UK’s Exit from the European Union

Alex Sobel Excerpts

Monday 24th April 2023 Westminster Hall

[Hilary Benn (Leeds Central) (Lab)]

The question in this debate is a simple one: what has been the impact of leaving the European Union? I was much struck reading the Government’s response to the petition, which was quite dismissive and defensive. In essence, they said, “It was a democratic decision so there is nothing to look into here. Nothing is happening.” Of course, a democratic decision has been made and we remainers—with the exception of the hon. Member for Strangford (Jim Shannon) and the Minister—lost.

The hon. Member for Gravesham (Adam Holloway) made the point about sovereignty. I met many people during the campaign who made that argument. Indeed, they said, “I don’t care about the economic impact. My sovereignty is more important.” I respect people’s right to hold that view; I fundamentally disagree with it. But what was unforgiveable was to claim that we could have all our sovereignty, keep all the benefits of being a member of the European Union and get further benefits on top of that. It simply was not true, and we now know it was not true. Therefore, those who argued for us to leave the European Union are now in a state of confusion and denial. That is what is going on, particularly around the economic consequences. If we do not understand what those are, how on earth are we going to build a different relationship with our European colleagues over the months and years ahead?

It is interesting that a number of hon. Members present have been on the UK Trade and Business Commission, reference to which has already been made, and I have had the pleasure of serving with them. We felt it was important to ask the question and then let the evidence speak for itself. If people want to come before the commission and say, “It’s wonderful—look at these opportunities”, I would love to hear from them. Not many have done that.

The truth is that Brexit has had a bad impact on the economy. I was really struck by the statistic that showed that the number of small businesses trading goods with the European Union declined by one third between 2020 and 2021. That is not entirely surprising, because it is small businesses that find it most difficult to cope with the burden of cost, bureaucracy and red tape. Brexit was sold as getting rid of cost, bureaucracy and red tape, but it has dumped the biggest load of those three things on British businesses that we have seen in our lifetime.

We will be the worst-performing large economy in the world this year, and business investment as a percentage of GDP has stalled since the referendum in the UK. It is worth reminding ourselves that the Office for Budget Responsibility said that Brexit

“will result in the UK’s trade intensity being 15 per cent lower in the long run than if the UK had remained in the EU. The latest evidence suggests that Brexit has had a significant adverse impact on UK trade, via reducing both overall trade volumes and the number of trading relationships between UK and EU firms”

Ironically, while all these costs have been imposed on British companies exporting, the Government have not yet introduced full checks on goods coming into the United Kingdom from the European Union. Why? Because they are afraid of shortages and delays. So the sovereignty that has been gained is not being used to apply the same checks going one way as we are facing the other way.

The trade deals have been referred to. I was struck when the former Environment Secretary, the right hon. Member for Camborne and Redruth (George Eustice), described the Australia agreement as being

“not actually a very good deal”—[Official Report, 14 November 2022; Vol. 722, c. 424.]

because we had given far too much away. We all know that is the case. What of the promised trade deal with the United States of America, which was the biggest argument we heard? It is absolutely nowhere to be seen. It is not happening; it is not coming. The fundamental truth is that if we make trade with our biggest trading partner more difficult—that is what we have done—we should not be surprised if it has an adverse effect on the British economy, at a time when we need all the growth we can get to help our constituents.

We have heard about employers finding it hard to get workers. When the commission met people at a fruit farm in Kent, I was struck when the owner said, “Last year, I couldn’t pick 8% of my crop because I couldn’t find enough workers. Do you know what I am doing this year? I am planting less crop and I am going to import more fruit from the rest of the world.” What a wonderful advert for British economic growth if that is the conclusion that farmer came to!

[Alex Sobel (Leeds North West) (Lab/Co-op)]

As I look at these issues as a member of the shadow Environment, Food and Rural Affairs team, it is really ironic that we are finding less UK production and more imported directly from the EU. That is a negative impact of Brexit, rather than a positive impact of us being able to trade out. That is exactly the opposite of the claims made and exactly why we need something like the petition suggests.

[Hilary Benn]

Indeed, that is the case. We want as much export opportunity as possible, but if we make it more difficult for our businesses, we should not be surprised if it damages people.

The other irony about sovereignty is that the Government said, “We will use our sovereignty to introduce a British version of the REACH chemicals regulation,” but they have just postponed that for the second time, not least because the British chemical industry has said, “You know it’s going to cost us about £2 billion for absolutely no purpose whatsoever—to get us back to where we were when we originally got our chemicals assessed under REACH.” The UK conformity assessed mark, which is meant to replace the CE mark that we find on the bottom of many goods, has been postponed by the Government again because a lot of British businesses say, “What is the point of doing this?”

On the Retained EU Law (Revocation and Reform) Bill, which is an artificial mechanism to try to force through changes to retained EU law, I remain of the view, despite the concerns expressed, that by the end of the year we will still be in alignment with a lot of EU law. That is partly because we argued for a lot of it in the first place—it was not imposed upon us; we were part of the decision-making process—as well as because a cost comes to the economy from diverging from the rules applied by our biggest trading partners. Every company that exports to Europe will make their goods to the standards set by Europe, whatever the British Government think, because that is what they will do if they want to continue to trade.

It is striking that for those who argued so strongly for the benefits—no “downside”, only “upsides”—all those quotes have come back to haunt them. They find it difficult to know what to say, so they try to blame remainers. It is like all revolutionaries, if I may use the analogy. When the revolution does not quite work out, they say, “But comrade, it was not applied with sufficient vigour and purity”—an argument that some Members in the Chamber might be more familiar with than others.

The truth is, and this is the hard part of the debate, that we cannot simply reverse what has happened. When I look not at the governing party, but at the other major parties represented in the House—with the exception of the SNP, which wants another referendum for another purpose—none of those parties is saying we should have a referendum after the next election to see whether the British people want to change their minds. We know that we cannot reverse it just like that.

The Green party wants to rejoin

“as soon as the political situation is favourable and the right terms are available.”

That is interesting. I understand the Lib Dems want to rejoin the single market once

“the ties of trust and friendship are renewed.”

The truth is that we will have to build a new but different relationship with the European Union, which will take time. Who knows what it will look like or what this country will look like in 10, 20 or 30 years? We have to be honest about the effect that the change has had on our country and our economy. That is why the question needs to be asked.