Trade and Customs Policy

Lord Empey Excerpts

Tuesday 5th December 2017 Lords Chamber

[Lord Empey (UUP)]

My Lords, I refer the House to my registered interest as a vice-president of the Institute of Export & International Trade, which is an educational charity.

A number of statistics are included in the very helpful Library Note, and they do not make particularly good reading. Although the European Union is by far our largest export market, it is also an organisation with which we have a huge deficit—some £82 billion, according to the note. I have an issue with the whole approach of this country towards trade and the generation of economic activity. With all the resources that we have, both academic and in the City of London, and all the international experience we have had over many years, why has this country effectively turned its back on business? This goes back to the 1970s and even beyond. It became unfashionable to have smelly factories —we needed to concentrate on all the services—but we still need a core element of manufacturing in this country. We have largely turned our back on that.

I believe that a large amount of the trouble goes back to our education system and our approach to education. One of the things that is at the root of our failure to improve our economic performance is basically a form of snobbery. For instance, let us look at the difference between ourselves and a country such as Germany when it comes to vocational education. Here, an engineer is someone with an oily rag who goes in through the back door, but there Herr Ingenieur is regarded highly and with respect. We therefore have our whole approach wrong, from the ground up, and that is why this country’s relative economic performance has over many years been declining.

I welcome the Minister to the Dispatch Box, but I say to her that our approach to trade, and to business generally, has been not as good as it should have been. Look at our competitors: they tend to be more active and aggressive when it comes to getting into markets. Reference has just been made to our economic performance in China, and while that is improving, it is from a minimalist position. We are not focused as a country on trading, yet that was where this country built up its entire background around the world. We talk about global Britain, but we have become terribly parochial. Our approach to education and the message that we send out to our young people is at the core of this fundamental weakness. Political clout in the world also comes with economic clout, yet we are seen as a country that is not moving forward in that regard. The Government and the Minister will have to address that.

Let us come to the City of London—to finance and our approach to taxation. We do not incentivise companies to trade, but we could use the tax system. A simple matter, for instance, is that the Institute of Export and International Trade provides qualifications for people in exporting. Your Lordships would not go to get your car fixed by a mechanic if that person had no qualifications, or to a dentist if they had no qualifications. Why do we risk the farm—risk the company—on people trying to export if they have no qualifications? We do not give a tax incentive to companies to encourage people to take that training.

The City of London is, allegedly, the financial capital of the world, so how is it that major companies in this country cannot win contracts, say, to build trains but are beaten by a German company? It is not because the trains are any better but because the German company could produce a better financial deal. How is it that the City of London, which is supposed to be the financial capital of the world, cannot beat anybody? I just do not understand why we do not say to the City of London and to companies, which are awash with cash in many respects at present, that we will incentivise them if they invest in something productive, instead of giving money to Russian oligarchs to buy houses that will lie empty in this city.

We need an entirely new approach to trade. It has to be front and centre and we should trade-proof all government policy by asking, “What is this doing to help grow our businesses or raise wage levels?”. We talk about poverty endlessly in this House, quite rightly, but it is basically caused by a lack of money. People are just not getting wages that would make them self-sufficient. Nobody—or, I suspect, very few—would want to languish on social security. But at the end of the day, if we do not put those issues at the front and centre of our policies, something is radically wrong.

I come to some of the issues that concern our international trade, such as tariffs versus standards. With the recent decline in our currency, tariffs are less of an issue but standards remain key and, of course, they come right into the Brexit process.

The noble Lord, Lord Whitty, said in his opening remarks that he would not delve into the Irish question, but I am afraid that I am not going to be so reticent. The fact is that yesterday, no matter how you measure it, was a bad day for the United Kingdom. It was bad because we have made statements which involve inventing a new language: we have “frictionless” now, which is a great word, and all sorts of things. We have to put it all in perspective. The amount of trade done across the Northern Ireland border is, in European terms, minute. It is done by a relatively small number of significant companies, allied to a lot of local people, particularly around agriculture, produce and animals. Why do we have to invent new phrases? What does “regulatory alignment” mean?

Can the Minister confirm this for me? If she cannot do it tonight then I am sure she will write to me. I was led to believe that when the document was leaked, it spooked a whole lot of people. Some people may have seen pieces of paper but did not pick up their significance; others, who may have believed that they had great influence over the Government, suddenly discovered that their influence was not that great after all. They discovered that, shock-horror, a UK Government were going to put a national interest first instead of a regional interest. This is not a new phenomenon to some of us who have been involved with negotiations over the years. However, a scenario has been put to me that people have misunderstood the phraseology and that the document did not mean that Northern Ireland and the Irish Republic would be permanently aligned with whatever Brussels decided on regulatory performance. But it would mean that the regulations that have already been agreed between the north/south bodies established under the Belfast agreement and the North/South Ministerial Council would stay as a fixed point.

There was then the revelation earlier today, when the Urgent Question was being answered in the other place, that regulatory alignment would apply to all of the United Kingdom. Forgive me, but that piece of arithmetic just does not add up. I believe that there are solutions to our border issue. The starting point is that everybody agrees that we do not want to go back to the past. We have spent 20 years getting rid of this obstacle, which is in our own minds as well as elsewhere. I am a totally convinced unionist and do not want to see, in any shape or form, a diminution of Northern Ireland’s position in the United Kingdom. However, we agreed a number of regulations. I was a Minister who set up, with our southern counterparts, two of the largest north/south bodies, InterTradeIreland and Tourism Ireland. As Energy Minister, I also did deals for gas pipelines and the electricity interconnector, so I have some grasp of the issues involved.

I believe that we could have a customs relationship between Ireland and the rest of the United Kingdom because 90% of Ireland’s goods go either to or via the UK, which is a land bridge across to Europe. We could also guarantee that we will not allow the integrity of the single market to be damaged by people who try to subvert it by bringing in goods that are not up to standards, or to use the Republic of Ireland as a back door in. All of that is possible; it is also possible, through working with the relevant customs authorities and other intelligence bodies, to communicate between Brussels, ourselves and Dublin so that we can find a way through. Can the Minister tell us whether that regulatory convergence or alignment would apply to regulations currently in force, such as those on animal health, or to new regulations that will come in over time? If it does, that will inevitably mean a divergence between our part of the United Kingdom and Great Britain. I would really want to know the answer to that question.

Coming to the bigger picture, the way that things have unfolded will make matters terribly worse because, if there is to be any change to it, who will be seen to have backed down? This matters a lot in Irish politics, as one well knows. There are so many games being played. People are seeking to be successors to the president of the European Union, there is a minority Irish Government, there is a minority Government here, people are jockeying for position, and we are caught in the middle of all this. We must remember that we have to think about our own people. Their future jobs and prospects are out there, and I have to say that the biggest mistake the former Prime Minister, David Cameron, made was preventing Her Majesty’s Government making any preparations for one of the two possible outcomes of the referendum. We are now finding that we are playing catch-up in so many different areas. We are well behind where we should be at this stage.

Finally, I return to the point I made at the start. We want to see this country re-established as a significant trader in the world, but we have to go back to basics. That starts in the classroom and in the attitude. It starts in where government sees the priorities lying. Economically, we should incentivise our businesses through the tax system so that, if they put their money into something that is going to be productive, they will get a better return from that than from putting it into property. We saw the crisis in the Irish Republic a few years ago over property. Money was sloshing around, and the crisis left a debt that will take two or three generations to clear. Please revisit the whole concept of where our economic policy lies.

I believe there is enough talent and qualified people in this country to find a way through this so that we end up as a really global Britain, not one that will inevitably be crippled by continuing deficits. Remember, it is more than 30 years since this country ran a trade surplus, and anybody in a corner shop will tell you that as we have continued to lose money like that for 30 years, when we come to a shock, as we inevitably will in the next couple of years, whether we get a good deal or a bad deal, we have no reserve, and that is where we are weak.