EU Referendum and EU Reform (EUC Report)

Lord Lea of Crondall Excerpts

Wednesday 15th June 2016 Lords Chamber

[Lord Pearson of Rannoch]

My Lords, I do not, with all due respect to the noble Baroness, withdraw a word of what I said. The fact is that 1.7 million cars come into this country from EU manufacturers—they have 64% of our market. I was about to say that anyone who wants to read the detail of what I have just said should consult the globalbritain.org briefing notes, particularly Nos. 114 and 118, which give the detail which is supported by the Society of Motor Manufacturers and Traders.

Time moves on, but the noble Lord, Lord Lamont, made another good point in yesterday’s Daily Telegraph. The tariff which we might suffer on our goods going into the single market would be around 3%, if the Brussels politicians get their vindictive way, but the net £10 billion we pay to Brussels every year is equivalent to a tariff of around 8%. Whichever way you look at it, tariffs will not be imposed to our detriment, so the whole economic scare story falls away.

In conclusion, I am often asked what happens if we vote to leave the EU next Thursday. The answer is: nothing much in a hurry. For a start, it will take the Conservative Party until its conference in September to elect a new Prime Minister, who would start withdrawal talks, so there will be plenty of time for the Eurocrats—

[Lord Lea of Crondall (Lab)]

On the thought about nothing happening next Thursday if the vote was for Brexit, until recently we were told that the idea of economic effects was scaremongering. Does not the noble Lord observe that the pound has been falling, and would he say that nothing will happen to the pound in this scenario?

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[Lord Lea of Crondall (Lab)]

My Lords, I thought that I was going to be late for the start of the debate because I spent part of this morning trying to get hold of a Polish plumber. He was going to ring me back, perhaps from Gdansk, I do not know. This was after I had tried a Cockney plumber who eventually called me back and said, “Sorry, mate. I am in Barcelona”. At least he is not causing mayhem in Lille. I shall come back to this because freedom of movement is one of the four freedoms, and it would be true in EFTA as well, so we ought to think about the reciprocal side of all of that.

I want to cover three points. The first touches on the malaise of voters, many working-class voters in particular, about the referendum. The second point looks at the tendentiousness of the slogan, “Take Back Control”. I would ask this: is it from Brussels that they want to take back control, is it from globalisation or is it from some other force? That is a different question entirely and it raises the twin question of the credibility or otherwise of unilaterally imposed regulation at the national level. The third point is the notion that there are no economic costs to Brexit when in fact they far outweigh the savings. There is indeed no such thing as a free lunch. Boris Johnson, Michael Gove, Iain Duncan Smith and all the rest of them are telling us a big lie about which someone in history would have been very proud.

On the first point, I am a convinced European. I have not been so all my life, but since I wrote in 1975 the TUC pamphlet saying vote no—an instruction I agreed with—I have been heavily engaged in the EU and have seen the inevitability and indeed the benefits and desirability of co-operation, of doing things together so that Europe is to some degree a more social-democratic part of the world than it would otherwise be. In terms of the present position in Britain, I do not think that “one nation” rings a bell in much of our industrial heartland. In terms of people’s identity, they certainly do not like being preached at about what they should like or not like, and coming from their experience we have to listen and understand that. In terms of our standard of living, our grandparents would have found the four freedoms—the freedom to travel, to work, to live as individuals and, of course, as businesses within the European Economic Area—almost unbelievably beneficial. There is a malaise about the type of work experience and the inequality we have.

I turn now to the second point about taking back control. In 2008-09 the crash of Lehman Brothers created a huge fall in the trend of the world economy and certainly in Britain as compared with the previous trend. It cost us a fall of many percentage points in national income, caused a flatlining of people’s living standards, and encouraged the growth of insecurity through things like zero-hours contracts. Whether they are called that in Gateshead, they are part of the malaise. Take back control, yes, but we can do that only on the basis of a degree of co-operation. Brussels is not the enemy when it comes to protecting us. Brussels is our ally. The Sun, the Daily Mail and the Daily Express are all telling people a big lie about their interests and it is clear that we have not done enough to put across our own explanation. However, I think that we are doing better as of now.

The third point is about the free lunch—the idea that we can get all the benefits and pay none of the costs. The noble Baroness, Lady Smith of Newnham, drew the analogy of marriage and divorce as if the experience of a divorce is that you get all the benefits but pay none of the costs. Surely the experience of most people, when looking at it from the outside, is that divorce is precisely the opposite. You have all the costs and none of the benefits. That is what would be true in this case, and I am glad that the European Union Committee has started to paint for us a picture of the leave scenario that exposes many of the fallacies which so far have not been adequately tested in the television studios and elsewhere.

There is a constituency that can be characterised as, “Stop the world—I want to get off”, but that is because in some respects we have ground to a halt on social-democratic workers rights reforms after a very good period inspired by Jacques Delors in 1988 which introduced many of the things that improved the quality of contracts of employment. Perhaps I may just underline the fact that reform has to be made at the level of Brussels because it would not be done by employers in Britain. They could be undercut and they were explicit in what they said: “We cannot do this on our own in Britain”. Even now, a lot of people do not understand that. It can be done only at the European level. Twenty-eight countries represents a big GDP. The GDP of the European Economic Area is larger than that of either China or the United States. We have to make sure that the positive picture is put across. I am quite sure that the big corporations of the world can live with a proper system of taxation and not take up the chicanery of McKinsey as reported last week by Gillian Tett in the Financial Times.

Finally, I shall put the actual numbers on the record. The Institute for Fiscal Studies has never hitherto been accused of being partisan. It has pointed out that the net figure for the so-called extra £350 million a week that has been promised is some £8 billion rather than £18 billion a year. When we look at the Norwegian and Swiss deals, the net saving on that basis would be £4 billion. That is to be compared with a hit to the public finances, leaving aside devaluation, of some £20 billion to £40 billion per annum against trend by 2019-20. Translate that into living standards.

The noble Lord, Lord Pearson, is not in his place. Some of us were accused of scaremongering when we—along with the Bank of England and others—said that the value of the pound would fall significantly. I suspect that not many noble Lords would disagree if I said that that has now become obvious to everyone. It is not scaremongering, it is the frightening scenario that Brexit would open up.