Leaving the EU: Negotiations

Ed Davey Excerpts

Tuesday 10th July 2018 Commons Chamber

[Sir Vince Cable]

The European Union over many years has developed a sophisticated rules of origin system in order to develop an answer to precisely the problems presented by the complex nature of modern trade. They are quite right to say that in an environment of uncertainty, there is very little merit in pursuing an agreement.

The other major disadvantage of what the Government are proposing is, as several Members pointed out yesterday, the complete neglect of the services sector. It is not just 80% of the British economy, but includes extremely important industries—notably financial services, but also creative industries, the digital sector and entertainment, and of course much manufacturing happens through services exports. Rolls-Royce earns as much from its maintenance contracts as it does from selling its engines. When we send cars to the European Union, we sell them with a package attached to financial services. It is not at all clear how the Government propose to unscramble those very complicated relationships.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

Does my right hon. Friend remember that when I was junior Minister to him as Secretary of State for Business, Innovation and Skills, we spent a long time arguing for more liberalisation of services, because it was in the UK’s interest to widen and deepen the services market in the EU? Is it not therefore ironic that a Conservative Government want to turn their back on service liberalisation and put up barriers? We could not get a more anti-business approach from the Conservative party.

[Sir Vince Cable]

It is a lot more than ironic, because this goes back a long way. There has been consensus among successive Governments, starting with Mrs Thatcher and Lord Cockburn through the Blair Government and the coalition Government, on accepting that services exports to the European Union were a major objective of British Government policy. I recall being sent to Berlin and elsewhere to denounce the Germans for their failure to open up their market for services trade and the mutual recognition of qualifications. For example, European countries currently decline to accept British ski instructors, as they do not have mutual recognition of qualifications. A great deal has, however, been achieved, and the Government are now inclined to turn their back on it.

The reasons the Prime Minister advanced for doing so yesterday are partly simply foolish and partly bogus. The folly lies in saying that any services transaction that involves people crossing the border, however valuable, is adding to our net immigration target and is therefore unacceptable, regardless of the economic merit. The bogus argument is to say that this is a problem within the European Union, but it is not going to be a problem if we have trade deals with other countries, because we will be able to proceed with services agreements with them.

However, we already know from the two failed attempts so far to negotiate an outline agreement with India that services trade, wherever it is—within the European Union or outside it—involves the free movement of people, and the Indians are insisting that if we are to have a bilateral trade agreement with them, part of the package will be importing Indian services in the form of IT consultants and much else. If we look around the other big emerging markets—Brazil, Indonesia, Pakistan, Nigeria—we can see that what they have to export is people. This is going to be an enormous obstacle to the Government reaching any kind of agreement with any country outside the European Union.

[Sir Edward Davey]

My right hon. Friend is being generous in giving way yet again. Does he remember that when he and I served on a Cabinet Committee looking at trade, we pushed just the arguments that he is now making, and the one person getting in the way of those arguments was the then Home Secretary—now the Prime Minister—who stopped a major trade deal that would be in this country’s interests?

[Sir Vince Cable]

My right hon. Friend is absolutely right. We could of course have had a trade deal with India already under the auspices of the European Union, as we do with South Korea, Canada and various other countries. The country that blocked the deal was the UK, because increased services trade would involve increasing numbers of people crossing over to the UK.

I was struck by the comment by one of the more strongly pro-Brexit Conservative MPs—the hon. Member for Gainsborough (Sir Edward Leigh)—when he was being critical of the Government yesterday. If I am correct, he said that he had no objection to cherry-picking, but that the Government are picking “the wrong cherry”. Actually, services are fundamental to our trade, and the Government have put us in a very difficult position.

The question now is: what should be done? The first step is for those on both sides of the House who believe that we should maximise the closeness of the economic relationship through the customs union and the single market—there are people of a similar persuasion in all parties—to try to achieve that. The right hon. Member for Haltemprice and Howden says we have a customs union already, which is exaggerating, but we can certainly converge on having a common approach. Of course, the nearer we get, the more the question arises of why on earth Brexit is happening at all. That leads us back to the question we started with about the need for the public to have a say on the final deal.

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[Chloe Smith]

What we should do is trust the people themselves. Is that not the fundamental point? Their decision in 2016 was not made quickly after just a few weeks; it was made in the context of years of debate on the subject. The idea that they were able to take that decision was what governed the ability to have a referendum. To suggest that some people were wrong or misinformed, or made a choice that has to be reversed, does people down, does trust in politics down, does our country down and does our democracy down terribly.

The referendum question was agreed by Parliament and presented to the people with no conditions or caveats, but with a promise from the Government that we would implement what they chose. We should be coming together and getting on with it.

[Sir Edward Davey]

I am grateful to the Minister for being generous in giving way. What is her estimate of when the Brexit deal will be done? What will be the date?

[Chloe Smith]

In case anybody in this place is still somehow, miraculously, unclear on the matter, we will be leaving European Union in March 2019—and so will the Liberal Democrats, whether they like it or not.

I turn to a few more points about Parliament. To try to undermine the result of the referendum by saying that it was somehow wrong does down Parliament, because it was Parliament that gave the decision to the people. We have always been committed to keeping Parliament fully involved in the process of leaving the EU and in determining the shape of the future relationship that we want to achieve. We have said consistently, and demonstrated through the European Union (Withdrawal) Act 2018, which has just gained Royal Assent, that Parliament will have a vote on the final deal reached with the EU before it is concluded. That is now legally established. Members will have the choice to accept or reject the final agreement. That, and not a second referendum, should be the decisive vote. Let us give Parliament its rightful role.

I turn to the motion, which deserves a little attention. As the Liberal Democrat leader noted in his opening remarks, Liberal Democrat motions do not come along too often, although they are always a pleasure when they do. I am a little perplexed about why the motion calls for a second referendum in light of the record of the Liberal Democrats. We have probably all seen the classic Liberal Democrat leaflets that say one thing to one street and something else to another, but people cannot do that in Parliament. All seven of the Lib Dem MPs then in the House of Commons voted to give the European Union Referendum Bill, which specified one referendum, not two, its Second Reading. The right hon. Member for Carshalton and Wallington (Tom Brake), the Liberal Democrat Brexit spokesman, was among their number. Why does he think today that he should change position and say something else in this motion? Maybe that is explained by the behaviour of the Liberal Democrats when article 50 was triggered; let us follow slightly more recent history. I seem to recall that, at the time of that vote, the Liberal Democrats were, frankly, all over the shop—there is no other way to put it.

Let me in passing, however, pay tribute to the right hon. Member for North Norfolk (Norman Lamb), who has just left his place. His constituency is near mine and he is a good man. He was the one Liberal Democrat Member who recognised publicly that his party’s position on Brexit was toxic. He feared that the party was not listening to people and was treating them with disdain. I pay tribute to him for his insight and courage in saying so.

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[Bob Stewart (Beckenham) (Con)]

Will the Minister give way?

[Sir Edward Davey]

Will the Minister give way?

[Chloe Smith]

Before I give way to anyone else, I just want to take the opportunity, given that it has been rather handed to me on a plate, to remind the House that it is the Labour party that is all over the shop on the result of the EU referendum. Labour party politicians and supporters have suggested more than 60 times, I think, that the party is going to support a divisive second referendum. Whether that is or is not its party policy at this precise moment in time is anybody’s guess.

Let me move on to the final point I wanted to make about the Liberal Democrats before drawing my remarks to a close. I want to reflect on what I think is the right thing to say at this moment. It is this:

“The public have voted and I do think it’s seriously disrespectful and politically utterly counterproductive to say ‘Sorry guys, you’ve got it wrong, we’re going to try again’.”

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[Chloe Smith]

It would be preferable if those of us who are Unionists, and who feel very strongly that our United Kingdom has made a decision together and should be able to look forward to a good result of that decision together, could unite around that argument. It is really important that we secure a deal that works for the entire United Kingdom. I am very pleased that the motion refers to the “people of the UK”. The hon. Lady and her colleagues are right to put that phrase in the motion, because we are committed to securing a deal that works for the people of the UK.

[Sir Edward Davey]

On the subject of the deal, one thing that confused us in the Prime Minister’s comments on the Chequers statement was this: if the EU puts forward a new rule and Parliament gets a chance to vote on it—the Prime Minister is very proud of that—what happens if this House votes against it? That has not been made clear. Will the Minister make that clear now?

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[John Lamont]

I have greater faith in the people of this country to make an informed decision—and, as I said earlier, they are entitled to vote in any way and for whatever reason they choose. Our job as parliamentarians is to accept their ultimate decision.

[Sir Edward Davey]

Will the hon. Gentleman give way?

[John Lamont]

I want to make just a little bit more progress.

I think that trying to unpick the result and the decision-making process of our electorate is a very dangerous thing to do.

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[Steve Double (St Austell and Newquay) (Con)]

I have the great honour of representing St Austell and Newquay in Cornwall, which was a new constituency in 2010. My home is in St Austell, so I previously lived in the Truro and St Austell constituency. I am the first Conservative Member of Parliament for that part of the country for 41 years. In fact, I was seven years old the last time we had a Conservative Member of Parliament. It was the constituency of the late, great David Penhaligon, and others since who may not have been quite so great.

I know what it is like to live under the representation of the Liberal Democrats, and one thing that has always puzzled me is why people in Cornwall, which has always been an incredibly Eurosceptic area, kept voting for the Liberal Democrats for all those years. One reason is that in Cornwall the Liberal Democrats were very shy about their European enthusiasm. They did not tend to talk about it very much, and they tried to shy away from it.

When I started to speak to people on the doorsteps, it came as a surprise to them when I advised that if they wanted to get out of Europe, the last thing they should do is vote for the Liberal Democrats. That is why I have respect for the Liberal Democrats’ position now, because from my point of view in Cornwall, at least they are at last being honest about it. They are being honest in saying they want to exit from Brexit and deny the result that the British people reached in the referendum. They think the British people got it wrong, having been ill-informed, having misunderstood or having been too thick to understand what it meant, so we should try to overturn the decision and try again.

I have a degree of respect for the Liberal Democrats’ honesty at the moment, but I have to say that the message I get from people time and time again is that the British people simply want us to get on with this. I speak to Conservative party members, as well as members of other parties, and I hear that the British people are tired of the debate on the process. They are tired of the Westminster bubble, where we endlessly debate and try to rerun the arguments from 2016. They simply think, “The British people made a decision. Let’s get on and deliver it. Let’s leave the EU and let’s deliver Brexit the best we possibly can.” I believe that is the attitude and view of the vast majority of the British people.

[Sir Edward Davey]

I met people in my constituency during the 2017 election who had that view—people who had voted to remain but said that now we should get on with it. However, I had local elections in my constituency in May, so I was knocking on a lot of doors, and I detect that opinion is shifting on the ground and in the polls. People are seeing the disarray of this botched Brexit, which is why they are changing their mind. May I ask the hon. Gentleman: has he ever changed his mind?

[Steve Double]

I have changed my mind, but I suspect that now is not the time to go into that. I have changed my mind on a number of things over the years, but I do not detect what the right hon. Gentleman says he is finding. I do not find it in my constituency from the people I speak to on the doorstep and meet around the place, or from the people who come to my surgeries. The clear message I get is, “We made a decision. Let’s get on with it.” A lot of people just cannot understand why we have not left already. They are frustrated because—[Interruption.] I would say it is because of Members on both sides of the House who have sought to delay the process—perhaps we will come on to discuss that.

I will not support the motion, and I wish to set out three reasons why it is a bad idea. First, I believe it would be bad for our democracy. We gave the decision to the British people. We are absolutely clear in the lead-up to the referendum two years ago that this decision was in the hands of the British people and that they would be making the decision. If we tried to rerun the referendum, in whatever form we want to put it, be it a second referendum or a referendum on the final deal, I do not think the British people would buy it. They would just see it as trying to change the decision. It would simply be saying to them, “Your view and your vote did not count.” As I said when I intervened earlier, I believe that one reason why many people voted leave was to give a clear message to the establishment saying, “We are fed up of being ignored. We want our voice heard. We want our opinion to count.”

It is a miracle that people voted leave, because the overwhelming movement of the establishment—of the Government, big business and so much of our society—was telling them “This is the wrong decision. This is a stupid decision to make. This is a detrimental decision to make.” The majority of people chose to ignore that and vote leave, and we should respect that.

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[Sir Edward Davey (Kingston and Surbiton) (LD)]

Sometimes in politics, parties and individual politicians must ensure that they are standing up for the right thing, given the evidence before them. One of the reasons why I am proud to be a Liberal Democrat is that we have done that on a number of issues of significant importance in the life of the country in recent years. Let me give House three examples.

The first example is the Iraq war. When the Labour party was pushing for the Iraq war, it had the support of the Conservative party, bar the right hon. and learned Member for Rushcliffe (Mr Clarke), and of the papers and the people, and it prosecuted that war. The Liberal Democrats were the sole voice, against public opinion, in warning that it courted disaster—for this country and for the middle east. We were right, and we were proven right.

My right hon. Friend the Member for Twickenham (Sir Vince Cable) was warning against the financial crash—the banking crash—in 2007-08 three or four years before it happened. As a former very distinguished economist, he could see the signs, and as the Treasury spokesman for the Liberal Democrats, he warned that it was coming. People did not like his saying that—I remember Labour Treasury Ministers and Conservative spokespeople saying, “Oh, the voice of doom”—but my right hon. Friend was right. I wish more people had listened to him, as a lot of people’s lives and businesses would not have been wasted by an appalling economic recession.

So it is with Brexit. The evidence is clear that it is going to be a disaster for our country. Those of us who have the values of internationalists and believe that working with other countries is in our interests are not going to be silenced on this issue of huge importance. We are going to make the case. Just as on Iraq and the banking crisis, people’s views changed. I think that people’s views on Brexit and on a people’s vote are changing. I urge Members across the House to recognise that fact and get behind something that people will be joining.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

In 2015, the right hon. Gentleman’s party manifesto said it wanted a referendum on whether we should stay in or get out of Europe. Was that a mistake or was it just that you were so out of touch with the people that you thought you would win that referendum? I can tell you that our party did not think that.

[Sir Edward Davey]

The hon. Gentleman, of course, is wrong. The manifesto was in 2005, when—[Interruption.]

[Lloyd Russell-Moyle]

I have the 2015 manifesto here!

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. The hon. Gentleman really must not use the word “you”, and let us not carry on with this sort of exchange.

[Sir Edward Davey]

Thank you, Madam Deputy Speaker. I know what was in the Liberal Democrat manifesto. In 2005, like all parties, we argued for a referendum on the European constitution. In 2015, we said that if there was a big change affecting sovereignty and powers, we would have a referendum. What happened afterwards was completely different, and the hon. Gentleman ought to know that.

I was saying that I detect that the demand for a people’s vote—a final say on the deal—is growing louder and louder. There are many reasons why I think that; it is not just evidence from the polls and from people talking to me around the country. I think it is a reaction to the chaos of this Conservative Government. If I were a Conservative MP, I would be embarrassed by the Government; I do not think we have been so badly governed since the second world war—probably before.

The Government simply cannot make up their mind about how to deal with the biggest issue of the day. They are totally split. The chaos of the past 48 hours beggars belief. It is pretty clear that the Chequers statement will not stand the test of time. The European Research Group, the hard-line Brexiteers, and some Tory remainers reject it and Brussels is saying that it is unacceptable. It is pretty clear that, after two years of effort, this chaotic Government cannot manage it. That is why we tabled this motion.

As one of my colleagues said earlier, people are sick and tired of Conservative Ministers, and indeed MPs, putting their personal or party interests above the nation’s. As my hon. Friend the Member for Oxford West and Abingdon (Layla Moran) said, when we talk to some colleagues outside the Chamber, they admit that Brexit is a disaster.

[Gareth Snell]

Will the right hon. Gentleman clarify a point I asked about in my speech? What question would the Liberal Democrats put on the ballot paper in a referendum? There are people who would not want to support a final deal but who would not countenance staying in the European Union.

[Sir Edward Davey]

I am grateful for the hon. Gentleman’s question as it enables me to explain that in detail. We are arguing for a people’s vote. People should have the final say when the deal is done, not before, so that they have the details of the question. One of the problems with the 2016 referendum was that no one knew what Brexit meant; in fact, we still do not. When we do eventually know—when there is a deal for people to look at, touch and feel—we suggest that the people should have the final say about whether that is what they want or whether they would prefer to stay in the European Union.

We need to look at what the Government have achieved so far. The process has been far longer than people were told. People were told it would be easy and that it would be quick, but after two years we still do not have a policy or a White Paper. We were told that Brexit would be very good value for money. We were not told that it would be so costly. No one said that Brexit would cost £41 billion—and that divorce bill is going to go even higher. It is costing far more than people were told, but it is also far more complex than people were promised. People were sold simple truths: it would be easy to extricate ourselves from our friends and neighbours who we have worked with for so long for over four decades. It is clear that that is not the case. There still is no deal. Frankly, given the performance and shocking chaos of the past 48 hours, that deal looks a long way away.

[Steve Double]

rose—

[Sir Edward Davey]

I will give way. Perhaps the hon. Gentleman will tell me when the deal will be done.

[Steve Double]

I am very grateful to the right hon. Gentleman for giving way. He has just said that we do not know what Brexit is going to be. I agree: we do not know what the final agreement is going to be. We do not know the detail, so how is he so sure that it will be disaster?

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[Sir Edward Davey]

As my hon. Friends have already said, we have the best deal now. It is pretty clear that we were prospering over 40 years. We have moved from being the sick man of Europe and the dirty man of Europe to one that was leading on the environment and leading on the economy. That happened during our time as a member of the European Union. The deal we have at the moment is the best possible deal. Anything different is going to be far worse.

I want to take on an argument put forward by those on the Conservative Benches that somehow having a people’s vote would undermine our negotiating position. Madam Deputy Speaker, does anyone in this House seriously believe that what we have seen from the Government is strengthening our negotiating position? What a disaster! I wonder whether Conservative Members ever talk to anyone from France, Germany, Italy or any of the other 27 member countries. They see us as a laughing stock. Our stock as a country has fallen. We used to be highly regarded for our diplomatic skills, for our leadership and for our stability. In a short time, this discredited Conservative Government have made us the laughing stock not just of Europe but of the developed world.

As a Minister in the coalition Government, I attended five European Councils, first as a junior Business Minister and then as Secretary of State for Energy and Climate Change. Over five years, I was involved in a whole set of negotiations in Europe: on the economy delivering a growth package, which was very much written here in London; and on an energy and climate change package, which was very much written here in London. My experience was that we could always win for Britain, completely contrary to the nonsense we hear from so many Brexiteers. Moreover, people listened to us. When we engaged in proper negotiations and proper politics, we could always win the day. I have been disappointed, angered and distressed by the appalling inability of the Government to negotiate—with themselves, frankly, let alone the European Union. Their attempt to try to build those relationships, which are critical in a successful negotiation, has failed lamentably.

I want to end with one problem that I have with the Chequers statement. The Minister was unable to answer it and the Prime Minister was unable to answer it during her statement on Monday. It is important in relation to the negotiations with Europe and to what this Parliament eventually decides. If there is a new rule produced by our EU colleagues relating to the single market for goods, this House will have the freedom to vote on it. That sounds very enticing to a Brexiteer: we will have the freedom to do that, we have taken back control and so on. What has not been spelled out is what happens if this House votes to reject such a new rule. It is absolutely clear that were the House to do that, the whole agreement that we negotiate with Brussels will collapse. This is going to be one of the key questions during the negotiations and during deliberations in this House. I think it is one of the questions on which the Chequers statement will fail.

This country and this House need better leadership. We have not got it and I fear we are not going to get it. That is the reason why this House needs to give the people the final say.

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[Mr Walker]

My hon. Friend makes his point powerfully, but we need to ensure that we allow ourselves to take the right approach and the constructive approach to the negotiations. Many Members on both sides of the House have identified the damage that would be done to the negotiating process by signalling to the European Union that, if it were to take a tough stance and allow the talks to break down, the British people would simply decide to pay in and still send vast sums of money. The right hon. Member for Kingston and Surbiton (Sir Edward Davey) confirmed that it was the position of the Liberal Democrats to ask the question at the end of the process: “Do you like the deal that is on offer, or do you simply want to stay in the European Union?” If we set out that question right now to ask at the end of the process, there would be no incentive for the European Union to engage constructively with the negotiations over the coming months. It is naive in the extreme to think that the EU would continue to negotiate in good faith on that basis.

[Sir Edward Davey]

Will the Minister answer a question that the Parliamentary Secretary, Cabinet Office, the hon. Member for Norwich North (Chloe Smith), failed to answer? In the Chequers statement, the Prime Minister stated that a new rule for the EU rulebook would be considered by this House and that we would have a chance to vote on it. Will he explain what would happen if the House were to reject a proposed new rule to add to the EU rulebook?

[Mr Walker]

I say to the right hon. Gentleman that we want to bring to the House an agreement between the UK and the EU that the whole House will want to support. There will be more detail on the precise measures in the White Paper that we are bringing forward at the end of this week—

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[Sir Edward Davey]

So you’re not going to answer the question.

[Mr Walker]

I say to the right hon. Gentleman, and to the hon. Member for Oxford West and Abingdon (Layla Moran), who spoke about the results of the 2017 election in her own constituency, that they should pay attention to the fact that more than 80% of the people who voted in that general election voted for parties that had made it clear that they would respect the result of the referendum. The 8% who voted for the Liberal Democrat party do not represent a majority in the country or a significant shift of opinion on this issue. We are at a critical point in our negotiations, and we simply could not afford the distraction of this debate about a second referendum. What we need to do now is to progress our negotiations with the European Union in order to achieve the right outcome. The approach agreed by the Cabinet at Chequers is a constructive way forward. We are seeking to get the best deal for the UK as a whole, and we intend to negotiate under the best possible conditions. To do otherwise would be irresponsible in the extreme.