European Union Referendum (Date of Referendum etc.) Regulations 2016

Lord Pearson of Rannoch Excerpts

Wednesday 2nd March 2016 Lords Chamber

[Baroness Morgan of Ely (Lab)]

My Lords, the starting gun has been fired and the Minister has correctly pointed out that this is the beginning of an historic journey for our country. This is about our country’s place in the EU and in the wider world. It is comforting to hear, after so many years of sniping and criticism, a full-blooded defence of the European Union from many, if not all, quarters of government. While we will pretend to enjoy the sight of Cabinet Members falling out with each other over this issue, it is worth underlining that the decision on whether we remain or leave the EU is too great a decision for us to fall into party-political squabbles. Whatever the initial motivation within the Tory party for wanting the EU referendum, we now need to do all we can to secure a remain vote, to put country above party and to do what is in the best interests of this nation.

The SI before us today, as the Minister has stated, sets out the date of the referendum, the start of the referendum period and the date on which designated organisations can apply for recognition. We have debated many of these issues before and we have no objection to the SI. The more interesting documents before us today are the White Paper, which sets out the agreement that the Prime Minister negotiated in Brussels in mid-February, and the devastatingly factual document produced by the Government on the process for withdrawing from the EU. If you were not sure about which way to vote in this EU referendum before, I would suggest you read the document on the process for withdrawal, which makes extremely sobering reading on what will happen in the interim period prior to any future relationship with the EU being concluded—a period that could last for a decade and put us in an extremely difficult situation as a nation. In addition, it is worth reading the document on alternatives to membership that has come hot off the press today.

The fact is that many of us would have supported the effort to remain a part of the EU, irrespective of the outcome of the Brussels negotiations. We believe that our relationship with our nearest neighbours must be much more than the four areas set out in that renegotiation. We think that our relationship is fundamental, yes, for access to our largest export market; critical, yes, for us to ensure safety for our citizens; and critical, yes, for protecting workers, consumers and the environment—but more than that, it sets out how we want this country to meet with the wider world. Never before have our country and our world been so interconnected; never before have we seen international terrorist threats that confront us all; never before have we seen worldwide emigration on the scale we see today; and never before have we been quite so aware that what happens economically on the other side of the continent will impact on our own standard of living in the UK. Now is not the time to be turning our backs on our nearest neighbours. Now, while the US is signing partnership deals with Pacific nations, is not the time to be retreating into splendid isolation, with no assurance of what our market access will look like. And now, when Russia is menacing in central Europe and the Middle East is in upheaval, is not the time to be reneging on EU solidarity and threatening our own national security. Now is the time to show leadership in Europe and demonstrate that we are committed to displaying an outward-looking vision for our country, safe in the knowledge that we have strength in numbers.

There are others who would have rubbished any deal the Prime Minister had returned with. Had he promised a decade’s supply of the finest Belgian beer, or guaranteed a place in the European Championship for every UK nation, or guaranteed lovely sunny days for the next three years, they would still have said no. They believe that we need to regain sovereignty. Where was our sovereignty, though, last week, when the pound plummeted and the markets decided that all this insecurity was bad for our economy? Where was our sovereignty when we needed to ask Italy to send back one of the London bombers? And where will our sovereignty be when we have to go back to our continental colleagues in the event of a no vote and beg for access to their market of 500 million consumers and an economy of almost £11 trillion?

I have heard the argument that the EU has a trade surplus with the UK, so they will want to trade with us; but that does not take account of the fact that EU exports to the UK account for 3% of EU GDP, while our exports to the EU account for 14% of our GDP. Only in Cyprus and Ireland does the UK represent more than 10% of total exports. Half of the EU’s trade surplus with the UK is accounted for by just two member states, Germany and the Netherlands—yet every single EU member state would have a veto on what that agreement would look like. Can we honestly be confident they would all be willing to sign on the dotted line in a generous trade deal? The leave campaign seems to have a schizophrenic attitude towards EU member states. On the one hand, they say that the EU is constantly ganging up on the UK and that we have no influence; and on the other they say that were we to leave, EU member states would roll over, allow us to tickle their tummies and agree to any new trade agreement we demand. Which one is it?

In an interconnected world, sovereignty is a fantasy concept. What the outers are offering is a dream ticket, promising a better life; but they have no idea of nor common belief in what that dream looks like or where it may lead. Nor can they offer any practical pathway or route to get to their promised land.

[Lord Pearson of Rannoch (UKIP)]

My Lords, does the noble Baroness agree that although we have 3 million jobs making and selling things to clients in the European Union, they have 4.5 million jobs selling things to us? Does she agree that they need our free trade much more than we need theirs and that it will therefore continue?

[Baroness Morgan of Ely]

The noble Lord clearly was not listening to me. I just explained that not every single other member state, some of which do not have a trade surplus with us, may want to sign on the dotted line for a future trade agreement. The fact is that 14% of our GDP depends on our relationship with the EU compared with 3% of its GDP. They would have the upper hand in a future negotiating strategy.

In the light of the fact that nobody knows which way the public will vote, I wonder whether the Minister in summing up would let us know whether the Government have made any contingency plans for what would happen, in the case of UK withdrawal from the EU, if there was to be a run on the pound. However, there are many people in this country who have yet to decide. It is those people we will all be trying to convince of the merits of our arguments in the next few months, and it is those people whom I believe the Prime Minister was trying to reach out to in his attempts at renegotiation. They may be relieved by the fact that we are no longer on an inexorable route to closer integration. They will be consoled by the guarantee that we will have a full say on the rules of the single market while remaining outside of the eurozone, and comforted by the knowledge that EU citizens will have to pay in to our welfare system before taking out of it. They can also be safe in the knowledge that the negotiations are legally binding and will take effect immediately after the British people vote to remain in the EU. The information that will set out citizens’ rights and duties if we cease our membership of the EU, which noble Lords requested to be produced prior to the referendum, will be invaluable to that group of people. We look forward to that information being published.

The EU is far from perfect. While we sit here in our gilded, centuries-old institution—

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[Lord Garel-Jones (Con)]

My Lords, it is a commonplace to state that we live in an interconnected, global universe. Many noble Lords have already made this point so I will not dwell upon it, but belonging to the largest trading group in the world undoubtedly gives us influence in those areas where international bodies take decisions that affect the daily lives of our own people.

I want to concentrate on just two issues. The fundamental challenge for the European Union is to identify those areas where, by acting together, the 28 member states can exercise greater influence over our interests and values without undermining the essential values of individual nation states, which provide—I am sure noble Lords will agree—a sense of belonging and social cohesion. But it has to be said that over the years the influence of national parliaments has been progressively diminished by Brussels and the Commission. One only has to look at the number of so-called patriotic parties that have emerged right across Europe to see the damage that this has done to the standing of the European Union right across Europe.

When the principle of subsidiarity was introduced into the treaty at Maastricht, I thought, “That’s it, game over. Nothing will ever be done centrally that can properly be done at national level”. How wrong I was. Since then a bureaucratic procedure was built around the principle of subsidiarity called the yellow card system, which has, to all intents and purposes, neutered this great principle. One of the things that the Prime Minister has achieved is to upgrade that yellow card to a red card, which enables national parliaments to block any proposals put forward by the Commission which they feel breach the principle of subsidiarity. Furthermore, the period of time that national parliaments have to get their act together, as it were, has been increased by 50% from eight weeks to 12 weeks.

Most of the comment and debate on the agreement made in Brussels has centred on a whole range of other important issues. I certainly do not want to diminish their importance other than to emphasise that many of the concerns that have been raised have their roots in the way in which national parliaments and national Governments have been slowly pushed aside by the Brussels bureaucracy. So as we move forwards, the red card that the Prime Minister has achieved will prove to have enormous importance.

I want to deal with just one of the many myths put about by those who advocate withdrawal—namely, that the remaining members of the European Union would be anxious to do a deal with Britain because they export more to us than we do to them. Well, yes, we would be sitting at a table with a group of people whose treaty we have just treated with contempt. We have nearly 50% of our exports at stake: they have about 10%, most from France and Germany. In any event, the idea that they would be in a hurry to produce a deal is not the case because they would be able to continue to trade with Great Britain through the WTO rules. So while I very much doubt that those who advocate leaving the European Union could achieve as good a deal as Norway, let us just give them the benefit of the doubt for the moment. Norway contributes to the EU 80% of what we do and accepts unlimited EU immigration. Actually it has a higher percentage of EU immigrants than we do. It not only abides by the single market regulations but has to accept all new directives over which it has no say whatever. It is actually called “fax diplomacy”. The directive is sent to the Norwegian parliament and it has 90 days to implement it. I find it ironic that UKIP and its friends who are advocating withdrawal are waving the national flag when in fact they are waving goodbye to national parliamentary sovereignty.

[Lord Pearson of Rannoch]

My Lords, I just want to put the noble Lord straight. It has never been UKIP’s policy to emulate the European Economic Area and Norway’s position. We feel that we can do something very much better for ourselves.

[A noble Lord]

It was, the year before last.

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[Lord Willetts (Con)]

My Lords, it has been an extraordinarily lively debate. My noble friend Lady Anelay said at the beginning that we would be trying the patience of the voters if the referendum were held any later, but I feel that I might try the patience of this House if the debate concludes any later. I would like to briefly reflect on the debate, especially on the very lively and powerful interventions that we have had from the Privy Council Bench—many generals under whom I served as a foot soldier in battles in the past.

The interventions have often concerned our economic relationship with the EU. As we come towards the end of the debate, the options are becoming clearer. There is some kind of Swiss or Norwegian option, involving joining the European Economic Area. The exact terms of that would have to be negotiated, but it would very probably involve accepting all the major freedoms of the single market. Indeed, the former Swiss Prime Minister has put it as follows:

“It therefore seems very optimistic to me for Leave campaigners to suggest that EU member states would simply grant the UK full access to the Single Market while allowing you to opt out of free movement”.

There is, therefore, some kind of deal on offer, but it involves accepting the product regulations and the four freedoms that come with membership of the European Economic Area. We do not have to go down that route if we leave. There are alternatives—and in several powerful interventions we have been told that the alternative is to look at the US relationship with the EU. That would indeed be a different model, which would not involve our joining the European Economic Area. The US-EU relationship still involves tariffs on US goods coming into the EU and vice versa. It involves customs controls on goods moving back and forth. In many ways, it would involve an increase in the red tape facing British businesses as they went through the same kind of hassle that US businesses now face. You have to comply with EU product regulations. That is why Lincoln Continentals are not cruising up and down the streets of Mayfair: they do not comply with EU regulations.

When it comes to services, the EU is absolutely clear—even clearer after the financial crisis—that if you wish to offer financial services in the EU you have to be based and regulated in the EU. Iceland is a warning about people offering services in the EU without being properly regulated in the area. Many American banks are located in London because—one among many reasons—that is how they access the EU market. Clearly, in a negotiation that led to our having a similar kind of relationship with the US, the EU would expect that type of arrangement. That is not because the EU is an unusually protectionist power. Let us be frank: the US similarly has a very protectionist attitude to competition from European countries, including ourselves. It is clearly in the British interest that these barriers between the EU and the US be reduced, and there is currently a negotiation aiming to do exactly that—TTIP. I do not believe that there is any prospect of any improvement in trade relations that could do better than the mutual powers of negotiation now happening between Europe and America. If America is to make any concessions to anyone for access to its markets, it will be to the EU and vice versa, so the best thing we can do is play a constructive role in those negotiations.

Another aspect of the relationship is the eurozone, on which the British Government have taken a strategic decision. Our approach to Europe was once described as, “Britain should be in the fast lane, but driving very slowly with everyone else flashing their lights behind us”. What we have decided to do with the eurozone is pull over and allow them to accelerate. There is an argument that this was a mistake, but my view is that if the eurozone is to succeed—it is clearly in our interest for it to succeed if at all possible, although it is a very confused and risky economic experiment—the deal is, “You go ahead; if you need to integrate, do so, but preserve our full rights as a member of the single market”. That is what has been secured.

It is not just a matter of economic arguments, though. We have also heard about democracy and democratic deficits. Very few people have put that argument more powerfully than my right honourable friend in another place, Michael Gove, in an excellent article setting out his views. I pulled up short when he said:

“EU rules dictate … the distance houses have to be from heathland to prevent cats chasing birds”.

He said that there is an EU rule that they have to be five kilometres away—an example of the trivial interference that we have from the EU. I have looked into this. There is indeed an EU habitats directive. It does not specify any five-kilometre rule about the location of housing next to heathland. That comes from Natural England, as it decides how it will interpret this EU directive. The five-kilometre rule is planning guidance—not legally obligatory—proposed by a UK agency when it thinks about what this rule should mean. The lesson I conclude from this is that a lot more of what we do lies in our own hands than we sometimes admit. Speaking as a former Minister, maybe we sometimes use the European Union as an alibi when it is a matter of domestic responsibility for domestic policy and domestic legislation. Britain is indeed a proud and self-confident country and we often still have the capacity to make our own decisions. We should celebrate that power and I do not believe our membership of the European Union is a significant threat to it.

[Lord Pearson of Rannoch]

Would the noble Lord accept that only about 9% of our economy and 9% of our jobs come from sales and trade to clients in the European Union, and that that is declining in deficit? Would he agree that 11% of our economy goes to the rest of the world and that the remaining 80% stays in the British economy? Does he accept that the whole of that 100% is afflicted by EU regulation? Would he care to answer that?

[Lord Willetts]

I would not.