that we will be worse off is not good for confidence or for the Government and it flies in the face of what people voted for. They listened to all these impact assessments and decided not to believe them, which is why they voted to leave the European Union.