Anna Soubry
Main Page: Anna Soubry (The Independent Group for Change - Broxtowe)Department Debates - View all Anna Soubry's debates with the HM Treasury
(6 years, 9 months ago)
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Mel Stride
While being ingenious in his use of language, my right hon. Friend will I am sure agree with me that the purpose of the implementation period is to make sure we have a period of certainty for business, so that when we end up with our final withdrawal agreement we only have one set of changes to make from where we are now to where we will be at that point. That is the purpose of the implementation period.
Anna Soubry (Broxtowe) (Con)
I do not want to alarm you, Mr Deputy Speaker, but I completely agree with my right hon. Friend the Member for Wokingham (John Redwood), which may be a first in this sort of debate—[Interruption.] He is in a state of high shock. In all seriousness, this is an implementation period—the clue is in the name—but many of us fear that by October we will have achieved nothing more than a woolly set of heads of agreement and that there will be little to implement. How does the Minister see things panning out in reality?
Mel Stride
Whether it is a transition period, an implementation period or whatever period one seeks to term it, the important thing is to understand what the period is about, and we have always been clear about that. It is a period in which we will remain closely involved—similar to how we are at the moment—so that when we move into the post-transition or implementation period we have undergone just one set of changes and that we have certainty in the interim for British businesses, which is exactly what they have been telling us they would like.
Paul Blomfield
I thank you for that clarification, Madam Deputy Speaker. I apologise for any offence, but I was simply quoting from the Financial Times column by the right hon. Gentleman, which said:
“Time to look further afield as UK economy hits the brakes”.
Anna Soubry
I hope we can return to the subject we are meant to be debating today. The hon. Gentleman talks about manifestos, and of course his party failed to get elected on its one. Is he familiar with the Conservative manifesto, which some may say we have drifted away from to some considerable extent? It made it clear that the Government’s policy, should they be re-elected to govern our country, was that we would seek a customs arrangement.
Paul Blomfield
I was aware of that manifesto, and the right hon. Lady is right in what she says. I also reflect that the manifesto and the narrative surrounding it sought an overwhelming mandate for a hard Brexit, which the British people failed to give to the Conservative party.
Let me move on to explain why we believe a comprehensive customs union with the EU that replicates the current arrangements also does not weaken our opportunity to develop trade with the rest of the world—certainly not in services. As Germany has shown, we do not need trade deals to develop trade, for example, with China. As the International Trade Secretary acknowledged when he was there with the Prime Minister in February, membership of a customs union will not hold back bilateral trade. Where deals can be done, we think member- ship of a customs union gives us a stronger hand in trade negotiations, as part of a market of 650 million people, rather than just one of 65 million people, and in maintaining strong EU standards.
Members of this place and the Government must be honest about the fact that any trade agreement—
John Redwood
I quite agree.
We wish to take back control. We will be a very different and much better country when this Parliament can settle how much tax we levy, how we levy it, how we spend money, how we conduct ourselves and what kind of laws we have.
My main remarks for the Minister and his colleagues on the Treasury Bench, however, concern the conduct of the negotiations. Like the Minister, I wish the Government every success. I hope that they get a really good deal—I look forward to seeing where they get to—but the EU is trying to make the process as difficult as possible by insisting on conducting the negotiations in reverse order. It says first that we have to agree to pay it a whole load of money that we do not owe. It then says that we have to agree a long transition period that coincides with its further budget periods, so that it can carry on levying all that money, and that is before we get on to what really matters: the future relationship and the questions of whether there be a comprehensive free trade agreement, what it will cover, and if it will be better than just leaving under WTO terms.
In order to have a successful negotiating position, the Government have rightly sketched out a couple of important propositions. The first is that nothing is agreed until everything is agreed. That is fundamental, and I urge Ministers to understand that they must not sign any withdrawal agreement unless and until there is a comprehensive agreement that is credible and that can be legally upstanding, because there is no point paying money for nothing. There would only be any point in giving the EU all that money if there was a comprehensive agreement that the Government and the country at large could be proud of, and which enough leave voters could agree with as well as remain voters.
The second thing that the Government have rightly said is that no deal is better than a bad deal. That, again, is fundamental to the negotiations. I have never made any bones about this, because I said before the referendum that no deal was quite a likely outcome, and a fine outcome. For me, no deal is a lot better than staying in the EU: it would give us complete control over our money, meaning we could start spending it on our priorities; it would give us complete control over our laws, meaning we could pass the laws and levy the taxes that we wanted; it would give us complete control over our borders, meaning we could have the migration policy of our choosing; and it would give us the complete right and freedom to negotiate a trade policy with the EU and anybody else. That would depend, of course, on the good will of the other side as well, but I would far rather be in that position than part of a customs union in which I had little influence and that was extremely restrictive against others. There is therefore an awful lot going for no deal.
The Minister and his colleagues must stick to the proposition that they will recommend a deal to the House only if it is manifestly better than no deal. They need to keep reminding the EU negotiators that no deal offers Britain most of what it wanted when it voted to take back control.
Anna Soubry
Will my right hon. Friend confirm whether he has seen the Government analysis—apparently it involves excellent modelling and is far better than anything they did in the run-up to the EU referendum—showing that if we were to crash out without a deal and rely on WTO tariffs, our projected increase in productivity and economic growth would be reduced by 7.7%? Is that what his remain-voting constituents—the majority—voted for?
John Redwood
No, of course it is not, but that is not true. I have written at great length about that elsewhere. Unfortunately, I do not have time to go into a detailed rebuttal of those proposals, but we know that the Treasury modelling got entirely the wrong answer for the first 18 months after the referendum. Its short-term forecast, which should be easier to make, was massively wrong and predicted a recession. I and a few others put our forecasting reputation on the line during the referendum by saying that there would be growth after an out vote, rather than what the Treasury forecast. We were right.
I assure my right hon. Friend that I have not voted for anything that will make us poorer. We will be growing well, as long as we follow the right domestic policies. It is complete nonsense to say that there will be that kind of hit. It implies that we lose over half our exports to the European Union, and it is not a proper reflection of what would happen to our trade adjustment were anything that big to happen. I want to concentrate on the customs union.
Anna Soubry (Broxtowe) (Con)
It is an absolute pleasure to follow the hon. Member for Nottingham East (Mr Leslie). On this, we are absolutely as one. It has been a consistent feature not only of the debate in the run-up to the referendum, but in everything that has followed, that there has been so much agreement between those of us on these Government Back Benches and those on the Opposition Back Benches. If I may say so, Opposition Front Benchers are also increasingly recognising the strength of the argument that Opposition Back Benchers and some Government Back Benchers have been making. We also have the agreement of SNP and Plaid Cymru Members; that is about it, unfortunately.
The point is very clear: this issue—the biggest issue that our nation has had to wrestle with in 40 years, and certainly since the second world war—has, on the one hand, divided our country and that division continues, but, on the other hand, has also brought together people from different political parties. We have put aside our party differences, because on this we are as one, and we have put our country first. I pay tribute to all the Members who have spoken out—often in the face of death threats, appalling emails and criticisms, and indeed unpleasantness even from within our own political parties—as doing so has not always been easy. However, it is very important that we do so because this is about our country and of course our constituents—it is not about us—and it is even more about our children and our grandchildren. As hon. Members have said, it is about making sure we get this right because the consequences will affect generations to come.
My view is that people in this country are undoubtedly getting utterly fed up with Brexit. I was going to say that they do not understand it, and that is not a criticism, but when we sit here talking about the finer details of “a” or “the” customs union “arrangement” or “agreement”, and when we delve into the detail of WTO tariffs on bananas, cars or beer—goodness me—people do not want to be involved. That is not because they do not care about our country—of course they care, desperately—but they elect us to this place so that we get on with that sort of stuff, and so that we put the country first and do the best thing for our constituents. They should not have, in effect, to micromanage the politics and detail of all the economic consequences and things that flow from that; they trust us to do it, but when they look at this place, I do not think they are particularly impressed by what they see.
In reality, the two major parties are almost together, although thankfully a difference is now emerging, which I will deal with in a moment. The Opposition have the good sense to come out in favour of a/the customs union—it does not matter what we call it; we now know that it delivers exactly the same arrangement that we currently have. [Interruption.] Sorry, “a” customs union, but I am not interested in the words. All I am interested in is what it delivers, and that is the only difference between the Labour party and the Front Bench of the Government who I obviously support. There is very little between them. Yet, as I have said before in this place, if we were to have a free vote, I have no doubt that the majority of Members would vote in favour of a/the customs union—we all know what we mean because we know what it would deliver, which is the continuation of peace and prosperity in Northern Ireland and the avoidance of a hard border. It would also convey many other benefits.
I also have no doubt that Members would vote in favour of us retaining our membership of the single market by being a member of EFTA, and I do not think that the people of this country are particularly impressed by the fact that that is not happening. They voted for us to speak up on behalf of them and their interests, and we should not be held back by three-line Whips and by an attitude that still exists in our society—led mainly by certain sections of the media—that anyone who has the temerity to speak out about or against the decision that was made in the EU referendum is in some way a “traitor” or a “mutineer”. It is an outrage! We come here to speak freely on behalf of our constituents.
Sir Robert Syms (Poole) (Con)
Is not a referendum the biggest free vote? Everybody participated; nobody was whipped. There were weeks and weeks of argument, and a decision was made.
Anna Soubry
That is a really interesting point. Of course we had a referendum, but can we just get real about this? First, 52% of those who voted did so for us to leave the European Union, but not one of them to my knowledge—certainly in my constituency—voted to be poorer. Of course, 48% of people voted for us to remain in the European Union, and they have a right to a say in what now happens. Too many people, including perhaps on the Government Benches, do not understand that a considerable portion of that 48% have accepted the vote, but now feel utterly excluded, sidelined and pushed to one side as we move forward to deliver the result in the interests of everybody in our country.
Peter Grant
The right hon. Lady is making, as always, an impassioned and well-informed speech. The ballot paper contained a question about membership of the European Union, but there has never been a referendum on membership of the customs union or the single market. Nobody knows for certain what people want regarding those institutions.
Anna Soubry
I completely agree; the hon. Gentleman is absolutely right. I take grave exception to the idea that across the length and breadth of this country people were sitting in pubs, cafés, bars or whatever discussing the finer points of the merits or otherwise of the customs union and the single market. The truth is that there are Members of this House who do not know what the customs union is, and there are Members of this House who do not understand what the single market is.
I am not going to name people, but I have had very good conversations with right hon. and hon. Friends about EFTA. I have explained, for example, that members of EFTA can retain their own fisheries and agriculture policies. There are colleagues who have said to me, “Good heavens, I didn’t know that. How very interesting. Can you tell me now about immigration?” So then I explain about articles 112 and 113, and so on and so forth, and about the brakes that could be put on immigration. These conversations have occurred only in the past three or four months, 18 months after the referendum and nearly a year after we triggered article 50. That is why I will say it again: when history records what happened in the run-up to and after the referendum, it will not be in any form of glowing testimony. On the contrary, I think we will all be painted very badly, apart from those right hon. and hon. Members who at least stood up and spoke out. If I dare say it, I think we have been increasingly proved right.
I think people are fed up. They want us to get on with it. They do not quite know what “it” is. Some people actually think we have already left the European Union. But they know that it is getting very difficult and very complicated. I believe that people are becoming increasingly worried and uneasy. It is the dawning of Brexit reality. They know that the deal, which they were told would take a day and a half, or a week and a half, will now take, if not for ever, then a very long time. When I say “for ever”, I mean that, if the Government continue to stick to their timetable, it will not be concluded until way after we have left the European Union. We will get very loose heads of agreement by way of a political statement attached to the withdrawal agreement, which this place will vote on sometime this October or November. People are beginning to realise that they have been sold a bit of a pup.
Only last week, I spoke to a constituent who voted leave who told me, in no uncertain terms—she was quite angry about it—that she had no idea about the implications for the Irish border of not getting this right. People of a particular generation really get it and understand this. Frankly, we are old enough to remember the troubles in all their ghastliness. We also remember the border. Some of us are old enough to remember customs border checks, when we had to go through a particular channel. We remember being terrified that the cigarettes or a bottle of whatever—I certainly would never have done any of these things, of course—might suddenly be uncovered by a customs officer, but that means absolutely nothing to huge swathes of our country. Older people, however, remember the troubles and they know how important it is that the border does not return. They understand how critical not having a border between Northern Ireland and the Republic of Ireland has been to the peace process. They are now not just worried about the return of the border, they are quite cross about it. They are getting cross not just because they do not want it, but because they feel that none of this was discussed and explained before the referendum.
As I have said, we are now having the debate that we should have had before the EU referendum. I am looking towards those on the Scottish National party Benches. The debate held in Scotland in the run-up to the independence referendum was a long, long proper debate. If I may say so as an outsider, every single issue pertinent to the debate was properly teased out and discussed. I do not think anybody could have complained that they did not know the consequences.
Jonathan Edwards
The right hon. Lady is making an excellent point. In Scotland, the Scottish Government produced a White Paper—650 pages long—outlining completely what they were proposing. During the European referendum, the leave campaign produced a poster on a bus. That is why we are in the mess we are in now.
Anna Soubry
I might not quite go that far, but the hon. Gentleman makes a really important point. I was a member of the Government that decided we would have a referendum. To be very blunt, I am now quite ashamed of the fact that I made a decision that we should have a referendum without the proper debate that we clearly should have had and without the long run-up. More than that, this is the conclusion that I think the British people have also reached: how on earth did a responsible Government put in front of us, the people of this country—notwithstanding how brilliant we are—an alternative that we now see will cause our country so much harm? During the referendum campaign, when “Project Fear” was at its full height—the campaign was very poor on both sides, but “Project Fear” in particular was madness and nonsense—I think that subconsciously, people thought to themselves, “No responsible Government would put something to us as an alternative to their preferred option that would deliver all this stuff, when actually, it will harm our economy, and even undermine or threaten our security and the future of peace in Northern Ireland. They wouldn’t do that.” Of course, now we know that that is exactly what that option was, but we have moved on, as I must too.
Anna Soubry
I will make one last point—no, I will take the intervention, because it is probably more relevant to what I just said.
Alison Thewliss
I thank the right hon. Lady for the speech that she is giving, because it is another good one. The point has been made about the very short period running up to the referendum, when people had to make a very big decision on the basis of very scant information. Does she agree that it was far too short to counteract the decades of misinformation, and that we have a real responsibility as politicians to get more information and more facts out to constituents, so that they can understand the basis on which they are going to make decisions?
Anna Soubry
The hon. Lady makes a very good point. Look, some people would argue that it is a miracle that 48% voted for the EU. Anybody who plays or watches cricket knows that before a game, they roll the pitch. We have taken a JCB digger to the pitch for the past 40 years. It is astonishing. On both sides, we have all blamed the EU for all our misfortunes: if something was difficult, we just blamed the EU. Then, of course, in a very short period, we said, “You know that thing that we said was really rather rubbish—actually, it is really rather wonderful. Would you go out and positively vote for it?”
The other dawning of the Brexit reality was in the excellent speech that the Prime Minister delivered a few weeks ago. In it, she faced up to the reality in a highly commendable way—her tone was right and I agreed with much of her content. However, the reality of what she said was this: in admitting that there would be, for example, no passporting for financial services and that we would have reduced access to the market, what she was saying—as others have observed—is that for the first time, I think, in the history of any Government in any country in the world, we are actively going to pursue a course, knowing that it will make us less prosperous than we are under the current arrangements. That is the view of Her Majesty’s Government. I hope as we go forward that perhaps the Government, in that spirit of reality, will also understand that this can and must be stopped. We cannot pursue a course that will make the people of this country less prosperous.
We are meant to be talking about the economic side of our EU relations and affairs, so I will make this observation. The OBR’s predictions were to be welcomed because they were better than its previous predictions about our prospects of growth. I observe, as many others have, that we benefit at the moment from a strong labour market. We are almost at the point of having record levels of employment, which means, of course, that we have more money in the coffers by way of taxation and national insurance. In the financial and insurance sectors, we have seen pay rises of some 7%, and as many have observed, services comprise 80% of our economy.
We know that consumer spending has risen, and that, too, would account for the increased money in the coffers, because it means that our VAT receipts have gone up again. The weakness of sterling means that the companies whose foreign earnings are important to them have seen the worth of those earnings go up.
We must take all those factors into account to understand why it is the view of many that, notwithstanding the OBR’s better forecast, our country is actually experiencing some of the slowest growth in the G20. We think we are doing well, but when we compare ourselves to other G20 countries, we see that we are not doing anywhere near as well as we should be. I have given an explanation of why we are not where we thought we might be, but the point, of course, is that if we were not leaving the European Union, we would be doing considerably better and our prospects would be considerably higher.
Let us be clear about this. Investments are already being delayed, and we know that unless we get this transition in place, a number of important businesses will leave our shores. We also know that business wants certainty, and, in my opinion, the certainty that it is crying out for is the certainty of knowing that we will stay in both the customs union and the single market. No one should underestimate the real risks that our country faces. If we do not get this right, businesses will simply leave. We have already seen examples of that. There are Japanese companies that were promised by Margaret Thatcher, one of the finest proponents of the single market, that our country would never leave the single market. They have invested billions of pounds in real, skilled jobs in our country. Anyone who speaks to those companies—as many of us do—should ask them how they see the prospect of our leaving the single market and the customs union, and, indeed, the European Union. The fact is that instead of investing here, they will invest in other European countries, because we were the bridgehead into the EU.
I have dealt with the Government’s analysis in my interventions, and I know that you are urging me to speed up, Madam Deputy Speaker, but I have not had an opportunity for some time to make a long speech about this matter, which is dear to my heart, so I hope you will forgive me. I hear you—or, rather I see you—and I take the hint. I am about to make my concluding remarks. However, these things need to be said.
The Government, quite rightly and responsibly, asked civil servants in all Departments to look at the different options that were available and to analyse the economic benefits that they might or might not convey. I urge Members to read the papers. They should go into the darkened room, or even better, get hold of those papers, because the Exiting the European Union Committee has had the good sense to publish them. This is new modelling—the best available framework, prepared by civil servants who act with complete independence and, as usual, have exercised the huge skills that they possess. They recognise all manner of variances. They believe that these analyses are the very best, and they are keen to sing the praises of the modelling.
What does that modelling reveal? It reveals that even if the House and the Government were sensible enough to accept the single market and the customs union, membership of the European economic area after we had left the EU would cause our projected growth to fall by 1.6%, a free trade arrangement would reduce it by 4.8%, and World Trade Organisation rules—the cliff edge urged by some Conservative Members; the most irresponsible of all options—would involve a reduction of 7.7%. Moreover, those models do not include the value of the customs union.
I want to conclude—you will be pleased to know, Madam Deputy Speaker—by expressing some views on trade deals. It concerns me greatly that the British public are not being properly and fully informed about them. I say with respect to those on the Treasury Bench that it is very important that they are absolutely up front with people and stop putting forward the chasing of what are effectively unicorn deals. We enjoy 50 free trade deals by virtue of our membership of the EU. The idea that we will not get a deal with Australia is madness, because of course the EU will soon be doing a deal with Australia, and who do we think they will be doing a deal with first, the EU or the UK? The EU of course. So we will benefit from all these free trade deals in any event; we are not getting anything different by leaving the EU.
It is very unfortunate that we are not explaining the facts on free trade arrangements—the 50 or so we currently have by virtue of our membership of the EU, and the other arrangements we also enjoy by virtue of our membership. As this analysis shows, the reality is that even if we get every single free trade deal that is available, that still will not make good the loss to our economy of leaving the EU.
So—finally, Madam Deputy Speaker—people must wake up and realise that our EU colleagues will miss us and they want us to stay, and if we leave and a future generation wants us to return we will not be able to re-join on such good terms as we currently have. The EU will not miss us because of our trade—they will find new markets; we must get real on that—but they will miss us because of what our country has always brought to the EU: we are the voice of sanity; we are the check on the excesses; we are the ally that many seek to keep the EU—
Anna Soubry
My hon. Friend shakes his head, but, with great respect, he should go and speak, as many of us have done, to ambassadors and senior members of Government. They are genuinely upset that our country is leaving, because of the loss from that and the damage and harm it will do to the EU and because of the great role our country has played in many respects in the best part of the EU’s work, which is the advancement of free trade.
I believe that the people of this country are looking for some way out of this mess, because it is a mess, and it is up to us as politicians to provide the leadership. This place cannot overturn the referendum result; the people began this and it is for the people to finish it. However, the people are now entitled to have their say on the final deal—I have no doubt about that—because their future is what is most important and increasingly, as the reality dawns and they understand the full detail of what we have done, it is not that they are regretting their vote, but they do not like what they see on offer as the future out of the EU. So let us be clear: let the people have a final say on the final deal.
Several hon. Members rose—
Mrs Madeleine Moon (Bridgend) (Lab)
It was wonderful to hear the speech by the right hon. Member for Broxtowe (Anna Soubry). I cannot say how much I agree with her about how much this House knows that what we are working towards will be an absolute unmitigated disaster for our constituents. Every one of us in the House, apart from the tiny minority who are driving this disastrous move forward, is absolutely clear that we are going to leave our country and our constituents poorer. It will be a disaster.
I have to say to the hon. Member for Clacton (Giles Watling) that it is nonsense to say that when the facts change, one does not change one’s opinion. Were that true, there would be no divorce. It would mean saying to every woman in the House, “You would never be able to take back that dress that you thought was wonderful when you first saw it but that looked an absolute unmitigated disaster when you got it home.” The facts are changing and we are finally getting to the truth of the disaster of where we are going, so it is right that we go back to the people and say, “Do you want to change your mind? Is this the right direction?”
The impact on London will be tremendous, as we have heard from my hon. Friend the Member for Lewisham East (Heidi Alexander), but I cannot begin to talk about how disastrous it will be for Wales. May I start with the issue of gross value added? Gross value added is one of those terms that does not really resonate with constituents, but let us look at what it means in Wales. In 2016, it was £59.6 billion. The Government’s projections mean that Wales would lose about £5.7 billion in the event of no deal, and around £3.3 billion if we secure a trade agreement. That is over a period of about 15 years, but it will have a huge impact on the Welsh economy. It is not the most vibrant economy, but it will have a devastating impact.
I could throw lots of figures about, but one that impacts on families across my constituency is inflation. Inflation remains at 3%. Wages are not going up, but prices are, and my families are becoming worse off. The cost of food and other goods is soaring as a result of the fall in the value of the pound, which remains about 15% below pre-referendum levels. That is a visible and very real impact on the daily lives of my constituents. Having seen that impact, my constituents deserve the right to another opportunity to decide whether this is a bet that they want to take given that, even under the Government’s own policies and analysis, it will bring further poverty, further disaster and limited opportunities for their children.
I have talked to many of my constituents about how they voted. Some of them say, yes, they got a great result. They got the result that they wanted out of the referendum; they got rid of David Cameron—job done. That is what they have actually said to me. It was not about Europe; it was about austerity. They hated what was happening to their families. They hated the fact that so many of them were heading off to food banks. Some of them say, yes, it was about immigration, but really it was about the wages that they were getting and the 1% pay rise that, year on year, meant that they and their families were falling behind.
For many of them, it was about taking back control. They would say to me, “These unelected bureaucrats”, and I would say, “Well, okay, but tell me the name of the director of education in Bridgend County Borough Council.” They would say, “What? I don’t know, Mrs Moon.” Well, that is an unelected bureaucrat. It is not who the bureaucrats are that we need to know; it is who the politicians are. It is the politicians who hold those bureaucrats to account and it is the politicians who make the decisions. It is about knowing who our politicians are and getting behind them that is the important part of democracy.
A grim time lies ahead. Most businesses constantly approach MPs to say that if we leave the customs union there will be severe consequences, which makes me really, really nervous. I have two major employers at two ends of my constituency: the Ford engine plant and Tata Steel. The impact on both the car industry and the steel industry will be devastating when we leave the European Union. I cannot begin to talk about the impact that job losses in those two industries will have on my constituents. I cannot begin to talk about the loss of future opportunities for the children in my constituency. I have fantastic schools and I am so proud of the bright, alert, really eager youngsters for whom we should, as a country, be promoting a future of opportunity, instead of which I hear fantasies about wonderful trade deals with countries that will never, ever bring the benefits—I ask Members to read the submission from Tata Steel—that access to the European markets currently brings to Tata Steel.
Anna Soubry
The hon. Lady is making a very important speech. I suggest that my hon. Friend the Member for Clacton (Giles Watling) visits her constituency, and talks to Ford and Tata Steel in order to understand the importance of frictionless supply chains, membership of the customs union and membership of the single market in the very real industrial world that the hon. Lady and her constituents inhabit.
Mrs Moon
I thank the right hon. Lady for saying that, because I have those conversations all the time.
When I trotted over to DExEU to read the wonderful insight reports that we were meant to see, I was absolutely appalled by the poor quality of analysis that would be devastating for the people I represent. I will not vote for anything in this House that I think will damage the people I represent. I feel awful guilt—the right hon. Member for Broxtowe also mentioned this—about having voted for that referendum without insisting that we had all these debates before we took it to the people. I recently attended one of my local Women’s Institutes, where a lady said to me, “We shouldn’t have been asked to vote, should we? I didn’t really know what I was voting for. I went with what everybody else was saying, but I didn’t really understand the consequences, and now I’m worried about my grandchildren.” We should all be worried about those grandchildren.
So here we are. It is really quite obvious that we are not going to have frictionless trade. If we leave the single market and the customs union, we are going to make sure that our families are worse off. Europe is on our doorstep. We can get from here into the centre of Europe in a matter of hours. The EU has 37 trade deals with more than 65 countries around the world, covering 15% to 17% of the UK’s trade in goods. The EU has trade deals in place with more countries than the US, which has 20; China, which has 23; and Australia, which has 19. And yet, what are we going to do? We are going to throw that away.
Finally, I am a Member of the NATO Parliamentary Assembly. Every time I attend a meeting, colleagues there tell me of their fear of the consequence of Britain’s departure for the stability of Europe. Every time I see them they ask me, “Is there any chance?” I just hope to God that we wake up in time and say, “Yes, there’s a chance.”
Robert Neill (Bromley and Chislehurst) (Con)
I have a lot of sympathy with what has been said by the hon. Member for Bridgend (Mrs Moon) and my right hon. Friend the Member for Broxtowe (Anna Soubry). I will put my case slightly differently and, perhaps, a little more succinctly.
I take the view that this country made an error. It was a democratic error, but it was an error. And because we are democrats, we have to live with the consequence of the error until such time as I hope may one day be the case, when the future generation reverses that error in some way. However, I am also a realist and know that that is not likely to happen any time soon. Therefore, we must ensure that we respect the outcome of the referendum—like it or not—but that we do so in a way that mitigates, to the greatest extent possible, the damage that will inevitably flow from it. The Prime Minister at her Mansion House speech was frank and honest, as I have always found her to be, about the fact that there is damage and that we must therefore mitigate the risk.
I do not do my politics in belief and faith; that is appropriate for the confessional, but not government and litigation. I do my politics in hard-headed reality, which is why I want to talk about services. Financial services underpin the economy of this country. We are a service economy or we are nothing. The position on services is worrying. My constituents are dependent on services, as 36% of them work in the financial and professional services sector—the 16th highest proportion in the country. Other hon. Members have already set out the massive contribution that the financial services make to our economy, beyond any other.
Anything that damages financial services damages the economy, the tax take, our public services, and the lives of every man and woman in this country. It directly damages the lives of my constituents. I will not support anything that materially damages the lives, the wellbeing and the services of my constituents. I want to help the Prime Minister to avoid that happening. To do that, I want to give her flexibility. As soon as she expresses realism, seeks flexibility and recognises that there must be compromise, some of my hon. Friends promptly appear with another pot of red paint. They are the ones who make her life harder, not those of us who support her in the realism and honesty that she set out in her Mansion House speech.
Let us then look specifically at what needs to be done to achieve the result that we need for financial services. First, we have to find for the City of London, if possible—it is a big if, and whether it will be achieved I know not, but let us set it out very clearly—a means, where mechanisms exist, to enable maximum access for financial services firms and for the legal services firms that underpin them: the two go together. There has to be an early transitional arrangement, or implementation—what’s in a name?—to ensure day-one continuity.
Secondly, there has to be—I want to hear from Ministers how we take this forward and a reassurance that it is central to their view—mutual market access built on the existing position of regulatory convergence. Moving away from that would damage market access; it is not in this country’s interest. That should be based on a commitment—frankly, an ongoing commitment—to mutual recognition and regulatory co-operation, with a joint UK-EU mechanism to ensure that regulation and principles of supervision are monitored as they evolve over time.
There would have to be a dispute resolution mechanism. We can call it a court or a tribunal—I do not much mind. We ought to think about the costs of a plethora of arbitration tribunals, although perhaps remaining within EFTA, or the EEA, will give us a ready-made dispute reconciliation mechanism through the EFTA court. It might be unwise to rule that out.
Anna Soubry
Is my hon. Friend concerned about the cost of all the provisions that will have to be made to govern all these various sectors and to manage all these new arrangements? Would he like the Government to produce, before any final meaningful vote in this place, the actual costs of delivering the Brexit deal?
Robert Neill
My right hon. Friend makes an entirely fair point. We should do that, because there is going to be an administrative cost that will ultimately be borne by consumers and taxpayers.
The industry itself has done analysis of the costs in some areas of financial services. For example, the wholesale banking industry estimates that if there is regulatory fragmentation, it is likely that $30 billion to $40 billion of extra capital will need to be raised. The London Stock Exchange Group calculates that changing the location of clearing houses—we must try to retain euro clearing, which is critical for the sector—will have a potential cost of some $25 billion, not just to us but to the EU27. It is in our mutual interest, on both sides, to get an agreement. No analysis of costs has been done: we should be honest about that and do so. We have to get these agreements.
We must ensure, too, that there is the ability to hire talent across the board and to move it seamlessly. It has to be possible that people can move staff from an office in Brussels, Paris or Frankfurt to London without any hold-up or delay—not even the need for the slightest bit of paperwork. That has to be achieved sensibly. Again, it is in our interest because otherwise we damage the ecosystem of the global financial hub that London is. As the Chancellor rightly acknowledged in his speech last week, the depth of the London capital markets frees not only businesses but sovereign debt for the EU27 nations. Too much rigidity from either side makes that difficult and puts it at risk.
The other thing that underpins this is the legal structure that goes with the professional services. Our legal services are second to none. We are the venue of choice for international litigation and dispute arbitration. That itself is a great gainer of income for this country. The legal services sector was worth £26 billion to the economy in 2015-16—1.5% of GDP—and is responsible for about £4 billion of exports, about 55% of which goes to the EU.
Fly-in fly-out arrangements are critical to that. We need an arrangement whereby, post the establishment directive, lawyers can have their qualifications mutually recognised in the EU27 states, can move seamlessly from one office to another, have the professional standing to advise their clients in EU27 countries and—this is very important but not often mentioned—have their client legal privilege recognised and protected, which can happen only where a lawyer’s qualification is recognised. Without a deal on that, British lawyers will not be able to advise clients or firms in EU27 countries—because professional privilege will not apply—appear in their courts or have the right to arrive in those countries and be present for negotiations with clients in important commercial contracts. It is critical, therefore, that we do not forget the need to get the legal services sector absolutely squared off in our future arrangements.
We must ensure the recognition and enforcement of judgments. A derivative contract—something we lead the world in—is worth while only so long as it can be enforced. We must ensure that they and all other commercial contracts have certainty of enforcement, not only over the transition period, but going forward, as they are typically written for three to five years. At the moment, we do that with one simple EU directive. It would be most unfortunate if we had to replicate that with each country plus those with which the EU has reciprocal arrangements. We can mitigate that by immediate action to join the Hague convention, but that is a back-up, not an ideal situation; we have to go further. I ask the Minister to detail what meetings he and his departmental officials have had with the Bar Council, the Law Society and, where appropriate, the senior judiciary to discuss the practical steps we need to take to safeguard the position of Britain’s legal services sector going forward and how it underpins the broader financial and professional services sector.
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
I am grateful for the opportunity to respond to today’s debate, and I thank all right hon. and hon. Members who have taken part. I have very much enjoyed closely following the debate and the valuable contributions that have been made, and I am sorry that I will not be able to acknowledge them all in the eight minutes that remain.
I want to acknowledge the range of advice that the Government have been given, from my right hon. Friend the Member for Wokingham (John Redwood), who made a strong case for no deal, to my right hon. Friend the Member for Broxtowe (Anna Soubry), who made a strong argument for the customs union and EFTA, to which I will return in a moment. I was also grateful to my hon. Friend the Member for Clacton (Giles Watling) for representing his constituents by supporting the Prime Minister’s centre ground position.
The Prime Minister has been very clear that the UK will leave the EU on 29 March 2019, a date that is fixed as a matter of international and UK law under the article 50 process. That position respects the vote of the people in the referendum on 23 June 2016 to leave the EU, and there will not be a second referendum. As the Prime Minister set out in her Mansion House speech, our decision to leave the EU does not mark an ending; it marks a new beginning for our relationship with our European allies. We want the closest possible partnership. It is pragmatic common sense that we should work together to deliver the best outcome for both sides, and that is what we are doing.
I want to take a little time to talk about some of the solutions that have been proposed in relation to off-the-shelf models. As we have emphasised, we do not want an off-the-shelf solution or an existing model; we want the greatest possible tariff-free and barrier-free trade with our European neighbours, as well as to negotiate our own free trade agreements around the world, particularly in relation to our comparative advantage in services.
We want to ensure that UK companies have the maximum freedom to trade with and operate in European markets, and we want to let European businesses do the same in the UK. But we have always said that we are not looking for a Norway-style deal or a Canada-style deal. There is no point starting from scratch as we build our new relationship, because, unlike a country such as Canada, we start from the position of already having the same rules and regulations as the EU. Seeking a Norway-style agreement based on participation in the EEA agreement would not pass the first test that the Prime Minister set out for our future economic partnership with the EU. It would deliver control of neither our borders, nor our laws.
On borders, remaining in the EEA agreement would mean that we had to continue to accept all four freedoms of the single market, including freedom of movement. On laws, continued participation in the EEA agreement would mean the UK having to adopt at home, automatically and in their entirety, new EU rules, over which in future we will have little influence and no vote. This would not deliver the British people’s desire to have more direct control over the decisions that affect their daily lives.
Membership of EFTA, in and of itself, does not deliver any market access to the EU; it is a trading bloc between four European countries, Switzerland, Norway, Iceland and Liechtenstein. Three of those countries participate in the EU’s single market through the EEA agreement, while Switzerland participates in some areas through a series of bilateral agreements with the EU. Therefore, joining EFTA does not say anything about our future economic partnership with the EU. Although we want to maintain our deep and historical relationships with the EFTA states, the UK is in many ways different from those countries. Our population is about 65 million, whereas the EFTA states together comprise about 14 million people. In 2015, the EFTA bloc’s collective GDP amounted to £710 billion, which compares with the UK’s £1.9 trillion. So the UK’s participation in EFTA would fundamentally change the nature of that group and would not be an appropriate model for our future relationship with the EU or with those countries.
Anna Soubry
I was making the case for the single market and the EEA, and I am sure the Minister would agree that that is not an extreme position to hold.
Mr Baker
I listened carefully to the words my right hon. Friend used and I am sure the record will show that she referred to EFTA, but I am glad she has clarified that, in saying she supports EFTA, she means EFTA as an EEA member. But I stand by the remarks I just made. I hope she will not mind my saying to her gently that from the perspective of many who want to leave the EU, saying that we want to solve the problems of leaving the EU by staying in the EU’s internal market, with all that that entails for non-member states, and staying within the EU’s customs union, so that we have to accept the EU’s common commercial policy, appears to suggest that we must solve the problems of the EU by, de facto, staying within it. That is how it comes across to many people who wish sincerely to leave the EU. I did listen carefully to her—[Interruption.] The hon. Member for Nottingham East (Mr Leslie) mentions transition, and of course we have set out the case for the implementation period.
I must press on, because I want particularly to pick up a point relating to borders and migration.