EU Referendum Rules

Barry Gardiner Excerpts

Monday 5th September 2016 Westminster Hall

[Barry Gardiner (Brent North) (Lab)]

It is always a great pleasure to serve under your chairmanship, Sir David.

For some, the referendum result represents a moment of golden opportunity; for others, it is a time of enormous economic risk. The petition we are debating today has been signed by an overwhelming number of people who believe that a second referendum should be put to the electorate. It has been signed both by people who voted to leave and by people who voted to remain. Curiously, the petition was created in advance of the referendum by somebody who supported the leave campaign and who is said to have believed that the result would be close but most likely in favour of remain. He was wrong.

With a majority of just over 1.25 million votes, 51.9% of votes cast called for us to leave, compared with 48.1% of votes to remain, on a turnout of 72% of the electorate. The referendum was certainly one of the most significant exercises in democracy that we have seen for a very long time, and it was for that reason that the Labour party tabled dozens of amendments to the European Union Referendum Bill to address the concerns that have now been raised in this petition, including provisions for electoral turnout and for a minimum threshold. Such amendments were rejected by Members of Parliament, alongside provisions that would have allowed 16 and 17-year-olds to have a say in what is probably the most important decision for their generation.

However, we must be clear that the British people decided in the referendum that our relationship with the EU, and its balance of rights and responsibilities, was wrong and needed to be addressed. Nevertheless, they did not, nor could they have been expected to, establish what the alternative might be. That is what the Government and Parliament must now determine.

What makes this process so complex is that we must seek to negotiate our exit from the EU and our future relationship with it while simultaneously forging our future bilateral trade partnerships with other countries—countries that would like to have clarity about where we stand with the EU before they conclude their own trade deals with us. Nothing could have made that clearer than the report released at the weekend by the Japanese Government, which expressed their proper concern about securing future access to Europe for Japanese companies that have invested billions of pounds in UK factories, jobs and distribution centres. That indicates the extraordinary risks that investment in the UK faces if we fail to maintain the free movement of goods and services into the world’s largest consumer market.

The Government must also address all the legislative gaps that will arise as a consequence of our secession from the European Union. The British people did not vote to see their workplaces made more dangerous or their maternity rights curtailed. The Government must ensure that where the basis of such rights and protections is lost because of legislation disappearing following a UK exit from the EU, new primary or secondary legislation is introduced to maintain the standards that British people have a right to expect.

EU nationals living in the UK and British nationals living elsewhere in the EU are desperate for clarity about where they stand. Do the Government plan to remove EU nationals from the UK? Should we prepare ourselves for the repatriation of some 1.1 million British citizens who are currently living elsewhere in the EU? Those are the non-duckable questions on which the Government have a duty to provide clarity; I hope that the Minister will provide such clarity in his summing-up today.

EU member states are our closest neighbours and strategic allies in matters of defence and co-operation, and the world is looking to us to set out how we will ensure that our departure from the EU does not cause instability throughout the region and— consequently—further afield.

The EU is currently the destination for 45% of all the goods and services that Britain exports and the source of 53% of all our imports. That is a stark measure of the level of trade integration that must now be renegotiated in the light of the referendum result. The Government must balance and recalibrate all the different elements that our membership of the EU has previously entailed. Essentially, however, there are three possible trading models: a free trade agreement, whereby member countries agree to abolish tariff barriers and quotas for goods and services between themselves; a customs union, in which member countries agree not only to reduce tariff barriers and quotas between themselves but to adopt common external tariffs towards other countries; and a single market, in which there is free movement of goods, services, capital and people, or labour. In a single market, there is also policy harmonisation over what constitutes such things as fair competition or reasonable health and safety regulations.

Although both sides of the referendum campaign lamentably failed to make it clear, in voting to leave the EU the British people voted to leave both the single market and the customs union. There is no smorgasbord of trade agreements laid out and waiting for the UK to choose from. The options that will be available to us will be determined just as much by what the other EU member states are prepared to give us as by what the UK wants.

Currently, there is no unified view among the other 27 EU members as to what they are willing to negotiate on. That situation is not going to be made easier by the forthcoming elections in France and Germany, both of which could have new leaders by this time next year. Timing is essential in all of this, and British MPs who say the Prime Minister should trigger article 50 now and without delay, without first setting out to Parliament the terms and basis upon which the Government seek to negotiate—indeed, without even indicating the red lines that the Prime Minister should seek to protect—simply have not grasped the logic of article 50. It is the logic of the game that young, testosterone-fuelled car drivers call “chicken”. The principle of that game is that while it is beneficial for each driver that the other driver gives way, their own optimal choice depends upon what their opponent is doing. If their opponent yields, the other driver should not yield, but if the opponent fails to yield, the other driver certainly should give way, to avoid a head-on crash.

What we know for certain is that no incumbent French or German leader can afford to be seen to be conciliatory towards the UK in negotiations before the elections in their own country. However, article 50 will not only trigger those negotiations but set a firm time limit—two years—within which they must be concluded. After that, in the absence of an agreed negotiated trade settlement, the UK would simply be ejected from the EU with no trade deal at all, unless every country in the EU separately agreed to an extension of negotiations, which could lead to the UK being held hostage to several unpalatable ransom demands.

Time is critical in negotiating trade deals; everything must come together, because the reality is that nothing is agreed until everything is agreed. Before article 50 is invoked, the Government must set out how they intend to ensure that the promises made to those who voted to leave the EU are met. The Government must decide whether it is vital to keep passporting arrangements for our financial services sector, and if that is a red line, they must decide what price they are prepared to pay for it. If that price is the continuation of the free movement of people, many people who voted to leave the EU in the referendum might well feel that the Government are simply ignoring their concerns over immigration.

Similarly, if a deal were concluded that allowed us to keep single market access and have no free movement of people, our financial contribution towards the EU might have to continue at an extraordinarily high level. A negotiating red line that achieved market access without free movement but at huge budgetary cost might not be acceptable to those who thought they were voting to stop paying £350 million a week to the EU so that they could spend it on the NHS instead. It might also not appeal to those who voted to leave because they wanted to reclaim the UK’s sovereignty. In return for its access to the single market, Norway is obliged to enact three quarters of all EU laws into its own domestic legislation. A UK operating under such an arrangement would in effect be a vassal state, paying tribute to the EU and meekly enacting the laws passed down by Brussels, without the right to influence or shape them that member status confers.

None of those arguments are arguments for ignoring the expressed will of the British people, but they are very good reasons for saying that the Government must decide precisely what they want from any negotiation and what they are willing to pay or sacrifice to get it.

It is also vital that there is real democratic oversight. That means that Parliament must be extensively involved in the process and that once the Government are clear about what their own objective is, they should then present it to the country. Even though the petition is evidence that some wish to see a repeat of the referendum vote, the Government, as we know, have refused that. However, such a refusal should, at the very least, come through a parliamentary vote in the House of Commons. Then, and only then, does it make sense to trigger the UK’s departure from the EU by formally invoking article 50.

Article 50 is a fuse; once it is lit it cannot be extinguished. If it is prepared for well, it may lead to an extraordinary firework display, as Britain illuminates the world stage with a renewed sense of commercial purpose, but if it is prepared for hastily and badly, the fuse will result in an explosion whose economic consequences will set back our country for a generation.