Brexit: Domestic and International

Lord Haskel Excerpts

Thursday 27th October 2016 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I always welcome an economics debate, and I looked forward to hearing what the noble Lord had to say because of his long business experience. I look forward to hearing the Minister too. But I was a little confused by the noble Lord’s words, because I always thought that we were an outward-looking champion of global free trade. I know that we were there when China announced the open door policy in 1978. We have been active in Asia, North and South America and the Middle East—trade delegations have been going there for years, with government departments and trade organisations developing and promoting UK goods and services. The noble Lord implies that this was hindered by our membership of the European Union. My response is one word: Germany. We have been very open for global free-trade business at home. The proof lies in the large number of UK businesses owned from overseas and the success of inward investment. Certainly, much of this investment was influenced by our membership of the European Union. It must be important that we retain these trading links, links that must not be sacrificed for political ends.

After all, what is modern world trade? It is relationships that lead to investment, trade in goods and services and movement of people, which nowadays are interconnected and interdependent. Much of this is taking place in an intangible digital world. This is why it pays to belong to a single market: it facilitates this rather complicated structure. Yes, the alternative is protectionism, but it is the kind of protectionism and national control of business that we see in places such as Russia, Turkey or China and which is on the rise in the face of declining growth in trade.

The noble Lord spoke of activating our own individual membership of the WTO. This could be a hair shirt. The WTO rules are very unforgiving. For instance, until we make our new arrangements, we shall have to charge tariffs on goods coming into this country. The noble Lord spoke of tariffs, but they are only one part. More important in world trade are the rules and standards, not only the technical standards set by standards institutions but the myriad product and service rules on health and safety, animal welfare, tax avoidance, labelling, the environment and modern slavery—I could go on. So is it envisaged that we will simply adopt the arrangements that currently exist between the EU and the WTO, or does becoming more open to world trade mean that we will seek our own detailed arrangements? If we do not accept those standards, we just enter a race to the bottom.

So, internationally, I do not see any benefits; domestically, I can see only problems. For instance, our membership of the European Space Agency gives us access to satellites which touch many sectors of our domestic economy—transport, communications, security, farming, land use and weather. Healthcare is being revolutionised by gene editing and stem cell therapy, much of it funded by the EU Horizon 2020 programme and work at the Crick Institute. Yes, the Chancellor has guaranteed that, if withdrawn, this funding will be continued by the UK taxpayer, but it is well known that, on average, international collaboration leads to much higher quality research than national research. So should we pay our dues to remain in the Horizon programme and to be a member of the European Space Agency? These are just two of the possible domestic difficulties.

It seems to me that we first have to get our own house in order, to make our own economy more resilient to a world of free markets. We need to build back our currency; raise productivity; modernise by building the fourth industrial revolution into our economy; and redouble our efforts to encourage long-term investment. We need to become less dependent on low-cost labour and immigration and focus on employee engagement and real growth in wages through investment and productivity and raise the standard of our goods and services. This is what world trade is about.

What does this add up to? To get rid of uncertainty we should maintain our access to the EU single market through membership of the European Economic Area with generous movement of people; sign up to the same existing arrangements between the EU and the WTO; and get on with the real work of an industrial strategy to build our economy. The noble Lord seems to be saying that disruption brings opportunities. Sometimes it does, but uncertainty is always the enemy of growth.