European Union (Withdrawal) Act

James Cartlidge Excerpts

Tuesday 12th March 2019 Commons Chamber

[The Prime Minister]

The right hon. Gentleman makes a very important point. A lot of focus has been put on legal changes, and I will come on to the fact that there are legally binding changes as a result of the discussions since the House’s vote on 29 January, but he is absolutely correct—the danger for those of us who want to keep faith with the British public and deliver on their vote for Brexit is that if this deal is not passed tonight, Brexit could be lost.

[James Cartlidge (South Suffolk) (Con)]

My right hon. Friend may have slightly lost her voice, but is it not true that were we to have a second referendum, 17.5 million people would have lost their voice?

[The Prime Minister]

Yes. My hon. Friend will not be surprised, given what he has heard me say from this Dispatch Box, that I entirely agree with him. I believe it is absolutely imperative that this House meets the decision taken by the British people in June 2016, that we deliver on the referendum and that we deliver Brexit for the British people. As I say, there is a danger that with a failure to agree a deal we could end up in a situation where we have no Brexit at all.

--- Later in debate ---

[Sir Vince Cable (Twickenham) (LD)]

It is a privilege to follow the right hon. and learned Member for Beaconsfield (Mr Grieve). I very much agree with what he had to say. Like him, we have no objections to the Irish backstop. It is one of the redeeming features of the Government’s agreement—their having foolishly and unnecessarily drawn red lines around the customs union and the single market, it was an inevitable and necessary measure to protect Ireland from a new, disruptive frontier. Our concern is much more fundamental—the fact that Brexit, as currently devised, will make this country poorer, weaker and less secure.

We have all heard a lot of general rhetoric about this issue, so I want to home in one particular aspect of the economics of it—the nature of the single market and how it originated. Thirty-five years ago, there was an insight in this country around the Prime Minister of the time, Mrs Thatcher. I do not know whether it was her or her advisers who saw that the future of business and trade rested on two s’s—standards and services—and that the traditional preoccupation with tariffs and quotas was of course very relevant, particularly for agriculture and manufacturing, but the future lay in another area.

For three decades, successive Governments—Conservative, coalition and Labour—have beavered away trying to create this structure of a single market, recognising the importance of those key drivers. That has been done on two levels. It was attempted at a global level through the World Trade Organisation, which is often called in aid by Government Members. That achieved virtually nothing, because the World Trade Organisation is essentially a weak organisation that brings together countries with massively divergent standards. It was also pursued through the European Union, with very great success.

One of the central problems of Brexit is that it potentially unravels much of the regulatory framework that has been put in place over those three decades. I have a very simple example, which gives us an indication of what is coming down the track. It actually relates to one of the Government’s success stories. The Government have been trying to roll over the 30 or 40 association agreements we have with the European Union. It would be disastrous if they were not rolled over. Quite a few important countries, including Japan and Korea, are making it very clear that they are not willing to get a move on, as the Foreign Secretary instructed them to, but one of the countries that did is Switzerland.

Switzerland is an interesting case. It is a British success story, with rapid growth in exports of 40% over five years. Britain has a big trade surplus with Switzerland. That is all under the existing arrangements. The Secretary of State for International Trade presented the roll-over agreement as a great success, and indeed it was. It is one of the few things that has actually worked for the Government in this area. But when some of the trade federations affected by the agreement started unpicking it, they noticed that it is not the same agreement that the European Union had.

Central to the European Union agreement was that it brought together about 19 key technical standards across the European Union and Switzerland, which enabled European countries to trade on a common basis. In the revised agreement, there are only five such standards. The companies in the UK that will have to deal with Switzerland in the future will do so at a competitive disadvantage. I have no way of knowing how important that is or how many jobs are at stake, but that small experience will be reproduced on a massive scale as Brexit proceeds, and we should take note of it.

[James Cartlidge]

The right hon. Gentleman raises a very good point about Switzerland, but surely the most important point about the Swiss is that they are one of the only examples of a country that has maintained very strong links with the European economy but has been able to go out and get very good trade deals, which have significantly boosted its export penetration around the world. We could achieve that, too.

[Sir Vince Cable]

I do not think that Switzerland is a very encouraging example when it comes to external trade deals. Its trade deal with China consisted of opening up the Swiss market to everything and getting virtually nothing in return. Actually, that illustrates a much wider point: one of the things that we sacrifice with Brexit is bargaining. The hon. Member for Camborne and Redruth (George Eustice) has now disappeared from the Chamber, but he pointed out a week or so ago—and he is a hardline Brexiteer—that our bargaining power with the United States over food standards is massively weaker than it would be if we continued to be a member of the European Union, and very poor standards will be inflicted on us. That is the kind of debate that we ought to be having, but we are not.

All the costs associated with the unravelling of the single market will be compounded by the loss of the customs union—I know that the Labour party has given that priority, and it is important, but it is not as important as the single market—and also by uncertainty. Had the Government done what they promised to do, which was to have a clear picture of the endgame before they completed Brexit, all that uncertainty would have gone. British firms with a time horizon of more than two years will now be afflicted by massive uncertainty about whether to invest in this country, and many of them will not do so. The future is wholly uncertain.

The combination of those factors has major economic consequences. I have taught economics for many years and worked in it for many years, and I know that it is not a precise science. However, one of the most fundamental principles of economics, going back to Adam Smith—and, indeed, before—is that if you put up barriers to trade, you make yourself poorer. That will now be compounded many times over.

In addition to all the economic costs, there is the unravelling of the collaborative arrangements. One of the best institutions in my constituency is an organisation called the National Physical Laboratory, which is a centre for key metrology standards. Alan Turing did much of his professional work for it, and I attended and spoke at its annual dinner a few days ago. The people who work there are absolutely horrified at the breaking up of their scientific network, and their inability now to attract European staff. That is being replicated in campuses, universities and scientific institutes across the country.

The European Investment Bank has hardly been discussed here. Crossrail, which has been one of the big innovations in London in recent years, was substantially financed by it, but it is now being dismantled. Those are some examples of the damage that has been done, and that is why the Government must go back to the public and put the deal to them. If they cannot get their deal through Parliament, they must give the people the final say.

--- Later in debate ---

[Boris Johnson]

I will come to that, but I am grateful to my hon. Friend for conceding that it was always infantile to pretend that there was no risk of getting into the backstop, because that was, for a long time, the contention of those who proposed that the backstop should be instituted.

I am afraid that this deal has now reached the end of the road. If it is rejected tonight, I hope that it will be put to bed and we can all face up to the reality of the position and the opportunity that we have. What we need to do then—now—is to behave not timorously but as a great country does. We have broadly two options. We can either decide, if the EU is unwilling to accept the minor changes that we propose, that we will leave without a deal—yes, I accept that that is, in the short term, the more difficult road, but in the end it is the only safe route out of this and the only safe path to self-respect—or we can decide to take a route that will end in humiliation by accepting arrangements with the EU that seem to limit disruption in the short term but will leave us as an EU protectorate with many important rules set elsewhere.

Members have asked, “What’s the worst that could happen?” I will give two examples, but there is any number of rules and regulations. The financial services industry would be subject to laws set by its leading competitors, which is emphatically not what the City wants. The Commission has already made it clear that it wants to use the passerelle clause of the existing treaty to bring in qualified majority voting on taxation. We would be subject to that, under a qualified majority vote in which this country would not participate. I urge Members to think hard and to see that that predicament would be democratically intolerable. We would have to tell our constituents that they had no power or influence in setting some of the rules that govern our country.

[James Cartlidge]

I have huge respect for my right hon. Friend, but he said that there were two choices. In terms of WTO rules, which he has advocated, there are two choices; that is correct. We can either have tariffs that hit our consumers, or we have no tariffs on imports, which would leave our exporters and industry at a terrible disadvantage. Which of those two options would he go for?

[Boris Johnson]

In any circumstances, we would have the freedom to decide what our tariffs were going to be, and under this—[Interruption.] Under this deal, we would lose the power to decide what tariffs we levied on the perimeter of the UK.

The most powerful argument that has been made this afternoon is the threat that some Members are apparently ready to hijack the long-standing rules of the House in order to take our constitution hostage, with Parliament to direct the Executive in international relations. That upends hundreds of years of constitutional practice and makes a nonsense of relations between Parliament and the Government. I believe it would lead to an even greater gap between people and this place. Let us abandon that project of dismantling our constitution in the name of making this country an effective colony of the EU.

Instead, we should take what now seems to be the more difficult route but is, in the end, the only one that preserves our self-respect, which is to leave as we are required by law on 29 March and to become once again an independent country able to make our own choices. I am not in favour of crashing out, as many call it. The Malthouse compromise indicates the way forward—the UK observes single market rules and customs duties and restrains our right to compete for a period of three years while we negotiate a free trade deal. I believe the EU would be open to that.

As we come to the final stages, it is vital that we retain our freedom of manoeuvre and do not rule out no deal. A delay will achieve nothing except to compound the uncertainty for business. Now is the time to behave as what we are—the fifth biggest economy in the world, the second biggest military power in NATO and, by many counts, the most influential cultural and intellectual force in Europe—and not to accept what I believe would be a humiliation and the subordination of our democracy.

--- Later in debate ---

[James Cartlidge (South Suffolk) (Con)]

It is a great privilege to be called to speak in this debate. If I had my speech written on a piece of paper, I would now metaphorically tear it up.

I will simply respond to the quite extraordinary comment of my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), of whom I am a great admirer. He was a very good Mayor of London. However, we have to appreciate that he is the primary spokesman and advocate for the idea that basically we should now leave on WTO terms, and many thousands of people in my party look to him and admire him for that and think he is right, yet I asked him the most basic question about the WTO today and he got it wrong. In my view, he did not understand it.

My point is that when it comes to WTO tariffs, if we go to a WTO no deal, which many Conservative Members who vote against this deal tonight will want, we have to understand there are only two choices. We are not taking back control of other countries, only this one, so we cannot affect the tariffs levied on our exports; we can only control the tariffs on our imports. It is the devil and the deep blue sea. We can either have a policy of WTO most favoured nation tariffs on imports, which could mean inflation of up to 20% on many foodstuffs and other consumer goods, or we can take the approach I understand we will be announcing tomorrow if this deal is defeated, which is to have nil tariffs on most imports. That is described as unilateral free trade but, in my view, it is not unilateral free trade but the unconditional surrender of British industry and British farming.

I want to talk about British farming, because I understand that, within the schedule we are poised to announce tomorrow if we lose this vote, arable farming—wheat—will be set with a nil import tariff. That is not a minor detail in South Suffolk, because there are currently no shipments of wheat booked out of the port of Ipswich after 29 March. That is not “Project Fear” but absolute reality, because the WTO tariff on wheat is €95, or £80, a tonne. The max to be had for milling wheat is £180 a tonne. Nobody is going to buy that. Even if we get quota, it is €12 a tonne, but we will not get it because under the WTO—guess what?—although we may come to deal with the EU on quota, New Zealand, our other friends in the Commonwealth, Australia and the United States are protesting against it in the WTO. People have to understand that the WTO ain’t no panacea.

But there is a way we can influence the tariffs on our exports, which will otherwise be very high, and it is old-fashioned: we make a deal with other countries, because we cannot directly control them. We do not have sovereignty over their tariffs, so we make a deal. Under the deal before the House, the good news is that we will continue tariff-free and quota-free trade with our largest market. Let us be honest, some of my colleagues will vote against the deal because they are getting the same emails I do, which say, “Go for WTO. Go for no deal.” They have to understand that that means that we, as Conservatives, would be saying that within a matter days the desirable outcome is the return of tariffs—and all the red tape that comes with tariffs—and non-tariff barriers across the whole of British industry. Do we think that is a good idea, as the party of enterprise? It is madness, and it will be damaging and destructive.

Here is the good news. People talk about why we voted for Brexit and all the issues around sovereignty, and I profoundly believe, because I am by nature an optimist, that if we get a sensible deal—if this vote passes —we will be successful, and I will briefly explain why. We may be the fifth largest economy, but we are 22nd or 24th in GDP per head according to the World Bank and the International Monetary Fund. We are low ranking because we do not have the sort of sustainable growth in exports that gives the higher GDP per head that our competitors enjoy.

If we take a sensible deal that secures our industrial base so that we have some industry to make those trade deals, then and only then, once we have sorted out the border, can we start making those trade deals. We will become more export-oriented and, if we control immigration sensibly, including from outside the EU, we will eventually see higher GDP per head. To really get that, we need the investment to come with it. That needs certainty, which means voting for this deal, being confident and being optimistic about the negotiations that follow on the FTA. It means backing Britain and saying, “Do you know what? We can do this. We are confident. We don’t fear the backstop. It is a risk, but we don’t fear it. We are confident.”

I believe that if we pass the vote tonight, we will be a very successful country.