Leaving the EU: Extension Period Negotiations

Julia Lopez Excerpts

Wednesday 22nd May 2019 Westminster Hall

[Julia Lopez (Hornchurch and Upminster) (Con)]

I beg to move,

That this House has considered negotiations on the UK leaving the EU during the EU extension period.

Although I have contributed to many Westminster Hall debates, it is an honour to lead my first one this morning and to do so under your chairmanship, Mr Robertson.

In my maiden speech nearly two years ago, I spoke of the “delicate gift” that is our “parliamentary democracy”, which is

“the sum of the toil”

and

“sacrifice…that generations before us have made”.

I also said that this “dynamic system” has worked on “trust”, with each cohort of parliamentarians vowing to “fine-tune” and reform our laws and institutions

“to reflect the needs and desires of the citizens they represent.” —[Official Report, 6 July 2017; Vol. 626, c. 1392.]

I made my own vow two years ago, standing on a manifesto to leave the single market and customs union, in an election at which nearly 85% of votes went to parties promising to fulfil the referendum result. I was elected to a House that had already triggered the two-year countdown to our departure from the EU, and I took leadership from a Cabinet that repeated in one voice that no deal was better than a bad deal.

On the eve of European elections, we should all reflect with regret on the fact that this generation of parliamentarians is now on the cusp of losing the trust that is so fundamental to democratic legitimacy. Could there be a more poignant symbol of that devastating loss than the scaffolded shroud that this mother of Parliaments now wears? How disappointing to those who flock to this place in admiration that they find not a confident institution but one where Big Ben—the icon of our democracy—is silent, its clock face peeping on to a Parliament that is being incrementally fortified against rising anger from the streets.

I do not wish to downplay the magnitude of the decision to leave the EU or the complexity of extracting ourselves from the EU some 40 years after entry. However, it should have been our role as parliamentarians to address and manage those complexities. Instead, it is an indictment of this place that, three years on, the question of whether we shall leave the EU at all is not even a settled one. There remains no clear vision of our future relationship with the EU or of our new role in the world to underpin Government strategy. In the absence of that vision, we have become increasingly desperate just to deliver the word Brexit, even if an unholy fudge to obtain our withdrawal binds us into the very systems that the electorate rejected while denying our voice within them.

I sought this debate not to argue about the merits or otherwise of leaving the EU, because that decision has been made, nor to pick over the bones of a withdrawal agreement that has thrice been rejected. Instead, I want us to take stock, ask ourselves how we got here and then—most importantly—ask how we can make use of the period until 31 October to deliver on the referendum and gear our country to its new future.

There are many and varied reasons why people voted to leave, but one of the turning points for me as a floating voter was the conclusion of the attempted renegotiation of our membership. In my opinion, the preference of many swing voters would have been to stay in the EU and reform it from within. However, the renegotiation was the point at which it became clear that British influence, and the threat of the third largest member of the EU walking away from it, was going to be an insufficient driver in making the EU more dynamic and accountable. Instead, the eurozone members were likely to require further political integration, creating a deeper divide with non-eurozone nations and an even more pronounced loss of influence for our nation when it comes to addressing the concerns of our own citizens.

Since then, we have spent three years effectively trying to carve out a bespoke association agreement with the EU, with Chequers being the Prime Minister’s attempt to obtain a half-in, half-out option. The EU dubbed that cherry-picking, and in reading the UK’s political dynamic, it has banked our offers of cash and a comprehensive security partnership, while holding us to a backstop in Northern Ireland that in the next stage of talks will ultimately pull us into a customs union and large parts of the single market. If it does not do that, it risks splitting our country.

[Peter Grant (Glenrothes) (SNP)]

I am listening with great interest to the hon. Lady’s comments. She does not want a Northern Ireland backstop. Could she tell us her proposal to respect the Good Friday agreement if we leave the customs union and the single market? Does she accept that the Government’s own view is that such a solution does not yet exist?

[Julia Lopez]

I will go on later in my speech to talk about some of the alternative arrangements that are already being worked up. There is a group within Government that actually has the resources now to deal with that issue, and the EU is also looking at alternative arrangements. I think that the question now becomes this: do we make those alternative arrangements now, or after we have signed a withdrawal agreement that is effectively an international treaty that will bind us into a number of things that are not in our country’s interest?

Tied into EU rules on goods, we will find that we have little leverage in negotiating access for our critical services, either with the EU or with new trading partners. However, there is absolutely no point in directing our frustration over this substandard withdrawal agreement at the EU. We have been out-negotiated, hoisted by the petard of an article 50 process that British diplomats designed; this poor outcome has come about through our complicity in its sequencing and design.

However, the withdrawal agreement has been neither signed nor ratified, so there remains a chance for us to pause and read the writing that the British public—if not Britain’s politicians—have seen on the wall for some time, namely that if we go ahead with this agreement, we will give up our ability to secure an attractive future relationship with the EU and instead will find ourselves in an unsustainable, asymmetric relationship with the EU, which will arguably leave us with less say over the rules and regulations that govern us than we have now. The transition period will only extend political uncertainty, and therefore economic uncertainty, because we do not know to what we are transitioning. That will throw a blanket over an economy that desperately wants a sense of direction. Whatever Bill now comes before us in Parliament will not change what has been negotiated in Brussels; we must not waste the next four months attaching funereal adornments to a thoroughly dead horse.

The public also know that the EU is unlikely to reform any time soon because the existing system benefits its most influential members. The EU will not draw up, at least in these current negotiations, a bespoke relationship with the UK, because it has decided that it values the integrity of the single market over frictionless trade with us, and it has also determined—quite correctly—that it has the leverage to reject our overtures regarding special treatment.

Parliament has so far done its job in judging this agreement to be against our interests. However, it has not accepted the consequences of that judgment. Despite attempts by parliamentarians to suggest practical amendments, the Prime Minister and the EU have made it quite clear that no other withdrawal agreement is available. They have also made it clear, through the sequencing of talks, that there can be no negotiations about the future relationship, beyond the broad-brush political declaration, until we have formally left. To put it another way, we will only be permitted to move to stage 2 once we have tied our hands behind our backs in stage 1.

I say with deep regret that we are left to face an unavoidable question: will we leave without a formal withdrawal agreement, with the economic challenges that presents, or will we vote to revoke article 50, and face the democratic consequences of that action? If parliamentarians wish to revoke article 50, let them vote for it and explain to their electorates why they now seek to overturn the inexorable logic of what they themselves put into law. Alternatively, we must face leaving without a withdrawal agreement and use the time before we leave to do our damnedest to make that work, while leaving the door firmly open for discussions with the EU on an alternative withdrawal agreement. Such an outcome, however, will require more than cosmetic preparation and jingoistic mantras about WTO terms. It will need major policy prescriptions, strong Government direction and co-ordination, transparency about the state of our preparedness and potentially even a fresh mandate if Parliament contrives to frustrate this process.

I am grateful to have the Minister for no deal here this morning so that he can set out with honesty and clarity the challenges that we would face in delivery, and how we can best mitigate them, while maximising the leverage of any advantages that this freedom might provide.

The urgent priority for Government in such a scenario would be to address the absence of an underpinning philosophy about Britain’s place in the world. My concern at this absence is reflected in Friday’s National Audit Office report on future trading policy, which effectively said that the UK will not get what it wants if it does not know what it wants.

The Brexit vote has often been misinterpreted as a misty-eyed reflex to return us to Britain past, but I see it instead as a judgment about the future—about where the world is going and whether the trajectory of the EU puts us in the right place to tackle the new challenges ahead. We are moving into an era of substantial regional trading blocs, in the form of China, the US and the EU. However, the UK has ultimately been unable to reconcile itself to Guy Verhofstadt’s vision, which he expressed this week, of an EU empire as the best way to flourish in this era, because we believe that the nation state still has fundamental relevance in maintaining the social and economic pact between Government and citizens that safeguards our cohesion.

Leaving the EU must not mean simply jumping into the arms of an alternative bloc. We must set ourselves up as a dynamic, open trading nation like Australia, Singapore and Canada, with strong links to all major powers and co-operation with the most forward-thinking, mid-tier nations on global standards for new technologies and data, the rule of law, security, and constantly evolving free trade agreements that break new ground on environmental stewardship, sustainable development and people-to-people exchange. Globally, we can be a bridge, a mediator and a thought leader; domestically, we can be a place of safety, liberty, creativity and prosperity, comfortable with the value of our nationhood and proud of our collective, modern identity.

Secondly, we need to move with speed—but not haste—in drawing up a new independent trading policy, ensuring that we avoid entering substandard agreements out of political imperative. We need to quickly establish whether the EU is genuinely interested in rapidly striking a comprehensive FTA along Canada lines, or whether it would seek to drag that process out to stifle talks with other nations. As things stand, it has been difficult for us to roll over existing FTAs, for example, because third countries want to see the shape of the future UK-EU trading relationship: how much flexibility over our own rules we are going to have, and how much access to the EU market.

Before making that approach to the EU, we have to undertake a hard-nosed assessment of our negotiating leverage, be it money, access to goods and financial markets, or co-operation on research and security. We must then answer broad strategic questions such as whether we have the capacity to attempt parallel negotiations with other countries, and whether to roll the Department for Exiting the European Union into the Department for International Trade so that the Government speak with a consistent voice. Immediately after tomorrow’s elections, we will require swift diplomatic analysis of how the new make-up of the European Parliament and Commission has changed the European power dynamic, and the extent to which that alters the landscape of future talks.

Thirdly, we need to accept that future access to the EU market will not be as good as our current arrangements, or is unlikely to be. Trading on WTO terms is not a cure-all, otherwise Governments would never seek to improve those terms via FTAs. We need urgently to identify which businesses will be most affected by that change in access and mitigate its impact, whether through a bold programme of tax cuts, greater regulatory freedoms that can drive competitiveness, or specific short-term support packages from the state. I would be grateful if the Minister explained what cross-departmental work has already been done in this area.

There also needs to be an analysis of long-term impacts. In financial services, for instance, the EU will want to avoid immediate shocks to its own institutions, but will then try to create a medium to long-term drag for firms so that they base themselves in the single market. What is our strategy to provide an even more compelling pull for services firms to retain, or move, bases here? How ready is our trade remedies regime, and are we really prepared for dealing with our own defensive producer interests, which we have hitherto hidden behind the EU to arbitrate?

Fourthly, Northern Ireland will require intensive and sustained focus. All parties, including the EU and Ireland itself, have agreed that there cannot be a hard border, so political impetus and financial resourcing need to be given to the alternative arrangements working group on how existing techniques—not new technologies—to check and clear goods away from the border can be implemented. I would appreciate the Minister’s update on that work, as well as on the state of preparedness at Dover and other major ports; on progress in rolling out authorised economic operator and trusted trader schemes; and on HMRC support for businesses dealing with new paperwork requirements.

If we are to take a tighter approach to immigration from the EU, we will need a major boost to our domestic skills agenda, including the adequate resourcing of our vocational education and college system; intensive investment in recruitment to the health and social care sectors; and incentivisation of businesses to train UK workers. What discussions has the Minister had about the preparedness of the labour market to tackle any impact of no deal?

To make this policy effort work, we will need to rally businesses, citizens and the civil service. Enough of the attacks on one another. Civil servants are just that: dedicated, professional citizens with a desire to serve. However, they cannot compensate for an absence of political direction. Once that has been provided, we must trust them to deliver.

That change of attitude must also translate to our dealings with the EU. Enough of the constant wartime references, and of speeches made in the UK that we think are not being heard in Brussels. The EU is not an enemy, but an organisation comprised of treasured partners; we need a reciprocation of that attitude, while reassuring the EU that it should not fear contagion. For Brits, our membership of the EU has always been more transactional, because as an island nation our borders are comparatively well defined. A desire for political stability, even if at times it comes at the price of economics, takes precedence for many continental European nations.

This new era therefore allows for a renewal of our relationship that will let each party move in a trajectory with which it is more comfortable. That relationship will require the establishment of fresh diplomatic frameworks for dialogue on issues of shared importance, and I would be grateful if the Minister explained what discussions he has had with the Foreign and Commonwealth Office about how we are gearing up our presence across the continent. The National Audit Office has also identified that DIT is under-resourced for the new relationships we wish to build. Can the Minister advise us on how quickly we might step up our presence in those countries with which we wish to deepen trading ties?

There are many other areas of no-deal preparations that require intensive focus. However, as other hon. Members wish to contribute, I will conclude by raising a bizarrely under-discussed aspect of Brexit that goes to the heart of this nation’s political malaise. Representative democracy works by citizens effectively subcontracting political decision making to a class of people in a way that gives those citizens the freedom to live their lives and prosper. They then endorse a framework and strategic direction for those decisions via a general election, or—in the case of Brexit—a referendum. In many ways, contempt for the political class has grown over these past few years in line with politicians’ avoidance of the kinds of decisions that they are explicitly elected to make, and their insistence on blaming institutions like the EU for failings.

Brexit was a signal to this place that the public want us to make more of our own decisions and then be accountable for them, but it is astonishing how few parliamentarians welcome the raft of powers that will soon make its way across the channel. We have not even begun to contemplate what that restoration of powers will mean for Parliament, and how it can be used to reinvigorate our pact with the electorate. In that vein, I would be grateful if the Minister could tell me what urgent thought is being given to rebalancing with the legislature the power that has been transferred to the Executive from Brussels via Henry VIII clauses in this period as a means of managing short-term Brexit challenges. Such power vested in Government may seem expedient now, but will rapidly seem less attractive under a Corbyn Government.

I fear that for some time, our political class has harboured a simultaneous inferiority and superiority complex about this nation’s abilities. One group of politicians consistently talks down our country’s inherent strength and resilience, while another parrots slogans of exceptionalism that diminish the practical challenges ahead. The public believe in this nation’s future beyond the EU, but expect us to be clear-eyed in its delivery. The Prime Minister has indicated that she will not take us forward in such an endeavour should her withdrawal agreement fail again, so the duty will fall upon any leadership contender to set out with resolve, and in forensic detail, their response to some of the issues I have highlighted. In doing so, I hope they will place service to nation, rather than personal ambition, at the heart of their task.

Regarding the latest EU extension period, EU President Donald Tusk warned

“do not waste this time”,

but it is not his wrath about which we should be worried. If on the road to 31 October, we do not employ the lessons we have learned over these past three years, the electorate may well indicate tomorrow that they are more than willing to bestow democracy legitimacy on another group of people.

--- Later in debate ---

[Julia Lopez]

Does my hon. Friend agree that a customs union does not actually deliver frictionless trade?

[Mr Clarke]

Indeed it does not. It has become a holy grail—a totemic example of our determination somehow to be in and half-out at the same time. As other hon. Members have pointed out, that is a fundamentally untenable position. Making the decision to leave the European Union means embracing the choices, challenges and opportunities that come with that; the same would be true of the decision to be part of the European Union. There are trade-offs to be made in either position. In that respect, there has been a fundamental lack of honesty throughout the entire debate.

The European Commission’s own website states:

“The Customs Union is a foundation of the European Union”.

I am clear that continued membership of the customs union would be not only a serious misjudgment, but a breach of faith with the referendum result. It was therefore with absolute incredulity that I watched the Prime Minister yesterday promising to adopt both the customs union and a second referendum as official Government policy if Parliament votes for them. Frankly, that position represents a devastating failure of politics, leadership and statecraft. Indeed, the only redeeming feature of the situation is that this desperate attempt to win the Labour party’s support must be the final one.

Many of us have advocated a Canada-style trading relationship with the EU, with frictionless trade and a high level of customs facilitation. In such an arrangement, we would be fundamentally responsible for controlling our internal affairs. Regrettably, we have encountered the twin misfortune of having a leader who never asked for it and an European Union that would rather turn us into a colony. Unless and until both those facts change, it is incumbent on us all to prepare for no deal. Indeed, on the very same day in March that Ministers stood at the Dispatch Box warning of the lack of preparedness for no deal, the European Parliament in Strasbourg voted through no-deal measures on, among other things, social security, road freight connectivity, basic air connectivity, the fishing fund, fishing vessels authorisation, railway safety and connectivity, and road haulage. There is no reason why there should be any interruption to or shortage of goods coming into the UK in a no-deal scenario.

--- Later in debate ---

[Julia Lopez]

I am incredibly grateful for the thoughtful contributions from Members across the Chamber. My hon. Friend the Member for Poole (Sir Robert Syms) talked about the need for handbagging during negotiations, and said that our leadership has too often been for turning. He also highlighted how hamstrung the no-deal preparations have been by the Treasury’s reticence.

My hon. Friend the Member for Walsall North (Eddie Hughes) released a lot of tension this morning. It was a wonder to behold. He is an eternally optimistic champion of an eternally optimistic constituency. Hearing that optimism being misplaced is a matter of profound regret.

The description of Government’s negotiating style as being like playing cards with a mirror behind us was painfully accurate. My hon. Friend the Member for Mansfield (Ben Bradley) talked of broken promises and the increasingly muddled and contradictory withdrawal agreement, which he doubts has any life left in it. He is right that we have no further time for delay.

My hon. Friend the Member for Witney (Robert Courts) highlighted the different perspective of the 2017 intake. He is absolutely right that how we dealt with the challenge of the EU’s political ambitions was always going to lead to a fissure. He said that the two sides of the divide in our country are not so far apart, and that we can heal.

My hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) talked of our collective shame that we have not delivered on the promises we made to our voters, and said that too much time has been wasted. We all want to leave the European Union in an orderly way, but that option has been closed off by ineptitude.

My hon. Friend the Member for North East Derbyshire (Lee Rowley) has been in a perpetual state of outrage since Chequers in July. We have had many quiet moments to share that. I appreciate his support. I thank everybody for a very good debate.

Motion lapsed (Standing Order No. 10(6)).