Budget Statement

Lord Taverne Excerpts

Monday 4th December 2017 Lords Chamber

[Lord Taverne (LD)]

My Lords, the OBR, the IFS and the Chancellor have all been accused by several speakers of excessive pessimism in their forecasts. I believe that they will prove to have been overoptimistic. I feel hesitant about differing in this from my friend, the noble Lord, Lord Tugendhat, whom I have always regarded as one of the most sensible of Conservatives. What is extraordinary is that the Government, the media and most of industry have all expressed confidence that in the end there will be a soft Brexit. But suppose they are wrong and we end up with no deal or the hardest of hard Brexits: if the financial markets should start to believe that this is where we are heading, it is very possible that there will be a panic, the pound will sink, business and consumer confidence will evaporate, and investment will dry up. Then we would be in a severe crisis. What price then the so-called pessimism of present forecasts?

What are the reasons why no deal or a very hard Brexit are a real possibility? Let us take the Irish problem—the border between the north and south of Ireland. Dublin wants a regulatory regime between the north and the south that is subject to the same rules and regulations as now. Obviously, this cannot apply to the rest of the United Kingdom so it would mean a border in the Irish Sea. How could this possibly be accepted by the Government, let alone the DUP? Other government proposals for a seamless, frictionless border—achieved by some innovative, untried and unexplained IT system—have rightly been rejected by the Republic as incredible. I have always thought—and the recent report by the Commons Brexit Committee confirmed—that the only way we can avoid a hard border is to stay in the single market and the customs union. But that has been firmly rejected by the Government. I really cannot understand why it was ever thought that these talks could succeed.

The failure of the talks at this stage is an indication of the problems of the talks about free trade in general. How can they conceivably be concluded and ratified by the parliaments of the 27 and the European Parliament before the Brexit date? It is said that the aim is now Canada-plus. The EU’s Comprehensive Economic and Trade Agreement with Canada took seven years to negotiate and would offer nowhere near the benefits we now gain from the single market and customs union; for example, services—our major export industry—would suffer particularly badly. Hence the need for Canada-plus, but this greatly complicates the negotiations.

The Government have conceded that more time will be needed, and now aim for a transition or implementation agreement, which, again, it is generally assumed can be sealed before the end of March 2019 and will run for two years after the Brexit date, during which we will stay in the single market and the customs union and will continue to be subject to the European Court of Justice. Will the Conservative Party accept that? It cannot even agree on the shape of the final relationship with the European Union. As I think the noble Lord, Lord Darling, pointed out, what would the transition be to? What would the implementation period implement? The obstacles to concluding the trade agreement are formidable. Furthermore, the moment we leave, all the various trade agreements with some 60 countries that have been negotiated on our behalf by the European Union cease to have effect. We would suddenly be left in total isolation, having to renegotiate some 60 by no means simple trade agreements.

When the reality of the problems that lie ahead in the Brexit negotiations begins to sink in, it looks pretty scary. No deal or a very hard Brexit loom as distinct possibilities, but also open up a new and happier possibility. I believe there is a very real prospect of a major shift in public opinion when a significant section of leave voters—who were promised the sunny uplands—realise that they did not vote to see their families seriously impoverished. If this happens, MPs who feel bound to obey the will of the people may find that the people’s will has changed. In Parliament a final vote is needed and it might well reject no deal. The only real choice for Parliament then would be to revoke Article 50—which is unlikely—or to let the people have the final choice. No deal might well lead to no Brexit. As several speakers have pointed out, if this unprecedented national act of self-harm were reversed, it would totally transform the present prospects of gloom and decline.