Government’s EU Exit Analysis

Lord Clarke of Nottingham Excerpts

Wednesday 31st January 2018 Commons Chamber

[Keir Starmer]

My hon. Friend demonstrates that hon. Members have been trying on behalf of their constituencies and regions to get a proper analysis of the impact of Brexit on the individuals, businesses and communities they represent. That is why it is so important to have that information. It will mean that we can have an informed debate and hold the Government properly to account.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

The right hon. and learned Gentleman described his experience of dealing with leaks. Does he accept that we have a curious cult of secrecy across Government today and have had for some years? A leak is a serious matter and I deplore leaks when documents are revealed whose contents compromise the national interest or are loaded with party political or other significance, but it is impossible to see how an objective analysis of the economic consequences of the various options that the Government are considering compromises the national interest. A properly open Government should make such information freely available to all those who have a legitimate interest in the subject, including MPs.

[Keir Starmer]

I agree. It is significant that the original documents that were requested last year were initially refused on freedom of information grounds, only then to be made available in the form I described, and then to be put in the public domain in any event, which demonstrates the point that many Governments—this Government are doing the same—put their arms around information that ought to be in the public domain to inform the debate. It is the wrong way of doing business.

--- Later in debate ---

[Mr Walker]

The Prime Minister has set out a very clear strategy for developing an FTA between the UK and the EU that goes much further than previous models. As I am explaining, the analysis under discussion looks at the existing models and compares some of them, which is not the same as what the hon. and learned Lady sets out.

[Mr Kenneth Clarke]

I thank my hon. Friend for announcing that the common-sense decision has been made overnight to stop trying to withhold these documents. I accept what he says about the caveats attached to all forecasts, although the idea that they are all rubbish is a new and sensational claim made by some of his colleagues.

Just to be clear about the status, is it not the case that the perfectly responsible Government Departments that produced these papers have reached the stage of briefing and informing Cabinet Ministers as they go to the next stage of discussions to try to create a policy for where we are going in the negotiations with the European Union? That status is the same as that for forecasts put to a Chancellor before making a Budget. Does my hon. Friend therefore accept that, although his words about caveats in economic forecasts are wise, we should not be tempted to drift into the rubbishing of the whole thing, which his colleague, the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Wycombe (Mr Baker), rather unwisely embarked on yesterday?

[Mr Walker]

My right hon. and learned Friend knows a lot from his own experience as Chancellor about the confidential information presented to Ministers ahead of Budgets, but that process has to go through a number of stages. As I have said, this information, which is preliminary and not yet finished, was presented to Ministers for the first time in recent days. It is, therefore, not in a form that is approved to go forward in the way he describes.

Despite, and in many cases because of, the points I have made, the analysis remains sensitive. Let me stress that the only reason we do not oppose the Opposition motion is that it makes clear that the analysis is to be shared with the Select Committee and Members on a confidential basis. We are about to embark on exploratory talks with the European Union regarding our future relationship and will be in formal negotiations over the coming months. Having an incomplete analysis such as this in the public domain would not serve the national interest in the upcoming negotiations. I cannot imagine that any reasonable Member of this House genuinely believes that it is in the national interest for the Government to have to publish at the start of the negotiation unfinished, developing analysis of scenarios that we are clear we do not want.

There is, however, another equally important reason why this analysis should not be put in the public domain, and it is simple: the functioning of Government—by which I mean any Government—about which my right hon. and learned Friend knows a great deal. I ask hon. Members who have been Ministers, who aspire to be Ministers or who have ever held a position of responsibility how they would feel about having to publish their team’s work in progress partway through a project. I am sure they would agree that publishing unfinished initial findings can be extremely misleading, and I am confident that they would join me in ensuring that that does not happen on a routine basis.

--- Later in debate ---

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

I call Rachel Maclean.

[Mr Kenneth Clarke]

rose—

[Mr Deputy Speaker]

Oops. I call Mr Kenneth Clarke. You were not on my list, but you have just been added.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

The Speaker got an ambiguous reply from me, and I will explain why in a moment, but first may I add my sympathies to those already expressed in the House, Mr Deputy Speaker, and say how delighted I am to see you back in the Chair?

I will explain why I hesitated when the Speaker asked me if I wanted to speak. First, I think—I will have to check—I agreed with every word that the right hon. Member for Leeds Central (Hilary Benn) just said. I was also hugely impressed by the speech made by my right hon. Friend the Member for Broxtowe (Anna Soubry). I was not at all sure, therefore, if I would try to catch your eye, Mr Deputy Speaker, because I did not wish to detain the House by simply repeating the arguments they gave, as other people want to speak. By my standards, therefore, I hope I shall make what might be described as a long intervention—I usually intervene for longer than other people anyway.

I want to comment on the status of these economic analyses and how one should use economic analyses, and what has been presented here. Brexiteers make a great deal in their arguments, when they try to dismiss the documents we are all going to see, of the inaccuracy of some of the documents put out at the time of the referendum. There is no doubt that the authorities then put out forecasts, in good faith, in which they overestimated the short-term consequences of the vote. It has to be said that some of those campaigning on the remain side—David Cameron and George Osborne, I am afraid, who are both friends of mine—grossly exaggerated the material they had, such that the arguments on the remain side in the national media, at times, were almost as silly as those on the leave side—on the question of money for the health service or Turks coming to this country. It was a wholly unsatisfactory campaign.

We should not exaggerate how wrong those forecasts were. The vote to leave has already made this country poorer than it would have been. The living standards of many people in this country are lower now than they would have been had we voted to remain. The vote produced an unfortunate devaluation in the pound and a surge in inflation at a time when very many people’s wages could not follow it, and that has had consequences. On the lack of any policy, I would defend my Government’s not having a policy yet on what they are trying to negotiate by pointing out that the Opposition party does not either. The right hon. and learned Member for Holborn and St Pancras (Keir Starmer) wisely declined to answer the question of whether the Labour party was in favour of staying in the customs union because he has not a clue what the Labour party’s view will be once it has settled its internal arguments—but that is a diversion.

The fact remains that we have already damaged ourselves. We are experiencing some economic growth, although it is not benefiting every section of the population, but that is because the global economy is, to everybody’s surprise, doing rather better than was expected six months ago. There is global growth. No one is quite certain why. I am certainly not, but it is beginning to look quite strong—it is strong in the United States and the European Union, and it is not too bad out in China—and as always we are benefiting from that. It was unforeseeable when the forecasts were made last summer, but now we have this strong surge, and we do not know how sustained it will be. It all looks a little fragile—there are one or two uncertainties about—but it is lifting the British economy a little, and I am glad that it is. But, because of the impact of the referendum, growth in this country is pretty feeble compared with the rest. We are the laggard in the G7. We are the laggard among the European economies against which we normally match our performance. That is the damaging consequence of the vote cast in the referendum in 2016.

[Alison McGovern]

Does the Father of the House agree that the extraordinary actions taken by the Governor of the Bank of England in response to the vote are very poorly understood, which creates an even worse impression of the forecasts made beforehand?

[Mr Deputy Speaker]

Order. I must inform the House that there will be a six-minute limit after the current speech, and if people intervene I will have to bring it down further. I do not want to stop debate; I just want to warn everybody.

[Mr Clarke]

I agree entirely with the hon. Lady. The Governor actually lessened the impact that the Bank forecast by taking very prompt action to minimise the consequences. He would still agree with me, however, and has done publicly, that there has still be damage to the economy already, and he has tried to quantify the effect on GDP as a whole.

I will conclude with one last point—I said I would be short—about these forecasts. I hope we get more full information from the Government as events unfold and some impact assessments of their policy, once they have decided what it is, but it is almost inevitable that the impact will be detrimental to some extent. I know of very few economists who believe in market economics at all who would say that leaving the largest, richest multinational trading agreement in the world can be anything other than, to some degree, detrimental. I look forward to someone such as my right hon. Friend the Member for Wokingham (John Redwood), with whom I often agree on economic policy, trying to explain to me how leaving the single market and customs union can have anything but a negative impact on the economy. How on earth can tariffs and customs barriers between us and our major market on the continent—the planning permission for those lorry parks, the recruiting of those thousands of staff—have a positive effect? How can regulatory divergence, which will damage trade, particularly in goods and services, have a positive effect? Whatever the best efforts of economists in these and future papers, they will be trying to measure the detrimental effects on the British economy that this step is bound to have. The country will be poorer if it pulls out of its present economic and trading relationships with the EU. It is our duty in this House, on a cross-party basis, to do what we can to minimise the damage.

[Several hon. Members rose—]