Exiting the EU

Lord Newby Excerpts

Monday 9th July 2018 Lords Chamber

[Baroness Smith of Basildon (Lab)]

My Lords, first, I concur with the noble Baroness’s statements on Salisbury. I thank her for repeating the Statement today. It was Harold Wilson who reportedly remarked:

“A week is a long time in politics”.


How the Prime Minister must wish that were true. We have to picture the scene on Saturday afternoon. Having achieved an agreement at Chequers, the Prime Minister can enjoy the fine weather and the positive mood that was, at that point, sweeping the nation. England have booked their place in the World Cup semi-final; Lewis Hamilton has qualified in pole for the British Grand Prix; and a plucky Kyle Edmund takes the lead, albeit temporarily, at Wimbledon. All is well. This is the high point of Theresa May’s premiership.

Fast forward to Sunday evening, when David Davis informs the Prime Minister that he is now unpersuaded by the Chequers position and is unwilling to play the role of what he calls a “reluctant conscript”. He resigns. Steve Baker follows and, just in case there was any doubt as to the dissatisfaction in the Brexiteer camp, Boris Johnson has also, after getting others to test the water first, taken the apparently principled decision to resign. With just 264 days until we leave the EU, we have a brand new Brexit Secretary and will soon have a new Foreign Secretary.

David Cameron as Prime Minister was so sure that he would get his own way in the referendum that he did not even plan for a leave vote. That was arrogant and irresponsible. Theresa May as Prime Minister, confident that she had a plan, promised the country,

“strong and stable government in the national interest”,

in an unnecessary general election; and we are being asked to believe that the Government are delivering a “smooth and orderly Brexit”, even though no one can agree what this means and nobody believes it. Following the June summit, the President of the European Council issued a last call to the UK, pleading for progress to be made ahead of the October summit. Last Friday— 464 days after the triggering of Article 50—the Cabinet met, debated and apparently reached a decision. For a brief moment in time, the Cabinet was united. There was radio silence from the usual suspects, for a time, and now we have chaos at the heart of government when we most need stability. There are rumours of letters being submitted to the 1922 Committee. One Conservative MP dared to declare: “I think Theresa May’s premiership is over”.

Far from offering answers, this melodrama raises only questions. Luckily for your Lordships, the noble Baroness the Leader of the House was at the Cabinet meeting at Chequers. Can she comment on reports that the advice of the Commons Chief Whip was that the Cabinet had to back this facilitated customs arrangement as a so-called compromise, as otherwise MPs would vote to stay in a customs union? Also, after spending the day with Mr Davis and Mr Johnson, did she get any inkling of the dramas that were about to unfold? Was the PM right to be so confident that she had convinced them, brought them with her and won the day?

The Government’s plan is not one that would have been adopted by Labour—not least because it includes no real plan for services, which account for almost 80% of our economy—but with only six weeks of negotiations before the October summit, there is at least a proposal on the table. It is not quite what the Prime Minister presented at Lancaster House or Mansion House, and it will not be clear what the EU 27 make of the offer until a White Paper is published later this week. EU diplomats are displaying a level of discipline that would baffle some in the Cabinet.

Reinforcing the view that this was more about Conservative Party unity than the national interest, the Environment Secretary acknowledged yesterday that the agreed position amounts to a fudge, in part because of party divisions but also due to parliamentary arithmetic. Having tried different versions of Brexit on for size, the Cabinet has now chosen one that is a soft shade of pink. The UK will leave the single market but will continue to maintain a common rulebook for goods; the jurisdiction of the European court will come to an end but UK courts will be bound to have the regard to its future rulings; and the UK will no longer allow free movement but will offer a mobility framework that allows continued travel, study and work in each other’s territories.

While this blurring of the red lines suggests a recognition of the political and economic reality, can the agreement really be said to amount to a substantial evolution in the Government’s thinking? It seems not. Instead of combining elements of two customs plans already rejected by the EU 27, surely a better approach would have been to propose a formal customs union with the EU, a position supported by business organisations and trade unions. While some argue that a UK-EU customs union would prevent us from striking new trade deals, it is worth noting that, while the Cabinet was locked away, the EU announced that it would sign a new agreement with Japan on Wednesday—a reminder that while this Government are consumed by Brexit, the EU just carries on. Could the noble Baroness the Leader of the House confirm whether the UK will seek to be a party to the EU-Japan trade agreement after Brexit, or do the Government really plan to turn their back on all existing agreements after the transition period to pursue participation in the as yet unratified Comprehensive and Progressive Agreement for Trans-Pacific Partnership?

Over the weekend it was suggested that the new mobility framework might allow for preferential treatment for EU migrants, and Prime Minister refused to rule that out, but the Leader of the Commons said on the “Daily Politics” that,

“there’ll be no special favours for EU citizens”.

Could the noble Baroness provide clarity on this specific point?

I want to ask about the area that most concerned David Davis, albeit for very different reasons. Paragraph 6.f of the Government’s statement from Chequers asserts that Parliament will have a lock on incorporating future EU laws into the UK legal order, meaning that,

“choosing not to pass the relevant legislation would lead to consequences for market access, security cooperation or the frictionless border”.

Does that mean that each and every individual EU regulation will require the consideration of both Houses? If so, have the Government estimated how much parliamentary time would be required each year? Would that proposal, if accepted by the EU 27, amount to a Swiss-style sector-by-sector agreement whereby, for example, the EU’s failure to implement a measure on car safety could lead to a loss of market access to that sector and therefore the imposition of tariffs? Where would that leave companies such as Jaguar Land Rover, which has already expressed its concerns? How can the Government avoid implementing the Northern Ireland backstop if the EU 27 cannot be sure that the UK will honour its commitments?

Although the Chequers proposal may offer more clarity on the Government’s thinking, it is no more coherent than previous Brexit plans. Whether you voted leave or remain, confidence in the Government’s management of Brexit is at an all-time low. As a result, faith in politics has been seriously undermined. Luckily—for some, maybe—the Cabinet will meet again tomorrow. There will even be a new face or two, or perhaps more by tomorrow, around the Cabinet table. I therefore echo the thoughts and comments of the noble Lord, Lord Finkelstein, in his excellent article in the Times newspaper, where he urged Theresa May to follow the example of Robert Peel by putting the national interest ahead of those of her party. I hope that today the noble Baroness the Leader will be able to answer my questions.

[Lord Newby (LD)]

My Lords, I add my condolences to the family and friends of Dawn Sturgess.

The Statement and the subsequent resignations lay bare the fundamental dilemma at the heart of Brexit. What is most important, access to EU markets and institutions, which is necessary for prosperity and security, or control, which is necessary for real independence of action? The former Foreign Secretary accurately summed up the Government’s approach when he said that it was to have their cake and eat it, and the agreement at Chequers still aims to perpetuate that impossibilist policy.

The Government have tried to avoid saying that they plan to remain a de facto member of a customs union by calling it a “free trade area”, but they have agreed to harmonise our rules with EU rules for trading goods, possibly in perpetuity if they cannot get their preferred long-term solution of the so-called facilitated customs arrangement to work. The Chequers statement is so incomplete on this concept that it is frankly pointless to try to discern how it would work, but I will ask one question. The Government say that the UK will eventually apply UK tariffs to goods intended for the UK and EU tariffs for goods intended for the EU. Do they envisage that the EU will adopt the same system, or have they given that idea up as politically and technologically impossible?

The Government have decided that there will be no attempt to have a common approach to services—some 80% of the economy and more than 40% of our exports. The Chequers statement says that this will mean that we,

“will not have current levels of access to each other’s markets”.

These words mean that there will be fewer service sector jobs in the UK post Brexit. Have the Government made an assessment of how many jobs are likely to be lost and can they give another single example of where any UK Government have previously adopted a policy that knowingly has job losses at its heart? The text refers to setting our own tariffs. When is the earliest that the UK believes it will be in a position to strike independent trade deals, given that this can happen only if the facilitated customs arrangement is in place? What assessment have the Government made about potential gains to be made in jobs under the Trans-Pacific Partnership compared with the jobs that will be lost in the services trade with the EU?

The noble Baroness, Lady Smith, asked some questions about the role of Parliament as envisaged in the Chequers statement. I have one supplementary question: does the noble Baroness the Leader of the House agree with David Davis, speaking this morning, that the concept of Parliament having a real say on customs matters was more illusory than real? Who are the Government seeking to fool by spinning that illusion?

On the movement of people, the Chequers statement contains but one sentence. It is deeply worrying. It says that EU and UK citizen should be able,

“to travel to each other’s territories”—

on unspecified terms—and EU citizens should be able to “study and work”. The Government clearly envisage major restraints on freedom of movement. Have they made any assessment of the impact of this approach on UK citizens wanting to travel, work and study in the EU, given that we must assume that freedom of movement will be restricted by the EU if we do the same to their citizens coming here?

The Prime Minister was at pains to stress that the Government will step up preparations for no deal. Can they confirm that while the Dutch, for example, have already recruited 800 new customs officers to cope with such an eventuality, the UK do not even plan to begin to do the same until later in the summer? How, therefore, could the customs service be even remotely ready for any no deal scenario next April? Does not the lack of planning to date mean that the bold brave talk of no deal is simply bluster?

Finally, the noble Baroness the Leader of the House was present in the room last Friday and, if reports are to be believed, like all other members of the Cabinet expressed her views. As virtually every other Cabinet member has already done so, could she possibly tell the House the gist of her contribution?

We will have a full debate on the Government’s White Paper on 23 July. Who knows what the Government will look like then? Today, however, they are simply a complete shambles.

[Baroness Evans of Bowes Park]

I thank the noble Baroness and the noble Lord for their, as ever, positive comments about where we are.

The noble Baroness asked about existing EU trade deals. We have been consistently clear that we want to roll over existing arrangements, and that is what we will continue to do.

The noble Lord and the noble Baroness asked about freedom of movement. The Prime Minister has been very clear: freedom of movement will come to an end and we will control the number of people who come to live in our country. It will be brought to an end through the immigration Bill, which we will see next year and which will bring migration from the EU back under UK law. Last July, as noble Lords will be aware, the Government commissioned the Migration Advisory Committee to gather evidence on patterns of EU migration and the role of migration in the wider economy ahead of our exit. Its final report is due in September. We will take account of its advice when making decisions about our future immigration system. However, we have been clear that we want a mobility framework so that UK and EU citizens can continue to travel to each other’s territories and provide services, which will be similar to what the UK may offer other close trading partners. The Prime Minister has also said that no preferential access will be offered to EU workers that is not on offer also to other trading partners with whom we seek ambitious trade agreements.

The noble Baroness asked about the common rulebook. She will be well aware that the EU will remain an important export destination for UK manufacturers. Maintaining a common rulebook would ensure that manufacturers could continue to make one product for both markets, preventing dual production lines while protecting consumer choice. As yet, there is no demand from UK manufacturers to change current regulations on industrial goods, but if in future changes are made to the rules that the UK feels unable to accept, we will be in a position to choose not to accept them. Both Houses of Parliament will have a role in making those decisions.

The noble Lord asked about services. He is right: we will strike different arrangements for services, because we believe that it is in our interest to have regulatory flexibility and we recognise that the UK and EU will not have current levels of access to each other’s markets. However, with services being such an important part of our economy, we want to be able to strike great deals in this area with other nations.

I can assure both the noble Lord and the noble Baroness that there has been much planning for no deal across government, but the Cabinet recognised that we need to step up on this. It is something that will be ramped up over the summer, to ensure that, while we do not want it, we will be ready for a no-deal situation. However, we will be focused in these negotiations on this clear and comprehensive proposal, which the Prime Minister will talk about with both the EU Commission and EU leaders in the coming weeks to make sure that we get a deal that works for the UK and for the EU.