EU Withdrawal

Baroness Bull Excerpts

Wednesday 13th February 2019 Lords Chamber

[Baroness Bull (CB)]

My Lords, in common with many noble Lords, I had decided to abstain from any further EU withdrawal debates feeling that all there is to be said has been said not once but many times. I was also keen to cede the floor to noble Lords better equipped than me, through experience and expertise, to comment on the manifold versions of EU withdrawal currently on the table and, indeed, at this point scattered all over the floor.

However, in reflecting on the contributions of other noble Lords to the debate in this House on 28 January, and in following the ongoing discussions that are the subject of today’s Motion, I am struck by the continued silence of what Sir Ivan Rogers, in his Liverpool University lecture last year, referred to as “the dog that failed to bark”, and so I rise, I hope briefly, to ensure that in this take note debate this House really does take note of the impact of the UK’s withdrawal from the EU on our world-leading services sector and of the absence of any real consideration of the needs of services industries within ongoing discussions.

Services are a UK success story. They have driven three-fifths of the rise in UK exports over the past 20 years, they are responsible for more than 40% of our total exports, they contribute 80% of the UK’s GDP and they account for four in five jobs up and down the country. UK services are exported all over the world, but the largest single destination by far is the EU, which is worth £90 billion annually to the economy.

So why have we heard so little about trade in services over the past two and a half years, never mind over the past two and half weeks? It might be because of the high concentration of services in London and the south-east or because of the predominance of financial companies in the general perception of what constitutes the service sector. With London perceived to have prospered at the expense of the rest of the country, and with the financial sector still held responsible in the public mind for the 2008 crash and the years of austerity that followed, perhaps forefronting services in negotiations did not feel like much of a vote winner.

Whatever the reason, much of the debate on the future economic relationship between the UK and the EU has focused on key “at the border” issues affecting trade in goods, such as customs and tariffs, rather than the “behind the border” issues of domestic rules and regulations that are the potential barriers to free and open trade in services. It is certainly easier to grasp the more straightforward concept of selling a good than it is to understand cross-border services trade, which is by no means all carried out via virtual means. There are five modes of services. Yes, services are provided remotely, but they are also provided in the supplier’s country, such as tourism or studying at a university. They are provided in the consumer’s country through the establishment of permanent offices. They are provided by fly-in, fly-out provisions, and they are provided within the manufacture and supply of goods, which are almost always supported by services, including maintenance contracts, legal, design and technology, and this last mode is not covered by the WTO General Agreement on Trade in Services. Of course, most of these services are delivered by people on the ground, which means that service provision is linked inextricably with ease of movement.

This bundling together of services, goods and people finds perhaps its most sublime expression in the cultural and creative industries, particularly in the part of the sector in which I was active, where it is impossible to distinguish between the person and the service they offer. I doubt he would have expected to be quoted in this context, but WB Yeats had it right when he asked:

“How can we know the dancer from the dance?”


In terms of the service that dancers provide, you just cannot.

As was noted earlier, the creative industries are particularly relevant in any discussion about services. They are responsible for almost 10% of UK service exports, they are creating jobs at four times the rate of the wider economy and they contribute £101 billion in gross value added every year, which is more than oil and gas, automotive, aerospace and life sciences combined. This success has been achieved on the back of the freedoms enabled through membership of the EU: the ability to cross borders without visas; to transport instruments, scenery and costumes without tariffs, carnets and border checks; to have professional qualifications recognised and IP protected; and to travel freely, often at ludicrously short notice.

Despite their importance to the economy, the UK’s reputation, tourism, inward investment and employment, the withdrawal agreement is silent on services. As we have often said in this Chamber, it is true that the declaration on the future relationship is, despite its brevity, a far more important document, in the long run, than the agreement itself, but the language is vague and none of it is legally binding, so while it promises “ambitious arrangements”, it is worryingly light on trade in services and on the mobility of people that allows services to be delivered.

It is hard not to conclude, as Sir Ivan Rogers did in his Liverpool University speech, that,

“UK services’ industries needs have been sacrificed to the primary goal of ending free movement”,

on the basis that it is the will of the people. I ask once again: which people? Polls show that public concern about immigration is the lowest it has been for 16 years. The Migration Advisory Committee has noted:

“The UK may find itself in the position of ending free movement just as public concern falls about the migration flows that result from it”.


Even the Sun reported a YouGov poll showing that eight out of 10 leave voters want to welcome the same number of doctors and nurses to the UK after Brexit, with more than half keen to welcome even more. One in five leave voters wanted more social workers, too. It was the high-salaried bankers they wanted turned away. So much for the proposed post-Brexit immigration policy which, as it stands, will facilitate exactly the opposite: access for the higher paid, but nothing beyond a one-year stay for the nurses, care workers and teaching assistants on which our economy and society depend. Once again, just for the record, I say that salary levels are not a proxy for skills.

The CBI warns that for service industries, like so many others, no deal is not an option. It goes on to say that under a no-deal scenario service industries would not be able to rely on WTO rules and that companies in some of the UK’s most successful exporting sectors, including finance, broadcasting and airlines, would be unable, for certain types of services, to trade at all. This will hit not just London and the south-east; the north-east and the West Midlands send about half of their services exports to the EU, which makes them proportionally more exposed to the effects of no deal.

Given the strength of the UK’s services sector, the jobs it provides, the tax revenue it generates and, by extension, the public services it supports up and down the country, can the Minister confirm that appropriate attention will be focused on getting the right deal for the services sector as discussions continue?

I join other noble Lords in expressing my disappointment at yesterday’s Statement. We are told to hold our nerve. I know a thing or two about nerves, but we now find ourselves in a situation not unlike the ballet dancer’s standard anxiety dream: it is 7.29 pm, the overture is playing, the curtain is about to go up and we are all lined up on stage with absolutely no idea of the steps we are supposed to perform. The Prime Minister’s Statement on the ongoing discussions provided no comfort whatever for the services sector or any other that the cliff edge is receding. In fact, it did quite the opposite: her apparent tactic of kicking the can continually down the road in an attempt to ensure the other side blinks first seems to be taking us ever closer to a place where no deal is a horrible inevitability.

This House and the other place have both confirmed their belief that no deal must be taken off the table. With the clock ticking, with no alternative arrangements to the backstop on the horizon, with no sign of EU willingness to reopen a deal our own Prime Minister said was the best we were going to get, with a mountain of statutory instruments and Bills still to be scrutinised and debated and with no parliamentary majority for a deal in sight, it is surely time to admit that there is no possibility that this country will be ready to leave the EU on 29 March. As the noble and learned Lord, Lord Hope, so eloquently pointed out early this afternoon, we now need as a matter of urgency to start the process of requesting an extension to Article 50 while time might just still be on our side.