EU Withdrawal

Lord Davies of Stamford Excerpts

Wednesday 13th February 2019 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I do not know if it has something to do with the algorithm used by the Whips’ Office to allocate the order of speakers in these debates, but this is far from the first time that I have had the pleasure and honour of speaking after the noble Lord. I have forgotten how many times it has been. His hatred of the European Union is so obsessive that it becomes quite amusing at times. Normally I do not have time to correct him, unfortunately, but I will correct him on just two points, since I think I can take that amount of time today.

The noble Lord referred to corruption in the European Union. That is a frequently used argument that one hears the whole time in Eurosceptic rhetoric. It refers to the Court of Auditors declining to sign the accounts of a number of operations involving the distribution of agricultural funds in the Union. The Commission itself has a very good record on corruption—much better, I might say, than the British Government. We are talking here about failures by the member states in their role distributing Union funds, such as structural funds and agricultural support. If, in fact, the Union were centralised as he says it is and all this was done centrally by the Commission, there would perhaps be less local democracy and less federalism, but there would also be less of what he calls corruption.

The second thing the noble Lord said—again, you hear this very frequently from Eurosceptics—was that the Union is undemocratic. In actual fact, if you suggested making it more democratic—I would be very much in favour of doing that, for example by having election of the President of the Union by universal suffrage as happens in the United States or France, say—he would be horrified and would say that was against national sovereignty. He cannot have it both ways. It is completely illogical. If he wants to charge the European Union with being insufficiently democratic, he cannot at the same time reject the obvious remedy, which would be to make it more democratic. I personally regret that that has not happened in the past and I trust it will happen in the future. It is more likely that it will happen in the future, because we will no longer be there. That is one of the ironies of this situation.

The present situation is obviously confusing for everybody, but one thing is quite clear: the Prime Minister, Mrs May, is playing games with the British people. She says that she intends to continue the negotiation with the European Union. She says that she has left some of her team in Brussels for that purpose. That is utterly absurd. The European Union has told her very clearly that it is not prepared to negotiate any further on her particular deal. That was a very reasonable answer and one that I would have given if I were in its shoes, because no sensible or business-like person agrees to reopen an agreement just a few weeks after it has been signed. It is utterly ridiculous. They were very helpful to Mrs May the other day when they gave her some explanatory letters, but apparently that was not good enough for her. The idea that she is continuing to negotiate is absurd.

Leaving her junior officials in Brussels and saying that they are somehow continuing the negotiation is even more absurd. If the Commission is not making concessions to her, it will hardly make concessions to junior officials. I imagine they are spending their time eating moules-frites and drinking rather nice beer. They cannot be doing anything else and presumably they are being paid on expenses for that purpose. It is all part of a charade mounted by Mrs May.

In the same way, a couple of weeks ago, Mrs May said that she wanted to discuss the Brexit situation with the Opposition and with parliamentarians across the board. It all sounded splendid, except that if she had had the slightest genuine intention of exploring the possibility of a consensual Brexit, she would have done all those things two or may be two and a half years ago. The thing is clearly a gimmick.

Why is she doing all this? She is clearly doing it, once again, to try to waste time. I have said this before in this House: the agenda is to waste time. She has done it on this occasion by simply cancelling votes or debates in the House of Commons or postponing them for a later date. Every time she gains a week or two, she gets nearer and nearer to 29 March. She thinks that on the eve of 29 March, everybody will be terrified of being blamed for a hard Brexit and will simply sign up to anything she wants as an alternative. That is the game that is being played. It is a very ruthless game, and it is hardly straightforward. It is perhaps a game that is not yet fully understood by the British public, but it will, no doubt, be dissected by historians in the future and we should have no illusions about it.

What should we do? I have no doubts about that at all. We are in a situation where Parliament cannot make a decision. There is notoriously no majority support for any solution in the House of Commons. There is majority support for a negative aspiration, which is not to have a hard Brexit. In a situation in which the normal leadership of an institution cannot agree on structural policies—on important corporate strategy, for example—it must go back to its stakeholders. A public company must go back to its shareholders. If you are a lawyer negotiating on behalf of your client and you cannot make any progress, you have to go back and ask for further instructions. The Eurosceptics rather like the word “instruction” in this context because they like to think that the referendum was an instruction to Parliament. I did not believe that and nor did the High Court. Nevertheless, perhaps if they like the word, they would like to chew it over and think about it again. That is a very normal situation which arises when an agent finds that he cannot make any further progress on the basis of instructions he has already been given. He must go back to his principal and ask for further instructions.

If the Executive branch of the British Government will not do it, Parliament must go back to the British people and ask for further instructions. That means that we should have another vote on this subject. Far from being undemocratic, it seems to me to be extremely democratic to give the people of this country a chance to judge the whole matter again. Lord knows, there has been fantastic change over the last two and a half years in this context. All of us, including very much myself, have learned an awful lot of things about Brexit which we never guessed before.

I like to think that I took a reasonably active part in the campaign. I never heard the words “customs union”—nobody ever mentioned it. Everybody talks about the customs union now. In the campaign, I did not hear any mention of the Irish dimension, until I raised it myself in a public debate in the Mansion House. My opponent clearly had not thought it through and so I had a considerable rhetorical victory there, which I enjoyed. However, it did not figure on the agenda in the referendum campaign.

Nothing could be more natural, democratic and transparent than saying to the British public, “We have been debating this for two-and-a-half years now. We have looked at it from many aspects and points of view. There are people in Parliament who are in favour of every conceivable possible solution. We would now like you, ladies and gentlemen, to take the decision”. I hope that is the way we will go forward—it should be. It is profoundly respectful of the electorate and the principles of democracy. Pragmatically, it is surely the only sensible and viable way out of the dilemma we now find ourselves in.

I wish to make one further point. There has been a great deal of concern, rightly so—not only in this House but in the other House, the media and in private discussions all over the country, particularly in industrial and commercial fields—about the damage that will be done to the British economy by any Brexit, particularly a hard Brexit, whenever it comes, be that in a month or two or at any other time. That nightmare faces us, and it is right that we should be mainly concerned about it.

However, the economic issues that I am most concerned about in this context are the longer-term ones. If we leave the European Union, it is goodbye to manufacturing in this country. That is a big statement, I know, but I am prepared to justify it. Of course there will still be some small manufacturing operations trading in the local market—manufacturing will not totally disappear—but it will go down from the present 8% of the economy to perhaps 2%, which is the kind of figure you find in Australia or Norway.

The reason for this is—I have been interested in this matter from many points of view, including my days in the City years ago—that almost every investment in manufacturing in this country is made for the purpose of establishing a base for supplying the single market, which many people have always wanted, and if you are no longer in the single market you do not qualify. As it is, we are in the single market but people who invest here and then sell in Spain, France, Germany or wherever have to face considerable transport costs and foreign exchange risks. They have accepted all those things up to now against the compensating advantages which we can offer in this country, but we have added, unfortunately, to the equation the substantial negative factors of the prospect of delays at frontiers and complete uncertainty about future British policy, including on regulatory divergence which could create non-tariff barriers. We have an unpredictable, incompetent Government, one member of whom has become a theatrical example of that incompetence. None of this reassures potential investors and it will be very bad.

I understand the economic theory which tells you that it does not really matter if we have a manufacturing economy; that it is just as good to have services, for example, or mineral extraction like the Australians. Theoretically that is true, but it makes a great deal of difference to individuals who have the skills required in manufacturing because it determines whether or not they have a job. It makes a great difference to areas of the country which have traditional manufacturing bases because it determines whether or not they become depressed areas. It is serious in human terms and should not be lightly thrust aside. It is a serious issue and that is why I mention it.

In other areas, there has been a complete failure to understand the long-term damage that will done. The noble Baroness, Lady Bonham-Carter, who is not in her place, made a good speech a couple of weeks ago about the broadcasting directive. No one contradicted her understanding of that, which is that if we leave the European Union it will no longer apply here. At the moment, as the House knows, that means that a television programme or a film which is released under licence in any EU country can be automatically shown anywhere else without further expense or bureaucratic procedures. That is a great advantage for our creative industries. If we no longer have the broadcasting directive, we shall be the last place anyone wants to make a programme or a movie, for reasons which are obvious to the House. That is an example of a services area—the creative arts—where we have a good record which will be damaged by leaving the European Union. It is so crazy.

Then there is the issue of the City and banking. Of course, bankers are unpopular people and no politician wants to be associated with defending their interests, and so the matter has never been properly mentioned here. Many people say, “Oh, it will be all right. Everyone will stay”. Some have said to me, “There has not been the exodus from the City of London which you expected”. I did not expect it at this stage in the game—I was right not to do so—but I read an article in a paper before Christmas which said that only 7,000 people from financial services have moved because of Brexit. That is an interesting use of the word “only”.

First, 7,000 people is not nothing at all by any means. The House will follow my elementary maths. You would not normally think it worth while to relocate someone who was not earning, say, £100,000 a year basic, with bonuses in a normal year being perhaps £200,000. So £300,000 earnings would be normal for someone in that category who is going to be moved for business reasons. If you multiply that by 7,000, it is close to £3 billion. Tax at 40% would mean about £800 million less for the Revenue. No doubt someone on that kind of earnings will save some money, but the rest of it will be spent. So there will be a considerable negative multiplier effect if people leave. It was 7,000 before Christmas—no doubt it is more now and might be more in the future—and that is not to be laughed at. It is a serious issue. It may not affect people in this Chamber, but we should think carefully about the prospect of running down such a British industry.

There will also be a loss of opportunities in that interesting sector—I worked in it for many years—for young people in the future, who had on their doorstep the biggest international financial market in the world. That will steadily no longer be the case. It will not happen overnight, but that will not be the case in 10 or 15 years’ time—certainly not to the extent it is now. We are debasing and devaluing a big national asset, and it is a sad moment.

Saddest of all is the fact that we are leaving the European family. We are rejecting our neighbours—not as neighbours but as close partners and friends in a common enterprise—and it is a grave and serious situation. We will be regarded inevitably as being stand-offish, arrogant and very foolish. People will not take pleasure in doing us favours in the future and they will not be particularly sympathetic if we run into reverses. It will change entirely our relationship with our closest neighbours and trade, defence and security partners in the future. We will no longer be working with them closely on all the causes we hold dear, from stability in the world, to the environment, to free trade, to human rights and so on. That will be a sad and grave day in the nation’s history, and I bitterly regret it.