European Affairs

Antoinette Sandbach Excerpts

Wednesday 14th March 2018 Commons Chamber

[Greg Hands]

I thank my right hon. Friend for her lengthy intervention. What I would say is that there is no such analysis of the kind she describes. What I am clear on is that it is our objective to maintain frictionless trade with the European Union as we go forward. It is our objective to conduct an independent trade policy and to seek, when the time is right, trade agreements with those partners. It is also our objective to seek the continuity in existing EU trade agreements for the UK, which I note the Labour party voted against on Second Reading of the Trade Bill. Labour is actually opposed to us seeking the continuity of existing trade agreements.

[Antoinette Sandbach (Eddisbury) (Con)]

Going back to the analysis published by the Government and the risk presented by non-tariff barriers, it was clear in that analysis that, even if we had an EEA-style agreement, there would still be damage to the UK economy. Is the Minister saying that he wants EEA-plus?

[Greg Hands]

I think I understand my hon. Friend’s intervention, but the Government have been clear for more than a year, since the Lancaster House speech, that our objective is not to seek an EEA-style agreement. Nor is it our objective to seek a CETA-style agreement. It is our objective to seek a deep and comprehensive agreement with the European Union, the like of which, I remind my hon. Friend, who I know studies these matters very carefully, was not modelled in those analyses. That is the most important point.

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[Christian Matheson]

Will the hon. Gentleman give way?

[Antoinette Sandbach]

Will the hon. Gentleman give way?

[Stephen Gethins]

I would like to make a little bit of progress, but I will come to the hon. Members in just a moment.

I am using this Government’s figures. We need to have a real and proper debate about how we plug the gaps in tax and in GDP.

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[Stephen Gethins]

I will just make a little bit of progress.

I say gently to Government Members that there are serious issues around tax raised and GDP that we must all wrestle with in a serious manner, offering some suggestions, but right now the Government are not handling some of the big issues of the day. Time that is being taken up with this issue is strangling political debate. The strikes in our universities right now are crucial for all parties and we should all take them seriously; yet, as we look to a fair solution, this matter cannot be a priority because this Government are so consumed by Brexit and what is going on with leaving the European Union that other issues simply get ignored. Brexit strangles that proper and serious debate.

[Antoinette Sandbach]

I do not want the impression to be given to this House that the recent figures published by the Exiting the European Union Committee were the same as the figures that were used pre-referendum. Two totally different economic models were used. It would be wrong for the record of this House to suggest that the figures used before the referendum were the same as the ones after.

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[Antoinette Sandbach (Eddisbury) (Con)]

It is always a pleasure to follow the right hon. Member for Leeds Central (Hilary Benn), who, as ever, was very eloquent. I heartily endorse his point about using multilateral institutions, but I fear that the failure of Europe to act in an appropriately tough way after the murder of Litvinenko may well have led the Russian state to think that it could have another go here. I would have argued for sanctions to be applied, particularly against Russia’s gas exports, as I think that that would have had a big impact. I support the right hon. Gentleman’s calls and the solidarity shown by Europe, but I ask it to go further and to consider strict measures against the Russian state.

I want to address the importance of not so much our trade in goods, but our trade in services, which has been under-represented in many of our debates on Europe. I do so particularly in the light of the rather aggressive statements by President Trump in the past few days. Services are vital for our prosperity. They constitute almost 80% of UK GDP and 80% of UK jobs, as well as 45% of our exports. A large proportion of our service exports go to Europe. In fact, this trade is worth £90 billion annually, which is more than the Government spend on transport, housing, the environment, industry, employment and agriculture combined. When we see it in those terms, we understand the importance of a deal for the service sector. That is not just about financial services, because it also includes sectors such as insurance, legal, cultural and digital services.

I welcome the Prime Minister’s commitment to an ambitious and comprehensive deal, which will be essential, as it will have to cover a range of sectors, including the service sectors, with their various requirements and needs. I therefore encourage Ministers to be bold. The exit analysis produced by a number of Departments, using the most up-to-date economic model, shows that the real threat to UK plc comes from non-tariff barriers. We can have a debate about the customs union, but I argue that it is non-tariff barriers that create the biggest threat to the UK economy.

[Mark Garnier]

My hon. Friend is right to raise the issue of non-tariff barriers. The World Trade Organisation itself identified that there were 300 non-tariff barriers in 2010, and the figure rose to 1,200 by 2015. Does she agree that Great Britain can be a strong advocate of free trade in the WTO and can try to drive a reduction in not only tariffs, but non-tariff barriers?

[Antoinette Sandbach]

Of course there is nothing to prevent us from doing that at the moment. In fact, the number of non-tariff barriers has increased during our membership of the WTO, even though we are also a member of the EU. That is a real and significant danger to the UK economy.

I hope that we will look in detail at sectors such as the three that I want to address: digital, insurance and legal. The digital sector covers a huge range of industries. They are not just new tech businesses; they cover a wide range of services for many companies. They are exposed to the same risks as many other service industries, but they also have to contend with data protection rules that will impact on data flows after Brexit.

TechUK says that digital makes up 16% of UK output and 10% of UK employment. It is a significant export sector, and about 96% of output and 81% of exports are in services. That is key. It is vital that we look at an agreement that deals with cross-border data flows with not only Europe, although 75% of our data flows are with Europe. We are one of the most advanced countries for trading online. Our consumers are extremely educated in and knowledgeable about buying goods and services online. It is important that we look at how we address these issues in a future deal.

Even if we maintain identical regulation with the EU, there are questions regarding the legal basis on which companies can transfer data between the UK and the EU27. It would be for the European Commission to assess whether we had achieved adequacy. Failure to achieve adequacy could force localisation or the redirection of an EU citizen’s data. That fragmentation could create significant costs for UK businesses, which would have to implement alternative legal structures. According to one study, cross-EU data localisation could cost between 0.4% and 1.1% of GDP, and lead to significant drops in private investment and a drop in service exports. The uncertainty over whether a deal will be struck could see companies restrict the amount of data they store and process in the UK in the short term. Clearly, we welcome the Prime Minister’s recognition that we will seek more than just an adequacy arrangement and that we want an appropriate ongoing role for the UK’s Information Commissioner’s Office, but it is vital that we actually deliver on that and do so quickly.

The second area I want to address is UK legal services. The UK legal services industry has made it absolutely clear that the CETA model does not provide a comprehensive framework for professional services. I would argue that the Government need to be looking at Norway-minus, not Canada-plus-plus-plus. It is clear that the impact of no deal on services in the legal industry would be more dramatic than it would be on the insurance industry. That is because a widely established series of EU directives has created a really well functioning market in legal services in the EU. The sector is worth £26 billion to the UK, which is the equivalent of 1.5% of GDP, and employs more than 3,800 people, often in highly paid and high-skilled jobs. In 2016, there was a net export of £4 billion from the legal services sector into Europe.

It is vital that, when we look at the customs union, the EEA should be the plan B. I agree very much with what my hon. Friend the Member for East Renfrewshire (Paul Masterton) said. We absolutely support the Prime Minister in going out and getting that deep and special partnership and deal, but if for any reason we cannot achieve that deal, the plan B should be an EEA/EFTA-style deal. That should be the fall-back, not WTO arrangements. If any of my constituents wonder how I have reached that conclusion, they should look online—it is on the parliamentary website—at the analysis that has been produced across Departments indicating that an EEA-style departure or agreement would be the least damaging option for the UK economy. That would still allow us to go out and strike trade deals—there are trade deals with 57 other countries—and to go into a potential market of 900 million people. We could still do fantastic trade with the Chinese, because when the Prime Minister returned from her recent China visit, she had signed £9 billion-worth of trade deals. I would argue that that option needs to be very seriously considered by the Government as a plan B.