Brexit: Trade in Goods (EUC Report)

Lord Inglewood Excerpts

Tuesday 18th July 2017 Lords Chamber

[Lord Inglewood (Con)]

My Lords, the speeches that we have already heard today point to the timeliness and excellence of the committee’s report. Before going further into my comments, I should declare an interest as president of the British Art Market Federation, which, because London is one of three global hubs in the art market, is involved in moving goods around Europe.

In the referendum, I was one of those who voted remain. One of my principal reasons for doing so was the fact that I wanted us to stay in the single market. It seems strange to me that, until about a year ago, the establishment of the single market was generally accepted as perhaps the UK’s and the Conservative Party’s greatest contribution to the EU. It was the crown jewel of our European policy, as I argued on the hustings. I believed that then, and I believe it now. It is an extraordinary achievement. While it was Jacques Delors who was leading the European Commission at the time, we should not forget that it was two British Conservative Commissioners, also Members of your Lordships’ House, who brought it into being: Lord Cockfield and Lord Brittan.

By any measure, it was a most extraordinary and complicated legal, political, economic and administrative construct and achievement, tying together separate marketplaces under a shared rule-making and rule enforcement procedure in which everyone participated. Furthermore, those marketplaces were set in the framework of very different legal procedures and administrative systems and traditions. And it worked—albeit with a little difficulty sometimes, it worked. When I see what is happening now, all I can do is echo Kipling and sigh,

“all our pomp of yesterday

Is one with Nineveh and Tyre”.

One characteristic of the report that has already been mentioned is that it focuses on the largest sectors of the economy, but it is important that we do not forget SMEs, which equally benefit from the single market. I recall a constituency case which involved a very small business exporting penknives to the continent and found that it was being thwarted. The effect of the creation of the single market was to transfer part of what I might describe as our abroad market into what I might describe as our home market. That has been of great benefit to our country’s economy, because economies of scale have generated wealth, jobs and taxes and, of course, commerce is not a zero-sum game.

In my relatively limited business experience, one thing that has been emphasised to me most frequently is the importance of looking after one’s home market. Leaving the single market throws much of our national home market away and goes directly against that proposition. The implications of that have been touched on by the noble Lord, Lord Hain. It is argued that we shall be free to make our own rules and strike our own deals—as will the other member states, as they will according to their internal and external policies. Of course, that is true. The question that matters to me is whether they will be better deals. No one knows, but we must be hard-headed in thinking about it.

I have a number of concerns. First, I am very anxious about the impact of non-tariff barriers. I know from the work that I did 20 years ago—I spent 10 years on the Legal Affairs Committee of the European Parliament working on the detail of the single market—how such things can be and are used to frustrate trade. Then we must think about the time and money spent on customs formalities. Equally, are we certain that our businesses will be engaged in fair trade and fair competition? We all know myriad ways that help can be given to our businesses’ competitors. In practice, if we are outside the single market rules, it will be a great deal harder to do much about it.

The Government tell me that there are plenty of opportunities to do business around the world. We know that: there are now. No country that we would like to negotiate with is likely to say no at this stage—it would be crazy. Secondly, are the countries which are to be our benefactors in this way likely, in our circumstances, to give us a big advantage over the rest of the European Union—which is, after all, a much bigger market? Thirdly, can and will they deliver? If the President of the United States promises some wonderful trade deal, he has the small hurdle of getting it through Congress. Fourthly, is what actually emerges going to help us? I recall a neighbour of mine who voted Brexit in order to make money by selling his beef cattle to Australia. I suspect that he is likely to be disappointed.

Businessmen conduct business because they see a deal with a turn for them at the end of it. Generally, by the time a politician points something out, it is too late. Business is in front, and we in politics are normally behind. Of course, in this country we are good entrepreneurs and enterprising—but so, of course, are businessmen from other countries. It is worth noting, as the noble Baroness, Lady Quin, said, and as I say without any satisfaction, that both France and Germany seem to be trading rather more successfully with China than we are.

Then of course we are told that we should be able to adopt more flexible business practices than our European competitors, and it is probably true that we could in this country adopt Hong Kong-style ways of doing business—but I do not want us to do that and, far more importantly, nor do the Government. Much of what critics of our employment and labour relations laws have decried has in fact been introduced by the UK Government behind a smoke-screen of Brussels to hide what they were up to.

Then we are told that, in a world of networks, “Belt and Road” proximity does not matter. In some cases that may be right, for low-value and low-quantity goods, but in other cases it certainly does, and having confidence in things such as dispute resolution procedures, the integrity of business partners and appropriate systems of dealing with issues when after-sales problems arise, certainly all matter.

Then we are told that we will be able to support our businesses with money not being paid into the EU budget. Speaking for myself, I do not think that the principle of contributing to the EU budget as we have been doing is inherently objectionable, since the structure of our manufacturing economy is especially suited to gaining advantage from other countries by virtue of single market membership. Furthermore, if we find that our national turnover reduces by leaving, VAT take will reduce, since it is a turnover tax. It would not surprise me at all if the tax gain from being in the single market equated to most, if not all, of the contributions that we have been making.

As we move towards the promised land post Brexit, I can see no reason in theory why membership of the single market should not be part of any final settlement that emerges. After all, Brexit means Brexit—neither more nor less; the eurozone is the eurozone and the single market the single market. My fear is that, if we leave the single market and reach the promised land, we will find that there is not a great deal of milk and honey when we get there.