Brexit: UK-EU Relations (EUC Report)

Lord Whitty Excerpts

Monday 2nd July 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I thank the noble Lord, Lord Boswell, for steering this report and initiating it himself, and for giving the House such a masterly presentation of what it is advocating. That makes it rather more difficult for the rest of us, and I may need to be slightly more controversial than I had originally intended simply to distinguish myself from the noble Lord. Still, his basic message is that time is short and it is time to abandon the red lines on both sides.

We are in a very difficult situation. Let us remind ourselves that the withdrawal treaty has not yet been agreed and that the issue of the Irish border threatens our even reaching stage one in any mutually agreed arrangement for the future. The transition period has also not been agreed, and therefore the question of what happens after 29 March next year is not as certain as a number of people and businesses already think. We are looking positively at October or November for not only agreement on the withdrawal agreement but a political declaration on all aspects of our future arrangements. Some on the European side refer to this as a four-pillar approach: the first pillar on economic affairs and trade; the second on internal security, police and justice matters; the third on external security and foreign policy; and the fourth on what my colleague, the noble Baroness, Lady Noakes, would probably refer to as the “odds and sods” of the agreement but it will include important things such as R&D, transport and, importantly, internal migration within the former EU.

How has it taken the Government so long to get to the point where the communication to the EU of our basic approach to the long-term relationship will depend on agreement by a fractious Cabinet this weekend? I claim no great foresight on this but the noble Baroness, Lady Verma, and I chaired a committee nearly 18 months ago at which we pointed out some of the arrangements that were needed and some of the decisions that would have to be made. For example, we referred to our future trade arrangements. We said the EEA option would be the least disruptive, although of course it had downsides in terms of freedom of movement. We said that all international agreements require some degree of compromise. We argued then that it is possible that a temporary arrangement to stay within the customs union, or a union with the customs union, would be a very sensible defence. Even this week we have seen the strange position of Michael Gove being ahead of the game once again by tearing up one version of the customs arrangements before, as I understand from the papers today, the Prime Minister tore up two. So we do not even know where we stand on basic trade in goods.

Our committee also said at the time that the issue of trade, important and central though it was, would have to be considered eventually in the context of other arrangements. We touched on an association agreement, which we come back to in this report. We were ambivalent about it because there were members of the committee, witnesses and others, who saw association agreements as a way into the EU rather than facilitating a way out. However, association agreements are much wider than that. One of the things that we must by now have noted about the EU is that it needs a legalistic basis for agreeing any movement, and association agreements in their broadest sense are clear within the treaties of the EU whereas bespoke agreements of any sort are not. Association agreements, for example, cover not only potential accession countries but countries such as Chile, which, as far as I know—I keep in touch with Chile as I have family there—have no intention whatever of joining the EU. So association agreements could be central to bringing together all the different themes of trade, security and foreign policy in a way that would give us a context and a totality of approach and give the Europeans what they need in terms of a legal base.

I have also on occasion been critical of how the negotiations have proceeded. A few months ago, I tried to relate them to my experience conducting industrial relations negotiations and talked about how so many mistakes have been made by the Government in that respect. I add another point to what I said then. In any such negotiations, it is very important to ensure that the people you purport to represent understand what you are doing and that, at the end of the day, there must be some compromise. I fear that the leadership of the Conservative Party has not obviously observed that and some of the members of the party are taking advantage of that failure to lay down those rules.

However, on reflection, this process is less like a negotiation over wages or the price of a house and rather more like a divorce. That is partly because it has serious emotional overtones but also because there are always complexities that you do not appreciate at the beginning. It is not a no-fault divorce. It is we who are walking away from what has for a long time been a tetchy marriage. As a result, we are not having any serious communication of minds between us and the European Union. We are in terms of procedure and what needs to be done next, but in terms of approach there is serious dissonance.

The Select Committee has picked this up on our visits to Brussels and in the report back that we get from the Secretary of State. It is all very formal and helpful, but indicates that there is no meeting of minds. To take the divorce analogy a stage further, we have made a grudging contribution to the ongoing upkeep of the house, but we are not engaged in what our future relationship will be. There are so many arrangements that we have to untangle and redefine after 45 years of marriage.

I shall focus a little on trade. A disturbing idea in the past few days is that we can reach agreement with the EU on customs for goods and ignore the whole of the service economy. That seems a crazy position for a country whose employment and GDP is now 60% in services. In the modern world, it is difficult to disentangle some of the contracts that offer products from the service element of looking after those products. So that is difficult to do in any case, but a single market for goods and a complete barrier on services as a result of regulatory non-alignment would be a foolish outcome for this country.

All the service sectors, which are so important to our economy—as important as manufacturing—require some across-the-board arrangements. They require the right of establishment, they require something such as passporting, they require intellectual property rules, they require data protection and data flow rules and mutual recognition of qualifications. They also require access to EU agencies in many areas, an issue which I was raising throughout the passage of the withdrawal Bill but has not yet been resolved, despite the fact that the Prime Minister’s Mansion House speech recognised that in some cases, we will need associate membership—if we can achieve it, if the Europeans agree—in some of those sectors. There are 30-odd agencies to which many sectors have to redefine their relationship. We hope we can get some degree of membership or associate membership to them. All these service sectors, from finance to the performing arts, need some access to those arrangements.

Most mention as their first item their need for access to the talent and labour available from the European Union. Some would say that it is our own fault that we have not trained people to be medics, scientists, vets or to contribute to the physical and performing arts, but the diversity of people who are talented in those areas that the European Union has brought us has been an important part of British success in those sectors. That means that the trade agreement is interrelated to the agreement, if we can reach one, on the future access of workers—of people—between the EU and the UK. We will need a bilateral agreement, as one of our sub-committees said a year or more ago, as part of the final deal.

We will also need respect for the rights of those workers and individuals. I was worried when I read a government paper that stated that environmental standards have to be as good as or better than those of the European Union once we have complete control of our regulations. It did not say that in relation to workers. It simply said that those standards should reflect the changing nature of the labour market. That is not much of a commitment to workers at either end —British workers or European workers coming here.

There are a lot of questions that the Government need to address. After all the division, manifest in the press and beyond over the past few weeks, the Government need in the next few days to come to a position that defines their approach to the negotiations, which can elicit a positive response from the European Union and which the British people will understand. At the moment, I fear that the Government are a long way from that position.