Brexit: Withdrawal Agreement and Political Declaration

Lord Wallace of Saltaire Excerpts

Thursday 10th January 2019 Lords Chamber

[Lord Wallace of Saltaire (LD)]

My Lords, I hope that when he replies, the Minister will have noted the strong speech from the noble Lord, Lord O’Neill of Gatley, echoed by the noble Lord, Lord Dubs, just now, that the Conservative Party’s internal confusion over Brexit distracts the Government from Britain’s underlying problems of inequality, poor productivity, poor housing and the north/south divide. Resentment over those neglected problems drove a large part of the vote to leave. Failure to address them will leave the country bitterly divided, whether we leave the EU or stay.

I want to challenge the deliberately misleading claims being made about the financial implications of the EU withdrawal agreement and the impact of withdrawal from the EU in the long term. On Monday the Prime Minister, announcing the new 10-year plan for the NHS, said that the extra financing would be available because,

“we will no longer be sending vast annual sums to Brussels ... with no increase to people’s taxes”.

David Davis, on the BBC “Today” programme on Tuesday, declared that leaving without a deal would free us from any future financial obligations, thus giving the Government a full £15 billion a year to redistribute to other spending programmes.

Yes, the UK has been a net contributor to the EU budget. We are the second-largest contributor, after Germany, as a wealthy country with a large population—though in terms of contributions per head we are the fifth largest, after the Netherlands, Sweden, Germany and Denmark. We should also remember that Norway contributes more per head to this explicitly redistributive budget, as a rich non-member which benefits from access to the single market. We have developed common institutions and agencies which have saved us money through sharing resources, and which will cost us more to set up again on our own. We have benefited from common programmes, which, when we leave, we will have to fund ourselves. And we have contributed to Europe’s global role in an uncertain world: a global Britain within a global Europe, rather than against a global Europe.

When we joined the European Economic Community in 1973, George Thomson, the British Commissioner, set up the Regional Development Fund to assist poorer regions across the member states, through which funds flowed back to peripheral regions, including within Scotland and the rest of the UK. Margaret Thatcher—of whom I know the noble Lord, Lord Forsyth, is a particular proponent—declared in her Bruges speech in 1988 that Prague, Warsaw and Budapest were also part of Europe. Successive British Governments championed eastern enlargement, from 1990 on; and funds thereupon began to flow, including from our contribution, to the poorer states of eastern Europe and to others outside the EU in the European neighbourhood—more than to France, Italy or Spain. That has been a shared investment in European security, since the end of the Cold War.

We have not yet negotiated the terms of our future relationship, but Ministers have repeatedly stated that they want the UK to remain closely associated with many of the EU’s existing programmes—from Horizon 2020 and its successor fund for research and innovation to the Erasmus student exchange programme, to Europol and the intelligence networks which contribute to our shared security, and to the European Defence Agency, which supports co-operation in defence procurement. It would damage our economy to cut ourselves off from commonly funded trans-European networks in energy and telecommunications. Ministers have promised that we will continue to pay our share of these programmes in return for continuing participation. The political declaration on the future relationship refers to a,

“fair and appropriate financial contribution”,

in return for UK participation in these.

The Government have not yet told us how much it will cost to replace EU spending within the UK on programmes from which we will withdraw—agricultural and environmental support, financial transfers for our poorest regions, and funding for scientific research and universities, if we do not remain within those EU programmes. Even the hardiest Brexit supporters seem to think that these funds will somehow continue to flow. Sir John Redwood declared last week that Brexit would allow us to cut tariffs and grow more of our own food. How we will manage to grow more of our own food without financial support for agriculture I simply do not understand. No one in the referendum campaign explained that Britain benefited from the many common institutions and agencies that we share with other EU states.

Now that we are leaving, we are spending heavily on duplicating those institutions. We need an upgraded national medicines agency, for instance; we are already recruiting additional diplomats to manage our bilateral relations with our European partners and others; we now have a new Department for International Trade. The Institute for Government recently reported that Defra has increased its staff by two-thirds since the referendum to handle repatriated agricultural and environmental regulation. HMRC estimates that it needs 5,000 more staff and a complex new computer system. Border Force is woefully short of staff and is actively recruiting. We cannot take back control of our coasts and waters without a substantial increase in HM Coastguard and more maritime patrol vessels. On top of what has already been spent, the Chancellor announced in December a further £2 billion for Brexit preparations distributed across 25 government departments, bringing spending on Brexit so far close to £5 billion. No doubt there will be more to come.

David Davis’s dream of leaving Europe without any further commitments assumes that our continental partners will continue to co-operate with us whatever we do and however we behave. Less reckless politicians understand that borders cannot be managed, nor trade maintained, without active co-operation with neighbours, so talk of some sort of “managed no deal” floats around. After all, we have 1,000 Border Force staff in France, Belgium and the Netherlands at present to speed travellers and goods across the Channel. I expect that the noble Lord, Lord Forsyth, expects that they will stay there so that there will continue to be frictionless trade. If we want them to stay in post and still benefit from other shared networks, we cannot simply walk away from the legacy costs of EU membership, as David Davis and the noble Lords, Lord Forsyth and Lord Framlingham, and the noble Baroness, Lady Noakes, in this debate all want to deny.

There is, therefore, no Brexit dividend. It is a sign of desperation that the Prime Minister is now claiming what Boris Johnson put on the side of the bus, which the Chancellor must have told her is nonsense. Brexit is already imposing substantial extra costs on the British Government. It will impose longer-term costs, both on the budget and on the wider economy.