Outcome of the European Union Referendum

Lord Desai Excerpts

Wednesday 6th July 2016 Lords Chamber

[Lord Desai (Lab)]

My Lords, it is a pleasure and a privilege to follow the noble Lord, Lord Norton—and just as he stuck to his speciality, I will stick to mine.

The women’s movement has taught us the very interesting slogan: “what part of no don’t you understand?” I say, “What part of ‘out’ do people not understand?”. People say that the referendum was based on too simple a question, but a referendum cannot be based on multiple-choice questions. It was in or out, and the message is that we are out. It is our duty to implement what the people told us.

Forget about the fact that they were misinformed. We have fought elections, and do we think that people were better informed in elections than in the referendum? Do we not think that people were made false promises in manifestos? I belong to the Labour Party, where every conference is about the betrayal of manifesto promises. The people may be illiterate; they may be racist; but they are the people and they were right. Our duty is to implement.

Secondly, on Thursday 23 June we had an economy. Today we have the same economy. It has not changed. It has not collapsed. Whenever the stock market collapses, people say, “The fundamentals are all right”. They never talk about fundamentals when the stock market is rising. I think that the fundamentals are perfectly sound. The British economy has not run away anywhere. The same people are working in the same jobs with the same ingenuity and enterprise. I also believe that the forecasts of recession are exaggerated. If we keep our heads there will be no reason for any panic or large-scale capital outflow because this happens still to be one of the most prosperous and productive economies—as it was on Thursday 23 June, and as it is today.

I would say only one thing about the right honourable gentleman the Chancellor. I expected him to be out there on Friday morning, giving the message that I am giving. He should have come out and said, “Don’t panic”. He might have added, “I don’t like this result but the economy is sound, and from there we proceed”—because we do not want to make mistakes in false panic. Let us remember that.

I will move on to what to do next. There are two phrases that people are confusing. One is the divorce. We have decided on a divorce, and then of course there is the problem of remarriage. What arrangements will we make when we are out? Shall we come back in with half a step, or really pretend that it never happened and be friends ever after, and act a little bit like Switzerland, Norway or whatever?

These things are sequential. The technicalities may be left to lawyers, but first we have to negotiate the out. The divorce has to be negotiated. There are 6,987—or however many—pieces of legislation that we have to review and decide how many of them to accept or not accept. It will be an enormous task. A friend of mine who works in the private sector said that one leading agency had made some contingency plans. He told me that two months ago they had decided to hire 4,000 people in case Brexit was voted for—and they have done that, let me assure you. The Government may have to hire 10,000 extra people to get through this, because it is going to be an enormous task. We will need a very large Joint Committee of both Houses of Parliament to be able to absorb the amount of work which has to be done. I think that the noble Lord, Lord Boswell, will have to bear most of the burden—and good luck to him.

Once we have worked out the divorce, we should work out what alternative arrangements we want. As far as I can understand—though I may be wrong—legally, those things are treated as separate negotiations by the European Council. We may be able to do something but first the divorce has to be worked out. Since the divorce will take two years from whenever we trigger Article 50, we are looking at the end of 2018 or 2019. Until then, we are in the EU; everything is fine, all the grants and agreements are still working, we are still in low-carbon territory and so on. So let us all calm down, let us say that we may be in this position until the end of 2018 or maybe the middle of 2019. Our rearrangement negotiations will start then, but it is very hard to predict how long they will take. They may take another two years.

Regarding Norway or Switzerland, I have one suggestion, which your Lordships may or may not like. The WTO option is the only option that does not require negotiations; it is a case of, “Okay, we have done the divorce, we will walk away, thank you very much”. In the remain campaign there were two tendencies that were mixed up. One was the liberal, free-trade element of the Conservative Party, which has never liked the customs union logic of the European Union. They are Adam Smith people, not Friedrich List people, and good luck to them; they got a bit nervous when they won, but that is another issue. If we are in the free-trade, liberal area, WTO is the best option—and, since everybody else is in the WTO, we may as well be there. That was the promise made by a lot of people. It is something that we had until 1973, so I do not know why we could not try it again. So I will just say: first the divorce, then the WTO—good luck.