EU Membership: Economic Benefits

James Cartlidge Excerpts

Wednesday 15th June 2016 Commons Chamber

[Mr Hammond]

The right hon. Lady is right. The deal on the table between Switzerland and China is deeply asymmetric and deeply unfavourable to the Swiss, but reflects the mismatch in scale between those two marketplaces. Being part of the world’s largest economic bloc allows us to stare squarely into the eyes of Chinese and American interlocutors when negotiating trade deals.

It is a well rehearsed and well understood fact that 44% of the UK’s exports go to the EU, but it is an underestimate because it addresses only exports to the EU. If we take into account the countries with which the EU has a free trade agreement—destinations for another £56 billion of British exports—the figure goes up to 56%, which does not take into account any of the countries with which the EU is negotiating free trade agreements. If we included them, we would be talking about more than 80% of UK exports going either to the EU or to countries with which the EU had trade agreements. At the very least, more than half of Britain’s exports would therefore be at risk if we left the European Union, and it could take a decade or more to put in place new deals with the EU 27 and the 53 other countries with which we have free trade agreements. It is not about choosing between growing our trade with the EU or with the rest of the globe—as the figures show, our EU membership is key to both.

[James Cartlidge (South Suffolk) (Con)]

Is not the central absurdity of talking about the EU deficit and the surplus with the rest of the world that our trade with the latter is largely conducted through foreign companies—Japanese car makers and American banks, for example—that base themselves here precisely because we are in the single market? They trade with the whole world—they do not see it as two different places. We as a country should have that attitude.

[Mr Hammond]

My hon. Friend is right. The world’s supply chain has globalised itself. If I am honest, when I listen to the arguments of some of our opponents in this debate, although framed in terms of hostility to the European Union, I sometimes wonder whether what I am hearing is hostility to the globalisation of our economy.

What is true for trade is also true for investment—the other side of the coin. The reality is that Britain benefits hugely as a platform for investment from both EU and non-EU countries, many of which see us as a gateway to the rest of the European Union. They come here because of our language, our skills, our flexible labour market and our domestic regulatory environment, but if I talk to foreign companies based in this country—I have lots of them in my constituency, and other Members will be in a similar position—and to others around the world thinking of making that investment decision, it is clear that the single most important factor in the decision making of most of them is our membership of the European Union. Our membership makes Britain a launch pad for doing business with the rest of Europe. Almost three in every four foreign investors cite our access to the European market as a principal reason for investment in the UK. If we lost that access, we would lose the investment. It is as simple as that.

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[Mr Clegg]

I will, if I may, make a little progress.

The second point, which is completely omitted by the analysis of Brexit campaigners, is our current account deficit. To be fair, the Government are very silent on that as well, for the very good reason that it is shockingly large. We now have a current account deficit which, at 7% of GDP, is historically and internationally very high and, in my view, unsustainable by historical standards in the long run. As the Governor of the Bank of England has said, if a country runs such a huge, unprecedented current deficit, it has to rely, as he put it, on the “kindness of strangers”.

[James Cartlidge]

Will the right hon. Gentleman give way?

[Mr Clegg]

If I may finish this point, I will then give way.

The only way in which that current account deficit is sustainable is if strangers from elsewhere in the world invest in assets in this country—in property, infrastructure, the financial services sector, factories and companies. It is on those investors, and on the kindness of those strangers, as Mark Carney has said, that the sustainability of the ballooning current account deficit relies. What will those strangers think after next Thursday, when they do not even know whether our country will survive at all? The United Kingdom may not persist because Scotland may trigger a second referendum, and see the United Kingdom fall.

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[Caroline Flint]

My hon. Friend is right, and in Yorkshire alone more than 2,000 EU migrants work in health and social care. Sometimes we must consider the nature of the work going on, and ask why those insecure, poorly paid sectors are using migrant workers. Those workers are being exploited, and that does not do much for the users of those services either.

[James Cartlidge]

Is the right hon. Lady aware that the Labour Government introduced tier 3 in 2008, which was for unskilled migration from outside the EU? That has been closed ever since, with the official reason that we get those unskilled workers from the EU. Will she speculate on where we will get unskilled workers from in future, when the Poles, Lithuanians and so on no longer come here to do the jobs that we struggle to fill with UK workers?

[Caroline Flint]

I will not speculate, but we need a future where work in social care is not poorly paid, because we are doing a disservice to social care workers, and to the elderly people and other independent adults who rely on them. That is the challenge, and we as a country must take ownership of that and not blame the EU for all the problems on our doorstep.

There is fraud and people who are paid off the books, but that happens with British people who work illegally too, sometimes with bad employers or organised criminal networks behind them calling the shots. Many more people come here because of the work available and because English is the international language. Change is not as easy for some as for others, and leaving the EU will not solve that. The coalition Government were wrong to abolish the migration impacts fund, and it is right that freedom of movement should mean freedom to work, with people putting in before they take out. It is good news that the much maligned European Court of Justice has ruled that it is right for EU member states to be able to withhold benefits.

Let us be honest. Young Brits today do not queue up to pick crops or work in social care. The greatest deceit by the leave campaign is that the UK can keep all the access to the EU single market, but not allow EU workers to work here. If we restrict EU workers who are allowed to work here, why would the 1.6 million Brits who work or live in Europe not face similar restrictions?

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[Mr Bailey]

Absolutely. My hon. Friend’s experience echoes my own on the other side of the midlands economy.

The fact is that investment, particularly by Tata in Jaguar Land Rover, has transformed the manufacturing economy in my constituency and the surrounding constituencies. We now have the new i54 development, which is a supreme example of what new investment in modern motor manufacturing can do. As a result of that, the local supply chain has been rejuvenated.

We have problems, however. My constituency has more foundries than any other in the country, and they form a vital part of the supply chain that underpins our ability to produce high quality cars and superb manufacturing exports, but they have skills shortages and an ageing workforce. However, they have been helped by the recruitment of skilled workers from eastern Europe through the EU. The companies involved tell me that without those workers, their ability to meet the demands placed on them by the cutting-edge technology that we are producing to expand our manufacturing exports would be hampered and jeopardised.

[James Cartlidge]

Is the hon. Gentleman aware that the policy of vote leave is that, when we leave the EU, we will stop all unskilled migration into this country? Does he think that that is even remotely credible?

[Mr Bailey]

No. Unfortunately, however, I do not have time to address all the issues that would arise from the leave campaign’s immigration policy, or lack of it. I need to focus on the relevance of these arguments to my constituency.

The fact is that without those workers, our ability to sustain this country’s cutting-edge manufacturing capacity would be lost. I would be the first to agree that we should be pioneering better skills, apprenticeships and so on, and I am glad that the industry is looking at that, but it does not have the capacity to recruit those workers at the moment. If those in the leave campaign were to carry out the promises they have made on migration, there would be a real prospect that those companies would be starved of the skills they need, and it could well lead to unemployment among the long-standing indigenous population who have worked in those industries.

As I do have a few moments left, I will address some of the wider issues raised by those in the leave campaign’s migration policy. Andrew Neil got out of Nigel Farage eventually the idea that they would try to reduce net migration figures to 50,000. They then deploy a seductive argument that if they stopped migration from Europe, they could have more from the non-EU countries, which I think is a pitch to our ethnic minority population, without it having an impact on our skills base in this country. The fact is that the sort of figures being quoted by the leave campaign, and by Nigel Farage in particular, would mean there would be no way we could recruit the levels of staff needed both for the manufacturing industries, which we have in my constituency, and the service industries, particularly the care industry, which have been highlighted by one or two Members today. Those in the leave campaign are raising a particular issue to try to inflame local public opinion, but then peddling only a bogus solution. We have one week to expose that and demonstrate to people that their interests are within the EU and in sustaining our current economic and manufacturing base.

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[James Cartlidge (South Suffolk) (Con)]

It is a great privilege to be called to speak in this historic debate. I will vote remain for one fundamental reason. I am a father of four small children, and the last thing I want is for them to grow up in a country with less opportunity than I have had the great privilege to enjoy. What an opportunity it is. If we vote to leave, this country will not go to the dogs; it will rather be a case of an opportunity cost and an opportunity missed. Alone in the world, we are the only major nation on earth that enjoys unfettered access to the European single market in a currency over which there is no existential doubt.

I was passionately opposed to membership of the exchange rate mechanism and the European Union, but I believe that to be a major nation in the EU but outside the straitjacket of the eurozone is to be in an incredible position; and that position has been strengthened greatly by the Prime Minister’s renegotiation. Some say that it was not a fundamental renegotiation, but the securing of the one key point that the EU cannot discriminate against countries that do not use the euro means that our platform of prosperity is now secure. I believe that, by voting to remain, we can build on that in four vital strategic economic areas.

First and foremost, we will restore our reputation as a safe haven and a sound and stable country in which to invest. This referendum, like the referendum in Scotland, puts that at risk by threatening huge uncertainty. If we vote to remain, while those two constitutional issues will not go away, to the people who matter—

[Stephen Gethins]

Will the hon. Gentleman give way?

[James Cartlidge]

I should be delighted.

[Stephen Gethins]

The hon. Gentleman has mentioned the independence referendum in Scotland. At least he will concede that the Scottish Government provided a 650-page White Paper saying what they would do in the event of an independent Scotland. I have seen squat from the vote leave campaign.

[James Cartlidge]

I do not need to add very much to that, but the point that I am making is in no way intended to incite the Scottish National party. I am simply saying that I believe we will restore our international reputation as a sound and stable nation by putting those two constitutional issues not to bed but to the margins, in the eyes of the investors and the people who matter most.

My second point concerns the terms of trade. Last year I was standing on the platform at Marks Tey station, on the main line into Liverpool Street, with a member of my Conservative association. A goods train passed, travelling from the Felixstowe direction towards London, and therefore its load was obviously from China. There was a container on every single wagon. A few minutes later, a chap looked at me with dismay when another goods train went in the opposite direction, with not a single container on it. I reassured him by saying, “Don’t worry: that’s what we mean by ‘invisible exports.’” [Laughter.] But actually, that is the key point. Because a few minutes later, on the same platform, herds of commuters—including many from my constituency —boarded the train to Liverpool Street, not to go and make widgets to be sent back to China, but to sell the insurance, to negotiate professional services, to do the finance.

That is where our comparative advantage lies. Trade is about comparative advantage—doing what you do best. If we leave, there is no way in which we can have a say in the attempt to complete the single market in services. I believe that if we stay, we will achieve that, and you cannot put a value on what that will add to our economy, given our expertise in the service sector.

My third point is about inward investment. I find it absolutely astonishing that we keep hearing from Brexit campaigners about the deficit in European trade compared with trade with the rest of the world. Only one group of companies is doing all that trade, and most of those—the ones that are making the biggest dent in exports—are foreign companies: Japanese car makers, American banks, and French pharmaceutical firms such as Sanofi, based in Haverhill, which I visited recently. Its biggest export market is, by far, the United States of America, but it is based here in the United Kingdom because we have access to the single market. To pretend that European trade and global trade are somehow separate is complete nonsense.

I believe that if we vote to remain, we will drive inward investment far higher, and therefore drive our exports. Instead of worrying about trade figures as some negotiating stance, let us look at them as we should, and conclude that we need to do better—and one way of doing that is to vote to remain, to show that this country is open again for business from around the world.

My fourth point relates to what is said about the future of the eurozone. Those who want to leave the European Union say, “The glass is half empty: we should leave because the eurozone will collapse,” and so on. Our flexible position means that if the eurozone gets into trouble, that will simply reinforce our unique status in that we alone, as a big country, have unfettered access and are not in the euro. If the eurozone strengthens, that will massively boost our exports and help with our trade deficit. We cannot lose, provided we play our cards right.

I would make one final, fundamental point. There are those who say that in this referendum on neither basis are we voting for the status quo, and they are right. If we vote to remain it will not be the status quo, because we will have made up our mind: after all these years of being held back by this interminable debate about whether to be in or out, if we decide as a country to remain, we are deciding to get stuck in in Europe, representing this country. I believe we will then have to stand tall, proud and prosperous in this great continent on behalf of this great country, and the only way to do that is to do the patriotic thing and vote to remain in the EU.