EU Membership: Economic Benefits

John McDonnell Excerpts

Wednesday 15th June 2016 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I beg to move,

That this House believes that the UK needs to stay in the EU because it offers the best framework for trade, manufacturing, employment rights and cooperation to meet the challenges the UK faces in the world in the twenty-first century; and notes that tens of billions of pounds worth of investment and millions of jobs are linked to the UK’s membership of the EU, the biggest market in the world.

This is the last opportunity that the House will have to debate the issue of our membership of the European Union before our people vote in the referendum next week. It has been described as the most important decision for a generation, and it may well turn out to be so. We therefore have a responsibility to ensure that it is made on the basis of the fullest possible debate, which will be considered and, hopefully, calm.

We need to acknowledge, however, what many of our constituents have been telling us about the debate so far. It has not, as yet, risen to the occasion. On the doorstep, people repeat that they simply want the facts and our honest assessment of the consequences for them and our country of whether or not we remain in the European Union.

[Sir Edward Leigh (Gainsborough) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

I will give way to the hon. Gentleman when I have finished this paragraph. I will be taking interventions, Mr Speaker, but I know that many Members wish to speak, so I shall try to limit the number of times that I give way.

On the doorstep people have simply asked for the facts, and I have to say many of them say they have been turned off by the exaggerated claims on both sides of the argument—put off by references to world war three on one side, and to comparisons of the European Union with the Third Reich on the other. “Project Fear” from both sides simply is not working. People will not be scared into the ballot box.

[Sir Edward Leigh]

I am most grateful to the shadow Chancellor for his courtesy in giving way, but does he understand that many of us believe that the real threat to our economy is not whether we stay in the EU or leave it; the real threat would be the implementation of the disastrous tax-and-spend policies that all his life he has advocated?

[John McDonnell]

I always find the hon. Gentleman’s interventions entertaining to say the least, but may I return to the subject of today’s debate?

Many people have seen this debate going on within the Westminster bubble among the Establishment. They do not feel involved, and many suspect that what they are witnessing is an unseemly battle for the succession in the Conservative party rather than a considered debate about the future interests of our country.

Much of the media coverage of the internal Tory strife has drowned out other parties. Polling suggests that many of our own Labour supporters are unclear about Labour’s position. So let people be absolutely clear: as the motion before us today unambiguously states, Labour is for remain. Today’s motion spells it out. It is about jobs, investment, trade with our largest market and the protection of the employment rights of workers so they can secure the benefits of participation in that market, but for many of us it is also about creating another Europe—a Europe that is more democratic, that promotes social justice as well as prosperity, that is more equal and sustainable economically and environmentally. We must do nothing now that jeopardises our European future.

[John Redwood (Wokingham) (Con)]

Does the shadow Chancellor share my concern about all those many cases where a UK manufacturing plant shut down and job losses have been very great, only to see new investment made in another EU country benefiting from specific and general grants and soft loans from the EU?

[John McDonnell]

My fear is that if we vote for Brexit we will cut ourselves off from the opportunity of that financial support as well, and that many other companies will move out. It is only courteous to also congratulate the right hon. Gentleman on his 65th birthday today.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

My hon. Friend is absolutely right about the bubble in Westminster. Does he not think that over these next few days every Member of this House has got to tell people in our constituencies what leaving the EU would mean for them? In Huddersfield it would mean catastrophic loss of income into our university and catastrophic impact on manufacturing industry.

[John McDonnell]

I fully agree. It is clear that a large percentage of people have not made up their minds yet, and that there are others who can be influenced, and it is essential that they make this decision on concrete facts rather than exaggerated claims like those we have seen so far.

Let us be absolutely clear: this is about jobs. There are 3.5 million jobs directly dependent on Britain’s membership of the EU. These will be put at risk as a result of a Tory Brexit. The traditionally Eurosceptic Treasury estimates that unemployment would rise following Britain’s leaving the EU by between 520,000 and anything up to 820,000. EU member countries accounted for nearly half of the UK’s stock of inward investment at £496 billion. This is far more than the US or any other single country.

[Philip Davies (Shipley) (Con)]

Can the hon. Gentleman answer a question that those on the Government Benches have been unable to answer so far? Why should we spend over £10 billion a year net to the EU in order to have a £68 billion trade deficit with the EU, when anybody with even a modicum of common sense knows that we can have a £68 billion a year trade deficit with a declining part of the world’s economy for nothing?

[John McDonnell]

The single market provides us with the largest market we have, and enables us to create long-term secure jobs. The benefits of our contribution come in the growing economy we have had over the years.

[Several hon. Members rose—]

[John McDonnell]

If I may press on—

[Geraint Davies (Swansea West) (Lab/Co-op)]

May I intervene on this very point?

[John McDonnell]

Yes—

[Mr Speaker]

Order. Before the hon. Member for Swansea West (Geraint Davies) intervenes, let me say that Members must not harangue the hon. Member for Hayes and Harlington (John McDonnell). He is generously giving way, but people should not insist on intervening until it has been agreed. I call Mr Geraint Davies.

[Geraint Davies]

I apologise for my Welsh mannerisms.

May I simply put it to the shadow Chancellor that only two countries—Holland and Germany—have a trade surplus with the UK, while the other 26 have a deficit, and does he therefore agree that in the event of Brexit those countries would vote for tariffs to protect their own jobs and we would be turning our back on 44% of our trade?

[John McDonnell]

The concern, obviously, is that tariffs would be introduced, but also the negotiating period to establish a new trade deal will take, optimistically, as the Prime Minister has said, seven years, if not longer.

[Mrs Anne Main (St Albans) (Con)]

I want to pay tribute to the thoughtful way that the hon. Gentleman is saying this should not be “Project Fear”. May I ask him, therefore, to join those of us who agree that this panic punishment Budget that has been suggested is not the way we should treat people who choose to vote leave? Can he say that his side would not implement those punitive measures, including slashing the NHS budget?

[John McDonnell]

We have yet to see the details of this Budget proposed this morning, but let us make it absolutely clear: the Labour party is an anti-austerity party and we have voted consistently against austerity measures.

[Alex Salmond (Gordon) (SNP)]

Is the shadow Chancellor aware that not only have we had the Chancellor’s proposed emergency Budget, but we have a six-point plan from the Brexiteers including a Finance Bill, which sounds less like a campaign than a coup to take over the Government? Does the shadow Chancellor detect any enthusiasm in the country for replacing this extreme right-wing Government with an even more extreme right-wing Government?

[John McDonnell]

I will come on to that subsequently.

With regard to trade, the EU is Britain’s largest export market by a long way. Some 44% of UK exports go to the EU, worth £223 billion. That is more than double the value of exports to the US, and more than 10 times the value of exports to China. That just gives an idea of the scale of the impact of the EU on our economy. It is argued that withdrawal from the EU will have no implications for jobs, investment and trade, almost as though things will just carry on as before. That flies in the face of experience of all other trade relationships. Access to the single market would have to be renegotiated. That would take at least two years, and more likely the seven to 10 years predicted by others. The climate of uncertainty created would undermine the critical factors investors and decision makers require when they invest for the long term: certainty, security and stability.

We have seen only this morning in Rolls-Royce the latest example of a company expressing its doubts about its long-term investment plans if Brexit goes ahead. We have also seen competitors across Europe welcoming with open arms those companies considering relocation if the decision goes to Brexit.

[Angela Rayner (Ashton-under-Lyne) (Lab)]

In my constituency people on the doorsteps are talking to me about two things: the economy and immigration. Does my hon. Friend agree that leaving Europe would affect only one of those things—our economy, which will be negatively affected? Leaving will do nothing around immigration.

[John McDonnell]

I will come on to that later in my speech, but the evidence is clear: the impact on our economy overall will set us back a number of years. Brexit will undermine our economy and undermine the futures of our families and communities, while at the same time doing nothing with regard to migration overall.

[Sir William Cash (Stone) (Con)]

In response to my hon. Friend the Member for Shipley (Philip Davies) referring to the trade deficit, will the shadow Chancellor comment on the fact that our trade deficit in export of goods and services with the other 27 member states is now £67.8 billion and has gone up by £10 billion this year alone, but our trade surplus with the rest of the world is £31 billion, up by £7 billion in the same year? Germany, however, has a trade surplus with the rest of the EU of £81.8 billion. What kind of single market is that for us?

[John McDonnell]

I join the hon. Gentleman in his critique of Conservative economic policy over the past seven years, which has undermined our ability to export, but is he really proposing to impose tariffs against the rest of Europe, which would undermine free trade generally? If that is the case, he would be undergoing a damascene conversion to a planned economy, which would amaze me.

The Labour party places critical importance on employment rights because those rights enable ordinary workers to secure the benefits of the jobs, investment and trade that membership of the single market brings. To be frank, over the past 40 years, as trade unionists we have been promiscuous in where we have gone to secure those rights. In the decades when trade union rights were under attack in this country, we have gone to the EU to secure those protections. And we have succeeded. We have secured statutory holiday pay, maternity rights and the right to parental leave, TUPE protection and a maximum working week. This has served not only to protect British workers but to prevent a race to the bottom across Europe, so that our own and all other workers are protected, wherever they work. There is a well founded concern that withdrawal would put jobs, investment, trade and employment at risk.

[Chris White (Warwick and Leamington) (Con)]

I recently spoke in the debate on the Queen’s Speech and called for an industrial strategy, not least because the manufacturing sector needs long-term assurance if it is to succeed. Irrespective of whether the shadow Chancellor agrees on the need for an industrial strategy, does he agree that a vote to leave would create unwelcome uncertainty at a time when our vital manufacturing sector needs stability?

[John McDonnell]

There is a desperate need for long-term, patient investment in our manufacturing base in order to develop an industrial strategy. The threat of Brexit is undermining those who make the decisions about that long-term, patient investment, and Brexit would be a disaster for recreating our manufacturing base in this country.

[Mr Dennis Skinner (Bolsover) (Lab)]

There is no better time than this for the labour movement to be considering employment rights in the manner that my hon. Friend is now doing. There is a pit site at Shirebrook that is now owned by Mike Ashley where he employs only 200 full-time employees and 3,000 people, mainly east Europeans, on zero-hours contracts, and where a lady went to the toilets to give birth to a child on new year’s day. That is horrific. At that pit site, after the war, east Europeans got the same money as me for working down the coal mine and they were members of the NUM. We have to get rid of this idea that people can be brought here on zero-hours contracts. If we state it loud and clear here today that we are going to get rid of this Mike Ashley and thousands of others around Britain, we will set fire to this campaign.

[John McDonnell]

I wholeheartedly concur not only with the criticisms that my hon. Friend has levelled but with his solution, which is based on the development of employment rights that have been consistently undermined in recent decades in this country.

As I was saying, there is a well founded concern that withdrawal will put jobs, investment, trade and employment at risk. The unpredictability of the outcome of this leap in the dark has united virtually every economist and economic institution of any standing, from the International Monetary Fund and the OECD to the Bank of England and the Institute for Fiscal Studies, in expressing their concerns about the risk to the economy. In the past 72 hours, we have witnessed the reaction of the world markets to shifts in the polls pointing to a possible Brexit, with £100 billion knocked off the value of shares, and the value of the pound dropping. The Brexit campaign has done more damage to capitalism in four days than the Socialist Workers party did in 40 years. This comes at a time when our economy is extremely fragile. Six years of unnecessary austerity, the chaotic failure of the various fiscal rules adopted by this Government, and our record current account deficit have made our economy extremely vulnerable to even a minor shock. And as the markets have just demonstrated, leaving the EU would certainly not be interpreted as just a minor shock.

Let me turn to the issue of migration. I believe that the economic arguments for remaining are overpowering—

[Pete Wishart (Perth and North Perthshire) (SNP)]

I want to make an appeal to the hon. Gentleman and the Labour Party: please don’t go near immigration. You have no credibility on that issue. You’re all over the place. You’ve been bullied by the Tories, and raising immigration will only help the leave case.

[Mr Speaker]

Order. I have never been bullied by anybody, and I am not all “over the place” on this matter. The Speaker is keeping out of it. I am simply seeking to facilitate fair play, and I remind the hon. Gentleman of the correct parliamentary language.

[John McDonnell]

With the greatest respect, I ask the hon. Member for Perth and North Perthshire (Pete Wishart) to listen to my speech before he comes to a judgment on this matter.

I believe that the economic arguments for remaining are overpowering, but the polls and the feedback from the doorstep confirm that immigration is a key motivating factor for some people in different parts of the country. Let me deal with some of the economic arguments around migration. I admit that I do not come to the debate on immigration completely objectively. I am the grandson of an Irish migrant. My grandfather’s generation of Irish migrants and subsequent Irish migrants built many of this country’s roads, railways and homes. They staffed the factories while many Irish women were the nurses who formed the backbone of the NHS and the teachers who taught in our schools. They all contributed to making this country’s economy the fifth largest in the world. That is what migrants overwhelmingly do. Over the last decade, migrants from new EU member countries contributed £20 billion more in taxes than they used in public services and benefit payments. More than 52,000 EU migrants work in our NHS. With labour shortages reported in key sectors such as construction, it is migrant labour that helps to fill the gap. The Royal Institution of Chartered Surveyors’ recent surveys show that a lack of skilled workers is already hurting the delivery of infrastructure projects.

Let us admit, however, that genuine concerns have been expressed about the impact of migration on wages and employment, as my hon. Friend the Member for Bolsover (Mr Skinner) suggested. Those concerns should not be dismissed. Research presented by Oxford University’s Migration Observatory has demonstrated that migration has not had the impact of reducing wages except in a small proportion of the workforce: those at the lowest end of the pay scale. This has to be addressed, and that is why Labour is calling for greater protection for this group of workers. Yes, reforms are needed with regard to the free movement of labour, to introduce greater protection of wages and employment rights and to halt the undercutting of wages and employment conditions. In government, we will renegotiate to give effect to those changes.

Other concerns have been expressed at the pressure placed on our public services by migration. The reality is that our public services struggle to cope with existing demand because of the austerity measures, the cuts and the chronic underfunding forced through by this Government over the last six years. But there is an argument that where pressures on public services increase in a particular area, funding must be made available to respond to that increased demand. That is why Labour has consistently argued for a special migration fund to assist those communities where demand increases. We condemned the abolition of the fund that was set up by Gordon Brown, but we welcome the Prime Minister’s statement today that he is exploring the establishment of a fund of that sort. We also want to seek further European funding to support this initiative, and that will be on our agenda.

[Mark Pritchard (The Wrekin) (Con)]

Does the shadow Chancellor agree that being an EU citizen in the United Kingdom might be an uncomfortable experience at the moment, particularly in the light of the language and tone being used by one of the leaders of the Brexit campaign, Nigel Farage? Does he also agree that if we were to remove those EU citizens and put in place the 50,000 cap proposed by Nigel Farage, we would see an exodus of people who work in our care homes, our hospitals and our schools? That would have a real impact on our ability to deliver public services. Is it not the case that we are an open and tolerant United Kingdom?

[John McDonnell]

I find some of the statements that have been made reprehensible and irresponsible, because they do not weigh up the impact of the policies being advocated on our public services and our economy.

[Jim McMahon (Oldham West and Royton) (Lab)]

I am listening to the debate and the contributions from across the Floor, and I am staggered, again, that people who come here to make a new life for themselves, uprooting their family to make a contribution to this country, are the scapegoats for the austerity measures of Government Members.

[John McDonnell]

Nothing more than that eloquent statement needs to be said.

Migration cuts both ways: British people have been among the main beneficiaries of the free movement of labour and people across Europe, with 1.2 million UK citizens living permanently in other EU countries and a further 1 million living in another EU country for at least part of the year. I remember the “Auf Wiedersehen, Pet” generation, when British workers secured jobs across Europe when our own economy was in recession. The eurozone is slowly coming out of recession and will, once again, provide opportunities that our own people will want to take advantage of. Young people, especially, are now studying, working and settling in large numbers across Europe. The number of UK students studying in Europe through the Erasmus scheme has risen by 115% in less than a decade.

[Mike Gapes (Ilford South) (Lab/Co-op)]

As honorary president of Labour International, may I remind my hon. Friend that any overseas voters who have lived abroad for up to 15 years and wish to get a proxy vote in this referendum need to apply by 5 o’clock today?

[John McDonnell]

I suggest that all those engaged with social media apply as quickly as possible.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

I, too, echo the point about the number of EU migrants who work in the NHS, which I have come from. They include my husband, who has worked here and paid taxes here for 30 years and yet is excluded from the vote. We should also remember that the people we export to Europe are predominantly those who have retired there. We import young working people and we export retired people, and we should remember that balance.

[John McDonnell]

That is an interesting point, and in this debate people have talked about our ageing population and just how much we need youth coming into this country to enable us to balance the population growth.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

We need to point out that one in five of the adult social care workforce in this country—230,000 people—was not born here. Greater London, in particular, is reliant on migrant care workers, with 60% of the adult social care workforce born abroad. Much of that sector would collapse without them, so those who talk about interfering with and restricting this have to remember that our care sector relies on these people.

[John McDonnell]

It is true to say that our care sector would collapse without the migrant labour we currently have, and that is a danger.

Much of the EU debate so far has dwelled on the past and immediate present, but as a country we need to look to the future. Many of the issues we face are transnational: climate change, tax evasion, tax avoidance and the refugee crisis. They cross country boundaries. The EU provides us with the vehicle to work in co-operation with our European neighbours to tackle these issues, but we have to recognise that people do care about what they see as a loss of sovereignty. A strong reform agenda is needed to ensure that where sovereignty has been pooled in decision making, there is democratic accountability. That means making decisions in the EU completely open and transparent, and ensuring that the Commission is effectively democratically accountable. It starts within the UK, by ensuring that we have more open and effective mechanisms for holding to account those Ministers and others who represent us in the EU decision-making process.

Britain takes the EU presidency shortly, which will enable us to lead the drive for reform. For the first time in a generation, there are parties and movements across Europe mobilising on an agenda of reform that we can share. There is the real and growing prospect now of a new European progressive coalition emerging that is willing to seize the agenda of the EU to end austerity, secure employment growth, tackle tax evasion and avoidance, confront climate change and of course co-operate to deal with the tragic humanitarian crisis of the refugees.

To conclude, in the overall debate on the EU I think I am where a great many British people are when it comes to making the decision next week. I did not vote to go into the Common Market, and I have been generally a Eurosceptic, critical of the frustrating bureaucracy of the EU. I am not a Europhile or a Europhobe. People like me are carefully balancing the prospects for my family, my community and my country. I think that, like me, many will take a pragmatic view that the leap in the dark of leaving Europe is a risk too far. For Labour supporters there is the added concern that needs to be taken into account: this would be a Tory Brexit. On 24 June, if Brexit goes through it will be a Tory Government who will be implementing withdrawal.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

If the right hon. Lady will let me, I will conclude.

It is likely, given the political fall-out from the campaign, that we would be talking about a Tory Government much further to the right than this one, with the UK Independence party yapping at their heels. I ask Labour supporters to ask themselves: do they really trust the hon. Member for Uxbridge and South Ruislip (Boris Johnson), and the right hon. Members for Surrey Heath (Michael Gove) and for Chingford and Woodford Green (Mr Duncan Smith) with our jobs, public services and employment rights? It is a risk too far and it closes the door on a European future that we have the opportunity of decisively shaping in the next few years. I urge hon. Members to support the motion and our people to vote next week to remain. But I also want to assure our people that whatever the result the decision will be respected and that the Labour Party will listen to the people and respond to their concerns. We will seek to bind our country together and not let the extremes divide us.