European Affairs

Jonathan Edwards Excerpts

Thursday 15th March 2018 Commons Chamber

[Mel Stride]

I believe that my hon. Friend is right. I certainly read that article this morning, and if what it says is the case, that would be good and sensible news, because it would be entirely logical that we should be in a position to go out and negotiate free trade agreements during any implementation period, although we respect the fact that the deals would not be switched on until we were beyond that point.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

As a part of the customs union, we have trade deals with 50-odd countries across the world, and I understand that they are worth some £140-odd billion per annum in UK trade exports. Will the priority during the implementation period be to renegotiate and sign deals with all those countries with which we currently have a trade deal? We know that some of them want to renegotiate the terms and want greater access to UK markets as a result. How many of those deals are we going to be able to renegotiate and sign before we actually leave the European Union?

[Mel Stride]

I reassure the hon. Gentleman that it is an absolute priority for the Government to ensure the consistency and continuity of the existing arrangements as they pertain between the European Union and other countries. I see no reason why we should not benefit from those arrangements, just as those countries will indeed benefit from arrangements with us as we go forward.

We have proposed practical solutions to help deliver a smooth departure from the EU. One such solution is the introduction of a joint committee to resolve issues or disputes that may arise during the implementation period. That approach is a common feature of international trade agreements. The joint committee would, for example, allow the UK to raise concerns regarding new laws that might be harmful to our national interest. We will also continue to discuss our involvement in relevant bodies as a third country during the period to ensure that EU rules and regulations continue to operate coherently.

It is in the interests of both the UK and EU to agree the precise terms of the implementation period as quickly as possible. We are close to delivering that, and we expect it to be formalised at the European Council meeting next week. The implementation period is key to forging the best possible future relationship, giving businesses and Government the time and certainty to plan for Brexit, and preparing the UK for its status as an independent trading nation. It will be a bridge from where we are now to where we want to be in the future—on exit, on day one, and beyond.

Looking further forward, it is crucial that talks progress so that we can agree the terms of our future relationship with the EU. We are now moving at pace to set the parameters of an economic partnership. As a Treasury Minister, I am particularly focused on how our economies will interact and grow together. As the Prime Minister said in her speech on 2 March, the UK is seeking the broadest and deepest possible agreement that covers more sectors and co-operates more fully than any other free trade agreement. A key component of any future agreement should be the inclusion of services, particularly financial services.

[Jonathan Edwards]

The Minister is being extremely generous in taking interventions. Taking him back to the implementation period and the negotiation of trade deals, will the priority be renegotiating the trade deals that we already have with all these third countries via the customs union or negotiating new trade deals with countries such as the United States and China?

[Mel Stride]

The hon. Gentleman will understand that both are an extremely high priority. We will be pursuing both avenues vigorously.

As my right hon. Friend the Chancellor made clear in his Canary Wharf speech last week, financial services is a sector that calls for close cross-border collaboration. The Chancellor also reiterated that it is simply not credible to suggest that a future deal could not include financial services. It is in the interests of both parties to ensure that the EU can continue to access and enjoy the significant benefits afforded by our financial services hub, because it is a regionally and globally significant asset, serving our continent and beyond, and near-impossible to replicate.

The UK can claim excellence in many areas, but in trade in financial services we are truly the global leader. We manage €1.5 trillion of assets on behalf of EU clients, and 60% of all EU capital markets activity is conducted here in the United Kingdom. Around two thirds of debt and equity capital raised by EU corporates is facilitated by banks right here in the UK. The huge economies of scale have led to London’s dominant position in EU financial services. As the Chancellor made very clear last week, we should be under no illusions about the significant costs if this highly efficient shared market is fragmented—costs that will ultimately fall to consumers and companies right across Europe.

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[Paul Blomfield (Sheffield Central) (Lab)]

As we mark the halfway point of this general debate, it is worth reflecting on the fact that we have had a number of thoughtful contributions from Members on both sides of the House. Although I welcome any opportunity for Parliament to debate and, I hope, shape Brexit, no one is under any illusions about the fact that over these two days we are doing anything more than filling time to cover the Government’s legislative paralysis. It is just over a year until we leave the European Union. We have a mammoth legislative task ahead of us, but the Government are holding back the Customs Bill and the trade Bill because they are, understandably, afraid of defeat. They have yet to present Bills on migration, fisheries and agriculture; perhaps they are worried about some of the hard truths in those areas.

The Prime Minister was right to say at Mansion House that we need to face hard truths, on the basis of evidence. Not only do I agree with the Prime Minister, but I agree with her former deputy, the right hon. Member for Ashford (Damian Green), who said:

“If analysis is being produced then publish it. And frankly there will be a big political debate about it. Let’s have this argument in public—that’s what democracies do.”

The country faces critical decisions that will define how we live and our place in the world for generations to come. Honesty, openness and hard truths are the very least that people deserve.

That is why the Opposition pressed for the publication of impact assessments and the Treasury analyses of the future of the economy under the different available scenarios. Those analyses, which have now been published, make sobering reading. Ministers have said on several occasions—I think this was repeated yesterday—that the three options that the Treasury modelled do not reflect their desired outcome. But the Minister for Trade Policy, the right hon. Member for Chelsea and Fulham (Greg Hands), yesterday told the House that the Government were seeking an ambitious free trade agreement with the EU. I think that that was repeated this morning. The central model in the Treasury analysis was exactly such an agreement—it was described as the best possible free trade agreement—so it has been modelled. What did that model tell us? Over 15 years, such a free trade agreement with the EU would result in a 5% hit to the economy. That would mean 5% fewer jobs and 5% less money for public services. To paraphrase the right hon. Member for Broxtowe (Anna Soubry), this must be the first Government in history who are setting as their ambition reducing the size of the UK economy.

At Mansion House, the Prime Minister was honest about the fact that her plans would result in downgraded access to EU markets. What she did not make clear, and what her Cabinet has resisted making public, is just how damaging that version of Brexit would be to the economy. Initially—this feels like some time ago—we heard Ministers talk enthusiastically about their plans for an ambitious free trade agreement with the United States, which would compensate for the damage to our trade with the EU. But according to the Government’s own analysis, even if they achieved that deal, it would boost GDP by just 0.2%. Let us be clear that that would be in return for dismantling our food health and safety standards, among other US demands. We could end up with nothing but a hard border in Ireland if we diverged from EU agricultural standards, and a US deal would require us to do so. If the ongoing negotiations on open skies are anything to go by, the special relationship will not count for much in the cold, hard light of trade negotiations.

It is fascinating to watch how even the more extreme Brexiteers suddenly decide, as the hard truth of the difficulties involved in a US trade deal dawn on them, that the US is not that important after all. On 4 March, we witnessed the spectacle of the hon. Member for Esher and Walton (Dominic Raab)—he was speaking as a Government Minister on Radio 5 Live—dismissing the importance of a US deal and saying that

“the real opportunities of the future will be with…emerging markets”.

US trade deals, the Northern Ireland peace agreement and Treasury economic analyses have all been casually brushed aside by those who long for the deepest rupture with the EU. But Labour will not do that.

[Jonathan Edwards]

In The Times today, the Government made a song and dance about this apparent concession by the European Union that the UK would be able to negotiate and sign trade deals during the transitional phase. Does the hon. Gentleman honestly believe that the British Government and the British civil service are going to be able to renegotiate 70-odd EU free trade agreements that we already have through the customs union, negotiate new trade deals with the US and emerging markets or whoever they may be with, and carry out the gigantic task of renegotiating the trade arrangement with the EU?

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[John Redwood (Wokingham) (Con)]

My business interests are declared in the Register of Members’ Financial Interests, but I do not plan to talk about them today.

Before the referendum, I made a speech in the House saying that we had become a puppet Parliament. All too often, regulations came from the EU that we could do nothing about, because they acted directly. In many other cases, even if we had been outvoted or were not happy about a proposition, a directive instructed the House to put through massive and complex legislation whether it wished to or not. We had a situation in which the Front Benchers of the main parties, alternating in government as they tended to do, went along with this. The convention was that the Opposition did not really oppose, because they knew that Parliament was powerless and that the decision had been made elsewhere, whether the British people liked it or not. That even extended to tax matters, such as a number of VAT issues, including areas where we cannot change VAT as we would like, and to corporation tax issues, which included occasions when we thought that we had levied money on companies fairly, but the EU decided otherwise and made us give it back.

Many British people shared my concern, and that was why we all went out together and voted in large numbers to take back control. The British people wanted to trust their British Parliament again. Of course they will find times when they dislike the Government, individual MPs and whole parties, but they can live with that, because they can get rid of us. They know that come the election, if we cease to please, they can throw one group out and put in place a group who will carry out their wishes. They said very clearly to our Parliament in that referendum, “Take back control; do your job.”

A recent example is that of Her Majesty’s Government presenting a very long and complex piece of legislation to completely transform our data protection legislation. Because it was based entirely on new EU proposals, it went through without any formal opposition. The Opposition obeyed the convention and did not vote against it or try very hard to criticise it. I am sure that if the proposal had been invented in Whitehall and promoted actively by UK Ministers, the Opposition would have done their job, found things to disagree with and made proposals for improvement. We will have this “puppet Parliament” effect all the time that we are under control from Brussels.

[Jonathan Edwards]

Given the scenario that the right hon. Gentleman is putting forward, is it not the truth that the Welsh and Scottish Parliaments will also be puppet Parliaments post Brexit?

[John Redwood]

No, that is not true. In their devolved areas, they have genuine power, which they exercise in accordance with their electors’ wishes, but of course this is the sovereign United Kingdom Parliament, and the devolved powers come from the sovereign Parliament, as the hon. Gentleman well understands, which is presumably why he likes being here.

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[Anna Soubry]

I completely agree; the hon. Gentleman is absolutely right. I take grave exception to the idea that across the length and breadth of this country people were sitting in pubs, cafés, bars or whatever discussing the finer points of the merits or otherwise of the customs union and the single market. The truth is that there are Members of this House who do not know what the customs union is, and there are Members of this House who do not understand what the single market is.

I am not going to name people, but I have had very good conversations with right hon. and hon. Friends about EFTA. I have explained, for example, that members of EFTA can retain their own fisheries and agriculture policies. There are colleagues who have said to me, “Good heavens, I didn’t know that. How very interesting. Can you tell me now about immigration?” So then I explain about articles 112 and 113, and so on and so forth, and about the brakes that could be put on immigration. These conversations have occurred only in the past three or four months, 18 months after the referendum and nearly a year after we triggered article 50. That is why I will say it again: when history records what happened in the run-up to and after the referendum, it will not be in any form of glowing testimony. On the contrary, I think we will all be painted very badly, apart from those right hon. and hon. Members who at least stood up and spoke out. If I dare say it, I think we have been increasingly proved right.

I think people are fed up. They want us to get on with it. They do not quite know what “it” is. Some people actually think we have already left the European Union. But they know that it is getting very difficult and very complicated. I believe that people are becoming increasingly worried and uneasy. It is the dawning of Brexit reality. They know that the deal, which they were told would take a day and a half, or a week and a half, will now take, if not for ever, then a very long time. When I say “for ever”, I mean that, if the Government continue to stick to their timetable, it will not be concluded until way after we have left the European Union. We will get very loose heads of agreement by way of a political statement attached to the withdrawal agreement, which this place will vote on sometime this October or November. People are beginning to realise that they have been sold a bit of a pup.

Only last week, I spoke to a constituent who voted leave who told me, in no uncertain terms—she was quite angry about it—that she had no idea about the implications for the Irish border of not getting this right. People of a particular generation really get it and understand this. Frankly, we are old enough to remember the troubles in all their ghastliness. We also remember the border. Some of us are old enough to remember customs border checks, when we had to go through a particular channel. We remember being terrified that the cigarettes or a bottle of whatever—I certainly would never have done any of these things, of course—might suddenly be uncovered by a customs officer, but that means absolutely nothing to huge swathes of our country. Older people, however, remember the troubles and they know how important it is that the border does not return. They understand how critical not having a border between Northern Ireland and the Republic of Ireland has been to the peace process. They are now not just worried about the return of the border, they are quite cross about it. They are getting cross not just because they do not want it, but because they feel that none of this was discussed and explained before the referendum.

As I have said, we are now having the debate that we should have had before the EU referendum. I am looking towards those on the Scottish National party Benches. The debate held in Scotland in the run-up to the independence referendum was a long, long proper debate. If I may say so as an outsider, every single issue pertinent to the debate was properly teased out and discussed. I do not think anybody could have complained that they did not know the consequences.

[Jonathan Edwards]

The right hon. Lady is making an excellent point. In Scotland, the Scottish Government produced a White Paper—650 pages long—outlining completely what they were proposing. During the European referendum, the leave campaign produced a poster on a bus. That is why we are in the mess we are in now.

[Anna Soubry]

I might not quite go that far, but the hon. Gentleman makes a really important point. I was a member of the Government that decided we would have a referendum. To be very blunt, I am now quite ashamed of the fact that I made a decision that we should have a referendum without the proper debate that we clearly should have had and without the long run-up. More than that, this is the conclusion that I think the British people have also reached: how on earth did a responsible Government put in front of us, the people of this country—notwithstanding how brilliant we are—an alternative that we now see will cause our country so much harm? During the referendum campaign, when “Project Fear” was at its full height—the campaign was very poor on both sides, but “Project Fear” in particular was madness and nonsense—I think that subconsciously, people thought to themselves, “No responsible Government would put something to us as an alternative to their preferred option that would deliver all this stuff, when actually, it will harm our economy, and even undermine or threaten our security and the future of peace in Northern Ireland. They wouldn’t do that.” Of course, now we know that that is exactly what that option was, but we have moved on, as I must too.

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[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

In the time available, I would like to touch on a number of points that are relevant to the debate, starting with what has been its main crux this afternoon: the future trading relationship between the EU and the UK.

Yesterday, the European Parliament passed a resolution on the framework of the future trade relationship, which will feed into next week’s EU summit and the EU negotiating position. It reiterates the position taken by Plaid Cymru from the very first day since the referendum result: the best course of action would be for us to stay in the single market and the customs union. That is the only realistic solution to avoid a hard border on the island of Ireland and—this of equal concern to me—a hard border in Wales at the ports of Holyhead, Fishguard and Pembroke Dock. The EU has frozen talks until the British Government come up with a solution to this problem, but it is on a plate for the British Government, if they would only listen to the evidence.

This is perhaps an opportunity to discuss the Labour party’s policy on a customs union, which is completely different—it is more or less a souped-up trade deal. A customs union is what Turkey has. It does not benefit from all the international trade agreements that the EU currently has. We have had a long discussion today about the 50 or 60 trade areas that they entail, which are cumulatively worth about £140 billion to UK trade. We would lose that. The other factor with a customs union is that while the UK would lose the benefit of the deals with third countries that are currently aspects of the EU customs union, those countries would be able to import into the UK. I had thought that Labour’s solution was a way of dealing with the problem of Northern Ireland, but Turkey needs lorry parks on the border with Hungary and Romania to deal with its border issues. That would be the case in Northern Ireland, so the proposal would not deal with the major issue of the border on the island of Ireland.

The National Institute of Economic and Social Research says that the cost to households in the UK will be about £600 per annum. Rabobank has put the cost of a no-deal Brexit at £11,500 per person. I think that the biggest cost relates to our public services. Some 20% of doctors working in the Welsh NHS come from the European Union. A number have already left. Some 45% of EU doctors in Wales have said they are considering leaving and another 12% have already made plans to go. Last week, I attended a summit with Hywel Dda University health board in my constituency about huge reorganisation plans for the health service in the west of my country. The closure of hospitals is on the table because staff cannot be recruited and retained, and Brexit will make that problem far worse.

Plaid Cymru recently won a vote on the Floor of the House for the first time in our 50-year history of service in the House of Commons on a motion on protecting EU citizenship for UK subjects. Now that the British Government have been mandated by the House of Commons, I look forward to them making progress on that. Indeed, yesterday’s resolution in the European Parliament reaffirmed Plaid Cymru’s position.

[David Linden (Glasgow East) (SNP)]

Throughout the entire process of Brexit, people have been talking about taking back control and respecting the sovereignty of the House. I am sure that, like me, my hon. Friend is therefore looking forward to the UK Government adhering to that motion, which was passed unanimously by this House.

[Jonathan Edwards]

We look forward, as I am sure my comrades in the SNP do, to holding the Government to account on the result of last week’s very important debate.

With regard to a meaningful vote, Members should not be in a position in which we can vote for either a bad deal or no deal. That position was outlined in the other place yesterday when my colleague, Lord Wigley, raised this issue. That strengthens the argument put forward by a number of Members, in particular the right hon. Member for Broxtowe (Anna Soubry), who made the case for a second referendum on the terms of the deal.

I disagree slightly with the argument of the hon. Member for Lewisham East (Heidi Alexander) that there has been no change in public opinion, and I speak from my experience. When I was at the hairdressers in Ammanford on Friday, I spoke to many people who voted out. They were pleading with me to sort out the mess that we now face and said that they would now vote differently. On Saturday morning, when I was buying tiles with my wife in Cross Hands for the bathroom in our home, everybody there said exactly the same thing. I think there has been a big change in public opinion. If people were given the opportunity to vote on the facts before them, there would be a change of opinion.

The next issue I want to discuss is the prospect of no deal. We often hear from pro-Brexit MPs that that should be a bargaining position to hold against the European Union. As the hon. Member for Bridgend (Mrs Moon) excellently set out, a no-deal scenario for Wales would be absolutely catastrophic, and I see no reason to reiterate her points.

I will conclude on perhaps one of the biggest issues, which relates to Brexit’s constitutional implications: the power grab that is now facing and impacting on the Welsh Government, the Scottish Government, the National Assembly for Wales and the Scottish Parliament.

[Mrs Moon]

The Prime Minister has repeatedly said that Brexit means Brexit, but does the hon. Gentleman agree that she does not seem to understand that devolution means devolution?

[Jonathan Edwards]

I fully agree. We have had two referendums in Wales to enshrine our constitutional settlement, but we have a British Government who are driving a sledgehammer through that settlement. I enjoyed the phrase “puppet Parliament” that was used by the right hon. Member for Wokingham (John Redwood). The reality is that if clause 11 of the European Union (Withdrawal) Bill goes through unamended, and unless the British Government accept the recommendations of the Welsh Government and the Scottish Government, our respective Parliaments would be puppet Parliaments within the British state.

That brings me to the new UK internal market that will have to be created following Brexit. Of course, we currently have the EU internal market, which deals with issues of trade within the British state. As somebody who supports Welsh independence, I recognise that there will have to be a UK internal market, if we end up leaving the EU single market, but the challenge at hand is who constructs that UK internal market. Will that be done on the basis of the political reality that we face in the British state—a multipolar state with four national Governments—or will it done through direct rule from Westminster? That is about not only the construction of the internal market, but how it is regulated.

Let me finish on this point: Westminster plays about with the constitutional settlements of Scotland and Wales at its peril. Unless respect is shown to the Welsh Government and to the people of Wales and the people of Scotland, instead of the disrespect agenda that we have at the moment, we will be discussing not Brexit in the years to come, but “Wexit” and “Scexit”.

[Several hon. Members rose—]