EU-UK Summit

Debate between Sarah Olney and Sadik Al-Hassan

Thursday 22nd May 2025 Westminster Hall

[Sarah Olney]

I am so glad that the hon. Gentleman raised that point, because what he will need to accept in time is that the way forward for cheaper electricity bills in this country is to invest in renewable energy. That, more than anything else, is what will reduce the cost of energy for consumers and businesses. The more renewable energy we have, including from wind farms off the east coast, the quicker we can get to reduced bills for our constituents.

The Liberal Democrats welcome many parts of the new agreement. It marks a distinct and positive step towards reversing the damage caused by the Conservatives’ pitiful negotiations with Europe, and I welcome the progress on those issues. I am sure that the hon. Member for Mid Buckinghamshire (Greg Smith) will welcome the fact that the Liberal Democrats would echo his call for a return of the European Scrutiny Committee; I agree with his comments on that.

According to a recent study from the London School of Economics, the Brexit deal reduced goods exports by £27 billion, or 6.4%, in 2022. Smaller firms were the most affected. The Government say that the new deal will add £9 billion to the UK economy, and we welcome the decisive step to address the disastrous damage that Brexit brought to our economy.

However, ahead of the last general election the Labour party drew itself some self-defeating red lines. The timidity in negotiations with Europe seems to be driven more by a fear of the Reform party than a commitment to bring forward proposals that would benefit the British people. Joining a new customs union with the EU is one such line. However, they are acting less like lines and more like chains weighing down on UK growth and prosperity.

[Sadik Al-Hassan]

It seems that the deal is both too much and too little. Perhaps if it were porridge, it would be just right. Does the hon. Lady agree?

[Sarah Olney]

I disagree; it is too little. Whatever the Government have said, it is too little for the Liberal Democrats. We would have gone further, although I certainly welcome the progress that has been made.

Times change. We know that joining a customs union would unlock vital new opportunities for British businesses and boost our economy in a meaningful way. In fact, even a deep alignment deal would boost growth by 2.2%, which could result in a £25 billion windfall for the public purse, and that would fall short of the benefits that a customs union would provide.

In the years 2020 to 2024, the net change in the number of small and medium-sized enterprises in the UK decreased by 25,495. Since 2019, UK businesses have also had an average closure rate of over 12%, outstripping the rate of new businesses starting up. I have heard about the challenges that businesses have experienced due to Brexit red tape, which is a direct impact of the Conservatives’ pitiful negotiation. Successful high street businesses that have operated for four decades tell me that the last 18 months have been the hardest period that they have experienced, due to the exponential increase in import duties and registration fees.

I have also been told time and again by small businesses in my constituency about the damage of Brexit. Far from seeing the freedom promised by the Brexiteers, we have instead seen an exponential increase in bureaucracy, resulting in business-owners spending many arduous hours sorting through additional paperwork, including complex regulatory differences for animal products such as wool.

Those are not isolated cases. Over a third of surveyed UK businesses have reported extra costs that are directly related to changes in export regulations due to the end of the EU transition period. We are glad that some of these issues will be addressed with the new trade agreement. However, the Government must be bolder. We will continue to urge them to be much more ambitious with regard to trade and the economy, and we will ask them to use this agreement as a first step in seeking a new customs union with the EU.

While we know that the long-term wellbeing of the UK is about being back in the heart of Europe, that requires strengthened trading agreements and a customs union. Closer ties with Europe are also key to our national security. We have long argued for closer alliances on defence in the face of Putin’s imperialism and Trump’s unpredictability, and we welcome the fact that the Government have committed to a defence agreement. However, I hope that the Minister will agree that that must be just the beginning, and that we must be far more ambitious in strengthening our economic and security ties with our nearest neighbours.

The Liberal Democrats have also repeatedly pushed the Government for a youth mobility scheme between the UK and the EU, so we are glad that the Government have seen sense and will look to introduce a similar scheme, whatever it might be called. We know that a youth mobility scheme is good for business, good for education and good for opportunity. Polling shows that two thirds of the UK population are in favour of a youth mobility scheme.

Red tape at the UK-EU border has prevented schools and children across the country from taking part in overseas educational trips. I think many Members would agree that such trips are a memorable and enriching part of a school career; however, according to the School Travel Forum, between 2019 and 2023 such opportunities reduced in number by 30%.

There are so many reasons to welcome and champion a new programme for young people. Given that the scheme the Government have indicated they will support would mirror existing capped arrangements that the UK already has with 13 countries, including Australia, New Zealand and Canada, I urge them to move with more urgency and to bring forward details and a timeframe for the implementation of such a scheme.

The Minister and I both know that a youth mobility scheme is not a return to freedom of movement. Will he confirm that the Government, who have shown good intention in introducing such a scheme, will not be sidetracked by scaremongering from the Conservative party and the Reform party, and that he will give his full commitment to the introduction of the scheme?

When I asked the Prime Minister on Tuesday for a timeline, he assured me that the Government will move quickly. However, given the thousands of students who hope to travel to Europe to study, the thousands of small hospitality businesses in this country that are struggling to recruit short-term staff and the musicians burdened with huge levels of bureaucratic paperwork, I reiterate my call here today. Will the Minister set out a timeline for the introduction of such a scheme, which will ease travel?