Outcome of the European Union Referendum

Lord Maude of Horsham Excerpts

Tuesday 5th July 2016 Lords Chamber

[Lord Maude of Horsham (Con)]

My Lords, I took no part in the referendum campaign. I felt no temptation to campaign on either side and so feel none to revisit the campaign today in the way that some have already done and others will, no doubt, do. Suffice it to say that I found the claims made on both sides of the argument to be exaggerated and overblown. The more I listened to the discussions and debates and the more I read, the more convinced I became that the arguments were far more finely balanced than either side would accept.

I have some history in this. In the late 1980s and early 1990s I had a season ticket to Brussels. I had a seat, successively, on the Internal Market Council, the Foreign Affairs Council, ECOFIN and the Budget Council. At the invitation of my noble friend Lord Lamont, who was then Chancellor, my signature adorns the Maastricht treaty. He found himself unavoidably detained on that day and said, “Francis, this is your chance to put your footprints on the sands of history”. I have frequently been invited to recant that youthful act but have never been tempted to do so, because I think the Maastricht treaty could have been an inflection point in the development of the European Union. It could have been an end to the theology of one size fits all; it is binary, you are either completely in or completely out. At that point we became a partial participant in the European Union. Sadly, after 1997, the differentiation disappeared and the one-size-fits-all ideology regained its momentum.

I shall set out a few reflections on what should happen now. We do not need to rush this. We need to allow time for emotions to settle and for things to become a little clearer. The less seen of Mr Farage in the European Parliament the better. That kind of behaviour is not likely to create good conditions for us to conduct the necessary and difficult discussions that lie ahead. It cannot make sense to trigger Article 50 early when precisely the people within the European Union who are urging it are exactly the people who are urging retribution and who think that Britain must be punished for this intolerable act of insubordination. We need to pick our time and in the meantime engage in sensible, grown-up conversations with other nation states. It does not all have to be done at once. The priority is to maximise our participation in the single market. That is not as simple as it seems because the single market is nowhere near as complete as it is sometimes made out to be. I completely understand the argument, made passionately by the noble Lord, Lord Birt, for certainty. But a bad certainty now does not trump a better certainty later, so taking time makes sense.

Reform of freedom of movement has its own momentum. I suspect that some changes will come on that, irrespective of what Britain asks for. It will be increasing clear that our economic interests and those of the rest of the EU remain closely intertwined. This is not a zero-sum game. Economic activity lost to the UK will by no means automatically migrate elsewhere in the EU. We are and will remain the second biggest economy. If we start sneezing as a result of actions deliberately designed to harm us, economies on the continent with immune systems that are, frankly, rather weaker than ours will soon catch a cold.

There is a danger here of those who have made predictions taking decisions that make those predictions come true. On trade agreements, it was said by the United States that Britain would be at the back of the queue and that no one would want to make a trade agreement with Britain. I tested this in my last week as Trade Minister in Washington, at a dinner attended by many trade experts including several former trade representatives from both sides of the aisle. I asked whether this was correct and with one voice they said, “Nonsense. We would do a trade agreement with Britain in a heartbeat”—and, to be frank, it would be a lot easier than completing the TTIP negotiations with which I was engaged. They are moving extremely slowly at the moment.

Likewise, on EU nationals, to echo points that I have made at other times in the Chamber, the Government should immediately make clear that position of the 3 million or so EU nationals already settled here will be protected. It cannot make any sense to hold out on that. It will be much better to establish the uncontested truth that these 3 million nationals want to remain here. This makes the point of how interlinked our economies are and will remain.

There is a movement towards reform within the European Union. Maybe this is wishful thinking—we have often tried to persuade ourselves that there is a movement for reform. We used to say that Maastricht was the high-water mark of federalism. But clearly there is growing frustration with the outdated certainties of Juncker. There is widespread anxiety about the undiluted doctrine of free movement. We used to talk about the free movement of labour, but that was in a different world without the huge disparities in wealth between member states that enlargement has brought.

Is it wishful thinking to believe that there may be constraints emerging on the freedom of movement that will be sharpened and made more immediate and pressing by Brexit, but also by the French and German elections that are coming up and the need for the mainstream parties not to be outflanked by the parties of the far right? There is a clear need for greater integration within the eurozone if it is to survive. There has to be a question mark over that, given the Commission’s reluctance to use even the powers that it has at the moment to enforce fiscal clarity.

The European Union needs to move away from its binary view of life—that you are either in the club or out of it and that there is only one way to be a European. At the moment we are a 65% participant in the European Union: not in the eurozone and not in Schengen. I hope that the outcome of this vote at some stage will be that we remain a participant—not a member, that decision has made—but I hope that it will not be in a European Union that is in that sense binary, and that what we used to call variable geometry will come to live again, with different countries participating to different degrees for different purposes. That is what could have been and can be again. I put the chances of its happening as no better than 50:50—so we should stabilise as best we can and show commitment to preserving as much of the trading relationship as possible to discourage disinvestment and to encourage investment.

The Government can now make the investment decisions that lie within their power. I am sorry to see the Government deciding to postpone the decision on airport expansion. That can and should be taken quickly. There are also decisions on licences for the exploitation of shale gas—a commodity that will be produced domestically for domestic consumption, with no EU implications whatever—which can and should be made as quickly as possible. So we should take our time before triggering Article 50 and do it in a considered and measured way.