Brexit: UK Plans

Lord Newby Excerpts

Monday 9th October 2017 Lords Chamber

[Baroness Smith of Basildon (Lab)]

My Lords, it is the first day back and we are discussing Brexit already. I am grateful to the noble Baroness for repeating the Statement, although I admit I felt an increasing sense of déjà vu as she went through it—probably I was not the only one. So much of it is vague and repeats previous speeches, Statements and comments that we have heard before.

At the outset, I want to pick up on one specific aspect. The noble Baroness will know of my interest in it from when the noble Lord, Lord Taylor of Holbeach, and I faced each other across the Dispatch Box on Home Office legislation. I listened carefully to the section on security—it is so vague and unspecific that it tells us absolutely nothing about priorities for negotiations or expected outcomes. Given the importance of the issue, we need more than that; phrases such as “bold, new strategic agreements” and “comprehensive frameworks” have been said time and again, but at this stage I do not know what they mean. I want to flag that up early on.

The noble Baroness mentioned the two White Papers that were published today—one is on the customs Bill. Is she aware that there are only 10 copies—nine now, because I have one—available to Members of the House of Lords? That seems entirely inappropriate and I hope she can look into it. Can she also say something about the consultation period? Cabinet Office guidelines indicate about 12 weeks as the norm for consultation, yet this paper—and similarly in the one on trade—has no deadline for consultation except to say that responses are encouraged on this by 3 November. That is less than four weeks away, and the other deadline is 6 November. That does not seem appropriate. I assume that if responses are encouraged by those dates, they are also the deadline for responses to be considered, and negotiations. I would be grateful if she could comment on those two points.

This is a hugely significant point in negotiations, the importance of which cannot be overestimated. On the day Article 50 was invoked, the countdown started for the UK to leave the EU. Only one thing was clear: two years is a very short time to ensure that we resolve all the issues relating to Brexit and our future relationship with the EU, including on trade, security, finance and our domestic regulations and legislation for public protection. We are around a third of the way through and it seems that too little significant progress has been made. Within days, we should have clarity on whether sufficient progress has been made in phase 1, to allow us to proceed to phase 2 in a couple of weeks’ time, or if negotiations will have to be delayed.

It is clear that the Prime Minister’s visit to Florence was designed to break the deadlock, and her speech was important for a number of reasons. First, it was the first time that she had accepted the need for a transitional phase—she prefers “implementation” phase; I do not care what it is called, but her recognition that such a period was required was important. Recognising the problems ahead, she tried to use the speech to jump-start the negotiations by supporting talks on a transitional, or implementation, deal.

We have always been clear, especially given the number of issues on which there is no certainty, that to prevent a Brexit cliff edge for our economy we must negotiate a time-limited transitional deal that maintains the same basic terms as we currently have with the EU. That means remaining in a customs union with the EU and within the single market while we build the bridge about which the Prime Minister spoke to a strong final deal. I welcome her commitment on that, but any negotiations should start from where we are now. Ruling out options at the start is like trying to operate with one arm tied behind our back.

This pragmatic approach has been welcomed by many of those organisations, including the CBI and trade unions, which fear the impact on businesses and jobs of a cliff-edge exit. It was a significant policy shift for the Prime Minister. She rightly recognised the warnings from businesses that opposition to transitional arrangements was already hitting the economy. Both the head of UBS Investment Bank and the chairman of RBS, and many others, have reinforced the message that unless transitional arrangements are agreed soon, there will be a significant shift of both staff and businesses out of the UK. Yet within days of the Prime Minister’s welcome comment, five of her Cabinet Ministers revealed conflicting and contradictory views. It is no surprise that the list of names is probably very similar to that for the next Conservative leadership contest. I am sure that many share the view that, following a disastrous election campaign which has weakened the Prime Minister at a time when, in the national interest, she has to be at her strongest, she is being further undermined by members of her Cabinet.

The Prime Minister’s speech was also part of her pitch that on the three key phase 1 issues, progress had been made and that progress was adequate for phase 2 to proceed. It will be a huge failure of government strategy if those talks are delayed. The Prime Minister is right that some progress has been made on the three issues, but the question is whether it is enough. It is clear from last week’s events in Strasbourg that the EU does not think that it is.

Let us look at those three issues. For those of us who voted in your Lordships’ House before the negotiations started on arrangements for EU nationals and the consequences for UK nationals in the EU, it is disappointing that this issue has not been resolved. I can see the noble Lord, Lord Tebbit, pointing around the Chamber and muttering. Unless he wishes to comment, I will continue. Businesses and academia are already experiencing some of the difficulties that we feared. The lack of agreement means that both here and across the EU, British and European Union citizens feel their lives blighted by uncertainty. Many in your Lordships’ House and the other place were persuaded by the Government not to vote for our Article 50 amendment, as the Government had promised that this was an early priority and would be resolved at the start of negotiations. The Government might find it harder to earn such trust in the future.

On the matter of the Irish border, there is an agreement on the required outcome, but the Government have been unable to say how it can be achieved. Initial proposals for a “technical solution” have been ridiculed by experts. A leaked report by the Irish Revenue Commissioners sets out in stark detail the vast increase in the amount of resources and bureaucracy that may result from Brexit, which will be significant at all levels and for all communities. Not only do the Revenue Commissioners warn that an open border will be impossible from a customs perspective but they even expect the important annual ploughing championships to be hit. That will affect the quarter of a million people who attend that event, and it makes a serious point about the possibility of additional paperwork being needed for machinery imported from the UK.

On the third issue—agreeing a formula for the “divorce bill”—not only is there no agreement with the EU but there is no agreement within the Cabinet either. Depending on your point of view, Boris Johnson is either an unprincipled, gaffe-prone Minister who shoots from the hip or a first-rate diplomatic Foreign Secretary. But even he has had to retreat from telling the EU to “go whistle” to accepting the need for an agreed formula and for quick progress to be made.

There is a debate to be had on whether progress is adequate to proceed to the next stage. The Prime Minister’s confidence about this is not widely shared. A war of words seeking to apportion blame will not make it any easier, but discussion and negotiation will, as will honesty and openness about the sticking points and difficulties. It is therefore all the more worrying that two Conservative Party Members of the European Parliament, a former chief whip and a deputy leader, who were honest enough to express their view and vote accordingly that progress was not yet sufficient, have been suspended from their party. That does not inspire confidence that these issues are being examined with an open mind.

I have three specific questions for the noble Baroness. Your Lordships’ House will have seen the joint statement from the TUC and CBI on citizens’ rights. The Prime Minister said in her Statement that she expected a quick agreement, but we have heard that before. Can she be more specific? Can the noble Baroness confirm that the UK negotiating team expects an agreement on citizens’ rights this week, thus concluding phase 1 of the negotiations? If not, will the Government keep an open mind, as urged by your Lordships’ House and now by many others, including the CBI and the TUC?

Secondly, returning to last week’s events in the European Parliament, it was significant that both President Juncker and Monsieur Barnier have addressed MEPs, as they do regularly. The Prime Minister has had an opportunity to do so and has not accepted the invitation. Given the possibility of a delay to phase 2, will the Prime Minister now reconsider the invitation for her to do the same?

Finally, if the Prime Minister’s Florence speech is really to break the impasse, it is clear that we must overcome the sticking point that is the financial settlement. I am not asking for details of figures, but have the UK’s negotiators been permitted to discuss potential figures at this week’s talks? I hope that the noble Baroness will be able to address those questions as well as the points made about the two White Papers published today.

[Lord Newby (LD)]

My Lords, since our debate in September on the Government’s so-called position papers, there have been three developments. First, we had the Florence speech, of which this Statement is a précis. Secondly, we had the Prime Minister’s conference speech, which was noticeable for the fact that less than 5% of it was devoted to the most important issue facing the country; namely, Brexit. Thirdly, we have had an extraordinary degree of infighting among members of the Cabinet. Many of us have lived through periods when there has been infighting within our own parties, and we know what it means: it becomes all-consuming; it becomes completely debilitating. That is the state of the Government today.

As I said, the Statement is a précis of the speech made by the Prime Minister in Florence, which, in her own terms, was intended to move the negotiations forward. How does it fare in doing that? It starts by talking about the economic partnership, which is to be “unique and ambitious”. The rest of the section simply sets out what the Government will not do. It says nothing about what the Government intend this to be. This is the first of what one might call “the ball in whose court?” issues. The Government say, “We’re not having this; we’re not having that; we’re not having the other”. The assumption is that somebody will come up with a solution, but not them. Certainly, there is no suggestion in the Statement of what the solution might be.

Ditto the security relationship. The phrase there is that there is to be a partnership that will be,

“unprecedented in its breadth and depth, taking in cooperation on diplomacy, defence and security, and development”.

We wait to see what that might mean, but that is it. We then move on to the next phase, implementation. The Government have accepted that there has to be an implementation phase, and there is to be a two-year standstill. The Government should not take any great credit for this. It is impossible to move from our current position in the EU to a new position without an implementation or transition phase. All they have done is accept the inevitable with extraordinary bad grace.

Half way through the Statement, the Prime Minister marks her success in the Florence speech. She says that it was extremely successful and that Michel Barnier said,

“there is a ‘new dynamic’ in the negotiations”.

Well, there is a new dynamic for the Secretary of State—he is staying put. The Secretary of State for Exiting the European Union is not going to Brussels today, and has not been, so all his input, at most, this week as in the past, is going to be some kind of Panglossian statement on Thursday afternoon, when he has just whizzed in, which will be immediately contradicted, no doubt, by Michel Barnier.

The Statement then gets back to the substance, the three big issues, of which Northern Ireland is the first. The Government say that we and the EU,

“have both stated explicitly we will not accept any physical infrastructure at the border”.

The problem here is that nobody—not this Government, not the Irish Government, not the EU, not a think tank, not a lawyer, not a company—knows how you can be without the customs union without some kind of border control. There is not a soul on the planet who has come up with a viable proposal for dealing with that, so how can the Government believe that they are making progress there, or that they could get a quick outcome?

We then come to the EU budget, where we want to make a contribution,

“to cover our fair share of the costs involved”.

What does “fair” mean? It is a very interesting word, but the Government give zero indication of what it means. Does the EU have any idea what our view of fair is? If it does, it is certainly something that has not slipped out from anybody in Brussels or in this Government.

We now come to legislation and the two White Papers that have been published today. I have not had a chance to look at them, but I have just one question for the noble Baroness. On customs, we are about to create “an innovative customs system”. It sounds great, but is she aware that, as we speak, HMRC is in the process of reducing regional and local offices so that the ports of East Anglia, Harwich and Felixstowe, are about to be managed from Stratford, in east London? I accept that this is, indeed, innovative, but it does not fill me with any confidence that the Government have even the vaguest idea how they are going to implement a new customs regime.

Finally, we come to the conclusion, which is that, as we look to the next stage,

“the ball is in their court. But I am optimistic it”—

I do not know whether that is the ball—

“will receive a positive response”.

What is “it”? On too many issues there simply is not an “it”: there are simply vacuous statements and pious exhortations. With parliamentary Liberal Democrat colleagues I spent a couple of days in Brussels during the recent Recess attempting to find out what was really happening in the negotiations. We met representatives from the Council and UKREP, other permanent representatives, MEPs and many others. Everybody, with the inevitable exception of UKREP, was at a loss as to what the UK was really after. It was not that they were objecting to what we were after; they simply had no clue. There was no beef, as they saw it, in the negotiations. Today’s Statement, I am afraid, suggests that on current trends they are likely to be kept waiting for this beef for quite a long time.

[Baroness Evans of Bowes Park]

My Lords, I am grateful to the noble Lord and the noble Baroness for their comments, as ever. I shall address some of the issues they raised. I know very well the interest of the noble Baroness in the area of security—she has held me to the fire over it a number of times—and the noble Lord, Lord Newby, raised the same issue. I stress again that the UK is unconditionally committed to maintaining Europe’s security and we will continue to offer aid and assistance to EU member states that are the victims of armed aggression, terrorism or natural or manmade disasters. Indeed, the European Council’s negotiating guidelines identify the importance of partnerships against crime and terrorism and it is clearly to the benefit of both sides to make sure that this new partnership is comprehensive and effective. I know that this will not satisfy the noble Baroness, but I stress that there is currently no pre-existing model of co-operation between the EU and third countries that replicates the full scale or depth of collaboration that currently exists between the EU and the UK in this area, which is why we want to design new arrangements that go well beyond any existing arrangements the EU has in this area and to draw on legal models the EU has previously used to structure co-operation with external partners in other fields, such as trade.

I apologise for the small number of copies of the customs White Paper. I agree that 10 is not enough and I have been assured that more are being produced and will be available shortly. I will look into the issue raised by the noble Baroness, of which I was not aware before she mentioned it.

On the implementation period, the Cabinet is united behind the vision the PM set out in Florence about a strictly time-limited implementation period based on the existing structure of EU rules and regulations during which the UK and EU would continue to have access to one another’s markets on current terms. I welcome the comments of the noble Baroness that this is, indeed, a step forward.

On citizens’ rights, we have been very clear that we want this issue resolved. The Statement made it very clear that we recognise the contribution EU citizens make and we want them to stay. As I said, and as the Statement made clear, in Florence the PM gave further commitments that the rights of EU citizens in the UK and UK citizens in the EU will not diverge over time, committing to incorporate our agreement on citizens’ rights fully into UK law and making sure that UK courts can refer directly to it. As for EU citizens living in the UK, where there is uncertainty around underlying EU law we have said we want the UK courts to be able to take into account the judgments of the European Court of Justice. We will be working hard to get an agreement. I am sure that the noble Baroness will accept that I cannot prejudge or guess the outcome of the current round of negotiations, but I reiterate the importance we place on achieving an agreement in this area as we know how important it is.

On the financial settlement, the basis of our negotiations in this round is clear. We have said that we do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave, that we will honour commitments we have made during the period of our membership and that we will make an ongoing contribution to cover our fair share of the costs involved. Again, I cannot prejudge or guess the outcome of the current round of negotiations, but we are obviously aware that this is an important issue. I fear that I am also unable to provide the noble Baroness with any further information about the Prime Minister’s interaction with the European Parliament, but if I am able to do so at a future point, I will, of course, do so.

The noble Lord and the noble Baroness raised the issue of Northern Ireland. It is important that both the UK and the EU have explicitly stated that we will not accept any physical infrastructure at the border; that means we are working from a common ground to achieve an outcome that we understand is extremely important to all of us. The noble Lord, Lord Newby, asked about customs. The White Paper sets out that we will be guided by what delivers the greatest economic advantage to the UK and three strategic outcomes in terms of our future customs: ensuring that UK/EU trade is as frictionless as possible; avoiding a hard border between Ireland and Northern Ireland; and establishing an independent international trade policy. I say to the noble Lord that HMRC operates one of the most efficient customs regimes in the world and we already have highly efficient processes for freight arriving from the rest of the world.