Department for Exiting the European Union

Bill Grant Excerpts

Monday 26th February 2018 Commons Chamber

[Angus Brendan MacNeil]

The hon. Gentleman makes a case for all reports, but the report is the best estimate we have to go with. The report was kept secret for a long time, but it seems that it chimed with more than one person when it had to be leaked in the end.

It has emerged that the UK Government have decided on the middle road. They are looking for a free trade agreement, which is the option of a 5% to 6% hit on GDP—those are the Government’s own estimates—although some of the Tory party would go for the 8% hit of WTO rules. They have made political choices with severe economic consequences that they probably will not personally have to face. In a funny, humorous and ironic twist, they expect the European Union not to respond in kind. They expect the European Union to react with complete economic rationale, even though their politics are ones of irrational economic actions.

As we know, the EU and the UK have already taken actions based on principles, for a higher purpose, and that was in Crimea because of Russia’s annexation of it. The EU’s principle of the four freedoms means that it will take a smaller hit than the UK and a smaller hit than they all took with Crimea, or about the same. The point is that, in the bigger picture, the European Union is going to lose effectively about a toenail here, while the UK debates how many bullets are to go through its feet. That is the difference in the damage that will be done.

From the principal parties, we have had slogans. The slogan from the ruling Conservative party has been the illuminating “Brexit means Brexit”, as well as “It’s going to be a Brexit for Britain” and “It’s going to be the best trade deal possible”. We can look at this as an analogy. The Government have crashed their Rolls-Royce and are going down the second-hand car shop looking for the best second-hand car possible. Will it be a second-hand car that is 2% less good, 5% less good or 8% less good than the one they currently have?

On the other hand, we have the principal Opposition party, Labour, talking about a Brexit for jobs and a Brexit for the people. Labour—or at least its leader—has thrown another variable into the works: it want a customs union. I do not see an estimate for that either. What does that mean? If hon. Members are familiar with national newspapers that run fantasy football activities for statheads and football fans, they will know that readers can pick and choose players from a variety of teams and compose their own team based on that fantasy—perhaps called Team Corbyn; I do not know—but it is notable that this need not bear any relation to the reality of football other than the statistics, and even the players do not need to know that they are in somebody’s fantasy football team. Similarly, what is now emerging is a fantasy customs union—it bears no relation to the views of the 27 other partner countries—and they can pick and choose elements from the newspapers to their heart’s content.

The estimates in the leaked statistics show that this option—it is not the customs union or the single market—will lead to a hit of between 2% and 5% to 6% to the UK economy. The current Labour leadership should be very clear about that.

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

I have listened to the very pessimistic overview taken from the part reports. I read them today in the reading room, which was awfully secure, rather bizarrely, I thought. The reports make it clear that they are not finished estimates, but crystal-ball gazing. I take it that the hon. Gentleman has no desire to respect the people by way of referendums. He has never really got to grips with the referendum in 2014 and I am hearing tonight that he has not really got to grips with the referendum of 2017. Does his party disrespect the people and referendums?

[Angus Brendan MacNeil]

The other referendum was actually in 2016, but in both referendums—of 2014 and 2016—the Scottish people voted clearly to remain in the European Union, so, yes, I do respect the two referendums. I want that opinion to be checked again in the further referendum on Scottish independence within the European Union that, as the hon. Gentleman knows, is coming down the tracks in jig time.

A customs union, as currently suggested by the principal Opposition, can have myriad or infinite permutations. Have no estimates at all been made for that? All in all, this is one of the areas where the estimates are huge, the variabilities are massive and it is very unclear where the chips will fall.

The overall message that should be going out is that when boardrooms and when the people of Scotland look at the two parties in this Chamber—the Government and the principal Opposition—they have to start thinking and, particularly in the boardrooms, they have to start speaking. They do not have to enter into political debate, but they have to start to become very strident indeed in what they are saying. I meet too many of those from companies who come to me with their fears and their estimates of what might happen. In reality, they have to start saying what they want, because otherwise it will be too late.

I am reminded of the book, “On the Psychology of Military Incompetence”. In a number of military events that occurred, whether in Crimea—the charge of the Light Brigade was in Crimea of course—with the Boers in South Africa, in Mesopotamia or in Afghanistan, the common theme running through them all was the fact that the rank and file could not believe their commanders could get it so utterly wrong, and it was only when hot lead ripped through bare flesh that people then understood. There are companies that are too afraid to move and that, for one reason or another, will not say a word, but when they are taken down by the 2%, 5% or the 8% damage of Brexit, I tell those companies now that it will be too late to do anything about it then, so speak now.

Recently, my Committee went to the USA and Canada to look at the possibility of trade deals. The farmers lobby asked us why. Ford said a UK-US deal would be incremental, but that a UK-EU one would be existential. Certainly, when I saw the border with other Committee members, it was not as fast as the border at the moment between Ireland and Northern Ireland or as the border between France and Spain. These are some of the realities that are coming our way.

--- Later in debate ---

[Hilary Benn]

Other Members want to speak. I have given way already, and I am about to bring my remarks to a close.

It seems to me that the estimates we should really be discussing are our best estimates of the economic impact of Brexit. We are now running out of time. It is 19 months since the referendum, and there are nine months to go in the negotiation, but, crucially, there is one month until the European Union draws up its negotiating guidelines for the new economic relationship. If we do not get a move on, we run the risk that options that the House—or, heaven knows, the Government, if they change their view—might want to pursue are closed off by the EU in the negotiating guidelines for want of clarity about what the United Kingdom is seeking.

[Bill Grant]

Will the right hon. Gentleman give way?

[Hilary Benn]

I will, but then I must end my speech.

[Bill Grant]

I thank the right hon. Gentleman. I am standing up without holding on to the ropes at the moment.

I am thoroughly enjoying the right hon. Gentleman’s balanced and informative speech, but should he not consider the possible thoughts of, for example, the Dutch flower growers, the Italian Prosecco producers, the Italian winemakers and the German car manufacturers? I am sure he agrees that they will wish to do business with the United Kingdom, because we are a good country to do business with.

[Hilary Benn]

The Prosecco and BMW car analysis of our future economic relationship with the European Union—we heard a lot of it during the referendum—simply fails to understand the sheer complexity of the task that we now face. The customs union, in one sense, is the easy bit. When it comes to our future relationship with the internal market and the whole question of divergence, which we may hear more about from the Prime Minister when she speaks on Friday, I can tell the House, following our discussions in Brussels a week ago with the Select Committee—colleagues who were there can confirm this—that the moment the Government start to talk about divergence, two things happen with the European Union.

First, the EU asks, “Divergence where? How? What will it mean? How will we manage the process?” It has experience of the Swiss-type deal, which is basically 60 deals, which it loathes because of the complexity of the task and the need to continue to negotiate and, in effect, renegotiate with Switzerland how the relationship will work. The second issue that the EU raises is this: it is afraid that we will use freedom to gain the competitive advantage of being able to sail through the door that the Government are asking it to leave open for us when it comes to trading goods and services.

We are now learning that after the simplistic promises—“You can have your cake and eat it”, “There will be a deep and special partnership”, and all that sort of stuff—we have come to the end of that approach to Brexit. Now is the time for choices. The Government will make their choice, and we will have to live with the consequences, but it will be very apparent to Ministers—not least, I am sure, from the exchange of views around that room in Chequers—that there are trade-offs to be made, depending on what it is that we want.

I have argued passionately for remaining in a customs union not only because I think that it is in the best interests of British business, but because of the question of Northern Ireland. Believe you me, if we are to meet the very high bar that the Government have rightly set for maintaining an open border—the Select Committee made this point in its report at the end of last year—I do not see how that can be reconciled with the Government’s current policy of leaving the customs union and the single market. What we need now are clarity and certainty, and we need them with speed. Above all, however, we need the right policies for the economic future of the United Kingdom.

[Tommy Sheppard (Edinburgh East) (SNP)]

It is a pleasure to follow the right hon. Member for Leeds Central (Hilary Benn). I hope to respond in a minute to some of the points that he made about the customs union. However, before I start to talk about DExEU and Brexit, I want to make some general observations about the process in which we are engaged during our two days of debate on the estimates.

When I, and most of my colleagues, came to the House in 2015, we were quite shocked by the lack of financial scrutiny of the Executive in the Chamber. Since we became the third party, we have pressed for change in the way in which the estimates are considered. I therefore welcome the baby steps taken this year, in that we are at least able to focus on a set of figures that relate to a Government Department and what it is doing, rather than discuss random topics that may or may not be related to budgetary matters. However, we still have a long way to go in holding the Executive to account financially and in terms of their policies.

I firmly believe that if we were the board of a large charitable organisation, the charity regulators would find us wanting in terms of our procedures for financial scrutiny and accountability. I also believe that if we were the board of a large corporation, our shareholders would be demanding action to improve our processes. I therefore hope that the steps we have taken this year are the beginning of a process, and we might one day get to a situation where the Government are required to produce a programme plan charting their future policies and their effects, and then each Department has to produce a programme plan, which each Select Committee can scrutinise along with the budget that goes with it. That is the process that the Scottish Government are engaged in, in terms of how they govern the responsibilities under their remit, and it is one that we could learn from and try to develop here in the years ahead.

What happens when we combine a rudimentary process of programme planning and financial planning with the complete absence of a set of policy objectives in the first place? The answer is DExEU, because here we have combined an absolute lack of planning and a financial mess. DExEU was set up in the summer of 2016 by a shell-shocked Government who frankly did not know what to do in implementing a referendum result that they did not expect. In a desperate desire to be seen to be doing something, they set up a brand, spanking new Department, with lots of new letterheads and people to write memos to each other, and lots of people employed to research and analyse something, the only problem being that there was no plan to be implemented.

In the absence of a plan to be implemented, we have gone from one chaos to another, and I share the Minister’s embarrassment. This must be the only Department in history that underspends its budget not by a couple of percentage points, but by 50% in its first year, and it has had to go to the Treasury to scale down its estimates of spending in the next financial year.

That is a phenomenal metaphor for the Government’s Brexit policy, because they do not know quite what they are doing. In the absence of their being able to play a co-ordination role in planning for Brexit, individual Departments have had to be allowed to do their own thing and try to deal with the consequences as best they can. That is why 90% of the amount of money being spent on Brexit preparations, or the lack of them, is not to be found in the Department supposedly responsible for co-ordinating preparations for Brexit. That is a ridiculous situation.

This, of course, is from a Government who have said not only that they will set up a brand new Department, but that money is no object for that Department. This is a Government who cannot find the money for our health service; a Government who are determined to squeeze down wages by pay restraint in the public sector and reduced living standards; a Government who have, for heaven’s sake, taken £30 a week of employment and support allowance from the most vulnerable people in our community—yet they can find £4 billion over the next few years to spend on preparing for Brexit. The problem is that the plans are so incomplete, and they do not know what they are doing, so they are even unable to spend the money.

[Bill Grant]

rose—

[Tommy Sheppard]

I will certainly give way, and hopefully we will hear what the plan is.

[Bill Grant]

I remind you, in case you have forgotten, that this Government created and increased the living wage and took millions of people out of tax, and your Government in Scotland asked that the wages cap be lifted in the public sector simply so you could tax people more.