Brexit: Withdrawal Agreement and Political Declaration

Lord Macpherson of Earl's Court Excerpts

Wednesday 5th December 2018 Lords Chamber

[Lord Macpherson of Earl’s Court (CB)]

My Lords, my first reaction when news of the Government’s deal seeped out three weeks ago was one of relief. The Prime Minister had pulled off what had seemed impossible—an agreement broadly consistent with her so-called red lines, which provided for a backstop on the border between the Republic and the north of Ireland, and which was acceptable to the EU. On top of that, it appeared to reflect public opinion, providing more control over our borders while keeping us economically close to our main trading partner. For a brief moment, I thought the tedious debate about Brexit and its associated negotiations would come to an end, and at last the Government could turn their attention to more pressing priorities around improving the UK’s economic performance.

However, as with all legal contracts, it is important to study the fine print. In this case, the six hundred pages of legal text, supplemented by a 26-page declaration, make somewhat disappointing reading. The more I have read the document, the clearer it is that the EU 27 have achieved all their objectives, while for the UK success is again deferred, kicked down the road into the next phase of endless negotiations.

The political declaration, long on adjectives but short on substance, is all things to all people. It could lead to any destination, which may be no bad thing. Most importantly, the EU 27 have no incentive to reach a speedy trade agreement. The EU has Britain over a barrel. Yes, it will use its best endeavours to reach a deal by the end of the transition period, but it will be a negotiation in which the UK has few cards left to play. We will face a number of cliff edges, starting with fisheries in mid-2020, as the noble Lord, Lord Selkirk, has just referred to. The balance of probability is that we will be salami-sliced into making one concession after another.

The EU has every incentive to play it long, bearing in mind that most trade deals take years to agree, and this one will run to several thousand pages. My old friend and colleague Sir Ivan Rogers was right to advise the Prime Minister in 2016 that agreeing such a deal could take up to a decade. I would be happy to place a large bet that no deal will be ready by the time the transition period expires at the end of December 2020, so either the transition period will be extended or the UK will enter the backstop arrangement. The former will require the EU’s agreement. Exit from the latter also requires EU agreement.

With hindsight, it is not very surprising that we have ended up in this position. The Government have made a number of strategic errors. First, they have never prepared the country for a no-deal scenario, so the threat of a hard Brexit has never been credible. Secondly, the Government triggered the Article 50 process without a clear plan for the way forward. Thirdly, at no point did the Government seek to create a cross-party consensus.

To this day, I am not sure the Prime Minister fully understood what she had signed up to when she agreed the Irish backstop last year. If she did, she never explained it to her then Foreign Secretary and DExEU Secretary, judging by their resignations some six months later. I think it is therefore perfectly reasonable for Parliament to ask the Government to think again. I am not under any illusions—the balance of probability is that they will not be able to wring substantive concessions from the EU, but it may be possible to tweak the declaration. Parliament may choose to give a clearer steer in favour of a Norway-plus arrangement. It may even instruct the Government to seek to negotiate an extension of the Article 50 process, as part of a bridge either to another general election or to a referendum. I am agnostic as to which of these options is preferable.

At this stage, a chaotic no deal is not a credible threat, since this Government still have the option of bringing the agreement back to Parliament in February or early March. For myself, at five minutes to midnight on 28 March, I might speak in favour of this deal.

Whatever happens in the coming weeks, we are going to have to get used to negotiating with the EU, and we are going to have to get used to negotiating trade deals with third countries. These will be particularly difficult, since I cannot see the United States Congress agreeing any deal without the UK lowering food standards. I also wonder whether the British people are yet ready for chlorinated chicken and hormone-infused beef—as much as they enthuse me. Interestingly, the Government’s analysis suggests that they do not expect these deals to add much to national income any time soon, as the noble Lord, Lord Shipley, pointed out. But whatever else happens, the Government will have to learn to multitask. Over the last two years, Brexit has created a policy exclusion zone across Whitehall.

At a time of uncertainty around our trading relations, promoting economic growth is now more important than ever. It is essential if the younger generation is finally to see an increase in living standards. Growth will not come from running a large budget deficit, but it will come from improving the supply side. I hope that at some point the Government will come forward with a serious and comprehensive plan for infrastructure, skills, competition and innovation. In addition, as my noble friend Lord Wilson suggested, they should develop a prospectus which will engage and enthuse the younger generation.