Exiting the EU

Baroness Evans of Bowes Park Excerpts

Monday 9th July 2018 Lords Chamber

[The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)]

My Lords, with the leave of the House I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:

“Mr Speaker, I am sure that the House will join me in sending our deepest condolences to the family and friends of Dawn Sturgess, who passed away last night. The police and security services are working urgently to establish the full facts in what is now a murder investigation. I want to pay tribute to the dedication of staff at Salisbury District Hospital for their tireless work in responding to this appalling crime. Our thoughts are also with the people of Salisbury and Amesbury. My right honourable friend the Home Secretary will make a Statement shortly—including on the support we will continue to provide to the local community throughout this difficult time.

Turning to Brexit, I want to pay tribute my right honourable friends the Members for Haltemprice and Howden and Uxbridge and South Ruislip for their work over the past two years. We do not agree about the best way of delivering our shared commitment to honour the result of the referendum. But I want to recognise the work that the former Secretary of State for Exiting the European Union did to establish a new department and steer through Parliament some of the most important legislation for generations. And, similarly, to recognise the passion that the former Foreign Secretary demonstrated in promoting a global Britain to the world as we leave the European Union. I am also pleased to welcome my honourable friend the Member for Esher and Walton as the new Secretary of State for Exiting the European Union.

On Friday, at Chequers, the Cabinet agreed a comprehensive and ambitious proposal that provides a responsible and credible basis for progressing negotiations with the EU towards a new relationship after we leave on 29 March next year. It is a proposal that will take back control of our borders, our money and our laws—but do so in a way that protects jobs, allows us to strike new trade deals through an independent trade policy, and keeps our people safe and our union together.

Before I set out the details of this proposal, I want to start by explaining why we are putting it forward. The negotiations so far have settled virtually all of the withdrawal agreement. And we have agreed an implementation period which will provide businesses and Governments with the time to prepare for our future relationship with the EU. But on the nature of that future relationship, the two models that are on offer from the EU are simply not acceptable.

First, there is what is provided for in the European Council’s guidelines from March this year. This amounts to a standard free trade agreement for Great Britain, with Northern Ireland carved off in the EU’s customs union and parts of the single market separated through a border in the Irish Sea from the UK’s own internal market. No Prime Minister of our United Kingdom could ever accept this. It would be a profound betrayal of our precious union. While I know that some might propose instead a free trade agreement for the UK as a whole, this is not on the table because it would not allow us to meet our commitment under the Belfast agreement that there should be no hard border between Northern Ireland and Ireland.

Secondly, there is what some people say is on offer from the EU: a model that is effectively membership of the European Economic Area, but going further in some places and remaining in the customs union for the whole of the UK. This would mean continued free movement, continued payment of vast sums every year to the EU for market access, a continued obligation to follow the vast bulk of EU law, but no independent trade policy and no ability to strike our own trade deals around the world. I firmly believe that this would not honour the referendum result. If the EU continues on this course, there is a serious risk that it could lead to no deal. Moreover, this would most likely be a disorderly no deal, for, without an agreement on our future relationship, I cannot see that this Parliament would approve the withdrawal agreement with a Northern Ireland protocol and financial commitments—and without these commitments, the EU would not sign a withdrawal agreement.

A responsible Government must prepare for a range of potential outcomes, including the possibility of no deal. Given the short period remaining before the conclusion of negotiations, the Cabinet agreed on Friday that these preparations should be stepped up. At the same time, we should recognise that such a disorderly no deal would have profound consequences for both the UK and the EU. I believe that the UK deserves better. So the Cabinet agreed that we need to present the EU with a new model, evolving the position that I set out in my Mansion House speech so that we can accelerate negotiations over the summer, secure that new relationship in the autumn, pass the withdrawal and implementation Bill, and leave the European Union on 29 March 2019.

The friction-free movement of goods is the only way to avoid a hard border between Northern Ireland and Ireland and between Northern Ireland and Great Britain. It is the only way to protect the uniquely integrated supply chains and just-in-time processes on which millions of jobs and livelihoods depend. So at the heart of our proposal is a UK-EU free trade area which will avoid the need for customs and regulatory checks at the border and will protect those supply chains. To achieve this requires four steps.

The first is a commitment to maintaining a common rulebook for industrial goods and agricultural products. To deliver this, the UK would make an up-front sovereign choice to commit to ongoing harmonisation with EU rules on goods, covering only those necessary to provide for frictionless trade at the border. This would not cover services because this is not necessary to ensure free flow at the border. It would also not include the common agricultural and fisheries policies, which the UK will leave when we leave the EU. The regulations that are covered are relatively stable and are supported by a large share of our manufacturing businesses. Moreover, we would continue to play a strong role in shaping the European and international standards that underpin them. There would be a parliamentary lock on all new rules and regulations, because, when we leave the EU, we will end the direct effect of EU law in the UK. All laws in the UK will be passed in Westminster, Edinburgh, Cardiff and Belfast. Our Parliament would have the sovereign ability to reject any proposals if it so chose, recognising that there would be consequences, including for market access, if we choose a different approach from the EU.

Secondly, we will ensure a fair trading environment. Under our proposal, the UK and the EU would incorporate strong, reciprocal commitments relating to state aid. We will establish co-operative arrangements between regulators on competition and we will commit to maintaining high regulatory standards for the environment, climate change, and social, employment and consumer protection.

Thirdly, we would need a joint institutional framework to provide for the consistent interpretation and application of UK-EU agreements by both parties. This would be done in the UK by UK courts, and in the EU by EU courts, with due regard paid to EU case law in areas where the UK continues to apply a common rulebook. This framework would also provide a robust and appropriate means for the resolution of disputes, including through the establishment of a joint committee of representatives from the UK and the EU. It would respect the autonomy of the UK and the EU’s legal orders and be based on the fundamental principle that the court of one party cannot resolve disputes between the two.

Fourthly, the Cabinet also agreed to put forward a new, business-friendly customs model: a facilitated customs arrangement. This would remove the need for customs checks and controls between the UK and the EU, because we would operate as if we were a combined customs territory. Crucially, it would also allow the UK to pursue an independent trade policy. The UK would apply the UK’s tariffs and trade policy for goods intended for the UK, and the EU’s tariffs and trade policy for goods intended for the EU. Some 96% of businesses would be able to pay the correct tariff or no tariff at the UK border, so there would be no additional burdens for them compared to the status quo and they would be able to benefit from the new trade deals that we strike. In addition, we will also bring forward new technology to make our customs systems as smooth as possible for those businesses that trade with the rest of the world.

Some have suggested that under this arrangement the UK would not be able to do trade deals. They are wrong. When we have left the EU, the UK will have our own independent trade policy, with our own seat at the World Trade Organization and the ability to set tariffs for our trade with the rest of the world. We will be able to pursue trade agreements with key partners, and on Friday the Cabinet agreed that we would consider seeking accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Our Brexit plan for Britain respects what we have heard from businesses about how they want to trade with the EU after we leave and will ensure that we are best placed to capitalise on the industries of the future, in line with our modern industrial strategy.

Finally, as I have set out in this House before, our proposal also includes a far-reaching security partnership that will ensure continued close co-operation with our allies across Europe, while enabling us to operate an independent foreign and defence policy. So this plan is not just good for British jobs but good for the safety and security of our people at home and in Europe, too.

Some have asked whether this proposal is consistent with the commitments made in the Conservative manifesto. It is. The manifesto said:

“As we leave the European Union, we will no longer be members of the single market or customs union but we will seek a deep and special partnership including a comprehensive free trade and customs agreement”.


That is exactly what the proposal agreed by the Cabinet seeks to achieve. What we are proposing is challenging for the EU. It requires the EU to think again, to look beyond the positions it has taken so far and agree a new and fair balance of rights and obligations, because that is the only way to meet our commitments to avoid a hard border between Northern Ireland and Ireland, without damaging the constitutional integrity of the UK and while respecting the result of the referendum. It is a balance that reflects the links we have established over the last 40 years with some of the world’s largest economies and security partners. It is a bold proposal that we will set out more fully in a White Paper on Thursday. We now expect the EU to engage seriously with the detail and to intensify negotiations over the summer so that we can get the future relationship that I firmly believe is in all our interests.

In the two years since the referendum we have had a spirited national debate, with robust views echoing around the Cabinet table as they have around breakfast tables up and down our country. Over that time I have listened to every possible idea and every possible version of Brexit. This is the right Brexit: leaving the European Union on 29 March 2019; a complete end to free movement, taking back control of our borders; an end to the jurisdiction of the CJEU in the UK, restoring the supremacy of British courts; no more sending vast sums of money each year to the EU, but instead a Brexit dividend to spend on domestic priorities such as our long-term plan for the NHS; flexibility on services where the UK is world leading; no hard border between Northern Ireland and Ireland or between Ireland and Great Britain; a parliamentary lock on all new rules and regulations; leaving the common agricultural policy and the common fisheries policy; the freedom to strike new trade deals around the world; and an independent foreign and defence policy. It will not be the most distant relationship possible with our neighbours and friends, but a new, deep and special partnership: frictionless trade in goods; shared commitments to high standards, so that together we continue to promote open and fair trade; and continued security co-operation to keep our people safe.

This is the Brexit that is in our national interest. It is the Brexit that will deliver on the democratic decision of the British people and it is the right Brexit deal for Britain. I commend this Statement to the House”.

My Lords, that concludes the Statement.

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[Lord Newby (LD)]

My Lords, I add my condolences to the family and friends of Dawn Sturgess.

The Statement and the subsequent resignations lay bare the fundamental dilemma at the heart of Brexit. What is most important, access to EU markets and institutions, which is necessary for prosperity and security, or control, which is necessary for real independence of action? The former Foreign Secretary accurately summed up the Government’s approach when he said that it was to have their cake and eat it, and the agreement at Chequers still aims to perpetuate that impossibilist policy.

The Government have tried to avoid saying that they plan to remain a de facto member of a customs union by calling it a “free trade area”, but they have agreed to harmonise our rules with EU rules for trading goods, possibly in perpetuity if they cannot get their preferred long-term solution of the so-called facilitated customs arrangement to work. The Chequers statement is so incomplete on this concept that it is frankly pointless to try to discern how it would work, but I will ask one question. The Government say that the UK will eventually apply UK tariffs to goods intended for the UK and EU tariffs for goods intended for the EU. Do they envisage that the EU will adopt the same system, or have they given that idea up as politically and technologically impossible?

The Government have decided that there will be no attempt to have a common approach to services—some 80% of the economy and more than 40% of our exports. The Chequers statement says that this will mean that we,

“will not have current levels of access to each other’s markets”.

These words mean that there will be fewer service sector jobs in the UK post Brexit. Have the Government made an assessment of how many jobs are likely to be lost and can they give another single example of where any UK Government have previously adopted a policy that knowingly has job losses at its heart? The text refers to setting our own tariffs. When is the earliest that the UK believes it will be in a position to strike independent trade deals, given that this can happen only if the facilitated customs arrangement is in place? What assessment have the Government made about potential gains to be made in jobs under the Trans-Pacific Partnership compared with the jobs that will be lost in the services trade with the EU?

The noble Baroness, Lady Smith, asked some questions about the role of Parliament as envisaged in the Chequers statement. I have one supplementary question: does the noble Baroness the Leader of the House agree with David Davis, speaking this morning, that the concept of Parliament having a real say on customs matters was more illusory than real? Who are the Government seeking to fool by spinning that illusion?

On the movement of people, the Chequers statement contains but one sentence. It is deeply worrying. It says that EU and UK citizen should be able,

“to travel to each other’s territories”—

on unspecified terms—and EU citizens should be able to “study and work”. The Government clearly envisage major restraints on freedom of movement. Have they made any assessment of the impact of this approach on UK citizens wanting to travel, work and study in the EU, given that we must assume that freedom of movement will be restricted by the EU if we do the same to their citizens coming here?

The Prime Minister was at pains to stress that the Government will step up preparations for no deal. Can they confirm that while the Dutch, for example, have already recruited 800 new customs officers to cope with such an eventuality, the UK do not even plan to begin to do the same until later in the summer? How, therefore, could the customs service be even remotely ready for any no deal scenario next April? Does not the lack of planning to date mean that the bold brave talk of no deal is simply bluster?

Finally, the noble Baroness the Leader of the House was present in the room last Friday and, if reports are to be believed, like all other members of the Cabinet expressed her views. As virtually every other Cabinet member has already done so, could she possibly tell the House the gist of her contribution?

We will have a full debate on the Government’s White Paper on 23 July. Who knows what the Government will look like then? Today, however, they are simply a complete shambles.

[Baroness Evans of Bowes Park]

I thank the noble Baroness and the noble Lord for their, as ever, positive comments about where we are.

The noble Baroness asked about existing EU trade deals. We have been consistently clear that we want to roll over existing arrangements, and that is what we will continue to do.

The noble Lord and the noble Baroness asked about freedom of movement. The Prime Minister has been very clear: freedom of movement will come to an end and we will control the number of people who come to live in our country. It will be brought to an end through the immigration Bill, which we will see next year and which will bring migration from the EU back under UK law. Last July, as noble Lords will be aware, the Government commissioned the Migration Advisory Committee to gather evidence on patterns of EU migration and the role of migration in the wider economy ahead of our exit. Its final report is due in September. We will take account of its advice when making decisions about our future immigration system. However, we have been clear that we want a mobility framework so that UK and EU citizens can continue to travel to each other’s territories and provide services, which will be similar to what the UK may offer other close trading partners. The Prime Minister has also said that no preferential access will be offered to EU workers that is not on offer also to other trading partners with whom we seek ambitious trade agreements.

The noble Baroness asked about the common rulebook. She will be well aware that the EU will remain an important export destination for UK manufacturers. Maintaining a common rulebook would ensure that manufacturers could continue to make one product for both markets, preventing dual production lines while protecting consumer choice. As yet, there is no demand from UK manufacturers to change current regulations on industrial goods, but if in future changes are made to the rules that the UK feels unable to accept, we will be in a position to choose not to accept them. Both Houses of Parliament will have a role in making those decisions.

The noble Lord asked about services. He is right: we will strike different arrangements for services, because we believe that it is in our interest to have regulatory flexibility and we recognise that the UK and EU will not have current levels of access to each other’s markets. However, with services being such an important part of our economy, we want to be able to strike great deals in this area with other nations.

I can assure both the noble Lord and the noble Baroness that there has been much planning for no deal across government, but the Cabinet recognised that we need to step up on this. It is something that will be ramped up over the summer, to ensure that, while we do not want it, we will be ready for a no-deal situation. However, we will be focused in these negotiations on this clear and comprehensive proposal, which the Prime Minister will talk about with both the EU Commission and EU leaders in the coming weeks to make sure that we get a deal that works for the UK and for the EU.

[Lord Lamont of Lerwick (Con)]

My Lords, I thank the noble Baroness for repeating the Statement and welcome certain aspects of it, particularly the commitment on free movement of labour. Perhaps I may press her on the common rulebook and how she would distinguish a common rulebook from an EU rulebook. While many manufacturing businesses want, as she said, to observe European standards, it is one thing to observe European standards when exporting to a third country, but it is another to be compelled by law to observe them both domestically and internationally. I appreciate that there would be parliamentary procedures for alterations in the future, but that is already the case with many European regulations. How would the noble Baroness distinguish this from being in the single market, which was one of our red lines?

[Baroness Evans of Bowes Park]

We will maintain the common rulebook and make an up-front, sovereign choice to do so. As my noble friend said, the rules are relatively stable and are supported by a large share of our manufacturing business. Of course, we would continue to have a strong role in helping to shape the international standards that underpin them, but, importantly, if Parliament did not wish to maintain this level of harmonisation, it would be able to say, “No, we don’t wish to do this”. We will understand the consequences of doing it, but Parliament will have the right to say no and to decide to take a different course.

[Lord Foulkes of Cumnock (Lab)]

My Lords, the Leader of the House has indicated that a lot more work has been done by the Government on the possibility of a no-deal outcome. How would such an outcome affect the Northern Ireland border, the position of European Union citizens in the United Kingdom and United Kingdom citizens in Europe, and our payments to the European Union?

[Baroness Evans of Bowes Park]

As the Statement made clear, a disorderly no deal is not something that we want or are working towards, which is why we have put this comprehensive and detailed proposal together, in order to have good discussions with the EU going forward, because that is what we are working for. But any responsible Government have to be prepared for all eventualities. The noble Lord would certainly criticise us if we did not do that. So that is what we are doing, but we are focusing on making sure that we receive a good deal with the EU.

[Lord Hannay of Chiswick (CB)]

My Lords, first, what the Leader of the House has said about dispute settlement for trade seems incredibly complex. Can she say whether there is any precedent for introducing into international law—because this will eventually be a treaty—the concept of “due regard” by one court for another? Has that ever been done before? This proposal is completely unsuited to some parts of the future partnership, particularly those dealing with justice and home affairs and the European arrest warrant, which cannot possibly be handled on the basis that has been set out. Would it not have been wiser to have looked at the precedent of the EFTA Court, on which we could have representation and which would provide a means of dispute settlement, for both goods and justice and home affairs? Secondly, the Statement states categorically and flatly that what has been proposed does not inhibit our right or ability to make deals with third countries. Can she name any third country that agrees with that proposition? Finally, the Brexit dividend seems to have come up. Could she table at some stage the size of the Brexit dividend, just for the next five financial years?

[Baroness Evans of Bowes Park]

I am sure that the noble Lord will be pleased to know that Malcolm Turnbull has welcomed the fact that we want to talk about joining the Trans-Pacific Partnership after we have completed our exit from the EU. There are certainly countries which are very keen to have trade relationships with us. In relation to his question about dispute resolution, where there is a dispute, it will be raised in a joint committee, which can refer a question to the CJEU only with the agreement of both parties. If the joint committee cannot resolve the dispute, it will go to independent arbitration. That mechanism respects our red line that the court of one party cannot resolve disputes between the two and the EU’s red line that the CJEU has to be the ultimate arbiter of EU law.

[Baroness Ludford (LD)]

My Lords, can the Leader of the House confirm that there is a fig tree at Chequers? This position is one long series of fig leaves. It is surely a pretence that Westminster could make a sovereign choice to depart from an EU rule with only modest consequences, when in fact the whole house of cards in a legally binding treaty would collapse. It is surely a pretence that the autonomy of the UK’s legal order would be maintained, when in practice the ECJ would at the very least severely constrain it. Lastly, it is surely a pretence that the complicated and baroque customs model would be business-friendly. In fact, it is heavy with red tape and is a smugglers’ charter. Far from being a soft Brexit, is this not a fictional kind of Brexit, which the people should be able to reject in favour of remain?

[Baroness Evans of Bowes Park]

I am afraid that I completely disagree with everything that the noble Baroness has just said.

[Lord Howell of Guildford (Con)]

My Lords, I believe that the Prime Minister’s Chequers plan is actually moving in entirely the right and sensible direction. I particularly welcome the suggestion of an accession to the Trans-Pacific Partnership, because that is where all the great growth in consumer markets over the next 10 years is going to be. But does the Leader agree that it is perhaps time to point out to the two extreme wings and polarised views on this whole debate, first, that on the other side of the Channel in the EU things are changing very quickly indeed—there are convulsions going on, borders are being closed and an entirely new pattern is emerging, much more in line with the ideas of some of us about reforming the European Union generally—and, secondly, that in some ways it took us 20 years to work out how to enter the European Union in the first place and it is bound to take at least five years to get out, and a little more patience in politics is often rather useful?

[Baroness Evans of Bowes Park]

I thank my noble friend. As I have said, this is a comprehensive and detailed plan and we are looking forward to negotiating with the EU. We do need to move at pace. Following Chequers, the Prime Minister has called a number of European leaders to take them through the plan. We are looking forward to negotiating our relationship. Those she spoke to, including Donald Tusk, Jean-Claude Juncker and the Prime Ministers of Sweden, Malta and Ireland, welcomed the further clarity. Of course, we will be putting more information out on Thursday in the White Paper, and we will then be taking negotiations at pace in order to achieve a deal that works for both sides.

[Lord Wigley (PC)]

My Lords, earlier this afternoon the Prime Minister was repeatedly pressed on the UK’s participation in the single market and customs union. Indeed, a Select Committee of the other place this morning recommended that it would be in the best interests of the UK to retain membership of those two organisations. The Prime Minister rested her defence for not doing so on the question of unqualified free movement. If it were possible for the mobility framework to be tweaked, and in the context of the new thinking in several countries in Europe on the movement of people, might it not be possible to look again at the question of the single market and customs union?

[Baroness Evans of Bowes Park]

I am afraid not. The UK’s current position implies two models of relationship: a standard free trade agreement for Great Britain with Northern Ireland remaining in the customs union and single market or membership of the EEA and a customs union. The Prime Minister has made clear that neither of these is acceptable or delivers on the referendum result. That is why we have put forward a comprehensive detailed plan, which we are now looking forward to discussing with our EU partners, to ensure that we can move these negotiations on at pace and deliver the best deal for the UK and the EU which all Members of this House, across this House, want to achieve.

[Lord Browne of Ladyton (Lab)]

My Lords, the Government’s first duty is to protect the public, so we should be reassured that this Statement and, indeed, the Chequers agreement, apparently agreed that we would be seeking a far-reaching security partnership with the EU. Indeed, the Prime Minister has been seeking that since the Munich security conference, with a united Cabinet behind her. Since then, we have discovered from Federica Mogherini that we can have such a relationship in security but as a third party not as a partner. Secondly, we have discovered that when the EU is contracting it has put in a break clause that means that it can get out of contracts of the nature we would be seeking if the contractor is not an EU member, which effectively freezes British companies out of contracting for security contracts, and then we have the Galileo row. So we have an example of a Prime Minister with a united Cabinet behind her negotiating. What progress have we made in negotiating a deep and meaningful security agreement with the EU since the Munich security conference?

[Baroness Evans of Bowes Park]

The noble Lord is absolutely right that we currently enjoy a high level of co-operation with EU member states. There is a challenge in finding a way through and our ability is currently being put at risk because, as he rightly says, the existing legal frameworks for third countries do not allow us to realise the ambitious future security partnership we are seeking. We are making these points with the EU. We are working very constructively with our EU partners. For instance, since the Salisbury incident we have led work with them to propose a package of measures to step up our communications against online disinformation, strengthen our capabilities against cybersecurity threats and further reduce the threat from hostile intelligence agencies. We have an excellent relationship in this area. The noble Lord is right that there are challenges, but we believe it is in both our interests to have a strong security partnership. We will continue to say that, and we believe that our EU partners agree. We will work through these current issues in order to make sure we achieve that end.

[Lord Tugendhat (Con)]

My Lords, may I say first how glad I am to see the Leader of the House still in her place? I hope she will still be with us when we debate the White Paper. Secondly, does she agree that many of the questions that have been put to her today are quite impossible to answer until we have the details in the White Paper, that what is clear is that the Government have put together a basic plan which will enable us to negotiate with the other members of the EU to act as the basis for a final agreement and that what differs between this proposal and those who attack it so frequently is that the Government have a plan and those who dispute it have put forward no plan of their own?

[Baroness Evans of Bowes Park]

I thank my noble friend for his comments. He is absolutely right: we will be bringing forward more detail on Thursday in the White Paper. I thoroughly commend it to all noble Lords to read, and we look forward to the debate shortly to talk about it further.

[Baroness Smith of Newnham (LD)]

My Lords, the Minister suggested that we need to work expeditiously. As the EU withdrawal Act took 49 weeks from introduction to Royal Assent, how does she propose that the business of getting the withdrawal implementation Bill through before 29 March will happen? Can she explain how the Government expect the EU 27 to accept a commitment from the Government that the UK will maintain a common rulebook in a sovereign way while retaining a parliamentary lock, given that no Parliament can bind its successor?

[Baroness Evans of Bowes Park]

We are confident we will be able to reach an agreement with the EU. On the withdrawal Act, a White Paper will be published in the coming weeks which will provide more detail on what will be in the Bill.

[Lord Reid of Cardowan (Lab)]

My Lords, I first apologise for having missed the first few minutes of the noble Baroness repeating the Statement. I was in the other place, listening to the Prime Minister’s Statement. With great respect, it does not improve much by repetition. On the subject of the quaintly named “facilitated customs arrangement”—in simple terms, for anyone who has not ploughed their way through the three pages, it means that we will have two different rates of taxation at the border of the United Kingdom for imports—the noble Baroness is a very intelligent Leader of the Opposition—

[Lord Reid of Cardowan]

Sorry, that was both inordinate expectation and a Freudian slip—probably overhopeful thinking. Does she not recognise that having two rates of import tax at the borders will inevitably lead, first, to a bureaucratic nightmare for British manufacturers and, secondly, to a smugglers’ paradise not only here but in Northern Ireland—I speak as a former Secretary of State for Northern Ireland, where they have 300 roads between the north and the south? Thirdly, it is clearly a method of undermining fair competition in manufacturing throughout the United Kingdom, as anything that you as a distributor claim that you are importing for a British manufacturer will be incorporated in a product at less cost, which we will then try to export to Europe. Lest I am accused of not having an alternative plan, why do we not just stay in the customs union?

[Baroness Evans of Bowes Park]

I thank the noble Lord for his question. We believe that this is a business-friendly model which will seek to facilitate the greatest possible trade between the UK and its trading partners, whether in Europe or the rest of the world, while allowing the UK to set its tariffs. There will be no new routine checks or controls for UK businesses trading with the EU. In relation to his suggestion of a smugglers’ paradise, the proposal includes additional behind-the-border enforcement to prevent third-country trading countries from seeking access to the UK through trade circumvention rather than through agreeing free trade agreements with preferential tariffs.

[Viscount Hailsham (Con)]

Will my noble friend tell the House what the Government propose to do to ensure that British financial institutions have continuous and successful access to the European market? The Statement is remarkably silent on that matter.

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[Baroness Evans of Bowes Park]

In relation to financial services, we will be proposing arrangements that preserve the mutual benefits of integrated markets and protect financial stability.

[Lord Liddle (Lab)]

My Lords, on non-financial services, does the noble Baroness accept that this sector of the economy, one of the most dynamic, creative, innovative sectors of the economy, has simply been thrown to the Brexit wolves? Why have the Government wilfully ignored the evidence and report of your Lordships’ Select Committee, which took extensive evidence on the non-financial services sector, which proved conclusively that membership of the single market was key to its success and business model? Finally, does she accept that not doing anything for services also means that the Government are contemplating what I would regard as unacceptable restrictions on the freedom of movement of British citizens on the continent and of EU citizens in our country, with very negative effects indeed?

[Baroness Evans of Bowes Park]

First, I say to the noble Lord that we always read the reports from your Lordships’ Select Committees with great care and attention. We may not always agree with their conclusions, but that does not mean that the work and intelligence within them is not taken very seriously by the Government. He is absolutely right about the importance of our services-based economy, which is exactly why we want to provide regulatory flexibility, because we believe that this is where potential trading opportunities outside the EU are largest. The UK will be able to negotiate our own trade deals focusing on services and digital, and these are very high in our thoughts.

[Lord Wallace of Saltaire (LD)]

My Lords, the Statement says that we will continue to play a strong role in shaping European standards and the international standards that underpin them. Those standards are negotiated within the European Union in a whole series of committees, on which British officials and other representatives sit alongside others. We will have left all those. Can she possibly explain how we will continue to play any role at all in shaping new European standards?

[Baroness Evans of Bowes Park]

As the noble Lord will be aware, many European standards are built on international standards, which we shall play an important role in helping to shape.

[Viscount Waverley (CB)]

My Lords—

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[Lord Maude of Horsham]

My Lords, will my noble friend be minded respectfully to suggest that this plan will mean that for trade in goods, for some years at any rate, this will mean that Britain will remain effectively in the single market—of course, the single market in services, especially financial services, is very far from complete—but that these arrangements will not be set in perpetuity? This is a moveable feast. It was not the case that Britain was in the EU in perpetuity. Those who comment on this should be careful not to assume that everything has to be done all at once. The one thing that is absolutely clear that would be catastrophic for this country, given the decision made last June, would be for us to falter and not deliver on the Brexit that people voted for.

[Baroness Evans of Bowes Park]

I entirely agree with my noble friend.