Brexit: Trade in Goods (EUC Report)

Baroness Armstrong of Hill Top Excerpts

Tuesday 18th July 2017 Lords Chamber

[Baroness Armstrong of Hill Top (Lab)]

My Lords, I want to pay tribute to the chair, the noble Baroness, Lady Verma, and the staff who support the committee. We enjoyed the inquiry, although it was a bit scary—and the more we did, the more scary it became. I regret that the Government have not managed yet to respond, as the noble Baroness, Lady Verma, said, because that adds to the feeling that they are overwhelmed by the task that faces us. I am afraid that that feeling goes far beyond members of our committee and Members of this House; it is there among stakeholders, too. As others have said, decisions have been made among businesses that are already going to affect trade and job opportunities in this country.

It looks as if the EU has a strategic plan. In fact, it prepared for a Brexit decision. The British Government did not—and I wish that I had confidence that they have been able to develop a clear strategic plan, with all the detail that is necessary to go behind any good strategic plan. It really looks as if government is lurching from tactical position to tactical position, with no strategic framework that the rest of us can discern.

I do not think that it is an accident that there are three Members from the north-east here today, and noble Lords will hear from all three of us within about half an hour. I am followed by the noble Lord, Lord Shipley, and of course was preceded by my noble friend Lady Quin. I want to be careful to not just say what they will say or have said or what I have said in previous debates. However, the region does have the highest proportion of its GDP in exports to the EU and a very high proportion of its economy is involved in trade with it. The importance of manufacturing to the north-east is absolutely clear but, as the noble Lord, Lord Howell, said, anyone—and particularly the automotive industry—thinking about manufacturing can see just how intertwined it is with services. The relationship is complex; it is not easily divided or separated. Nor is it easy to separate the chain of activity that goes way beyond one country, let alone one city.

The city of Sunderland, in which Nissan is located, and South Tyneside council, which is very near to its plant, have been working together to develop what they call an international advanced manufacturing park on the outskirts of the current Nissan plant, which would enable other manufacturers allied to high-value automotive manufacturing to locate there and develop new business activity. One of the ambitions is for much more of the whole car to be built in Sunderland but even with that the issue of country of origin does not go away. During the preparation of this report and our previous one it became evident just how important that is for free trade. It is important even if we are not in the single market, and I will come to that point later.

Country of origin will be an issue, whatever the nature of our trade, as will the availability of skilled labour and equivalence in our regulatory regime—something that we all hate to go on about, but which is very important. Along with that equivalence needs to go an agreed mediation system. Are we going to be ready with all of that in 18 months? I suspect not. The Government have said that they do not want a sector-by-sector trade deal but a comprehensive free trade one. The view of the International Trade Secretary seems to be that we can prosper with trade outside the EU and, indeed, outside the countries that have a trade deal with it, which would demand another route too. At its best, it will be extremely difficult to get to equivalent levels of trade with countries other than the EU bloc and those it already has trade deals with. It is also going against the reality that we will still be part of Europe even when we have left the EU, for all sorts of reasons that I do not have to explain to a Foreign Office Minister. We have to be on good terms with our neighbours in Europe.

The blasé view that it is all going to be straightforward and that if the EU makes it difficult we can move beyond it will be disastrous for the north-east. People in the region need the Government to be fully active now in consultation with local authorities, businesses and other stakeholders in the region, in preparation for the negotiations on trade. They need the Government to be clear about the transition agreement and I agree with what other noble Lords have said on that. They also need the Government to get on with taking decisions on the industrial strategy now. If the regions are to prepare for life outside the European Union, they need to develop the infrastructure and other things that they need to survive. That means that the Government have to get on with their industrial strategy so that at least there is clarity around the money that will be received in places that have to construct an alternative way forward. The key cities have produced a response which reminds us and the Government that devolving resources and decisions is critical if we are to have a growing and more-balanced economy that brings more balance and equity to our country.

The response from Sunderland and South Tyneside to the Green Paper on the industrial strategy concentrates on the international advanced manufacturing park. They see that as critical to their determination to grow the economy and develop sustainable, quality jobs. The Government must get on with responding to the Green Paper responses and begin to take decisions. They also need to ensure that they work with businesses, further education colleges and local authorities to up the game on skills development. As I said in a previous debate, the north-east still has a skills gap, largely because young people are still leaving the region. That means that our skills training and support is simply not good enough and we are not keeping them in the region. Virtually no attention was paid to that point during the election campaign but it was raised again and again in the evidence submitted to the committee. I hope that this debate helps the Government to make the decision to give regions such as the north-east confidence and support in meeting their ambition to grow their economies and at least retain their existing businesses.

In my previous speech I made it clear that I support our membership of the single market and the customs union. I support what others have said about that today. I have heard nothing from the Government that persuades me that they have anything like an acceptable alternative which will give certainty to business and enable regions such as the north-east to trade effectively with the European Union.

The report makes it clear that huge challenges face the country in relation to its trade following Brexit. It is the Government’s task to turn those challenges into opportunities. That will not happen by pretending that this will all be easy and straightforward. We will only begin to get anywhere near that if the Government engage much more seriously with people here and in the regions, people in business and the public, and negotiate in a much more open and confident way than we have seen to date. I have a lot of respect for the Minister and know that she will not try to put us off in the way that I am afraid I felt was the case when the Secretary of State appeared before the Select Committee last week. This is an issue on which we need clarity and decisions from the Government; otherwise, the future for regions such as the north-east is very bleak indeed.