Queen’s Speech

Lord Bilimoria Excerpts

Monday 23rd May 2016 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, the gracious Speech included the words:

“My government will hold a referendum on membership of the European Union”.

Could the UK survive if it left the EU? The answer is: absolutely, yes. There is no doubt that we would as we are a hugely adaptable, flexible and resilient nation. I am openly Eurosceptic. The European Union is in urgent need of reform. Despite their huge powers, MEPs have no accountability before the electorate and no connection with the regions they represent. I do not know anyone who knows who their MEPs are. Furthermore, it is ludicrous to move from Brussels to Strasbourg for a week every month; the EU should be based in Brussels. Just imagine if Parliament had to move between Westminster and Belfast or Edinburgh once a month. The euro is a proven failed project because one size cannot fit all—and, on that point, the noble Lord, Lord Owen, was right. The European Union has just 7% of the world’s population and 25% of the world’s economy, yet it has 50% of the world’s welfare spending. That is unsustainable.

Yet, in spite of my reservations, and in spite of being a Eurosceptic, I believe that we should stay in the European Union. Yes, the UK would adapt if we left, but the question is about the short to medium-term consequences: instability, uncertainty and destabilisation. There is no question but that the UK economy and our international standing would take a severe blow should we vote to leave the EU. This is the view held by heads of state, international trading partners, almost every country in the world and, critically, our closest allies.

Indeed, if we left the EU, we would need to renegotiate 50 trade agreements, not least our trade deal with the EU itself. That would not exactly be an easy negotiation with an organisation we had just deserted and, through our actions, possibly permanently destabilised. Brexiteers talk about how we would be able to sign trade deals quickly with other countries, and even talk about relying on the WTO. Well, if the WTO was so great, why were all these trade deals necessary in the first place? Trade deals are notoriously tortuous processes, and it will not be easy to agree trade deals with other countries, especially as we will be trying to forge trade deals with the very countries which did not want us to leave the European Union in the first place. As we know, the EU accounts for 44% of our exports and 55% of our imports but, in contrast, only 8% of the EU’s exports head to the UK. Indian administrators, politicians and business leaders see the UK as a gateway to the European Union and the key to their prosperity. European leaders do not want us to leave. They have categorically said: “We want you to be a part of the EU”. The IMF, the CBI and the Bank of England have all urged the UK not to leave. I have spoken with professors from Harvard Business School, of which I am an alumnus, who have been unanimous in urging the UK to remain in the EU. In fact, they have gone so far as to say, “You would be mad to leave”. This is about pragmatism and the enormous impact leaving the European Union would have on inward investment, international trade, innovation, the strength of our industries and economic growth.

Should we leave the European Union, we would lose a vast amount of research and development funding, threatening something that is already underfunded compared with the EU and OECD averages. Almost 1,000 projects at 78 UK universities and research centres benefit from funds from the European Research Council. We also stand to lose the strong collaboration that currently exists between British and European universities. In fact, all universities in this country have spoken out against Brexit. I am chancellor of the University of Birmingham and chair of the advisory board of the Cambridge Judge Business School. The noble Baroness, Lady Perry, made an amazing valedictory speech as a university leader. It was inspirational.

More broadly, people simply do not realise that we are the number two inward-investment destination in the world. There is no question but that Brexit would cause our inward investment to suffer. Look at the automotive industry, with Tata, Toyota and other Japanese manufacturers. Look at the City of London, which sucks in huge amounts of investment and talent. Our recovery is fragile because of our budget deficit and current account deficit; Brexit would cause huge instability, a dip in the pound, a rise in interest rates, a rise in inflation, a drop in house prices and, almost definitely, a recession.

In her excellent maiden speech the noble Baroness, Lady Jowell, mentioned migration, one of the most talked-about topics in that debate. The reality is that 50% of net migration to this country is non-EU. If we were to leave the EU, not only would we probably have to agree to free movement of trade and people anyway, but it is not as if EU immigration would come to a standstill. This country is reliant on talent from across Europe. From agriculture to hospitality to the City of London, an immediate cessation of EU immigration would hit our economy hard.

Arguments focusing on the impact of the introduction of the living wage are invalid, as 40% of EU migrants are under the age of 25. Benefits are another red herring, as EU immigrants contribute five times more than they receive in benefits. Brexiteers keep contending that, as we are the fifth largest economy in the world, we would be fine outside the EU. They neglect to mention the role that the EU has played in that through investment, its 500-million-strong market and our standing. We are not a superpower but a global power, and Brexit would cause our standing on the world stage to be hampered. We sit at the top table in the world on every front: a permanent seat on the United Nations Security Council and membership of the G7, the G8, the G20, the EU and NATO. On that note, it is not just NATO that has kept us safe and secure over seven decades—it is the EU and NATO together. We have never operated alone; we thrive in collaboration and partnership.

A senior vice-chancellor of a European university said to me the other day, “How can the UK even think of leaving Europe? You have saved us twice in the last century. How can you even think of being responsible for what might potentially destroy the EU? Would you be able to live with that?”. That is not what this country does. We do not desert. We do not run away. Europeans see us as a beacon of freedom, justice, democracy and fairness. Leaving the EU would threaten both the Union and our economic recovery, and we should heed the advice of almost everyone else in the world outside the UK.

Brexiteers talk about losing our sovereignty. We are very much in control of our sovereignty, as we have the best of both worlds: we are part of the EU but not part of Schengen, and we are not part of the euro. Crucially, we are also not bound to measures advocating an ever-closer union. This is where I disagree with the noble Lord, Lord Owen: there is no way there will ever be a United States of Europe. We are in control of our destiny and, in spite of all the protestations about EU red tape, the majority of red tape and barriers in this country come from ourselves through our tax system, planning laws and housing laws, not from the EU. Many EU directives have in fact been good for this country. We are one of the most open and flexible economies in the world where, in 26 years of building a brand from scratch, I have never come across corruption. An open economy has enabled me to build a household name and a growing global brand, thanks to this country, not because of any EU red tape.

I am not talking about scaremongering; I am talking about reality. In fact, it is what the Brexiteers want us to do that risks everything we have and creates uncertainty. We need to stay together in the EU and help it to reform from the inside. As the famous saying goes: “If you want to travel fast, travel alone. If you want to go far, travel together”.