Brexit: Competition and State Aid (EUC Report)

Lord Inglewood Excerpts

Thursday 24th May 2018 Lords Chamber

[Lord Inglewood (Con)]

My Lords, I was not a member of the committee but despite—or because of—that, I congratulate the committee and the chairman because this is a very important and complicated topic and the report is important, albeit, as I shall suggest, we are still talking about unfinished business.

Competition and state aid policies form one of the unsung but crucial parts of the contemporary marketplace which is our economy. After all, we need a free, regulated and fair marketplace which is necessary and appropriate for a 21st-century society and contributes to stability, prosperity and personal freedom. The origins of this in this country go back deep into the 20th century, as the report points out, and were integral to the European Economic Community, as it then was, right from the beginning; I refer, for example, to Articles 85 and 89 of the treaty. As people have said, it is hard enough to do this within a single jurisdiction but it is much more complicated to do it across jurisdictional boundaries, which in turn need common institutions to administer and enforce what is in place.

I am one of those unfashionable and eccentric people who consider that the European Union single market was one of the extraordinary legal, diplomatic and political triumphs of the 20th century, albeit it has not yet even been completed. In some quarters I may well be considered a dinosaur—possibly even one clad in ermine—but so be it.

If a country leaves the EU, it leaves all this behind it, but no man is an island, least of all a global trading nation, and these things cannot be looked at introspectively. Domestically, as we have already heard, the consequences of leaving are systemically reasonably straightforward and align with the processes we are considering in the context of the European Union (Withdrawal) Bill. Internationally, however, it becomes rather more complicated because the reality, as is recognised in the much looser WTO rules, is that at least some framework dealing with a number of these topics is both appropriate and necessary. In the case of arrangements going beyond that, the requirements, such as those in the context of the European Union, are likely to be more stringent. If this country is looking for comprehensive, frictionless trade into the EU post Brexit, it is more or less completely wishful thinking not to suppose that something giving effect to the vast generality of existing EU rules will be required. This is a proposition with which the Government seem to concur.

However, it is not simply a matter of the rules. There is also the question of enforcement. Currently, as we know, Brexit is defined by the Government as leaving the jurisdiction of the European Court of Justice, so how can we achieve that? It is true that the EFTA and EEA mechanisms exist but I am not sure whether like is really being compared with like. After all, Iceland, Liechtenstein and Switzerland’s economies are not comparable with our own and they have an entirely different relationship with the economy of the European Union.

When I was working on the detail of the single market, quite some years ago now, one perennial problem was the difficulties thrown up by non-tariff barriers and creative, partial and partisan legal interpretations. Just as those difficulties were an issue then, I expect that similar things may turn out to be an issue in this context in the future. An additional problem that I anticipate could be that if we secure trade agreements of some kind of superior character with other nations around the world, they may well want to reciprocate arrangements covering such things with us. While those agreements may be compatible with WTO rules, how will they lock into whatever arrangement we may put in place with the European Union? Before we know where we are, we would be in the world of having to deal with the kind of problems that used to arise across Europe with the question of parallel imports.

In the whole debate in this country about these topics, we spend far too much time talking to ourselves about what we want and insufficient time thinking about what the counterparties with whom we will be—and are—negotiating would like to have. In the case of the EU, I dare say that the counterparties are a trifle disgruntled with us but, to secure a deal, it has to be agreed by both sides. We have to find ways of meeting both sides’ aspirations.

As we know, the current plan is that we are jettisoning membership of the European Union on 29 March next year but, as yet, we really have no idea what is to follow it. As I understand it, it increasingly looks as if the Government are going to say to us, “Well, we don’t know what’s coming next—but trust us”. That looks to be close to signing a blank cheque and, when I was brought up, I was told that was a very foolish thing to do. It is a view that I subscribe to still. It is now all about not leaving the European Union but what we are going to get next.

The point is that we currently do not know and the crucial moment will be the withdrawal agreement. That agreement seems rather akin to getting on a train at the station—but when you get on one, you need to know your destination. You otherwise risk being like the heroine who was sung about by Marie Lloyd on the music-hall stage:

“Oh! Mister Porter, what shall I do?


I want to go to Birmingham

And they’re taking me on to Crewe”.

We need to know when we board that train what the destination will be. As far as competition and the other policies we are discussing are concerned, we need to know what that framework is going to be, and currently we do not.