Leaving the EU: No-deal Alternatives

Paul Blomfield Excerpts

Wednesday 21st February 2018 Westminster Hall

[Paul Blomfield (Sheffield Central) (Lab)]

It is a delight to wind up for the Opposition with you in the Chair, Mr Sharma. I join other Members in congratulating the hon. Member for Eddisbury (Antoinette Sandbach). A large majority in this House respects the outcome of the referendum, but wants to ensure that we leave the EU on terms that protect the economy and people’s jobs and livelihoods, as well as the rights and protections that we gained through 43 years of membership. It is a majority that recognises our future lies in a close and collaborative relationship with the European Union. The hon. Lady is very much part of that majority, and she has done us all a service by securing this debate and in the way she opened it.

There is a heavy responsibility on this Parliament, on all our shoulders. We face the most important choices in our lifetimes that will affect generations to come. That demands that we are honest and open in evaluating the decisions we face. That is why Labour has consistently pushed for the publication of impact assessments and economic analyses so that we have the information we need to inform our decisions. We need to avoid what the Prime Minister’s former deputy, the right hon. Member for Ashford (Damian Green), described on Monday as the

“problem of politicians who won’t accept evidence.”

He was also right when he said:

“If analysis is being produced, then publish it. And frankly there will be a big political debate...Let’s have this argument in public, that’s what democracies do.”

The referendum was a clear decision, but it was a painfully close vote that we should implement in a way that unites the country, which involves the sort of compromise that many Members have talked about. Whether people voted remain or leave, they will not thank politicians who lead them into a Brexit on a false prospectus that fails their expectations and damages their prospects. We need to be honest about the expectations created by the referendum. Everybody now recognises that £350 million will not be released for the NHS, or for anything else, as the Chancellor confirmed in his 2016 autumn statement.

Nor will taking back control mean a significant change in migration. As the Environment Secretary told the National Farmers Union yesterday,

“agriculture needs access to foreign workers...both seasonal and...permanent.”

He echoed the Brexit Secretary who said in Estonia last year that the door will not “suddenly shut” on EU immigration, as it will take “years and years” for British citizens to fill the employment gaps.

On the ECJ we need to recognise that any trade agreement will involve ceding sovereignty to bilateral or transnational bodies. People need to know that trade deals will have consequences. The US Commerce Secretary, Wilbur Ross, has made it clear that a

“critical component of any trade discussion”

with the UK would be the scrapping of EU food rules. And for what? For 0.2% growth anticipated by the Government. So open discussion of all the options is vital as we move forward.

I have been to the reading room and I should make it clear that I am complying with the confidentiality requirements, so I quote from information in the public arena. We should pay attention to the Government’s own analysis that EEA membership would see 2% lower growth than otherwise projected over 15 years. A comprehensive free trade agreement with the EU would result in 5% lower growth, and no deal would almost double that: an entire 8% lower growth.

No deal is, of course, the most damaging of all the options. The hon. Member for Eddisbury made that case extremely clearly and well. We should look at everything. The Labour party wants to keep a customs union and a new relationship with the single market on the table. We want to consider the EEA-EFTA model, as my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook) argued when we last debated the issue.

[Vicky Ford]

Did the hon. Gentleman say he wants to keep membership of “a” customs union or “the” customs union on the table?

[Paul Blomfield]

I really love the pedantry of this. I was clear that we are talking about a customs union that serves the needs of the British economy and British manufacturing.

As my hon. Friend the Member for Greenwich and Woolwich argued previously, the EEA-EFTA model raises challenging issues and would need to be supplemented by customs arrangements, but it should not be lightly discounted, because there are features of the EEA-EFTA model that we would want to see as part of any final deal.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Paul Blomfield]

I was just about to mention the hon. Gentleman, so I am delighted to give way.

[Kevin Hollinrake]

I await with anticipation what the hon. Gentleman will say. When he said he would not lightly discount EFTA and the EEA, does that mean the official Opposition are not discounting it as an option?

[Paul Blomfield]

I think that is fairly clear: we want to keep options on the table, in an economy-first Brexit negotiation. I was going to say that the hon. Gentleman’s points about the political ideology of the EU27 were reflected, ironically, at the weekend in Munich by the Prime Minister, when she warned the European Union not to let “political doctrine and ideology” stand in the way of a good deal on security—the hon. Gentleman is nodding. She was right, but if that is good enough for security, why is it not good enough for the economy? Political doctrine and ideology from the European Research Group has framed the Government’s approach from day one, ignoring not simply the 48%, but so many of the 52% who did not vote for an extreme and destructive Brexit.

We have now had two of the series of Cabinet speeches apparently defining the “road to Brexit”, and they highlight the depth of divisions. We had the Foreign Secretary’s damp squib, setting out his ambition for regulatory divergence, contradicted yesterday by the Brexit Secretary, who tried to reassure everybody that little would change. Tomorrow, of course, the Cabinet will try to resolve the differences.

At this moment, out of the shadows, comes the European Research Group again, with a letter echoing the one co-ordinated by the Minister when she was its chair, seeking to derail the Government’s policy on the transitional period, and with it to ensure that the country stumbles towards the extreme and destructive Brexit that the vast majority of people simply do not want. Perhaps the Minister will take the opportunity, having not yet replied to my letter of several weeks ago, to reject that approach, and make it clear that she supports Government policy on the transition.

There has been a lot of common ground in today’s debate. The Opposition hope, even at this late stage, that the Government can reach out to the common ground in Parliament and in the country, with a sensible approach to the negotiations that face us in the few short months that we have left, seeking a Brexit that puts the economy first and keeps all options on the table.

--- Later in debate ---

[Suella Fernandes]

Norway does not have a seat in the European Parliament. It does not have a vote on whether regulations coming through the EEA agreement apply to it or not. It generally has to follow those obligations in line with its obligations under the EEA agreement. To diverge from that agreement would be a breach and would therefore lead to questions about its membership and subscription to that agreement. That is a fundamental point that makes membership of the EEA and the Norway option not attractive for the UK.

In response to calls from business, the implementation period is there to benefit businesses and individuals, so that they avoid the need for two sets of changes. It will also give them more time to adjust to the new future partnership.

[Paul Blomfield]

Will the Minister give way?

[Suella Fernandes]

I will not, unfortunately. I have only six minutes and I have quite a lot to get through. I am sorry; I cannot.

The implementation period will also ensure that businesses have time to adapt to the new relationship between the UK and the EU. Crucially, only under a deal with the EU and the UK can this essential period take shape. None of the alternatives suggested in today’s debate can offer that level of continuity and clarity to businesses and citizens in the short term. That is why the deal that the Government are seeking is the best alternative to a no deal and is an alternative that we are confident of securing.

On EFTA—

[Paul Blomfield]

Will the Minister give way? There is a tradition of accepting an intervention from a shadow Minister.

[Suella Fernandes]

I must continue because I do not have much time, and EFTA has been a big issue in this debate. I will give way if I have time after my comments—I hope the hon. Gentleman will have patience with me.

Several hon. Members have raised EFTA membership today as the main alternative. Although we recognise the benefits of ensuring continuity in our relationships with the EFTA states, we have no plans to seek membership of the EFTA agreement for four key reasons.

First, EFTA is a trading bloc of four countries. Membership of EFTA does not in itself deliver any market access to the EU. Norway, Iceland and Liechtenstein effectively participate in the EU single market by virtue of the EEA agreement. That would not deliver more direct control over decisions affecting the UK, nor would it deliver control over migration, which is a key aspect of our leaving the EU.

Switzerland participates in some areas of the single market through a series of bilateral agreements with the EU, but many of those do not cover the areas in which the UK has interests. In any case, the Government have made clear on a number of occasions that we are not pursuing an off-the-shelf arrangement; we are not copying and pasting other agreements. We are seeking a particular bespoke agreement relevant to the UK’s economy. The model I have been discussing does not strike the right balance on democratic control and mutual market access that we want in our future partnership with the EU.

Secondly, our ambition as a global trading nation goes beyond the scope of EFTA’s existing free trade agreements with third countries. EFTA’s FTAs are not suited to the size and type of the economy in Britain. They are not with the larger economies of the world—countries and economies with whom we would wish to be pursuing new economic partnerships. They are not in the sectors where our economy has strengths, which are areas in which we would want to pursue new agreements. Leaving the EU offers the opportunity to negotiate our own free trade agreements and to be a positive and powerful force for free trade in the world.

It is also worth mentioning that membership of EFTA would not be the quick and easy solution that some here have argued. Even if EFTA members were to welcome us back into EFTA, we would not have immediate or automatic access to their 27 FTAs. Our entry into each one would need to be negotiated individually with the third countries involved.

Thirdly, membership of EFTA means accepting free movement between EFTA member countries, as the EFTA convention provides for free movement of EFTA nationals. Liechtenstein has been raised as a derogation, but it is not a comparable example. Liechtenstein is a country with a population that numbers less than that in almost every constituency in the UK, at 37,000. It is very difficult to see how the example of Liechtenstein can be applied to the UK, with its population of 65 million.

Finally, although we want to maintain our deep and historic relationships with the EFTA states, the UK is in many ways different from those countries. The EFTA states have a combined population of 14 million people, compared with our population of 65 million. The EFTA bloc’s combined GDP in 2015 was around £710 billion, in comparison with the UK’s £1.9 trillion. The UK’s participation in EFTA would fundamentally change the nature of that group.