European Union (Notification of Withdrawal) Bill

Lord Lea of Crondall Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 27th February 2017 Lords Chamber

Moved by

[Lord Lea of Crondall]

1: Clause 1, page 1, line 3, at end insert “while retaining membership of the European Economic Area (EEA)”

[Lord Lea of Crondall (Lab)]

My Lords, I think that one of the themes of these two days in Committee will be that there are no easy answers to the dilemmas we all now face in the United Kingdom. There are upsides and downsides to every option for Brexit and the country’s future. That includes membership of the European Economic Area.

Perhaps I may remind the Committee that we can retain our membership of the single market without membership of the EU only through maintaining our membership, which of course we have already, of the EEA. To spell it out, membership of one or the other is required; that is, either of the EU or of EFTA. That is why I need to say a little more about how we would work within EFTA, which currently comprises three countries: Norway, Iceland and the Duchy of Liechtenstein. We cannot, as we sometimes seem to be doing, rule out all of the options before us, and certainly not rule them out prematurely. Rather, we should look at the pros and cons of each, as has been done in the outstanding report of the joint sub-committee of the European Union Select Committee on Brexit and trade options, chaired by my noble friend Lord Whitty.

We were members of EFTA from its inception in 1960 until we joined the EEC in 1973. I declare a retrospective interest, having chaired the last meeting of the EFTA consultative committee, which was made up of national employers and trade union organisations in consultation with the Council presidency. The meeting was held in Vienna in December 1972. The EEA has a two-pillar structure: the EU on one side and EFTA on the other. They meet together in the EEA council at government level, with various joint committees on particular points, along with a joint parliamentary committee and the EEA consultative committee.

The substance of consultations with the EU depends to an extent on the weight of the member states involved, but I am told by contacts in Norway that these are not without value, and I think that something like this was also the burden of the message sent by the Norwegians who gave evidence to parliamentary committees in both the Lords and the Commons. On the objection to this approach, there is of course the constant complaint that plan B, C or D falls because, “We would not be at the table”. I have to point out that the famous 52% asserted—or supposedly asserted, if they knew what they were doing, which we assume they did—that, without equivocation, they did not want us to be at the table. So that can hardly be a drawback to where we go from here: end of story, full stop. Surely we can all agree that we have to balance influence on the one hand and freedom of action on the other.

EFTA has its own court of adjudication on issues such as interpreting the EFTA treaty and its application of rules of origin, technical standards et cetera. So we will be bound by the rules of EFTA consequent on the relationship with the single market, but obviously there is a great deal of legal alignment with the EU. The four freedoms can themselves be interpreted in different ways. For its part, the Commons Select Committee noted in paragraph 122 of its report that the Secretary of State for Brexit had indicated on 1 December last year that the Government,

“give very high priority to both tariff-free access and access without tariff barriers … that may or may not include membership of the single market”.

The Lords committee report stated in paragraph 82 that in trade terms, becoming a non-EU member of the EEA,

“would be the least disruptive option”,

providing free access to the single market in services and partial access to it in goods. The trade agreements are often negotiated advantageously by EFTA itself. I believe that there is a score of such agreements rather than agreements with individual member states.

I turn now to freedom of movement, border controls, work permits et cetera. Every facet of this debate has now been opened up more than it has been for many years—and by “open” I mean open and not closed down in advance. There is a considerable degree of variance among EU countries on how free movement is interpreted. In Belgium, there is a requirement for a job to go to, it is necessary to pay the rate for the job and no job advertisements can be placed in eastern Europe without being placed also in Belgium. Our Secretary of State seems to have come up with a new form of words about the guarantees for people who are already resident and working in this country. I would simply say that this is an area where we all know that constructive thinking needs to go ahead on a bipartisan basis.

Regarding attitudes in Norway, Iceland and Liechtenstein towards our application to become members once again, which have to be thought about, it is fair to say that we have very close relations—with a possible question mark in the case of Norway about something that happened 1,000 years ago—notably because of the North Sea energy fields from Shetland through to Aberdeen and further south, in particular in the north-east of England and down the east coast. This is true for the UK as a whole in a great variety of ways, including through the activities of the Norwegians’ well-managed, energy-based sovereign wealth fund, which is now worth £250 billion. A lot of that investment is deployed via London, as we were told in a recent briefing by the fund.

Without being presumptuous, and while recognising that EFTA would change its internal dynamics and, to some degree, its character and profile, the advice generally is that one would not expect hostility in Norway—the largest of the three—to any hypothetical application from the UK to rejoin the association. Positives would also arise from this for Scotland, Wales and Northern Ireland, compared with the alternatives. This is becoming more and more obvious as the weeks go by.

In paragraph 58 of its report, the Lords committee observes:

“Various studies had shown that from the EU’s perspective, ‘the EEA is the most preferred model’ of association for third countries”.


That is not a consideration to be underestimated, and it may influence attitudes among the EU 27 countries. These options for trade, investment, tariffs et cetera have to be the subject of not just theoretical argument but practical experience, such as was given by a Mr Emerson, who pointed out in evidence reported in paragraph 70 of the report that the advantage of the EEA option is, inter alia:

“It is a system that exists, offers legal clarity and actually works. It is closest among other options … to the status quo in economic terms and it would avoid uncertainty and thereby minimise damage to the UK as a destination for foreign investment aimed at the EU market”.


These are among the reasons why it would be counterproductive to leave the EEA, certainly prematurely. I know that going down the route I am advocating would entail Ministers eating some words. But I am sure that their digestive systems will be up to it once they have all run a few times around St James’s Park. I beg to move.

[Baroness Quin (Lab)]

My Lords, I support the amendment moved by my noble friend as a way to probe aspects of the Government’s approach to our future trading relationship with the European Union. The EEA was created when the UK, Denmark and Ireland changed from being members of EFTA to members of the EU, but the scale of their commercial relations with the other EFTA countries made it necessary to abolish customs barriers between the two groups of countries. A similar imperative will operate in the current situation as far as the UK market is concerned, given the scale of our trading with the EU. Obviously, in many ways the EEA would not be my preferred option because I would prefer to be in the single market—indeed, I would prefer to remain in the EU. However, given where we are after the referendum, I certainly think it is worth the Government considering and responding to the points that have been made.

My noble friend referred to the excellent report by the European Union Committee on Brexit: the Options for Trade and the fact that paragraph 5 of the conclusions says:

“EEA membership would be the least disruptive option for UK-EU trade, not least because it would maintain membership of the Single Market for services”.


I specifically ask the Minister whether this paragraph of the report, highlighting the importance of services to our economy and the way that that can be handled within an EFTA-type solution, has been discussed with the City of London, and what kind of response was made by the City to the point in the report.

Obviously, we will have a further chance to look at the report when it is discussed in this House on Thursday, but it is very germane to the discussions this afternoon, both on the EEA and on the single market. Therefore, it is quite right to highlight it today and I take this opportunity to do so. Certainly—this point has been made many times—whatever people voted for in the referendum, we are all pretty sure that they did not vote to make themselves poorer. As a result of that, exploring the best deal possible, in looking at all the possible options, is going to be vital. I believe that the Government need to take the amendment and the report very seriously.

--- Later in debate ---

[Lord Lea of Crondall]

My Lords, on that last point, I would point out that the Government are very good at demolishing every possible hypothesis that is put up, but at some point they will have to look at them constructively—they will have to look at the report on Thursday, as we have just heard—and consider the costs and benefits of each of them. At the moment, what seems to be happening is that one after another various ideas are brought up in debate, which is what we are here for, and the Government produce a tremendous round of artillery to blow up that particular bridge—that is, that particular idea. However, they have never laid out how those couple of sentences in the Lancaster House speech, reproduced in the White Paper, will work. We on this side are opening ourselves up to the vulnerability of saying exactly what we think might be an option. It behoves the Government very soon, in the national interest, to look at what might work rather than at what might not. We will have to return to these matters and look at the pros and cons of this option as well as all the others.

Instead of the Government just saying what is ruled out, it would be good to hear a bit more about what is ruled in. Instead of concluding, like Mrs Thatcher, that “there is no alternative”, they should see that there are several alternatives to just walking away, but we have not heard about these in any detail. We are getting to the ridiculous position where we will have the so-called great repeal Bill, and this Bill will be on the statute book, but there will be no detailed prospectus at all, on the flimsy grounds that that would give the game away about our negotiating position. This does not bode well for the Government coming back with a satisfactory solution to the serious challenges facing the country. However, that is as far as we can take this today, so I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

--- Later in debate ---

[Lord Spicer]

My Lords, a distinction is made on purpose between access to the single market and membership of it but most of the speeches made on behalf of remain make that confusion. No one is arguing—or at least I have never met anyone who does—that we should not have access to or do business with the single market, in the same way as they will still want to do business with us. The question is whether we want to be members of it. I so agree with what my noble friend Lord Howell said about the fact that the world is changing now. For a start, the single market is a trade bloc, and it has a long and noble history of being one. It is based upon German technological protection and general French centralisation and protection. That is the foundation of it philosophically. Britain is a high-seas trading nation and, I think, should not be part of that market, but of course it should be trading with it. No one argues otherwise, although of course one has to point out that it is a fairly sluggish market because that is what protected markets are.

[Lord Lea of Crondall]

On the idea that you can choose between access and membership—membership has some obligations regarding what you have to do on standards and so on—I ask the noble Lord to reflect on whether it is Alice in Wonderland to say, “Oh, we would much prefer to have access but not membership”.

--- Later in debate ---

[Lord Blencathra (Con)]

My Lords, I have no problem in agreeing with the noble Lord, Lord Wigley, that a good trade deal, and a fair trade deal, is important for Wales—and, indeed, for all parts of the United Kingdom. My problem with the amendments is that they fly directly in the face of what the people voted for. Since the referendum, many remainers have been peddling the myth that the people voted to leave the EU but not to leave the single market. The single market was not on the ballot paper, they say, so the people could not have voted for it. Apparently they just wanted to leave the EU but to stay in the single market; we heard that point put passionately by the noble Lord, Lord Ashdown, a few moments ago.

Remainers have accused my right honourable friend the Prime Minister of “opting” for a hard Brexit. I submit that that is nonsense. The Prime Minister is not opting for a hard Brexit, a soft Brexit or any sort of squishy Brexit; she is merely attempting to carry out the wishes of the people to leave the EU. That automatically means leaving the single market, because if we stay in the single market we are still in the EU, to all intents and purposes.

[Lord Lea of Crondall]

Would the noble Lord respond to the notion that the people decided that they wanted access but not membership? So the 48%—let us get this right—wanted membership of the single market and the 52% wanted access? Was that on the ballot paper, by any chance?

[Lord Blencathra]

My Lords, it would be difficult to respond to that without tying myself in circles, because the noble Lord has got it slightly wrong. But I will come on to the point about people saying we could access the single market. At one point during the campaign, it may have been my right honourable friend Boris Johnson who said, “We could leave the EU and still access the single market”. What happened? All hell broke loose. It is not that we were shot down but the Government and their advisers dropped the equivalent of all their bunker-busting bombs on us. “No, no”, said the then Prime Minister, the Treasury and the BSE campaign. “If you vote to leave the EU, then you are out of the single market. You are out of the customs union. You can’t have one without the other”, said all the government spokesmen. “You can’t have your cake and eat it”, they said. On that occasion that is what the Government said. Opposition Members have quoted various leave spokesmen who have said, “Oh yes, we want to be in the single market and leave the EU”, or, “We want to access the single market and be in the EU”, but the response from the official BSE campaign, the Prime Minister and the Government was, “No, you can’t. Leaving the EU means leaving the single market too”. On that occasion, the remain campaign was not economical with the truth.