A New Partnership with the EU

Baroness Ludford Excerpts

Tuesday 17th January 2017 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

I thank the Minister for repeating the Statement, which, regrettably, we saw on TV before it was given in the Commons.

We welcome the commitment to a vote in this House on the final deal—but how much better had the Government committed to a vote on Article 50 rather than having to be dragged to the courts. We also welcome the objective of ending up with a fairer Britain—it would have been strange if they had asked to get to a less fair Britain. Our worry is the sting in the tail of saying that “no deal” and a new economic model was better than a bad deal. That sounds like lower taxes, which means fewer public services and therefore a price to be paid by exactly those ordinary working people whom the Prime Minister claims to prioritise.

However, I do not want to dwell on the possibility of failure in negotiations. I want to welcome the commitment to as free trade as possible with the European Union—our major market, our closest neighbours, our security partners. I welcome the Government’s use of the word “partnership” as a grown-up relationship which benefits both sides. My concern is whether this is possible, since the Government are contemplating leaving the customs union. Without that, we are in WTO territory, with no protection for services, a poor deal for agriculture —the future of which got no reference at all in the speech—and higher prices for consumers as tariffs are imposed. The NFU estimates that there would be cheese and meat tariffs of up to 30%, with extra red tape adding a further 6%.

More than this, if we are not fully in the customs union, we will not be able to import and export finished products or components without “country of origin” rules and checks. That is costly and time-consuming. If costs to business increase, how can we expect them to invest and innovate? Outside of the customs union, our financial services would also be at a disadvantage—a cost to industry as well as the services themselves. If our insolvency regime does not work, investors will think twice about locating here and putting their money at risk. If our insurance, hedging, clearing and other major services are weaker, so is the chance of entrepreneurs and investors risking their capital.

We of course welcome the commitment to maintaining workers’ rights and hope that the Government will therefore support Melanie Onn’s Private Member’s Bill, which entrenches just that. Furthermore, workers are consumers too, yet they did not get a mention in the speech. Their rights to be protected from unsafe goods or food, their ability to travel visa-free, using their domestic car insurance, or to get compensation for delayed air travel—all these also need to be retained but were not mentioned. We were pleased to hear the acknowledgement of the importance of science, but we heard nothing as to whether we would be able to stay within the European Medicines Agency or other similar agencies, which are vital for our trading relationships.

What of the future needs of our economy? The Government, quite rightly, want to protect EU citizens already here, but what of the future? A quarter of a million EU nationals work in public services, but there will be churn and, in care homes as well as hospitals, we may need these people in the future, as with the 100,000 EU nationals working in food and drink.

I leave just three quite simple questions with the Minister. First, what impact assessment have the Government made of the UK being outside the customs union, and will he commit to publishing that? Secondly, does he accept that, even if we come out of the ECJ, any trade agreement requires some sort of dispute adjudication body? So what thought has been given to what might be appropriate for a free trade agreement with the EU? Finally, what response does he envisage from the EU 27 to these objectives?

[Baroness Ludford]

My Lords, I too thank the Minister for repeating the Statement. We see that the Prime Minister, who pretended that she did not have to choose, has come to the end of her “cake policy” period and has made a choice, and it is the most damaging one possible in response to the referendum result and in terms of the values, vision and alliances that Britain wants to pursue. We do indeed need to take this opportunity to ask ourselves what kind of country we want to be, but the Prime Minister is deluding the country if she thinks that the UK will emerge stronger, fairer and more united from this Brexit plan.

The attempt to rebrand hard Brexit as clean Brexit does not survive a moment’s scrutiny. It will be destructive, messy and antagonistic, as indeed the Government’s contemplation of “no deal” suggests. There is overwhelming public support for free trade with the EU to continue, and the only true free trade is inside the single market. That is why Mrs Thatcher created it, and the Conservative manifesto last year pledged to stay inside it.

Do the Government expect to be thanked by millions of Britons, particularly young ones, who will lose their protection from data-roaming and flight cancellation rip-offs, as well as the freedom to live, work and study where they want? The Government’s claim that we will be a fairer country with workers’ rights enhanced is contradicted by Chancellor Hammond’s threat that we will be the Singapore of Europe, as a tax haven with slashed regulation.

The Prime Minster claims that we need hard Brexit to be more outward-looking and to reach beyond the borders of Europe, but that is perverse. The most obvious example of international co-operation is on our door-step—the very EU on whose single market she is turning her back. The contention that the UK needs to reject the EU to “go global” posits a completely false choice. The EU, with over 50 free trade agreements, is a gateway to the global stage, not an impediment to it, and leaving it risks exposing the UK and its people to the coldest winds of globalisation that the EU helps protect them from.

The Prime Minister is aligning the country with a protectionist incoming US President—ironically while the Chinese leader speaks at Davos in favour of free trade. She says that she wants the EU to succeed and for the UK to be its best friend, but the choice of hard Brexit aligned with Mr Trump and, through him, with President Putin and against Chancellor Merkel is a rejection not only of the single market and the European economic, social and human rights model but, indeed, a pact with those whose declared—not even hidden—objective is to subvert, divide and break up the EU and NATO, and thus the bedrock of our security.

The Prime Minister says that she wants us to be tolerant and a magnet for international talent but, by refusing a unilateral guarantee, she is sending a message of denigration and rejection of the 3 million EU citizens who already contribute so much to Britain’s economy and society, putting them through agonies of insecurity and subjecting them to the most Kafkaesque Home Office bureaucracy.

When the British people voted last year, they did not vote to live in a world where our values are replaced by ones set by Presidents Trump and Putin, so the case for a referendum on the Brexit deal, so that people can decide democratically whether they want a future as portrayed by this Tory Government, has been strengthened even further.

[Lord Bridges of Headley]

I thank the noble Baronesses, Lady Hayter and Lady Ludford, for their contributions. I start by addressing the point about no deal being better than a bad deal. I repeat what I said in the Statement and what my right honourable friend the Prime Minister said in her speech. The Government’s objective is to succeed in these negotiations. We are aiming for success but, as any responsible Government would do, we are preparing for a whole range of outcomes, and it is absolutely fair to say that we should be transparent in that. Being transparent all along is what I think this House would wish us to be.

I think that the noble Baroness said that we would be leaving the customs union and therefore essentially going straight to WTO terms. Again, that is not exactly what the Prime Minister set out this morning—indeed, it is far from that. We are aiming for a comprehensive free trade agreement. Undoubtedly there are aspects of and concepts behind the customs union which, as my right honourable friend spelled out this morning, we do not want to be part of, such as the common external tariff. But there are other aspects of the customs union, such as frictionless trade and, as she and her right honourable friend giving the Statement in the other place mentioned, ensuring that we avoid impediments to trade.

We are approaching these negotiations unlike how other countries have approached negotiations with the EU. Not only are we a considerable trading power in our own right, but we have spent the past 40 years as a member of the EU. Therefore, unlike other nations that are trying to ensure that trade barriers come down, we want to make sure that trade remains as frictionless and free as possible. That is an extremely good way to start these negotiations, and that is why I do not quite share the pessimism that I feel is coming from some of the questions we have heard today.

As regards the point on an impact assessment, there is a wide range of possible outcomes to these negotiations and it would be impossible for us to model all of them. Furthermore, as the House has heard me say at this Dispatch Box on many occasions, and as the other place voted for, we must not undermine our negotiating position by giving our European partners information that might enable them to see the weaknesses in our position.

A considerable amount of thought has gone into and continues to go into the issue of a dispute mechanism. The noble Baroness is absolutely right: there will need to be some form of dispute mechanism. She is quite right to observe that, in other trade deals, there are such mechanisms. We will be thinking about that and it will be a subject for negotiation.

As regards the envisaged EU response, I know from the conversations that I have been lucky enough to have with our European partners’ ambassadors in London, and from conversations that my colleagues in my department have had with their counterparts, that there is considerable keenness, as there is in this House, for the Government to spell out their position on certain things, such as whether we wish to be a member of the single market, have a transitional arrangement or continue to be part of the common external tariff. We have done that today. I very much hope they will recognise that and note the fact that we are, as the noble Baroness so rightly said, approaching this in the spirit of good will, wanting to create a new partnership that is of mutual benefit to both sides. I very much hope that that will come to pass.

Turning to the noble Baroness, Lady Ludford, who made a number of remarks, I have to say that I fundamentally disagree with the premise she is starting from. I do not agree that globalisation is an inherently bad thing. I think that competition and free markets are a good thing and that, over the past 10 to 20 years, the forces of globalisation have helped raise prosperity throughout the world. So I dispute that.

As regards becoming the Singapore of Europe, as I said, I also dispute the suggestion that we should be not transparent with people about the potential outcomes of these negotiations and our potential response to those. It is absolutely right that we should be candid with the British people about this, and that is what we shall do.

I am sorry to say that I disagree entirely with the noble Baroness’s remarks that, essentially, we are aligning ourselves with those who wish to see Europe break up. It is absolutely not in our interests to see that happen. The Prime Minister has made that clear, and I will make that clear at any opportunity I have.