Department for Exiting the European Union

Marcus Fysh Excerpts

Monday 26th February 2018 Commons Chamber

[Angus Brendan MacNeil]

The other referendum was actually in 2016, but in both referendums—of 2014 and 2016—the Scottish people voted clearly to remain in the European Union, so, yes, I do respect the two referendums. I want that opinion to be checked again in the further referendum on Scottish independence within the European Union that, as the hon. Gentleman knows, is coming down the tracks in jig time.

A customs union, as currently suggested by the principal Opposition, can have myriad or infinite permutations. Have no estimates at all been made for that? All in all, this is one of the areas where the estimates are huge, the variabilities are massive and it is very unclear where the chips will fall.

The overall message that should be going out is that when boardrooms and when the people of Scotland look at the two parties in this Chamber—the Government and the principal Opposition—they have to start thinking and, particularly in the boardrooms, they have to start speaking. They do not have to enter into political debate, but they have to start to become very strident indeed in what they are saying. I meet too many of those from companies who come to me with their fears and their estimates of what might happen. In reality, they have to start saying what they want, because otherwise it will be too late.

I am reminded of the book, “On the Psychology of Military Incompetence”. In a number of military events that occurred, whether in Crimea—the charge of the Light Brigade was in Crimea of course—with the Boers in South Africa, in Mesopotamia or in Afghanistan, the common theme running through them all was the fact that the rank and file could not believe their commanders could get it so utterly wrong, and it was only when hot lead ripped through bare flesh that people then understood. There are companies that are too afraid to move and that, for one reason or another, will not say a word, but when they are taken down by the 2%, 5% or the 8% damage of Brexit, I tell those companies now that it will be too late to do anything about it then, so speak now.

Recently, my Committee went to the USA and Canada to look at the possibility of trade deals. The farmers lobby asked us why. Ford said a UK-US deal would be incremental, but that a UK-EU one would be existential. Certainly, when I saw the border with other Committee members, it was not as fast as the border at the moment between Ireland and Northern Ireland or as the border between France and Spain. These are some of the realities that are coming our way.

[Mr Marcus Fysh (Yeovil) (Con)]

Will the hon. Gentleman give way?

[Angus Brendan MacNeil]

I am very glad to give way to one of the Select Committees colleagues who were with me. I predicted at the border that some people would see what they wanted to see, so let us see what happens.

[Mr Fysh]

The hon. Gentleman is absolutely right that we saw the border between the US and Canada. The US and Canada have different regulatory and customs systems, yet they have a just-in-time, integrated supply chain that works perfectly well, so it is possible. The forecasts that he referred to earlier take no account of the possibility of such just-in-time supply chains continuing to work in a free trade agreement scenario.

[Angus Brendan MacNeil]

We were told that the average wait time was 15 minutes and just-in-time takes cognisance of that. If two minutes at Dover becomes four minutes, that will result in a 17-mile tailback. And, of course, no embarkation of ships takes place on the US-Canadian border after they have passed, or just before, the border point.

In summary, this Government exercise is costing about £250 million a year. It will cost the Scottish economy, which concerns me most, between £3.6 billion and £12 billion a year by 2030, and the way in which the two main parties are going at it means that the figure will probably be closer to £12 billion than to £3.6 billion. It really is time that the UK took a short, sharp look at itself. I predict that Brexit will probably collapse on itself. The economic reality will hit the rhetoric head first, and when it does so the rhetoric will just vanish into a pile of dust and be trampled by the economic reality, which is that the people want their jobs and they want the economy running, not the ideological purity of some Members of this House.

--- Later in debate ---

[Hilary Benn]

The hon. Gentleman anticipates exactly the point that I was going to make. I should point out that the information about the Committee taking that decision last week came into the public domain when our minutes went up on our website, so it is available for everybody to see.

I was just about to say that the assessments of the economic impact of some policy choices that the Government face have been hotly contested by some. Civil servants have been accused of producing figures to support views that they already hold, rather than undertaking an objective examination of the evidence. I have to say that to attack civil servants and Government economists in this way is both wrong and unfair. The right hon. Member for East Antrim (Sammy Wilson), who is also a member of the Select Committee, was absolutely right to make the point that the analysis is, rightly, heavily caveated. That is important, because trying to forecast what the future holds is a difficult business, as we all know, and there is a strong argument for saying that if the information is going to be in the public domain, the nature of the caveats should be too.

[Mr Fysh]

Does the right hon. Gentleman think that there is enough information in the impact analyses to judge whether the impact assessments are objective?

[Hilary Benn]

I made the point a moment ago that Government economists and the Treasury are not the only people who are trying to look at the economic impact of leaving the European Union and what the alternative models might produce. I presume that all the other ones have already been published; they all show the same picture. Indeed, the best indication we have had since the referendum result of what the world thought of the British economy’s future value came the day after, when the pound fell. The world looked at the United Kingdom and said, “You’re not going to be as well off as you were. The economy is still going to grow”—let us not get that wrong—“but it will grow less than it would have done had you not left.”

All I am arguing is that we should make the effort to try to understand. Having been a Cabinet Minister and having looked at many impact assessments when legislation was coming forward, I know that we do this for all sorts of things that are really quite minor by comparison with this absolutely fundamental change that the country is facing. That is why, for me, it is inexplicable that so little work has been undertaken by the Government in an attempt to assess the situation so people can then look at it. The other point I would make is that if that assessment had shown that the British economy would be better off, the report would not only have been published yonks ago, but would already be gathering dust on our bookshelves.

[Mr Fysh]

I have looked at forecasts for many years as a professional. I share the right hon. Gentleman’s concerns about these impact forecasts, but perhaps for different reasons. They have absolutely no value as a decision-making tool. Frankly, I am shocked at how poor and poorly constructed they are. I encourage all hon. Members to read them in detail and see exactly that.

[Hilary Benn]

Different Members will draw different conclusions from what they read. It sounds to me that the hon. Gentleman is making an argument in favour of openness, so that everybody can make a judgment. In the circumstances, that would be a very wise thing to do.

My last point is that the argument we are currently having in the political world about membership of the customs union as opposed to leaving it, which is the Government’s policy, is all about what is in the best economic interests of the United Kingdom, our businesses, and the jobs and communities that depend on them. I say to my hon. Friend the Member for Darlington (Jenny Chapman), who occupies a position as shadow Brexit Minister, that I unreservedly welcome the fact that there is now a growing consensus in the House in favour of remaining in a customs union with the European Union after the transition period. As hon. Members will know, I have been arguing for that for a very long time. It is supported by, among others, the CBI; it would remove any risks of a return to tariffs and help to ease concerns about supply chains; it would be an essential first step, but not the complete answer, to ensuring a free and open border between Northern Ireland and the Republic without infrastructure; and it would also save money—the hon. Member for North East Fife made the point that, if we are in a customs union, we will not need to recruit a load of new customs officers.

The House will face that choice in due course, however long the Government delay the Trade Bill. To the two SNP Members who have spoken, I should say that, despite their slightly ungenerous characterisation of the policy position announced by the Leader of the Opposition and the shadow Brexit Secretary over the last two days, I trust that, when the vote comes, the SNP will be in the Division Lobby with Labour Members and others.

--- Later in debate ---

[Sammy Wilson (East Antrim) (DUP)]

Unlike most contributors to this debate, I do not believe that we are spending the money in these estimates to take the United Kingdom into some dismal future. Rather, it is essential that this money is spent in order to ensure that this country has a bright future. I do not want to debate the reports about our future economic prospects, other than to say that 15-year economic reports do not mean a great deal. We can dispense fairly quickly with 15-year economic reports that are full of caveats that highly uncertain figures should not be used as forecasts or given any weight as single-point estimates. None of the reports made to date have come to fruition. In fact, all the gloomy forecasts have been totally dispelled in the short run.

The money that we are spending in these estimates to exit the EU is money well spent. It will release billions of pounds in the future from our EU contributions. It will open new horizons to do trade deals with the parts of the world economy where 90% of future growth will happen. It will enable us to stop the imposition of the red tape from Europe that stifles innovation and new industries in the United Kingdom. Indeed, it is the established industries that most hanker after the directives, because they influence the regulations from Europe in order to cut out competition, so that should indicate that we are going in the right direction. The money is essential to open up a bright future.

It is important that we are prepared. People have commented on the unpreparedness and the fact that we have a lot of work to do in the negotiations. Yes, the establishment and the elite may well have found the referendum result unexpected, but that was because they were all so cosy in their little arrangement. However, the people voted in a certain way and now the Government must act, which is why we have the Department for Exiting the European Union, and it is important that we prepare for all the different scenarios, including for no deal.

When we look at how European bureaucrats and negotiators are treating the situation, they still do not believe that the views that people expressed in the referendum will actually be implemented. We therefore get the kind of nonsense that we have had from Michel Barnier over the last couple of weeks. He has threatened us with things like, “If you do not behave, you will be punished,” and now that has to be put into legal language that will almost tie us to an option that keeps us in the single market and the customs union. It is important not only that the Government send out a signal, but that they are prepared to walk away on WTO rules if there is no good deal for the United Kingdom. That should be used as the basis to negotiate a future free trade arrangement.

[Mr Fysh]

One of the concerns I have is that we might have a political agreement on a transition or implementation period in the next six or nine months, but if that falls over at the last minute, it will be essential that we have made the preparations now. I am concerned that we are not getting on with appropriate speed with some of the infrastructure that could alleviate the potential trade issues at the border.

[Sammy Wilson]

Not only are these preparations needed in case there is no deal; many of these preparations will be essential whether or not there is a deal. Of course we have to spend money on registering EU citizens who already live in the United Kingdom, as the Chairman of the Select Committee, the right hon. Member for Leeds Central (Hilary Benn), mentioned. The Home Office needs to spend money on the borders as it prepares for our exit. Whether we have a deal or no deal—or whatever scenario there is—IT infrastructure or surveillance infrastructure, or whatever, will be needed to monitor the trade that goes back and forth. It is essential that we spend that money.

Reference has been made to an underspend. The hon. Member for Edinburgh East (Tommy Sheppard) said that the underspend is a metaphor for Brexit, and maybe it is. Yes, we will save an awful lot of money when we leave the European Union. We will save our contributions to the EU budget. If the underspend is a metaphor for Brexit, it is simply due to efficiency. That is well and good.

The Department is entering uncharted waters. Given the work streams that need to be done, do the underspend last year and the reduction this year reflect the true resources that the Department needs? Given the nature of the people, as was explained to us at the start of the debate, have there been difficulties in getting the needed expertise? If so, what plans does the Department have to ensure that we have sufficient resources to do the important work we have talked about? The Minister has made an assessment of future needs; is he convinced that other Departments have sufficient money? Finally, £365,000 has been spent on legal fees in Northern Ireland. Have those costs arisen as a result of action taken by the known fraudster in Northern Ireland who is now a serial litigant?