Brexit: Options for Trade (EUC Report)

Baroness Armstrong of Hill Top Excerpts

Thursday 2nd March 2017 Lords Chamber

[Baroness Armstrong of Hill Top (Lab)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Verma, and my noble friend Lord Whitty who, as the chairs of the two sub-committees that came together, guided us very carefully to as clear a report as possible. I saw this inquiry as a straightforward attempt to set out the myriad relationships that there are currently between the European Union and other countries and the costs and benefits of each approach, so that wider stakeholders, the public, and the Government could begin to see some of what will need to be negotiated.

As I have said before in this House, I am learning a lot from these committees—I come out of every meeting thinking that this is much more complicated than anybody anticipated, and certainly more than anybody understood before they were able to place their cross on 23 June last year. I approached this inquiry as I approach most things: through the prism of the region that I come from—the north-east. Trade is at the centre of the relationship between the north-east and the European Union. Indeed, a higher proportion of exports from our region go to the EU than from any other region. These exports are almost exclusively manufactured goods, although there are, of course, services that often go alongside them, but we export more manufactured goods per capita than anywhere else in the country. The north-east has a positive balance of trade that is the healthiest in the country and I am sure that the Government will not want to lose or neglect that really important point, because I suspect that the north-east is—by every criterion—one of the areas left behind that the Prime Minister talks about so much.

The Government, in their response to the report, make it clear that they are not actually going for any of the models that are outlined in it. They do accept, however, that they have to prepare for the “no deal” option, which would mean reverting to WTO rules. Even before triggering Article 50, they have already ruled out the option that the majority of manufacturers want—continued membership of the single market and the customs union. That means that the struggle to meet their expectations is going to be even greater, and I hope that the Government accept from this report the challenges that any new deal is going to bring. None of them is cost-free and none of them constitutes “taking back control” continually, as my noble friend Lord Whitty said. The real problem that crawls out of this report is that nothing is for nothing.

The Government have been, to date, incredibly optimistic, but sometimes it seems—and their response to this report reinforces this view—that they are not being wholly realistic. What manufacturers are looking for is as much clarity and certainty as possible. I accept that it is not possible at this stage to provide that fully, but the Government have a responsibility to respond to those ambitions as much as possible. I have met no one in the EU—and the committee has met people from the EU in relation to this report and to many other activities in recent months—who wants to be vindictive towards us. However, their prime ambition seems to be to make sure that the EU survives and, hopefully, prospers. If they think that we are seeking a deal with no difficult consequences for the UK—that it is all going to be wonderful in the way it is often described to us in government speeches—then they are going to look at that with a great deal of caution. They do not want people in any other country to feel that we will get a better deal than they would and that, therefore, it is worth them seeking to leave the EU. We have to remember that in the way that we negotiate and approach this.

I suspect, and the report reinforces this, that the devil will be in the detail, and that the framework for future relations that will have to be spelled out in the leave document, which we normally refer to as the divorce settlement, will simply not be able to explore the detail. In this case, the Government need to address transitional arrangements, but they seem somewhat coy in acknowledging this. They say—again, as the noble Lord, Lord Whitty, said—that they expect a “phased programme of implementation” following the Article 50 process. Frankly, I do not care what the Government want to call it. What we need, and what manufacturing industry in particular needs, is some clarity that there will be a process put in train after the two-year limit, which will deal with the detail in a way that does not put it at the cliff edge. I know that that is the Government’s ambition but they are going to have to establish the game plan, as we say in the report.

I am normally an optimist: being a woman in the Labour Party and a Sunderland supporter, you have no option. However, I find this very difficult. I do not accuse the Government of false news, although a lot of the campaigning for the referendum could be described in that way, but I caution them about being so optimistic that it appears blasé. The worst outcome will be to raise expectations that are then distinctly underachieved. That is not in the interests of the country and, I might say, especially not those of the north-east. I hope the Minister recognises that we need a dose of reality in this debate. It will be a long, tough road ahead. Yes, we want the best outcome but this is a negotiation and while we may be one of the largest countries in the EU now, we are not in sole control of these negotiations. We need to approach them realistically and with humility.