EU: Withdrawal and Future Relationship (Motions)

Gareth Thomas Excerpts

Wednesday 27th March 2019 Commons Chamber

[Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Clacton (Giles Watling). He will not be surprised that I profoundly disagree with his viewpoint, but it is good that the House has finally had the chance to debate the full range of options.

I will vote with most enthusiasm tonight for motion (M), which my right hon. Friend the Member for Derby South (Margaret Beckett) tabled. I voted to respect the outcome of the referendum in 2016 and trigger article 50, but in the past two and half years, so much more has become clear about the detail of the real impact of Brexit on our constituents and so many of the promises of those who campaigned to leave have been shown to be untrue.

I was proud to be one of 1 million who marched in London on Saturday. It should not only be the 650 of us in Parliament who get to have the final say on which Brexit option is decided. Given that Brexit has such huge implications for our country, surely it is only right that once a deal has been finalised, the people should have the final say.

I will vote for motion (L), which the hon. and learned Member for Edinburgh South West (Joanna Cherry) tabled, to strengthen the protection against a no-deal Brexit for our country.

However, as a House of Commons, we have a duty to try to help the Prime Minister and the Government to move on from the deal that she has been peddling so unsuccessfully for so long. The dilemma for the House is how close or how distant a relationship we want with the EU. Every independent economist suggests that the more distant our relationship with the EU in the future, the greater the adverse economic impact. For me, that means we should opt for the softest Brexit possible, staying in the customs union and the single market.

The vast majority of jobs for my constituents and others depend on the services sector and every independent economist suggests that there will be a huge impact on our country in loss of services business if we leave the single market. For that reason alone, we should stay in the single market.

Trade remains the last great unicorn to be fully taken down. I do not believe that there will be better trade deals on offer after Brexit. We have got good trade deals as a result of membership of the EU and I look forward to supporting motion (M).

European Union (Withdrawal) Act

Gareth Thomas Excerpts

Wednesday 9th January 2019 Commons Chamber

[Stephen Barclay]

My hon. Friend is absolutely right both to draw the House’s attention to the urgency of this issue—we have 78 days before we leave the EU—and in his sectoral understanding of the flow of goods and how that impacts the key industries in his constituency. That is why so many business groups support the deal. They want that certainty.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Further to the question from the right hon. and learned Gentleman, the Father of the House, to the Prime Minister earlier, and in the context of the House having voted against the Government twice over its concerns about the possibility of no deal, does the Secretary of State accept that it would be the Government’s responsibility, if they were defeated next Tuesday, to bring forward legislation to suspend article 50?

[Stephen Barclay]

The hon. Gentleman raises an important point that many hon. Members have raised, but it does not address the legal position. The position of the courts is that we cannot unilaterally extend article 50. That requires the consent of the other 27 member states, and we do not know what conditionality would be attached, if it were sought. In particular, the courts were clear that the only way would be to revoke on the basis of a permanent decision. Given that more than 80% of the electorate voted for one of the two main parties, and that both parties’ manifestos backed the decision to leave—that commitment is on page 24 of the Labour manifesto—I feel it would be divisive for our country to proceed in that way.

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[Mr Djanogly]

I would not argue with the right hon. Gentleman about promises being made during the referendum campaign that could now be disputed, but the same could be said for a lot of general elections that we have had in the past. To say that elections or referendums are discounted because of what people maintained during the course of them would not, I am afraid, be a line that I would take.

Furthermore, if the deal is rejected by this House, from my point of view I will do everything I can to ensure that we do not leave the EU without a deal, and, to my mind, the next best thing after the Prime Minister’s option would be the Norway-plus alternative. If the Government’s deal fails to pass this House, and assuming that the Opposition’s no-confidence motion fails, I hope that we shall then start to find a new tone of cross-party working. We shall need a degree more honesty in how we describe Brexit issues, where in reality no one is going to win—not us and not the EU. We have the Labour Front Bench changing its position; we have the Brexiteers shouting, “Sell-out”, at every initiative while offering nothing as an alternative; and we have a Government who have frequently made soothing hard Brexit noises to Brexiteers while lining up a deal that clearly has a trajectory of close regulatory alignment to the single market and some form of customs arrangement. I do hope that the Government get their deal, but if not, it will surely be because they have unsuccessfully attempted to be all things to all men.

[Gareth Thomas]

Does the hon. Gentleman accept that if the deal does not pass this House next Tuesday, agreement to extend article 50 will be an urgent priority for the Government to bring forward a measure on?

[Mr Djanogly]

The hon. Gentleman makes a very important point. If the deal is rejected and we start looking at other possibilities—on a more consensual cross-party basis, I hope—then clearly whatever route we take leads to the deadline, and an answer to that may well have to be to extend the article 50 period. I am very pleased, looking back over a year ago now, that some of us in this place decided to ensure that the Government were not able to restrict the timing of the article 50 period, and so that will be a possibility.

Rather than add to the fudge, let me explain why and how, if this deal fails, Members of all parties should coalesce around a Norway-plus option, and why the “plus” element—being in a customs union with the EU—is a good thing. First, most business wants a customs union because it allows free movement of almost half our exports between Union members without tariffs and checks and paperwork. Opponents say that this would stop the UK forging its own trade agreements, but, to my mind, the benefits of the EU customs union are far greater. We must keep in mind that the EU has some 250 FTAs with some 70 countries, and the UK plan is to “roll over” those deals, meaning that, at best, we would have the same—not better—terms as the EU with one third of the world’s countries. There would be no advantage of being outside the EU. That is, of course, assuming that we are able to make those deals happen, which we know is proving somewhat elusive, as the hon. Member for Nottingham East (Mr Leslie) explained.

Secondly, the chances of negotiating better FTAs as a country of 50 million, rather than a bloc of 500 million, is realistically and simply not how it normally works. Thirdly, there will be significant costs of going it alone on FTAs, from being forced to take US genetically modified crops to issuing visas to countries, as currently requested by Australia and India. Fourthly, FTAs take a long time to negotiate—an average of seven years.

Fifthly, the claim that Commonwealth countries will prioritise us over the EU is unrealistic, not least considering that the Czech Republic currently has four times the trade with New Zealand than we do and that the Swiss do much more trade with India than we do. Sixthly, “most favoured nation” clauses in our rolled-over EU agreements and the integrated nature of world trade will significantly reduce our ability to get commercial advantage. Finally, high levels of foreign input into our manufactured goods will create huge problems under the so-called rules of origin.

In conclusion, my view is that we shall be better off with a customs union arrangement with the EU, and the deal on offer presents the best opportunity of securing future prosperity for our companies and employment for our people. We should support it.

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[Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure to follow my hon. Friend the Member for Pontypridd (Owen Smith). I very much agree with his conclusion that we need to consider the suspension of article 50 and go back to the people of this country.

As others have said, the deal before the House is a bad deal for Britain, and the Prime Minister knows that as well as the rest of us. Her own Government’s analysis shows that there is no Brexit scenario in which we would be better off as a country, and Opposition Members know that it will be the poorest of our country who will be most at risk of losing out further.

Crashing out without a deal is clearly the worst option before us. The prospect of food price hikes due to tariffs kicking in, the supply of key goods being disrupted, and huge transport delays is profoundly worrying. If the Government had handled negotiations better and Parliament had been allowed an earlier vote on this deal, the Prime Minister could have averted much of the huge costs and considerable uncertainty that the country faces. Companies are already transferring assets and jobs, notably services businesses, particularly those in financial services. Car manufacturing industries that are of huge importance to the midlands and the north, such as Land Rover and Vauxhall, have delayed investment, cut jobs and shifted parts of their operations overseas—and that has happened while we are still in the European Union. Many of us know from discussions with those running our public services in our constituencies that the shortages of staff in many of those services have been exacerbated as EU nationals start to believe that they are not welcome in Britain anymore.

The Government would have us believe that the choice is between their deal and no deal, but as others have said in this debate, that is simply not the case. They could take off the table the prospect of no deal. I believe that this deal will be defeated, and I hope that when the Prime Minister comes back to the House, she will move very quickly to rule out the possibility of no deal.

Among the many problems with the Prime Minister’s deal is the fact that we are being asked to commit huge sums of money—£39 billion and upwards—but we will be a rule taker. We will have no say on rules that will continue to have a profound impact on businesses and jobs in the UK. Crucially, none of the detail about our future relationship with our closest trading allies has been locked down. The fact that we have not even begun seriously to negotiate the future trade deal between the UK and the European Union is deeply worrying.

In my seven years as a Minister, from 2003 to 2010, I worked on trade negotiations. I attended numerous meetings of EU Trade Ministers, made many visits to the World Trade Organisation headquarters in Geneva, attended many meetings with ministerial colleagues from around the world and had many conversations with businesses here in the UK, trade experts and non-governmental organisations. Trade deals are immensely complex. Negotiations take years. Each trade deal strand has implications for other trade deals. The House should not underestimate just how lengthy and complex the negotiations with the European Union would be before any signing ceremony for a UK-EU trade deal.

Turning the non-binding wishlist that is the political declaration into a legally binding trade treaty between the EU and the UK will certainly take longer than the 21 months claimed. It is true that trade experts disagree on how long it will take, but Professor Alan Winters of the independent UK Trade Policy Observatory thinks a further two or three years at a minimum is inevitable. Uncertainty will become the new normal for export and import businesses here in the UK.

Not only are the issues at the heart of the future trade deal between the EU and the UK complex, but the process of reaching an agreement will change after exit; the exit agreement has to be approved only by a qualified majority vote, but the trade deal would require the agreement of every EU state, each with its own specific interests. The French have already made clear that they will have demands on fishing, and Spain has made it obvious that it will have Gibraltar once again firmly in its sights.

There is then the question of services, which others have mentioned. Let us take just one example: although reform is still needed to the financial services industry, it is critical to our country’s future, brings huge financial benefit, particularly to my constituents and others in London, and creates thousands of jobs, yet there is little commitment in the political declaration to the UK and the EU trying to provide each other with significant market access for financial services. That is deeply worrying.

Quite apart from any other considerations, it is difficult to see why the UK would be offered better treatment in a trade deal than EU’s existing partners, given the most favoured nation protocol. The EU would be required to extend the same better offer to those partners, without receiving anything in return. It is a dangerous myth to claim that there are huge new trade deals just around the corner to offset the economic damage that people on most sides of the debate accept—at least privately—would be the consequence of our leaving the EU. No country will want to negotiate a trade deal with the UK until we have settled our future relationship with the EU. Indeed, 90 countries already have deals with the European Union that give them a back-door route into the UK market. Worse, the European Union will be in a very strong position in trade negotiations with us, because the backstop will protect its £95 billion surplus in goods while doing little to help us get a good deal on services, where we have the surplus. That backstop will kick in years from now unless we can agree terms.

Once upon a time, a trade deal with the US, too, was touted as easy to agree, the benefits being said to be more generous than anything the EU could or did offer. In my experience, the Americans fight even more ferociously than the French for their trade interests. Donald Trump will demand more access to the NHS for big American companies, and significant reductions in our health and safety standards; chlorinated chicken will be just the start.

Brexiteers will not admit—to his great credit, the hon. Member for Huntingdon (Mr Djanogly) mentioned it—that every trade deal Britain seeks to negotiate on its own will require us to grant immigration access to our country. India will insist on it, Latin America will insist on it, and Europe will insist on it, too.

It is not just the lack of any serious detail about our future trading relationship that I worry about. The country should take seriously the warnings of the cross-party Home Affairs Committee about the implications of the Government’s deal for our future security. The lack of progress in locking down the detail about our future relationship with other security services via Europol, about the European arrest warrant and about how security will operate at our borders in the future is a significant concern.

All the great promises made by the different parts of the Conservative party have, one after another, been revealed to be little more than the emperor’s new clothes. The Prime Minister promised that a deal would be easy to get, yet here we are, years off from knowing what our future relationship with the EU will look like. There will not be millions of pounds extra each week for the NHS as a result of leaving. The claim by the right hon. Member for Haltemprice and Howden (Mr Davis) that there would be no downside to Brexit looks even less believable two years on.

Given that the facts have changed, how divided the House and the country are, and how much more we know now, I remain firmly of the view that we will have to go back to the people. It is not an abuse of democracy to have a further referendum. It would be elitist to think that we in the House know best. The divisions in our country are not a reason not to go back to the people. If anything, they are a major reason why we should. Every serious alternative scenario to the Prime Minister’s deal would take time to achieve. To allow those discussions to take place and to allow serious parliamentary discussion, the Prime Minister should bring forward urgent legislation to extend article 50 for at least 12 months. Every careful independent analysis of the benefits and risks of Brexit overwhelmingly reveals that our country will be weaker; we will be weaker with the Prime Minister’s deal, and certainly weaker without any deal. I will not vote to make our country weaker.

European Economic Area: UK Membership

Gareth Thomas Excerpts

Monday 6th November 2017 Commons Chamber

[Stephen Kinnock]

I will make some progress.

Carolyn Fairbairn of the CBI said only yesterday:

“We remain extremely worried and the clock carries on ticking down”.

As a result, she said, more

“and more firms are triggering their contingency plans to move jobs or change investment plans.”

Reality has finally bitten, even in the minds of some of the most deluded Brexiteers, that it was always a fantasy to think it would be possible to complete the divorce and the final trade deals in parallel. A solid cross-party consensus on the need for a transition deal has therefore emerged, as was made clear in the Prime Minister’s Florence speech. All parties in the House also agree that we must leave the EU by walking over a bridge rather than by jumping off a cliff, and the EU has welcomed the fact that the Government have finally started to show some signs that they understand the realpolitik of the negotiations.

Given that an off-the-shelf transition deal is inevitable, it is clear to me that EEA-EFTA is the only viable option. The EEA and EFTA are well-established and well-understood arrangements that offer the clarity, stability and predictability that the British economy so desperately needs in these turbulent times. Transferring from the EU to the EEA and EFTA would allow us to balance sovereignty and market access. Crucially, such a transition deal would buy us time for negotiate the final comprehensive trade and strategic partnership deal that will shape the terms of the UK’s relationship with the EU for decades to come, while also allowing us to enter into independent trade negotiations with third countries because we would be outside the customs union.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Is my hon. Friend’s point not all the more pertinent and timely in the light of the visit of the United States trade representative, Wilbur Ross? He certainly seems to be implying that a US-UK trade deal would take significantly longer than the 19 or 24 months to which the Government are clearly hoping to secure agreement for a transition deal.

[Stephen Kinnock]

I think that there is unanimity, almost, on the issue of the timing. I would add that the benefit of EFTA is that it is not a customs union but a free trade area, thus enabling us to connect with the vital single EU market but also to strike third-country deals with countries including, potentially, the United States.

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[Sir William Cash (Stone) (Con)]

For a free trade agreement to be possible after Brexit, the interim period must involve no membership of the EEA, the customs union or EFTA, because that would remove the freedom we need to negotiate with third countries. That includes any period in the EEA, being party to the EEA agreement, like EFTA states, or a bilateral Swiss-style agreement. The EEA essentially means membership of the single market and commitment to the four freedoms—free movement of goods, services, capital and workers. Three EFTA states—Norway, Iceland and Liechtenstein—signed the EEA agreement in 1994, but the EEA agreement would mean insufficient freedom for us to be a credible partner in trade negotiations with others. The agreement means taking on the single market acquis, but having no vote on legislation.

Through the EFTA Surveillance Authority, regulation is being harmonised, with EFTA itself stating that

“the EFTA Surveillance Authority and the EFTA court… respectively mirror the surveillance functions of the European Commission and the Competences of the Court of Justice of the European Union”.

The EEA therefore does involve the harmonisation of laws in significant areas of the environment, social policy and so on, in those countries’ domestic economies. It involves the application of ECJ case law by the EFTA court, and I completely disagree with the assertion of the hon. Member for Aberavon (Stephen Kinnock) that it does not. The EEA also includes the free movement of persons. In other words, the European Court of Justice effectively prevails, and our influence over the EEA would be infinitely and hopelessly inadequate.

Let us consider the experience of Norway for a moment. The Norwegian Government commissioned a study of the EEA’s impact, and it found that Norway implements

“approximately three quarters of substantive EU law and policy”.

That makes a mockery of much of what the hon. Gentleman said. Furthermore, the cost of the EEA to Norway has increased tenfold since 1992, and nearly 12,000 EU directives and regulations have been implemented through the EEA agreement and have changed Norwegian society in a significant number of areas. We are told that, on the EU legal database, 17,000 regulations have come to us since we entered the European Union, yet Norway, which is in the EEA, has acquired nearly 12,000 EU directives and regulations.

[Gareth Thomas]

Can the hon. Gentleman tell the House when a Norwegian Government last proposed leaving the EEA?

[Sir William Cash]

The Norwegian Government have consistently made it clear that their position is to stay in but, in practice, the trend of attitudes in Norway is increasingly moving against that position. I was at a conference only last week at which a young Norwegian leader of the people’s movement made it clear that more than 70% of young people in Norway want to get out of the EEA and do not want to join the EU. That is the position, and the bottom line—I do not need to speak any longer on this—is that there is absolutely no case whatsoever for our joining the EEA. Joining is completely contradictory to the mandate that we received in the referendum, which is perfectly clear. It is impossible.

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[Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Carlisle (John Stevenson), who made a number of interesting points, two of which I wish to follow up. He rightly noted that the outcome of the referendum did not determine the future basis of the UK’s relationship with the EU and that it was this House’s responsibility to do that in the months ahead of March 2019, when we leave the EU. He also rightly noted the huge amount of uncertainty at the moment, which is stalling many investment decisions and, understandably, worrying the business community up and down the UK. That has been underlined in graphic detail over the course of the CBI conference today and recently—notably by the Governor of the Bank of England just last week, when he highlighted the significant impact that Brexit is having our economic growth in the UK, at a time when, in his view, the British economy should be doing much better than it is.

I have to be straight with the House: I come to this debate having made it clear in the general election that I wanted Britain to maintain full access to the single market and having always thought that Britain was stronger through co-operating with our allies through the European Union and, in particular, its single market element. I have to accept that even though my constituency voted strongly in favour of remain, that relationship looks like it is going to change in the future, but it seems to me that continued membership of the EEA represents an opportunity—certainly in a transition phase, but potentially in the longer term as well—for the concerns of those who voted to leave and those of us who voted to remain to be squared.

It is striking that, notwithstanding all the concerns we heard from the hon. Member for Stone (Sir William Cash), Norway has consistently sought to stay in the European economic area, with the benefits of not only full access to the single market but control of agriculture and fisheries. Surely that is the beauty of the EEA at this time, as we look at the case for a longer-term transition deal than the Government are currently considering. It is part of an internal market with the single market. It replicates it, albeit with the two exceptions that I have outlined and that other Members have acknowledged, yet it comes without membership of a common defence, security and foreign policy, which concerned a number of those who voted to leave. Crucially, it allows member states to negotiate their own trade deals.

As a former trade Minister who watched and took part in many a long discussion about trade deals, I struggle with the idea that we could do quickly a comprehensive trade deal with, say, the United States, or even with India or Australia. Given the short timescale for a transition deal that appears to be envisaged by Ministers, and certainly by the EU, it is fanciful to think we will be able to sort out comprehensive trade agreements within that time. The EEA therefore surely represents a sensible transition arrangement. It is also worth considering for the longer term.

In the seconds I have remaining, I turn to the issue of whether or not we voted to leave the European economic area. I say gently to the hon. Member for Stone that I do not think we did. Notwithstanding the points that others have already made about a mandate, there was no reference to our leaving the EEA in the pamphlet that the Government published to explain the context of the referendum vote. I therefore think there should be a specific vote in the House on whether we should leave the EEA.