European Union (Notification of Withdrawal) Bill

Lord Birt Excerpts

Monday 20th February 2017 Lords Chamber

[Lord Birt (CB)]

My Lords, I was a passionate remainer but I will vote to pass this Bill without a moment’s pause for we simply must respect the people’s choice. However, we are woefully underprepared for the gigantic challenges ahead. The White Paper, complete with its correction slip, was shockingly flimsy—as flimsy as the paper it is printed on. There were 300 to 400 bland words on immigration, for instance, and a host of questions about matters such as sectoral impact that should have been answered long ago.

Secondly, we are woefully overoptimistic. We are in a weak, not strong, negotiating position. It is in the EU’s overall economic interest to negotiate a bespoke deal with us that facilitates free trade, but politics will trump economics. Some of the 27 countries on the other side of the table have very different priorities. Most will not want to see us benefit from exit and incentivise future breakaways. Some will put the spoke in the wheel for their own domestic reasons. For example, Spain’s concerns on Gibraltar may affect the multiple freedoms our airlines currently enjoy in Europe, worth a whopping £60 billion a year to the UK economy. Some European countries will be opportunistic and look for advantage. I have a good friend working for the French authorities to facilitate the transfer of financial services from the City to the Île-de-France. I personally know of one major British bank that is actively exploring moving half its workforce out of Britain. The EU 27 represent 44% of UK trade, but we are just 8% of theirs. We need a deal far more than they do, so no one but no one can predict with any confidence at all the outcome of such complex, multiparty negotiations.

Thirdly, we appear woefully blind to the risks we are running. There are three roughly equal trading blocs in the world—North America, Asia and Europe—but trade halves as distance doubles. It is hard to believe that the scope for increasing our trade with the rest of the world—56% of our trade now—will be greater than the damage we risk to the 44% of trade we conduct on our own European doorstep.

We are also poorly positioned economically and politically to navigate these unsettled waters. We have just experienced nearly a decade of, I would suggest, unavoidable austerity. Ten years of flat personal incomes or worse and a creaking, overstretched public sector, accompanied by the biggest surge in immigration in our history, created the sourness and frustration that underlay the 23 June result. Yet, immigration is vital to our economy at every level, whether picking the cauliflowers in Lincolnshire, staffing our care homes or attracting some of the best brains in the world to power our financial service industries. We meddle with all that at our economic peril. Squaring the circle—meeting our economic interests while achieving the political consent of a discombobulated population—is a huge political challenge.

The backdrop to meeting that challenge is grim. The noble Lord, Lord O’Donnell, mentioned his role in the IFS. As the IFS’s work demonstrates, it seems highly likely that Brexit will prolong public and private austerity in the UK well beyond 2025—well into a second decade. The mood of the country will become more disgruntled still, with unknown consequences.

We are all in this together now. What the Government must do from here on in is show proper respect for our institutions; involve Parliament meaningfully; unite a nation divided down the middle; be hopeful yet realistic, but not giddily optimistic, about our prospects; and be honest and open with the British people about continuing austerity and the white-water ride ahead.

Outcome of the European Union Referendum

Lord Birt Excerpts

Tuesday 5th July 2016 Lords Chamber

[Lord Birt (CB)]

My Lords, some voting for Brexit were sincere British nationalists, opting for the romance of freedom and independence. For most, however, it was a vote of pure protest against an elite that has let them down. Our failure in the UK, as elsewhere, effectively to regulate the financial sector and to be prudent with government finances has brought nearly 10 years of austerity.

Immigration is vital to our economy, it enriches our culture and society and I support it wholeheartedly. But the biggest surge in immigration in our history has, in recent years, brought incredibly rapid change to agricultural centres such as Boston in Lincolnshire, and to our older, poorer industrial areas, and it has placed a heavy strain on our social fabric. In the past three years, for instance, Peterborough’s maternity unit has been closed on 41 occasions to women about to give birth—a traumatic experience—for want of capacity in one of the UK’s fastest-growing cities. That is an unpardonable failure of government to forecast need and to provide.

While it is easy to understand the frustration and anguish that has prompted the Brexit protest, the vote is a catastrophe for the UK and for its people. One of the EU’s most important achievements, alongside other international institutions, has been to foster a stable, collaborative environment in Europe after centuries of destructive conflict. This is especially poignant for me at this moment because, 100 years ago last Friday, my grandfather Joe went over the top on the first day of the Battle of the Somme. As a child, I knew him well and was transfixed by his many tales of that horror-laden and wasteful war. Weakening the ties that bind Europe together cannot be in our long-term interest.

For our economy, the consequences are immediately adverse. I have witnessed that for myself in the first full working week since the Brexit vote, and old and trusted colleagues in the finance sector have shared their own direct experiences with me. I will give some examples; I could give more. I have had a briefing on a major Asian financial institution pulling out of a done deal to acquire a major and valuable British company. I know of another sales process involving a major British-owned company which trades heavily all over Europe that was stalled because of buyer unease over Brexit, and because debt financing was now uncertain. If negotiations within the EU are prolonged, our economy will be racked by uncertainty for years to come. The Chancellor has already been forced to withdraw the targets for reducing our still massive indebtedness. We risk a recession and a further shock to our system when we are not yet over the last one, and we risk 20 years or more of continuing austerity, not just 10.

Our only hope is to negotiate terms to remain full members of the European single market. The notion of some in the Brexit camp that we should not want to be an equal participant in the biggest market in the world beggars belief. They appear not to have the slightest notion of how global markets work or of how complex are the activities of leading British businesses. We are paying a high price indeed for their naivety, for the professionalisation of our political parties and for the diminishing life experiences of some of our leaders. Nor do the most buccaneering of the Brexiteers appear to have the slightest notion of how global investors operate: how professional and how aware of risk they are. It will be entirely rational for global investors to be extremely cautious about investing in the UK until there is crystal clarity about all our circumstances.

But negotiating to remain part of the single market will not, of course, be easy, for our negotiating position is now weak. We need access to Europe’s markets far more than Europe needs access to ours. Some EU members will want the UK to pay a painful price in negotiation in order to discourage exit or secessionist movements in their own countries. Some sectoral interests in Europe will press to advantage themselves over their British counterparts. Some electorates, wounded by a sense of British rejection, will want their leaders in turn to reject us. I work a great deal in Europe these days and I had many pained emails last week from European business friends and colleagues. One senior German industrialist recounted an exchange he had witnessed in his local bakery, with an overexcited shopkeeper shouting that Germans had to accept as a reality that the British hate Europeans. Local Mercedes workers in the same queue joined in angrily to assert that Mercedes should find other markets to sell their vehicles. Being nice to the Brits may become bad politics.

Yet we must hope and we must strive. Britain is already a member of the EU on special terms—absent from the euro, absent from Schengen—and there is a mutual interest in the UK remaining in the single market. While other countries will not easily give up the notion of the free movement of labour, perhaps all will recognise the advantages for all members of qualifying that freedom to gain the economic benefits while reducing social friction. Let us hope that we can find an accommodation. If at all possible, we need an exit negotiation which is not prolonged but rather is simple and quick and reduces uncertainty for all. Without that, the white-water ride ahead could be very rough indeed.

Syria: UK Military Action

Lord Birt Excerpts

Wednesday 2nd December 2015 Lords Chamber

[Lord Birt (CB)]

My Lords, the Middle East has been tragically riven by religious, sectarian and tribal strife and difference. It is a region where feudal rulers, cruel despots and now barbaric terrorism have flourished. Much of the area’s wealth flows from a single, much sought-after commodity. The West’s imperial past and more recent superpower intervention have fermented an already deadly mix. Like a nightmare video game, one scene of horror effortlessly morphs into something new, unexpected and worse. The human cost for people trying to live ordinary lives within the region is appalling. Now the problems spill over on to our and other shores.

For centuries, Europe itself was in turmoil, so we may hope that one day peace, harmony and prosperity may characterise the Middle East, too. The journey to that destination will be prolonged indeed, but the Vienna talks offer a hopeful sign. Barbarism may yet prod us into starting that long haul now.

My difficulty with the Government’s position is one of emphasis. I would like to see us marshal the peerless skill of our diplomats to deploy their expertise and wisdom to exploit what prestige and influence the UK still has in the world. I would like to see us sharing the lessons of our own experience, including of failure. I would like to see us defining a path to peace across the whole region.

That is an awesomely difficult task, but the history of the past 70 years surely tells us that piecemeal solutions do not work. It is in that context, with clearly defined goals, widely supported in and outside the region, that I would sign up to wholehearted military action using the full power of the West’s might. But, for all the undoubted brilliance of the RAF and the bravery of our pilots, it is hard to believe that extending their reach across a desert border marks a significant step on that long path to peace.