European Union (Notification of Withdrawal) Bill

Julian Knight Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 7th February 2017 Commons Chamber

[Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I do not intend to delay the Committee, as most of these amendments are narrow and address the very specific point that the hon. Member for Greenwich and Woolwich (Matthew Pennycook) raised.

I have a simple concern as to why there is such a peculiar sense of the vital importance of these particular forecasts, which give huge credit to the Treasury’s ability to forecast where we may be going in almost every sector. As my hon. Friend the Member for South West Wiltshire (Dr Murrison) said, many of the forecasts have been fundamentally wrong in the past, so I asked the Library how accurate the Treasury forecast of May 2016 turned out to be. It is worth relating exactly how accurate it turned out to be, even when the Treasury had such a huge array of figures and possibilities before it:

“In May 2016, the Treasury published forecasts for the immediate economic impact of voting to leave the EU. It forecast for a recession to occur in the second half of 2016, with quarterly GDP growth of -0.1% in both Q3 2016 and Q4 2016 forecast (a second ‘severe shock’ scenario was also shown with a deep recession occurring; under this scenario growth of -1.0% in Q3 2016 and -0.4% in Q4 2016 was forecast). In reality, the economy continued to grow at its pre-referendum pace, with quarterly growth of +0.6%”.

Now the figure has been adjusted again by the Governor of the Bank of England to close to 2%, with the prospect of further adjustments.

[Julian Knight (Solihull) (Con)]

On the quarterly growth statistics, I understand that even knowing what is happening right now is often very difficult for the predicting entities. In fact, I believe they have had the correct numbers four times in 270 quarters.

[Mr Duncan Smith]

The range of prediction from the Office for Budget Responsibility had nearly a £90 billion margin for error over the previous seven years; that £90 billion went from £50 billion on the plus side to £40 billion on the minus side. The problem we face is the sense that these forecasts give us any strong, real indication of what may happen in the economy. I raise this issue because the new clause and other amendments relevant to it make triggering article 50 contingent; it cannot be done officially until these forecasts are laid. This is not about consulting on them or their being made as a matter of the Government providing information. In other words, the article 50 letter cannot go until these are laid. All they do is inform the debate depending on what the forecasts are. From talking to economists, I am of the general opinion that we have had seven years of growth, and normally within the cycle we would expect to have a flattening at some point after this long period of growth. That would be the normal prospect, but economists will tell us that we are defying the normal prospects. Whether or not we have a natural process of slightly lower growth directly as a result of this longer period of growth, and what happens to the world economy and what is happening in the EU, is almost impossible to forecast with any great accuracy.

My point is that new clause 5 states:

“The Prime Minister may not give notice under section 1 until either HM Treasury has published any impact assessment…HM Treasury has laid a statement before both Houses of Parliament”.

With respect, I say to the hon. Member for Greenwich and Woolwich that this is not just a helpful attempt to get information to the House; it is exactly what he said it was not. It is clearly a back-door attempt to make it almost impossible for the Government to get on and trigger article 50. As my hon. Friend the Member for Dover (Charlie Elphicke) said, the referendum verdict was to trigger article 50. The people were not asked, “Shall we trigger article 50 only after we have laid various reports of notables who believe the economy is good, bad or indifferent?” They were asked, “Do you want to leave or do you want to stay?” They chose to leave and we have to get on with it. The idea that the Government are going to go into a negotiation without any idea about what they favour and what they think will, by and large, on the margins, be better for us is ridiculous.

The House must recognise that it is going to be swamped with information of this sort; every forecasting agency is going to be in the game of telling us where we are, and none will be the wiser. Everybody in the House will take the worst or best one, depending on what they want. If the OBR has a margin for error of £90 billion, people can take whatever position they want. But it does not change anything, because we are leaving. The nature of the agreement that we get with the EU, if we get one, is not going to be based on a bunch of forecasts. It will be based on what those negotiating for the EU think is in their general best interest and what we from the UK manage to persuade them is in our mutual best interest. That is what a negotiation is about.

Anybody who has been engaged in negotiation in business will know that you start with your base, bottom line, worst case for you and try to improve upon that, and the other side does the same. This is not going to be about one side saying, “I tell you what my forecast comes to. It tells me we are going to be better off. What does your forecast tell?” and the other side saying, “Ours says we are going to be better off and you will be better off, so which forecast are we going to take?” The battle of forecasts is a ludicrous and pointless exercise.

--- Later in debate ---

[Mr Duncan Smith]

Thank you, Sir Roger, for that explanatory intervention. May I say to my colleagues that I am still prepared to take interventions should they wish to keep them short?

[Julian Knight]

We have just spoken about the power and the necessity of the City of London. Does my right hon. Friend realise that the other major capitals, Paris and Frankfurt, do not have the same infrastructure? Frankfurt, for example, has only one foreign language school, and Paris has restricted labour laws.

[Mr Duncan Smith]

That is an important point, and it plays hugely into the Government’s hands. It was the head of financial services in Frankfurt who was over here just before Christmas. When he was interviewed by the BBC, he was asked whether he was over here trying to get people to take up jobs in Frankfurt’s financial sector. To the journalist’s utter horror, he said yes. The journalist then said, “Therefore that means, presumably, that you think that after Britain leaves the European Union, the City will be finished, and that Frankfurt is looking to take its business.” He almost laughed and said, “Oh, no, no, no. We absolutely need the City of London to thrive and prosper, because it is the way that we keep our capital cheap. We cannot replace it, as its business will go somewhere outside Europe.” He said that London is the only global city in Europe. The point that he was making was that, although we move around and trade jobs, the expertise and ability to make capital deals lies here in London, and Frankfurt wants to make sure that the United Kingdom Government, the European Commission and the European Council reach an agreement that is beneficial to both sides, with access to the marketplace.

I make no bones about this: I am an optimist. There is nothing in the new clause that would in any way help the Government. Even more importantly, it would not enable the House to reach any kind of measured conclusion, such as letting the Government trigger article 50. I will conclude now unless somebody wants to intervene.

[Mr Duncan Smith]

I agree. The head of the OBR has said that, in the end, most forecasts are wrong. On that basis, it would not really help the House in any way suddenly to have a Treasury forecast, any more than if we had a multitude of forecasters here saying where they think the economy will go. I do not blame them for being wrong, because there are far too many moveable parts in economies as complex as the United Kingdom or, for that matter, the European Union or even the global economy.

Ultimately, if the Opposition are really honest, these new clauses and amendments are really about making sure that the Government’s hands are tied, and slowing down the process in the vague hope that, somehow, people’s opinions will change and it will all look too difficult. These forecasts will then allow everyone to go out and say, “Oh my God, this is so terrible. Look what will happen if we do not get this arrangement or that arrangement.”

[Julian Knight]

My right hon. Friend is being generous in accepting interventions. He has just talked about a sort of buyer’s regret. As I understand it from my experience on the doorstep, most people just want us to get on with the job. In fact, polling shows that Brexit is slightly more popular now than it was at the time of the referendum.

[Mr Duncan Smith]

I will not carry on for much longer, but that is exactly the point. All that will happen if we amend the Bill and tie the Government’s hands so that they are slow in triggering article 50 is that the British people will get frustrated and angry.

--- Later in debate ---

[Michael Gove]

I entirely agree, and my hon. Friend makes two important points. Of course, we had the referendum and some people on the remain side feel sore because they think the result was not just a betrayal of their hopes, but was won by means that, to put it mildly, they do not entirely endorse. I absolutely understand that, and there is a responsibility on those of us who argued for leave to listen carefully and to seek to include in the type of new relationship we have with the European Union the very best ambitions and aspirations that were put forward as reasons for staying. I think that can be done and that this House has a critical role in bringing it about, but it can be done only once article 50 has been triggered and the British people have had the confidence that we are leaving.

[Julian Knight]

I thought that the hon. Member for Streatham (Mr Umunna) spoke powerfully about breaches of promise, but is there any bigger breach of promise than blocking Brexit by supporting these wrecking amendments?

[Michael Gove]

My hon. Friend is absolutely right, and there is a particular element to it, as well. One of the important principles of our constitution, which as a former Justice Secretary I wholeheartedly believe in, is the principle of judicial review. It is absolutely right that Executive action should be subject to judicial review. It is the only way, apart from the exercise of power in this House, that we can be certain that the Executive is following the rule of law. I am one of those people, albeit that I campaigned for and voted for us to leave the European Union, who was pleased that the Supreme Court held this Government to account so that we have this legislation before us now.

Having said all that, and having placed on the record my support for both this legislation and the principle of judicial review, if we accept any of these new clauses or amendments, we will subject the operation of article 50 to judicial review. That would mean that if any single one of these impact assessments were not prepared in exactly the right way, at the right time, with appropriate care, the whole process and the democratic will of the British people could be upended. Different people have different views about experts—I shall come on to them in a few moments—but I know whereof I speak.

As I have said, I made a number of mistakes during my ministerial career—too much for us to be able to run over now, given that our debate has to close at 9 o’clock. One thing I remember is that judicial review on the basis of a relatively small infraction, as admitted by the judge, of an equality impact assessment—one I deeply regret—nevertheless resulted in the paralysis of this Government’s school capital building programme. Now, if we want to create a feast for lawyers and a festival for litigators, we should accept these new clauses and bring in these amendments. In so doing, we will see the tills ching in the Middle and Inner Temples and hands wring up and down the country, as we once again frustrate the will of the people.