EU Membership: Economic Benefits

John Redwood Excerpts

Wednesday 15th June 2016 Commons Chamber

[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.

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[Mr Hammond]

I am grateful to the hon. Gentleman. He certainly did not hear me claiming that the EU was uniquely imperfect. It is just another imperfect institution among very many, including our own Government, I am certain.

I know that we are safer because we work with other EU member states to tackle the threats of terrorism and organised crime, and I know that we are better off for being part of a market of more than 500 million consumers, with the combined economic weight of a quarter of the world’s GDP, when negotiating trade deals with the rest of the world. I want to dwell on that point, because it is fundamental. We said back in 2010 that our economic security and our national security are two sides of the same coin, and it remains true today. Without economic security, there is no national security. How could we be safer if we could not afford to invest in our nation’s security and defence? How could we be stronger and more influential if our economy was shrinking?

[John Redwood]

How can the Foreign Secretary say that we are more secure and better off? If we take the fishing industry, for example, the number of fishermen has halved since we joined the EU and the industry has been under a common fisheries policy that has driven us into import dependence on other countries.

[Mr Hammond]

I say that because I take a holistic view. I am looking at the interests of the United Kingdom as a whole, taking into account all the pluses and minuses of our EU membership—yes, there are negatives as well as positives—balancing those arguments and reaching a conclusion about the net benefit to this country of being a member of the European Union.

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[Stephen Gethins]

The hon. Gentleman will not be surprised that I do agree. Just as Scotland is a medium-sized European state, so the UK is a medium-sized global state.

[John Redwood]

Can the hon. Gentleman explain why the trade of a number of countries that are neither a member of the EU nor have any special arrangements with it has grown considerably faster than our trade with the EU from inside it?

[Stephen Gethins]

The right hon. Gentleman oddly suggests that our trade will grow more once we leave this enormous trading bloc, with all the benefits that come with it. Like all his colleagues in the leave campaign, he is failing to face up to facts.

The EU makes us healthier. We gain from healthcare across the European Union whereby citizens from the EU can benefit from our healthcare just as we benefit from theirs. There is research that makes us healthier. Scotland is currently taking the lead role on dementia research, involving 15 organisations in 11 member states. I am proud of the role that we play in that, just as other member states are contributing to our health through their research.

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[John Redwood (Wokingham) (Con)]

Prosperity, not austerity, is what we want, and that will be so much easier to achieve when we cast off the shackles of the European Union. It is an institution renowned for its gross austerity and the damage it has done throughout great swathes of our continent, driving young people into unemployment, preventing school leavers from getting any job at all, and starving public services of cash. Those policies have done terrible damage in Greece and in parts of Italy, Spain and Portugal. It is good that we have some freedom to distance ourselves from those policies, and we will have even more freedom when we take back control of our money, taxes and budgets.

It was bizarre to wake up this morning to press comments that there would need to be a post-Brexit-vote Budget. I am going to wait to see what the British public really want in a vote that is still to be decided, but the Government seem to have conceded defeat by saying that they would launch an austerity Budget if the British people dare to vote for their freedom and democracy. There is absolutely no need to do that, and I reassure the British people that there would be absolutely no chance of them getting such a Budget through the House of Commons. There is no enthusiasm for it from the SNP or the Labour party, and after Brexit many Conservative MPs will vote for lower taxes and more public spending, because that is what we will be able to afford as a result of the Brexit bonus, or dividend, when we get back the £10 billion a year that we send to the EU and currently do not get back.

[Simon Hoare]

Will my right hon. Friend give way?

[John Redwood]

No, I cannot. I have to be tight on time, because others wish to speak.

Those who want to remain so hate the idea that there is going to be a dividend, because they know that that money is taken away from us and is not used for the priorities of their electors and their local health and education services. Within the European Union, we are not legally allowed to get rid of VAT on fuel—a much hated imposition that hits those on lower incomes far more than others—but we would be free to do so as soon as the British people vote to leave, if that is their wish.

The issue of our membership of the EU needs to be looked at over the longer term. All of the gloomy and bogus forecasts by those who wish to remain are based on the assumption that the single market is a precious and virtuous body to which we can belong, which has fuelled our prosperity and manufacturing growth so far, and which would no longer be available to us if we left. Of course, they are wrong on both counts. Our membership of the single market has not helped our manufacturing. When we leave, we will still have access to the single market, just as 165 other countries around the world have access to it daily without being members, without having to accept the freedom-of-movement provisions and without having to accept the taxes and the laws that are imposed on us on a wide range of issues that have nothing to do with trade whatsoever.

The single market, when it was introduced, did not accelerate our growth rate or our exports in manufacturing in any way. The Government did a very good long-term survey, which covered the period 1951 to 2007. They started in the stable year ’51—it was necessary to leave out the bit immediately after the war, when there was a big demobilisation effect—and went up to 2007. The figures for manufacturing today are identical to those from 2007, because unfortunately we had a deep manufacturing recession in ’08-’09 and we are just about getting back to the ’07 levels. The survey showed that between 1951 and 1972, before we joined the European Union, we had manufacturing output growth of 4.4% per annum; and that since 1972, during the long period of time for which we have been in the thing, there has been absolutely no manufacturing growth at all.

If we look at individual sectors, we can see that prior to joining the European Union, our metals sector grew at 3% per annum, but it has declined at 6% per annum since we have been in the European Union. Our food and drink industry grew at 5.6% per annum before we joined, and it has fallen at 1% per annum ever since. Our textiles sector grew at 2.6% per annum when we were out of the EU, and it has fallen by 6% per annum since we joined. We used to have a 45 million tonne a year steel industry, thanks to massive national investment and the Labour Government of the ’60s, but it now produces only 11 million tonnes. We had a 400,000 tonne aluminium industry when we joined the EU, but we have only a 43,000 tonne industry left. We had a 20 million tonne cement industry when we joined the EU, but we have a 12 million tonne industry left. We had a 1 million tonne a year fishing industry when we joined the EU, and we have only a 600,000 tonne industry now.

Some of those industries, particularly the fishing industry, as my hon. Friend the Minister well knows, have been gravely damaged by our EU membership. EU rules in the common fisheries policy, and the quota allocations to other countries against the interests of our own fisherpeople, have caused the number of fishermen in our country to halve during our membership of the European Union. Our experience of manufacturing as a member of the European Union has been far from benign. High energy prices, rigged subsidies, arrangements that help other countries more than ours and a policy, quite often, of providing subsidy, grant and cheap loans to manufacturers literally to transfer plants from Britain to other continental countries have been part of the background to the dreadful erosion of our manufacturing.

It is fair to look at manufacturing because, as I think remain campaigners always say, there is no full single market in services. The single market was completed in goods by 1992. We have experienced that single market since 1992, and it has not made any beneficial difference whatsoever to our manufacturing. The deep-set decline that has characterised our period of membership of the European Union was not turned around by the introduction of those single market measures. Fortunately, our services have not yet been damaged by the growing regulation within the EU, but the evidence from what happened to manufacturing is not encouraging when we look at what might happen to our services. There have already been many cases in which the City of London, defending its interests as a financial services provider, has found itself at variance with incoming European rules. The matter is settled by qualified majority vote, so being around the table is of no use to us because we get outvoted. If we dare to take it further, we get European Court judgments against us for our alleged infringement of the rules.

[Several hon. Members rose—]

[John Redwood]

Mr Deputy Speaker, I know that you are very keen that I keep these remarks very short. This is an important case that does not get heard in the House, so for once I will not be able to take interventions.

The position is quite simple. Outside the European Union we will continue to trade fully with it, as we do today. We who want to leave the European Union are not proposing a wholesale removal of rules and regulations. One of the genuine benefits of the single market, as has been pointed out, is that there are common rules and regulations for trading with all countries. The great news is that we will get the benefit of that whether we are in or out. The Americans, who have grown their trade with the EU more quickly than we have done from within, get the benefit of that part of the single market because they have to supply only to one specification, just as we do from within. Many of the common rules and standards are informed by global ones, but we have been kicked off the global bodies by the European Union. Outside the European Union we would have the advantage of getting back our seat, vote and voice on the global bodies, so we would have more influence at the top table in return for no longer being part of the EU.

For prosperity not austerity, for control of our own taxes, for spending our own money, for providing growth by spending that extra money, and for trading freely with Europe without all the restrictions, controls and arguments, vote leave.

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[Mr Clegg]

Being called “off beam” by the hon. Gentleman is quite something. He and I share a passion for Sheffield, however, so I shall put that aside for a minute. In the economy of this country, 78% of GDP is generated by services. Services are barely affected by taxes, tariffs and levies, but British lawyers, British engineers, British architects and British creative industries trying to sell their wares, as they successfully do—we are a services economy superpower in Europe—are affected by precisely the rules that are thrashed out in Brussels, in discussions that we would be excluded from if we left the European Union.

As the right hon. Member for Wokingham acknowledged, the completion of the single market in services is, indeed, a work in progress. We are the chief author and architect of the success in that area. Why on earth would anyone walk away from the construction of a building of which they were the chief architect and the chief beneficiary? A 7% increase in our GDP is the calculated improvement in the economic performance of this country if we complete the single market in services, but the Brexit camp want to walk away from that.

[John Redwood]

Why was there no improvement in manufacturing activity with the single market?

[Mr Clegg]

Dare I say it, but even by the fairly specious standard of the statistics bandied about by both sides in this campaign, the way the right hon. Gentleman used statistics was spectacularly misleading. From listening to the Brexit campaign, people would think that the club we have been a member of for 43 years has been the fount of all misery. How come we are still an independent, free and broadly speaking prosperous nation if we have been a member of it for over four decades? I simply think that that applies to his example.

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[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I thank the more than 35 hon. Members from both sides of the House who have made speeches. I cannot mention them all, but I shall highlight a few of the points that were made.

My hon. Friend the Member for Kingston upon Hull North (Diana Johnson) talked about anger at cuts to public services but said that there is no way that leaving the European Union will magically solve that problem. My hon. Friends the Members for North Tyneside (Mary Glindon) and for Sedgefield (Phil Wilson) said that 160,000 jobs in the north-east are reliant on trade with the European Union, with much that comes through European structural funds that create opportunities for jobs, start-ups, and their local economies.

My hon. Friend the Member for West Bromwich West (Mr Bailey) talked about concerns about the impact on our manufacturing industries. My hon. Friend the Member for Bishop Auckland (Helen Goodman) noted the total failure of the leave campaign to set out how any new trade agreement could work.

[John Redwood]

rose—

[Seema Malhotra]

I am afraid I do not have time to give way.

My right hon. Friend the Member for Cynon Valley (Ann Clwyd) said that our rights are safer if we stand together, and that we should not risk those rights being jeopardised by those who see them as red tape. My hon. Friend the Member for Wirral South (Alison McGovern) said that we need to stay in the single market for our economic prosperity and security, that we should not risk a race to the bottom on working conditions, and that the vote next week is a choice of austerity versus prosperity and influence versus irrelevance.

We are a proud nation—proud of our history, our diversity and our place in the world as a nation that has been at the forefront of progress in science and technology and in politics. I am proud of our place at the heart of the European Union. The vote next week is not just about keeping the world as it is today—it is about how we stand tall with our neighbours in shaping and creating the world of tomorrow, and facing the global challenges of sharing our prosperity and tackling the issues on the environment, tax avoidance and humanitarian crises. Those challenges will not go away if we leave the European Union; instead, we will have fewer allies as we seek to confront them. For our trade, manufacturing and employment, we gain from being members of the European Union. That is why Labour is pro-Europe and the party for reform in Europe. Our message is based on opportunity, hope and fairness—opportunities for future generations and for our economy and society from our membership, now and in the future.

I spoke to a man in my constituency who was conflicted about his vote. His parents were planning to vote leave, but then he asked himself what that would mean for his children. He thought about his children’s opportunities and decided it was vital to get his parents to think again about what their vote would mean for their grandchildren. Why are young people so positive about the European Union? It is because they cherish the freedom to travel, to learn and to experience what Europe and the world have to offer. When young people think about migration, they can see it also in terms of the opportunities it brings for them. Yes, we recognise that immigration needs fair rules and proper controls, but we cannot deny the benefits. Over the past decade, migrants from new EU member countries have contributed £20 billion more in taxes than they have taken in public services and benefits. More than 52,000 EU migrants work in the NHS.

We understand people’s legitimate concerns about the threat to their jobs from the undercutting of wages and the pressure on public services, but that is why we need stronger laws against bad employers and the migration impact fund, which should never have been cut. We need more houses and access to skills and apprenticeships.

I have no truck with those who say that we should choose between the Commonwealth and the European Union. That is absolutely a false choice. When the people and leaders of the Commonwealth nations say that it is in our interest to remain, we should listen to them. Likewise, when young entrepreneurs say that being in the EU has given their businesses the chance to go global overnight, and when scientists such as Stephen Hawking and 150 fellows of the Royal Society say that membership is vital for the future of scientific research, we should listen to them. When the National Union of Students, the Institute for Fiscal Studies, the OECD, the National Farmers Union and many others say that we should remain, we should listen to them.

We are part of plans to create a digital single market in Europe, which will be a huge opportunity for Britain’s tech industry, creating the best part of 4 million jobs and worth €400 billion a year. Many of those jobs and opportunities will be available to this country’s entrepreneurs. Why would we walk away from that? This is what the future of the European Union can offer: more jobs, better jobs and better rights at work.

The European Investment Bank, an EU institution in which Britain holds a sixth of the shares, is the world’s largest international public bank and it is directly owned by member states. In the past 10 years, the bank has invested more than £40 billion in UK infrastructure. Last year alone, the UK received £5.6 billion from the EIB to help regenerate communities and invest in infrastructure up and down the country, with projects such as campuses in Swansea and Belfast and the technology and innovation hub at Strathclyde, and £250 million went to Northumbrian Water.

Let me be clear: I do not wish to scaremonger, and no one should vote based on fear, but people must vote with their eyes open to the risks. I have been asking businesses what makes Britain an attractive destination to invest in, and companies tell me time and again that they choose to invest in Britain because of our language, inclusive culture, heritage and world-class education system, but a key compelling factor is because it also provides access to European markets and, through them, to the rest of the world. That pull factor will disappear overnight if we walk away from the European Union.

[John Redwood]

Will the hon. Lady give way?

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[The Chief Secretary to the Treasury (Greg Hands)]

It is my privilege to bring this most timely debate to a close. This is, of course, the final word from the Government at the Dispatch Box before the British people go to the polls next week to make one of the most important decisions about the future of the United Kingdom in the modern era. For many people, this is the biggest political decision that they have ever had to make. Indeed, I was only nine years old at the time of the 1975 referendum.

This is not like a general election. It is not just a choice for the next five years. There is no going back from the choice that we make, as a nation, next Thursday. A vote to leave would be irreversible. There is no “try before you buy”, and there are no returns. That makes it all the more important that we make the most of the opportunities, such as this debate, to look again at what is really in the interests of everyone in the UK.

I thank all Members for their contributions. In closing the debate, I want to be very clear about my conviction that the UK is far better off as part of the European Union than outside on our own. There have been 53 speakers today, 46 of whom have supported Britain’s staying in Europe, many of them passionately so. I cannot mention all of them, so I will refer briefly to four—two from each side.

First, my hon. Friend the Member for Aldridge-Brownhills (Wendy Morton), in a moving and important speech, declared for remain here on the Floor of the House. I commend her for making the right choice. In the interest of fairness, let me briefly mention one of the speeches against the motion, of which there were not many; there were seven in all. I did not agree with the arguments made by my hon. Friend the Member for South East Cornwall (Mrs Murray), but she made extensive references to Looe in her constituency, where I spent many happy years as a child growing up, and it was great to hear references to places such as Pengelly’s fish shop.

I will mention two speeches from Labour, by the hon. Member for Kingston upon Hull North (Diana Johnson) and the hon. Member for Newcastle-under-Lyme (Paul Farrelly). Far be it from me to suggest how Members should campaign in their constituencies on the matter, but I thought both of them did well to mention the local businesses, local jobs and local facilities that would be under threat from a vote to leave the European Union. I have to mention that the hon. Member for Newcastle-under-Lyme and I were both migrant workers in the 1980s in West Berlin in the Feinschmecker-Etage of the Kaufhaus des Westens.

I want us to remain, and I say that as someone who is not blind to the faults and the flaws of the European Union. Being critical of the EU does not mean wanting to leave the EU; it means wanting to keep enjoying all the benefits it has to offer while continuing to fight for the best interests of the UK in Europe. If we choose to stay, we can have the best of both worlds. We will never be forced to join the euro, and the deal struck by the Prime Minister in February means that our rights as a country outside the eurozone will be protected, as my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) said. We will have no membership of Schengen, no ever-closer political union, greater control over welfare and greater control over the pull factors for migration.

Crucially, we will also be at the heart of the single market, which is improving in the areas of services, capital, energy and digital. We will have a seat at the table when the rules affecting us are set. We can trade freely with half a billion people inside the EU. As part of this huge trading bloc, we have gained much better deals with other countries across the globe than we ever would have done had the UK been sitting at the negotiating table alone.

[John Redwood]

Will the Minister give way?

[Greg Hands]

I do not have the time. I am sorry.

Today, we have seen yet further proof that the UK’s economy is on the road to recovery. We have the highest employment level on record. Unemployment is at its lowest since 2005, the year I first entered Parliament. We can be proud of what we have achieved. However, we are putting our hard-won recovery in jeopardy: with one enormous leap into the dark in just eight days’ time, we risk throwing it all away.

I care about facing up to the facts. It is only right to examine what voting to leave might do and, frankly, we should be concerned. In the Treasury, we have done a lot of work to understand what leaving the EU might mean for this country. One study of the short-term impact of leaving suggests that if we vote to leave, we could be pushing ourselves headlong into a recession within a couple of years. In fact, compared with remaining, we might well see a rise in unemployment of between 520,000 and 820,000; a fall of between 12% and 15% in the value of sterling; a decrease in GDP of between 3.6% and 6.0%; and increased borrowing of anything up to £39 billion, which is the equivalent of a third of the NHS budget each year. Some people say, “So what?” Others say, “This is a price worth paying.” For the vast majority of people in this country, however, these things—they are just what will happen in the immediate aftermath—really matter.

We have debated employment rights quite a bit and heard about the benefits of the EU in creating and guaranteeing them, but no one among the leavers has been quite clear about which of these rights would be guaranteed if we leave. So many questions have been left unanswered about what Britain might be like if we left. Of course, there is also the possibility we might still just have to follow any regulations handed down by Brussels, but, crucially, with no choice or influence over what they are. Norway is a clear example: it is required to comply with EU legislation, such as the working time directive or the agency workers directive, in exchange for access to the EU market, but, crucially, with no vote on the decision making.

It is also unclear how leaving the EU could be better for our businesses and for our trade, because the world in which we live and trade is more globally interconnected than ever before. All the alternatives to EU membership would represent a huge step backwards in terms of trading with the EU and, I believe, with the rest of the world as well.

It is the sheer number of uncertainties about leaving the EU that is so concerning. People desperately want to know what leaving would really mean. What would our relationship with the EU be? Would we have access to the single market, and if so, on what terms? What about our trading relationships with other countries. and what happens to all the laws and rules we have that come from the EU? Resolving such questions will be intricately complicated—so much so that it is doubtful whether negotiations would be completed after a decade, let alone in this Parliament. Let us think about that for a moment: where will our lives be in a decade’s time? Let us think in particular about the young people whose futures also lie in the balance on this decision: where will they be after a decade?

Our economy is growing once more. In my view and that of the Government, that is not an accident. It is the result of the sacrifices we have all made, and the parts we have all played in fixing the economy. A vote to leave, with all the uncertainties that surround it, will put all of this country’s hard work at risk. Let us listen to our global allies such as the United States, Canada, Australia, Japan and Germany, and indeed to businesses based in this country—not just our major financial corporations, but the smaller companies that rely on exporting to the EU market. It is clear to me, as it is clear to them, that it is by remaining in a reformed European Union that we can keep growing, not bring about a recession of our own making; keep creating jobs, not jeopardise people’s livelihoods; and keep attracting investment, not lose out to our international competitors.

As I said at the start, this debate represents the final opportunity for this House to look at this vital question. This is not about the narrow interests of any one political party; it is about coming together in the national interest. If, like me, the House believes Britain is stronger, safer and better off in the EU, I urge it to support this motion.

Question put.