EU Withdrawal

Lord Howell of Guildford Excerpts

Wednesday 13th February 2019 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I agree with a great deal of what the noble and learned Lord, Lord Hope, said in his excellent speech. If this goes on much longer I fear that the noble Lord, Lord Newby, will run out of jokes and perhaps the noble and learned Lord, Lord Hope, out of apposite analogies.

As the Commons struggles it its paralysing three-way trap and the search goes on for the holy grail of alternative arrangements, the question again is how your Lordships can best help with advice on escape hatches, if any exist. The position has now been clarified and reclarified to the point of almost total unintelligibility. Either there is an Article 50 delay—short, medium or long—although for what purpose no one openly has an answer, as the noble and learned Lord, Lord Hope, emphasised; or there is the so-called crash-out, managed or otherwise; or, the best hope, the withdrawal agreement treaty scrapes through at the end of February or the end of March, still unopened but somehow reinterpreted by a codicil or instrument to make it temporary and conform to the consent required under the Good Friday agreement, a point that often tends to be overlooked. The device being examined for that is called a joint interpretive instrument which can be attached to the treaty. So that is what is behind the withdrawal agreement.

Behind the delay lobby is the obvious wish for another referendum, which we have heard about, although the questions remain of who knows where that would lead, what it would settle and whether the legislation to launch it could ever pass through the other place.

Behind the no deal, walk away or crash-out option on WTO terms, we have the assurance of my noble friend Lord Lilley that there are 30 reasons not to worry. Unfortunately there are many others who have at least 30 more reasons to worry a great deal—not least farmers, most of industry and business, the police and many other major concerns of this nation.

As for the withdrawal agreement scraping through before the end of March, behind that is the hope that both the EU negotiators and, here at home, the famous ERG diehards in the other place will all yield a bit and make concessions, along with 50 or 60 Labour MPs who are said to be now seeing sense, or so I read.

On top of this, we now have the letter of the leader of the Opposition, Mr Corbyn, to the Prime Minister asking for agreement on “a permanent customs union”. It is a pity that he did not ask instead for an evolving customs partnership because that in the end is what we are going to get. Not only do customs authorities in and out of the EU co-operate closely all the time anyway but most goods travel under simplified procedures.

However, more than that, behind the Corbyn letter there is an alarming and pitiful ignorance—admittedly widely shared by many Members of Parliament and the media—about the radically changed nature of all trade today and of the real meaning of a customs union in modern conditions. This is where your Lordships can help—if we can get heard above the cacophony of disagreements in the other place. The McKinsey Global Institute reminds us that today—and even more tomorrow—most international trade is not going to involve customs machinery at all. Already the bulk of both service trade and just-in-time import trade is conducted without any reference whatever to customs unions or customs delays.

Services do not do customs or customs unions. Services which are not traded through frontiers at all already constitute more value in global trade than goods. This dominance of services, which have grown 60% faster than goods trade in the past 10 years, is completely obscured by traditional trade statistics. The conventional statistics—last year’s Bradshaw, as the late Harold Macmillan would have described them—fail to track soaring cross-border flows of digital services and intangible assets between affiliates which are becoming a huge part of the trade picture. I do not know who does the research for Labour or advises the excellent but obviously frustrated Sir Keir Starmer, but they should get on top of this.

In short, the whole idea of a permanent customs union with the EU, which Mr Corbyn is calling for, is becoming marginal to boosting our trade and, therefore, our jobs in the digital age. As the Governor of the Bank of England was saying this morning, there is indeed a new order in cross-border commerce lying ahead. By the end of the two-year transitional period, if the withdrawal agreement allows, it will be even more so. I hope that the noble Baroness, Lady Hayter, whose speeches on this matter are always a treat that I enjoy, will be able to tell us exactly where Labour has got to on this new situation. We have heard nothing about it so far.

The other area where Commons experts plainly need help is in their mistaken conviction that the EU today is a fixed system on a fixed path. In fact, the old EU model is being rapidly overtaken by all the obvious pressures of digitalisation, notably populism, massive centrifugal forces and decentralisation—all causing what the New Statesman, which I do not often quote, calls a new European schism. Eastern and central Europe are breaking with Brussels, southern “Club Med” Europe is rejecting the north, I now read that the French are withdrawing their ambassador from Italy, and Greece has been putting on trial its chief statistician for the crime of telling the truth. As for the core of EU countries, France—our long-standing ally and friend—magnificent Germany, also now our good friend, are both in deep stress and political instability. We should be working out how to assist them instead of arguing with them over outdated trade practices.

Ireland, too, should be our closest friend these days, not our opponent. I strongly agree with the noble Lord, Lord Hain, who made that point the other day. This is a close neighbour that is now richer than us in terms of per capita income, is increasingly ready to forget old bitterness, faces undoubted dilemmas with which we should strongly sympathise, and actually wants to engage more closely with the Commonwealth and stick closely to the Good Friday agreement, as well as the common travel area and a dozen other relationships that both sides should treasure.

All in all, the Brexit situation ought to be perfectly able to be handled by a properly informed and functioning Parliament ready to support a step-by-step approach into the utterly changed conditions lying ahead—the first step being precisely what the withdrawal agreement, maybe with some codicils, offers, as my noble friend Lord Lansley pointed out a few minutes ago.

[Lord Wallace of Saltaire (LD)]

My Lords, I am doing my best to follow the noble Lord’s argument. I do not entirely understand what a widening customs partnership is. It is an unclear concept. We all agree that in a digital age and where standards and regulations are at least as important as tariffs, we are in a different world. When Margaret Thatcher was Prime Minister 30 years ago, she accepted that having a single market was more important than being in a customs union. Can the noble Lord explain how a widening customs partnership would deal with the harmonisation of standards and regulations, which—I think he is arguing—are more important than customs these days?

[Lord Howell of Guildford]

The explanation would take longer than the time I have available. I shall share it with the noble Lord afterwards but the basic point is that services are the expanding side of international trade. Standards have to be negotiated with America, the European Union and so on, and within the EU of course, but also with all the great new markets of Asia, Africa and Latin America, where the big expansion of services will be. There never was a clear single market in services. We hoped for it but it never worked. We face the same problem there as we are facing throughout the world. It is perfectly straightforward that in this area old-fashioned customs arrangements affect only solid physical goods; they are a declining part of the system. Therefore, concern with old-fashioned arrangements is becoming less relevant.

[Lord Butler of Brockwell (CB)]

I follow a great deal of what the noble Lord said but physical goods still have to cross the border, and I am not sure what solution he has for that on the Irish border.

--- Later in debate ---

[Lord Howell of Guildford]

That is a different question. What we are talking about here is whether one is in or out of a customs union with the single market. I am saying that it matters a great deal less than it did. I can produce a long list of statistics showing that it is becoming less important.

Turning to the Irish border, I have always argued, as a lot of people have argued, that it does not need future technology. At present there is an invisible border but considerable differences between the Republic and the north in a variety of things. That can continue. There can be additional policing, authorised transport and all the rest of the things that we have discussed in this House which can deliver over the next two years, unless we are very stupid, a perfectly adequate invisible border. It can be done, and a great many people know it can be done. The argument about the backstop is absurd because no one ever wants to reach that point, as the noble Lord recognised.

In my view, the Brexit situation should be perfectly manageable. Next time it comes up in the House of Commons, it should be made a vote of confidence. If—I repeat “if”—regrettably this Parliament still votes it down and cannot agree on any way forward, and therefore is failing the people, the only course is for the people to elect a new Parliament, for which a short Article 50 extension would be needed and would be granted. Like it or not, and want it or not—and it does not sound as though the Opposition want it now—that is the way that parliamentary democracy works. Just in case, I gather that 6 June has been pencilled in as the appropriate date.