Brexit: Trade in Non-financial Services (EUC Report)

Lord Inglewood Excerpts

Monday 18th December 2017 Lords Chamber

[Lord Inglewood (Con)]

My Lords, these days it seems almost unbelievable that until a couple of years or so ago, driving forward the European Union’s single market was perhaps the Conservative Party’s flagship European policy, and had been so for a quarter of a century. This important report by the committee of the noble Lord, Lord Whitty, shows why and how it generated wealth and prosperity for this country, which has helped to pay its bills. For 10 years of that time I served on the European Parliament’s Legal Affairs Committee, as my noble friend the Minister knows, where I played a small role in building that market. It was pernickety, painstaking and often frustrating work. The single market in goods was the most obvious, the single market in financial services perhaps the most high profile, and the single market in services may be the most elusive and the one with most potential. Our country benefits from each of them, and because the single market in services has been scandalously long in gestation, as has been pointed out, if we were to leave the single market now without re-engaging on continuing equivalent terms, we shall be snatching defeat from the jaws of victory.

One of the lessons I learned from that time is the realisation that to have frictionless trade, it is essential to eliminate non-tariff barriers which ingenious protectionist Administrations will be looking to impose while paying lip service to free and fair trade. In this regard lies the importance of the role of the European Commission and competition law, and of the European Court of Justice in policing that market in the interests of fair play. In this context I emphasise the importance of the principle of direct applicability of law, which gives the small man as much as the rich corporation the benefits of the market. Enforcement of rights is as important as the existence of the right itself, since justice delayed is justice denied, and there is no real right if it is too costly or difficult to enforce.

To establish a working single market you need agreement on, participation in and confidence in a structure that it seems to me has to have three essential components: an arrangement for making rules; the rules and a way that they can evolve; and enforcement. If you move away from this tripartite structure, you go on a journey which inevitably goes from rule maker to rule taker. The more exceptionalism we demand and seek, the less in control we shall be and the less benefit will result for us.

As has been mentioned, it is sometimes said that we can pick up what we may lose from leaving the single market by trading elsewhere in the world. However, I have never found any hard evidence to support that; rather, I agree with the noble Lord, Lord O’Neill of Gatley, who knows much more about these things than I do, who, in a recent article in the New Statesman, points out that trade with the European Union and trade outside the European Union are complementary and not alternatives. I think that that was the point that my noble friend Lady Noakes was making. In this area certainly, we can clearly do better. As the Government themselves have pointed out, both Germany and France are currently more successful in trading with China than we are.

As politicians, we have to be especially alert to the siren song that businessmen will conduct business at the behest of ministerial utterance. For a number of years I chaired a north of England manufacturing company, and the board took its decisions on the basis of what it considered commercial merit—and if there was some government support or, better still, money, that was a bonus.

In the contemporary world of networks we see how the hub structure works across national boundaries, and in the “not impact statements” made available to parliamentarians, we read that five of the top 15 global legal firms are based in London. Spokes radiate from the hub and subsidiary nodes develop, while if power deserts the hub, they may and do turn into the network’s focus. Similarly, in another area with which I have some familiarity and which has been touched on already, the United Kingdom, and in particular London, is the main European centre for broadcasters, be they English-speaking or not. Already, now that they are looking at uncertainty, some are leaving, principally for Amsterdam, and many others are making plans.

We need to be clear about the oft-quoted proposition that leaving the single market will bring a bonfire of regulations which will turn the United Kingdom into an occidental version of an Asian tiger. Every new Government I can ever remember have promised to slash red tape, but I have never seen it happen. We must remember, first, that a significant number of rules owe their origin to non-EU international agreements. Moreover, the UK Government themselves have often over the years used European Union decision-making to introduce regulation they want to see, as that is a way that is more convenient and discreet. The Prime Minister has ruled out getting rid of a lot of European legislation, so if the present Prime Minister will not do that, I can hardly see the leader of the Opposition taking a radical view and going further. Finally, as has been mentioned, this country seems to like regulation. You only have to look at the gold-plating that has gone on—and let us not forget that Jobsworth is an Englishman.

The more we want to diverge from the single market, the less access we shall be accorded as our counterparties in the negotiations will consider that we will be trying to dump, either socially or economically, our products and services on them. We can speculate as much as we like over what the real options are, but of course it is not simply a matter of what we would like; at least as important is what the other member states would want for themselves. One thing, though, is certain: the more we “take back control” over trade with the European Union, the more we give it away. They are two sides of the same coin.