Brexit: UK-EU Relationship

Baroness Hayter of Kentish Town Excerpts

Thursday 1st December 2016 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I will start with two thank yous. The first is to my noble friend Lord Liddle, whose knowledge of all things European is unsurpassed in any place but this—and even here is of the highest. My other thank you is to the noble Lord, Lord Ricketts, for making his maiden speech during a Labour debate. I assure him that in no way does it compromise his independence on the Cross Benches. As a former Permanent Secretary, our man in France and at NATO, he is one of that select group who is able to challenge my noble friend as our resident top shot on Europe.

The City of London, the CBI, economists, industrialists, investors, consumer groups and trade unions all fear that the Government, whether by default or by intention, are heading for a hard Brexit, with the UK removed from the single market and even the customs union, and detached from common regulations and minimum standards. Labour’s preference would be for a Brexit that prioritises the economy, jobs and living standards, with no watering down of environmental or consumer protections. This means maintaining our business links, including transport—the CAA supports retaining the benefits of the common safety regime in Europe—market access, competition and consumer protection.

But will our relationships with the EU allow continued membership of the European common aviation area, without which British airlines will no longer be able to sell flights between European cities but only directly to them? Asked last month, the noble Lord, Lord Ahmad, could say only:

“The Government is considering carefully all the potential implications arising from the UK’s exit from the EU for our aviation industry. This includes the implications for UK-based airlines relating to Air Traffic Management and the Single European Sky”.

That is not good enough. By now we need clearer indications than that. The travel industry is calling for access to liberalised aviation markets in Europe and globally, the continuation of visa-free travel, and continued participation in the European health insurance card. What can the Minister offer on those?

Will the Government respond to the pleadings from the higher education sector that its interests should form part of the negotiation framework, with the aim of continuing our close relationship with the remaining 27, such that we have full access to the EU’s research frameworks and educational programmes? Likewise, our vital pharmaceutical industry needs us to promote life sciences, ensuring the flow of researchers and participation in networks, as well as retaining the medical agency and full participation in its work.

There are other agencies where we need continued participation: Erasmus, the European Investment Bank, the chemicals agency, the air safety agency, and Euratom, which was mentioned by my noble friend Lady Crawley. Its funding runs out in 2018, possibly jeopardising Oxfordshire’s £300 million joint nuclear fusion reactor. We also understand that Horizon 2020’s successor is being prepared on the basis of the UK being excluded, with immense consequences for our research funding. What are the Government doing on all those?

As my noble friend Lord Liddle stressed, the service sector is crucial to our economy, with employment growth driven by services, particularly professional, business and computing. Financial services are vital for their earnings, which are perhaps 3% of GDP, but also for other businesses—for the financial flows, insurance and reinsurance needs of umpteen sectors. However, no one in Brussels seems to think that the City of London will get a good deal. Indeed, the Government’s unpopular approach is risking the continuation of passporting, which as we know allows UK-regulated bodies to do business across the EU without being regulated again in other member states. Passporting requires single market membership and that, as we all saw from the handwritten note that followed the meeting in 9 Downing Street, is “unlikely”—presumably because No. 10 is prioritising migration over everything else, including jobs and prosperity.

England and Wales form a global hub for legal services as businesses choose to use our laws in their contracts, with London the seat for arbitration. Various EU directives enable our lawyers to represent UK clients in other member states. Because our judgments are enforced abroad through so-called Brussels I, and because under Rome I contracting parties can choose English law, we have become the preferred seat for arbitration. Will the Government prioritise continued access for our lawyers to practise and plead across the 27? We hear that many are heading off to Dublin to requalify, as they fear the loss of access. Will the Government also prioritise remaining in Brussels I and Rome I? Will they work with insolvency practitioners such that, after Brexit, they can continue to chase down assets squirrelled abroad but due to UK creditors?

Then there is competition policy, which is vital to protect consumers’ interests. EU membership underpins the Competition Act 1998, allowing for a seamless regime across the EU. But what will happen in 2019? Any divergence could lead to major uncertainty for businesses and international undertakings. How is the CMA preparing for relations with the other 27 competition authorities and with the Commission, post-Brexit? Will judgments in the 27 be adopted here in the 28th and vice versa? Who will safeguard consumers’ interests against monopolistic or unfair practices? More widely, can we replicate EU mutual recognition agreements with third countries, such as China and America, whereby goods can be certified as being in conformity with the destination’s rules by authorities within the exporting country, thus saving time, expertise and border checks?

As a member of the EU, we are party to more than 50 free trade agreements granting reciprocal access and waiving most duties. How do the Government plan to replicate these? Such questions, like others posed today, indicate the complexity of unwinding 40 years’ worth of trade, co-operation and interdependence. We have to involve every sector, consumers as well as industry, in these talks, for what the Dutch finance minister has described as “a tough ride” for the UK. Jobs, the economy and living standards should be the priority for negotiations. The Government need to hold that package as their lodestar and seek to build a national consensus around a Brexit plan that will work across the whole UK and for every part of it.