Future Relationship Between the UK and the EU

Richard Burden Excerpts

Wednesday 18th July 2018 Commons Chamber

[Richard Burden (Birmingham, Northfield) (Lab)]

I am grateful for the opportunity to say a few words in this debate, Mr Speaker. I wish to start by declaring an interest: I chair the all-party parliamentary motor group, which receives secretarial support from the Society of Motor Manufacturers and Traders, the Motorsports Industry Association and the RAC Foundation.

I want to say a few words about why the stakes are so high for that industry and sector in terms of getting our approach to Brexit right. That is not a narrow parliamentary debating point. It is not about which faction is on the up or on the way down in the Conservative party—or indeed in any other organisation. We are talking about the future of that sector in this country. It is a sector that brings in £77.5 billion every year in revenue and which makes up almost 10% of manufacturing output. It is an industry on which literally hundreds of thousands of jobs up and down the country depend. This is about the livelihoods of people in the west midlands and in other parts of the UK. It is about reality. I want to focus my remarks on why, despite the vote earlier this week, I really think that continued customs union membership has to be a negotiating objective of our future relationship with Europe and why the so-called facilitated customs arrangement—whether it be max fac, quite fac, relatively fac or not very fac at all—just really will not cut it.

Every day, trucks deliver £35 million-worth of parts to the UK. Most of those are then shipped back to the European Union. The whole industry relies on a delicate system of just-in-time delivery, with the ability to move parts and goods within the European Union quickly and efficiently and with costs kept to a minimum. Any barrier to that frictionless movement will result in delays at the border, additional customs bureaucracy and extra costs to business.

Just think about Operation Stack and about how quickly the roads to the channel ports got gridlocked when industrial action in France caused delays three years ago. It cost the freight industry £750,000 every single day. Just think about how quickly customs checks at our ports would cause the same kind of snarl-ups and about the millions that it would cost the automotive sector. I say to Members: do not just take that from me; listen to what the industry itself is saying. The Society of Motor Manufacturers and Traders issued this warning:

“Any customs model that fails to replicate the benefits of UK automotive’s current trading relationship with the EU is likely to create delays, disrupt highly efficient “just-in-time” manufacturing and undermine competitiveness.”

As its chief executive Mike Hawes said in May:

“Continuation of customs union membership is a minimum for the car industry. ”

Just listen to the warning from Jaguar Land Rover, which said:

“a hard Brexit would cost £1.2 billion a year in trade tariffs and make it unprofitable to remain in the UK”.

Earlier this year, the Business, Energy and Industrial Strategy Committee warned:

“There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future”.

Its warning must be taken seriously. It said that the most that we can hope for is

“an exercise in damage limitation”

Unfortunately, on current form, the Government are even falling short of that objective.

[Matt Western (Warwick and Leamington) (Lab)]

My hon. Friend makes a very important point. Specifically, does he share my frustration that there was not greater support from the Conservative Benches for new clause 18, which would give that default—the customs union—at the end of January 2019 to give that reassurance and safeguard to the industry?

--- Later in debate ---

[Richard Burden]

My hon. Friend is absolutely right. If there is one thing that business says time and again it is that it wants certainty. It is the idea that, even if one’s objectives do not go quite right, one has something else there that can provide that certainty for the future. That “backstop” of customs union membership would have provided that much needed certainty.

How can we describe the Government’s approach in the long-awaited White Paper? Well, “courageous” is the term that Sir Humphrey Appleby probably would have used. Others may describe it as fantasy. Nowhere else is that more obvious than in relation to what it describes as the facilitated customs arrangement. If we read through it, we see gobbledegook explanations that are so opaque that they could have been written by Sir Humphrey himself.

Just look at how the White Paper suggests we deal with imports from third countries arriving in the EU for onward transfer to the UK and vice versa. The Government say that the EU’s customs approach will be “mirrored” at the same time as we will be imposing our own tariffs and customs arrangements elsewhere. As far as I can see, this is entirely reliant on a non-existent track and trace system to verify origin and tariff application, but until that technology exists, we will need to check everything meticulously at the border to apply different tariffs and different rules to different things. Put together, that means that the UK is taking on a huge bureaucratic and systematic burden for every single item imported to, or transferring through, our ports and slowing down the movement of goods in the process and causing the very friction that we always say that we want to avoid. But now, after the last couple of days in this Chamber, the Government have managed to twist themselves into even more knots by kowtowing to the Brexit fanatics on their own Back Benches. Doing so has made the White Paper’s proposals, problematic as they were, even more unworkable.

Of course, we know that the motivation of at least some Conservative Members is to create a proposal so chaotic and so unreasonable that we crash out with no deal and fulfil some sort of long-held Eurosceptic fantasy project. That is why I do not believe that the Government’s suggested approach will work. Far better and far simpler to remain in a customs union with the European Union so that trade between the EU and the UK can be truly frictionless; so that there really is simplicity and maximum facilitation of goods arriving from third countries, with one easily understood set of external tariffs; so that there is no hard border on the island of Ireland; and so that we can continue to benefit from the trade deals that the EU has with 68 other countries, without having to renegotiate them.

We could have made the resolution of this whole thing a lot simpler if the Prime Minister had not said that single market membership was a red line in the first place. Were it not for the chaos and the confusion that the Government have created, we could, by now, be an awful lot further on than we are. That is why I urge the Government, even at this late stage, to listen to the voices of industry when they say that the only reliable way to achieve the frictionless trade that we need is to remain in a customs union with the European Union.