UK and EU Relations

Lord Taverne Excerpts

Tuesday 12th September 2017 Lords Chamber

[Lord Taverne (LD)]

My Lords, I will concentrate on the effect of the Government’s decision to stay out of the customs union, their plans for controlling immigration even though that is not yet an official paper, and the prospects of a new referendum.

First, I find so depressing the Government’s complacency and lack of realism. This is one factor why our negotiators seem much better at losing friends than making new allies. One example is the way the Government keep boasting about how strong our economy is. The fact is that it is very fragile. Our 16 to 18 year-olds rank in the bottom four of the OECD’s 35 members for numeracy and literacy. As a result, we lack the skills that industry needs. Our growth is now the slowest in the G7. Nine out of northern Europe’s 10 poorest regions are in Britain. Our productivity is about 20% less than the average of the G7 and has not improved for a decade. Brexit will make matters worse.

There was an important and impressive recent report about leaving the customs union by the All-Party Parliamentary Group on EU Relations. Unfortunately, I have time only to quote part of its summary. It says that leaving will gravely damage our industry, and the damage will affect business across many important sectors of the economy, such as food and the chemical industry, and will be particularly damaging to industries with just-in-time supply chains such as the motorcar industry and aerospace. Leaving the customs union will see UK companies having to comply with high levels of new bureaucracy. Requirements on rules of origin alone could add costs of up to £21.5 billion for UK exporters. IT systems will need to be improved and we will more than double the number of traders making customs declarations.

All the trade deals that the UK currently enjoys with third-party countries as part of the EU will have to be renegotiated, starting from scratch. Deals with new markets will take many years to negotiate. It seems clear from the report that the likely loss of trade with the EU and these third countries cannot be offset by new trade deals around the world. The report points out that the Government’s important promise of,

“the freest and most frictionless possible trade in goods between the UK and the EU”,

is ludicrously optimistic at best and dangerously misleading at worst. As the noble Lord, Lord Hannay, added, no details are given of how that is to be achieved, except that it will need new and untried imaginative IT technology—or “magic” as the noble Lord, Lord Adonis, called it. In fact, the Government’s record in introducing grand IT schemes is not particularly encouraging. One of the most disturbing of the report’s conclusions is that the only certain way to avoid a hard border between the economies of Ulster and the Republic, which almost everyone agrees would have a devastating effect on both, is to remain in the customs union.

On the leaked plans for immigration control, although those are not yet official policy they obviously represent what Mrs May wants, given her record in the Home Office. They went down badly with the CBI and the Institute of Directors because of the loss of skills and their effect on productivity. However, for the public the most serious impact of strong curbs on immigration of the kind outlined in that paper will be on the NHS, which is already heading for a crash. A third of new nurses each year come from the EU and yet applications from EU countries are down by 94%. EU doctors also play a vital role; many of them are leaving as they no longer feel welcome. Other public services will also suffer grievously. One example is the Government’s plan to build more than a million houses in the next few years. This requires a 35% increase in the construction workforce. Instead, that is forecast to decline by 6% as Poles and Lithuanians want to leave.

The fact is that negotiations are going badly. Indeed, it seems that the Government and their allies are already preparing for the consequences of a hard Brexit or no deal by blaming Brussels. However, this time that strategy may not work because the public have begun to see the Government as incompetent and no longer believe what they say. Living standards are falling. As wages barely increase if at all, inflation heads for 3% and may well be rising. The pound is likely to fall further. This can hardly be blamed on Brussels. It will become only too obvious that Brexit is making Britain poorer.

What, then, are the prospects of a new referendum? I admit that at the moment there seems to be no majority in favour. However, polls show that public opinion is beginning to move quite sharply towards the idea of what would not be a rerun of the last referendum but a new one, now we know what Brexit means. It is not £350 million a week for the NHS but instead a worsening shortage of nurses and doctors, and a big divorce bill. People did not vote to lower their own living standards and did not expect that to follow. It is now plain that it will. A referendum would give them a chance to change their view. I may be completely wrong, but I would be surprised if there were not increasing support for a new referendum. It is interesting that more and more people now surface who accept that “no Brexit” cannot be ruled out. It is no longer an impossible dream.