Brexit: Trade in Goods (EUC Report)

Lord Marland Excerpts

Tuesday 18th July 2017 Lords Chamber

[Lord Marland (Con)]

My Lords, I start by declaring my interest as chairman of the Commonwealth Enterprise and Investment Council and my business activities as in the register. I too compliment the committee and my noble friend Lady Verma on this report: it is a concise observation on the current trading of goods with the European Union. The report suggests that the EU has finally been able to land, after the most tortuous process, 36 preferential trade deals. It concedes that these are not free trade deals, and indeed some have been described as general systems of preferences that have been agreed with African, Caribbean and Pacific countries, many of which are members of the Commonwealth—of which more later. Happily, the report also tells us that 73% of all goods traded are not with the European Union—the prophets of doom around us need to take that into context.

The committee indicates that there may be significant delays for our Government and Secretary of State in reaching free trade agreements shortly after leaving the EU with the 15 countries that have been identified. How very worrying, some might think, including my noble friend Lord Livingston of Parkhead. But I have long been of the view that FTAs are a current erroneous obsession, and I am totally opposed to my noble friend when he says that they are important. Our largest single-country trading partner is the United States. We have never had a trade agreement with the USA, or, for that matter, with many other countries, and it would be incredibly difficult to achieve one. So I have a lot of faith in the ability of British business to trade. Of course, a trade deal is necessary only when the rules of engagement with the trading party are not consistent or are subject to abuse. We have long traded throughout the world on this basis. The noble Lord, Lord Howell, makes the incredibly valuable point that, with the technology upon us, trade will take place in a totally different landscape.

As an aside, 15 trade deals—which is what the Government think they want—is a very modest ambition. If they are determined to develop that ambition, I hope they will look outside government, which they seem slightly incapable of doing, and invite others to support them in this endeavour.

Whereas this report is long on evidence, it is regrettably and not unsurprisingly short on solutions. It seems to me that this is representative of the paradox that the country is in. We know we are leaving the European Union, but the Government have not prepared themselves adequately—indeed, they were encouraged not to plan for it at all before the Brexit referendum. The current state of our politics, to put it mildly, demonstrates that business cannot rely on government for leadership.

I was brought up with the simple tenet that the country and people do better when government does least. If ever there was a moment in our time when this exists, it is now. Government for those in business is a burden. It taxes us, it legislates us, and it puts hurdles in the way of our business prospering. It is therefore no surprise—I agree with the noble Lord, Lord Livingston —that business has become cautious with its exports and that its first priority is to plan for “what if” scenarios.

At this point I pay a compliment to the Government—I do not want to be an onslaught against my own Government—because they have done a number of good things to promote trade. They have increased the export guarantee fund and made it more flexible; reduced corporation tax to the lowest in the G20; and made the process of starting a business more competitive than in any other country in the G20. However, as the statistics show, 60% of our SMEs are still not exporting—and therein lies a major problem, Brexit or no Brexit.

We therefore have to free business. This would not be to the detriment of sound business practices because investing in people and in development requires carrying the workforce with you, as any sound business should do. And as Ministers and all of us will agree, a fair distribution of profits among the workforce, not irresponsible salary generation, is very important. However, it is business that will develop trade. Therefore, government needs to overhaul its regulations and review the sometimes ridiculous gold-plating and the regulations that have been imposed from Europe to make the UK less competitive. I say that with first-hand knowledge of the insurance business, where we had to deal with endless regulations brought from Europe to make us less competitive in the United Kingdom. Government also needs to ease the opening of banking arrangements, which continue to be baffling and a tortuous process, and reform the tax system so that it no longer has the current overcomplicated layers of tax. It needs to introduce a faster-responding legal system that allows disputes to be resolved quickly, thereby underlining the importance of the rule of law and Britain’s role in the world as the fairest legal system. Government agencies’ help for companies to find a route to markets and how to get into countries is absolutely vital.

Manufacturing is slowly returning to this country because we have become competitive again. However, we need to turbocharge this by bringing together industry groupings in enterprise zones. What has happened to them? Why are we not starting them again? Over the years they have proven to be successful not only in generating business but in regenerating areas of the country which badly need it.

As a Conservative I regret to say this, but the Government are way off the pace. Their political processes are stuck in a time warp of excess paper, ponderous decision-making and a total lack of energy. Rarely do we hear from Ministers and quangos that represent businesses about the phenomenal opportunities that exist for exporting and for this country. We also need joined-up thinking between the FCO, DfID and DIT to ensure that our excellent programme of aid has dividends for the British workforce, but not exclusively. However, there are recognised projects such as the well-known airport in the Caribbean that is about to be built, and to which the UK has given a great deal of aid, and guess who is doing the contracting work? The Chinese.

As chair of the Commonwealth organisation focused on trade, I am bound to say that the Commonwealth—which contains 52 countries and one-third of the world’s population, of which Her Majesty the Queen is Head of State, and which is proven to be 19% more competitive to trade into—is a complete open goal for the UK Government. Yet the reluctance to show real leadership is, I am afraid, a concern. We hope the Commonwealth summit to be held next April will give the UK an opportunity to show its leadership on the world stage, but it must seize that opportunity. As an aside, I should say that the formation of a Commonwealth unit under the Cabinet Office for this event is a welcome move.

As we know, not only is the Middle East one of our biggest investors in this country, it is also one of our biggest importers. I am delighted to see that the noble Baroness, Lady Symons of Vernham Dean, is serving on this committee. She has deep knowledge of the Arab world. Why have the Government been so reluctant to stand up to their friends and be a force of interlocution in this complicated part of the world? We have to enhance relationships rather than diminish them at this critical time.

As a former Prime Minister’s trade envoy, I know at first hand that we have many outstanding relationships. Why have the Government been so reluctant to strengthen our country trade envoys, whose work has paid great dividends because it is a cross-party, continuing arrangement in many markets? Many of our trade envoys have seen two ambassadors and two UKTI officials while they have been the consistent force in-country. As we know, in business the continuity of relationships and the personal touch are incredibly important. The FCO needs to revamp its attitude to post.

But let us not end on a good old moan. The opportunities for the United Kingdom are phenomenal and we have the building blocks in place. We have an education system that we may criticise, but the outside world is deeply envious of it. We have four of the top 10 universities in the world and we have educated countless foreign students, all of whom remain loyal and well disposed towards us. We are world leaders in so many areas that it would take too long to list them. We are an innovative, practical nation, a country whose people like to work. We have the right workforce, and here all credit to the unions which I worked with when in government because they understand our need to be competitive. They have changed their rules to support us. We have the rule of law and we have control of our currency. My message to my noble friend the Minister is this: tell your colleagues to lift up their spirits and release some, but not all, of the shackles on businesses in order to help them export.