Brexit: Preparations and Negotiations

Lord Hannay of Chiswick Excerpts

Monday 23rd July 2018 Lords Chamber

[Lord Hannay of Chiswick (CB)]

Can the Minister explain how this exclusion of the European Court of Justice will apply to the operation of the European arrest warrant, which involves individuals and not Governments?

[Lord Callanan]

The European arrest warrant is of course part of the security partnership that we seek to agree. It has some challenges at the moment, given the constitutional bars that one or two member states have, but we continue to discuss with the EU how we can take that proposal forward.

In a limited number of areas, we would choose to adopt a common rulebook to ensure the free flow of goods. That body of law is relatively stable, and when there are any changes, Parliament would have to approve them.

We are taking a principled and practical approach. Yes, we have shown flexibility as we strive for a good deal for both the UK and EU. As we demonstrate our ambition for a close partnership through the White Paper, it is worth emphasising two key principles that we share. The first is that Article 50 dictates that a withdrawal agreement must come alongside a framework for the future agreement. The second, flowing from that, is that nothing is agreed until everything is agreed.

We will not sign away our negotiating leverage or spend taxpayers’ money without anything in return. In December we agreed that the financial settlement would sit alongside a framework for a deep and mutually beneficial future partnership, but if either side should fail to meet their commitments—and I should say that we certainly do not expect that to be the case—it would have consequences for the package as a whole that we agree.

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[Lord Hannay of Chiswick]

My Lords, speaking at number 23 in this debate, I did not think that I would succeed the first person to speak on behalf of the Government’s White Paper, but so it has been. I am afraid to say that I will make one point in common with the noble Baroness, Lady Nicholson, and pay tribute to those who put together the 98 pages. It is the first comprehensive explanation of the Government’s negotiating position that we have had in the two years since the referendum. However, apart from that, I am afraid that I will depart rather widely from what the noble Baroness said.

The White Paper, which had such a troubled birth and has had a pretty troubled life in its short three weeks, is not under any circumstances a blueprint for a deal, and anyone who believes that it is is doomed to be disappointed. That is all the more so given that there are so many holes in this White Paper, which other speakers before me have mentioned—as many as in the ordinary piece of Swiss cheese—and so many inbuilt contradictions, some of them, of course, forced on the Government by their own capitulation to the European Research Group, that most Orwellian of brand names. That is really what leads me to my overall conclusion about the White Paper, which is: too little, too late.

It is too late because it should have appeared nearly two years ago before the Prime Minister drew all those red lines, without any Cabinet or parliamentary authority, on the customs union, the single market and the European Court of Justice, when she spoke in October 2016. If it was not made clear then, it should have been done before triggering the Article 50 letter, with its two-year cut-off. If it was not done then, it should have been produced at the time that political agreement was reached on the withdrawal arrangements in December 2017. If it was not done then, it should have been done when the rather inadequate transitional period was agreed in March this year. That is quite a list of chances missed.

If that is too late, it is too little because of all the holes and contradictions. I shall mention just a few, and I would welcome a response from the Minister when he comes to wind up this debate. The first is the Irish backstop. We settled for something. We agreed to it in December 2017. Now all we can say is that we do not agree and will never agree with the legal language that the Commission has produced. Okay, so what can we agree to? What legal language are we prepared to accept? Legal language there will have to be; if not, there will not be a deal.

The second is the free movement of people. For the first time, the White Paper speaks about a framework for mobility to be negotiated with the EU 27. When I spoke about this at the time of the Statement, the Minister rattled off a number of references where I would find all I needed. Alas, no, there is not a word about what this mobility partnership means. This framework for mobility remains a great mystery. We have no White Paper on immigration and no post-Brexit immigration Bill. We have nothing. The negotiators—ours and theirs—do not have a clue from reading those 98 pages.

The third is dispute settlement. A hugely complex and cumbersome procedure is put forward which might conceivably handle disputes between Governments but is quite inadequate and unfit to deal with disputes about the rights of individuals, most importantly on the European arrest warrant, which is a crucial part of any security arrangements that we may reach. What I do not quite understand is why the Government have never paid any attention to the possibility of borrowing the example of the EFTA court, which would provide a British judge and which reaches decisions which are not legally binding and immediately applicable. I think that they could have done better than this cat’s cradle.

The fourth is the service industries, which form 80% of our economy and are hugely competitive across Europe and the world. There is nothing in the White Paper that says what will be done for them. They are simply being hung out to dry, with no solutions proposed.

The fifth is the backstop, or what is called the lock for Parliament on changes in the EU rulebook, in which we are told that Parliament will be able to reject them. That, frankly, is a sham. Using that would bring the whole edifice tumbling down and, as the Swiss discovered when they started to monkey about with free movement, it does not take long to come down.

Last, but not least, I come to the customs facilitation arrangement, an extraordinarily ambitious and untried system. Is it even consistent with our WTO obligations, where exporters on the whole expect to know what rate they will trade in when they send their exports? Is it even faintly possible that it can be introduced in the rather short timescale of the 20-month transitional agreement?

We are now approaching the endgame for these Brexit negotiations. It is no good saying, as has the leader of the other place, that this White Paper is our final word. It is no good saying, as has the Prime Minister, that the White Paper is,

“a set of outcomes which are non-negotiable”.

That is a recipe for the worst possible outcome: no deal. There would have to be consequences, and they would be pretty dire.

As many speakers before me have said, we must recognise that there will have to be further compromises—I agree, compromises by both parties to the negotiations. To pretend otherwise is to bring up more trouble in the autumn. I hope that the lesson will have been learned. Otherwise, the negotiations will continue—I say this with some sadness—to be the most ill prepared and ill conducted in this long saga of our relationship with the European Union. The historians who write the story of this will not be kind to those who take us over the cliff.

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[Baroness Falkner of Margravine]

The noble Lord was of course a member of that committee and he knows the system well. What he loses sight of is the timing. The discussions are happening now. As far as I know, and I am sure the noble Lord knows, we are not at the table—this is a point I made early on.

[Lord Hannay of Chiswick]

My Lords—

[Baroness Falkner of Margravine]

If I could conclude answering one intervention, I may be disposed to take another, but I am limited in my time and will perhaps wish to continue this bilaterally. Let me deal with the point made by the noble Lord, Lord Kerr.

[Lord Hannay of Chiswick]

My Lords—

[Baroness Falkner of Margravine]

No, I am sorry. I am not going to give way until I have dealt with the point made by the noble Lord.

The noble Lord’s point was that if we were full members sitting at the table we would negotiate not to give away our rebate—of course, because there is unanimity. The essence of what I am saying is that the EU is making these decisions now while we are not at the table, because the decision deals with the period 2021 to 2028. We have absented ourselves because the withdrawal agreement suggests that we will leave in March 2019. His hope that we can somehow exercise a veto while we are not at the table seems somewhat futile.

I need to make progress so I will not continue on this point, but rather deal with those who believe that a Norwegian option is the answer. I have indicated to the House that I will not give way and I see the Government Whip urging me to come to my concluding remarks, so I will continue. Several noble Lords believe, as in fact the EU negotiators told us last week, that the only other option would be to remain in the single market, through membership of the EEA—in other words, the Norway option. We are told that this would give us access to everything we want. Yes, it might do so, but returning to the Norway option would involve us giving up the rebate, as we would no longer be a member of the EU, merely a member of the EEA; hence, no rebate. The resulting maths goes like this. In 2016 we paid £123 per head. Norway paid roughly £135 per head. The general belief is that Norway does not receive a great deal in receipts, as it participates in fewer programmes, so it actually pays more than we are currently paying. So those who think that the EEA is a good option need to think about how they would sell that to the people. It would be rather difficult to say that paying a bit more would result in a good deal.

I turn, in concluding, to the issue of the UK withholding the exit fee of £39 billion. My committee conducted an inquiry into Brexit and the EU budget in March 2017. We came to the view that while the UK had a moral and political obligation if it wanted a good deal, there was no jurisdiction in which the EU could challenge the UK in a court case. The negotiation on a figure was just that—a negotiation. In light of that, if the rest of the negotiation fails, I would find it odd that we would stick to just one element of it: nothing is agreed until everything is agreed. I suggest that the Government abandon this White Paper and pursue the creativity that the Foreign Secretary has called for today: either a Canada-plus-plus or another option that delivers an association agreement with enhancements as we leave.