Customs and Borders

John Bercow Excerpts

Thursday 26th April 2018 Commons Chamber

[Several hon. Members rose—]

[Mr Speaker]

Order. Neither the right hon. and learned Member for Rushcliffe (Mr Clarke) nor the hon. Member for Vauxhall (Kate Hoey) will be subject to what I will call the common external tariff, otherwise known as a time limit. Such time limit as they are subject to will be self-imposed. I am sure that they will want to bear it in mind that, while we wish to enjoy the fruits of their intellect and eloquence, colleagues will wish to do so only if it is not at their personal expense.

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[Mr Speaker]

I am very grateful to the hon. Gentleman for his point of order. The short answer is no. I have been attending to my duties in the Chair since 9.30 am without interruption. It would have been perfectly possible for somebody to beetle into the Chamber to advise me of a Minister’s intention to make a statement on this matter but, as a matter of fact, that has not happened.

I know the hon. Gentleman is always looking onward and upward—he is an optimistic fellow—and, although there is no great likelihood of a statement on the matter today, as he contemplates the joys of his weekend ahead in Cardiff South and Penarth, he can always look forward to Monday.

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[Several hon. Members rose—]

[Mr Speaker]

Order. A five-minute limit on each Back-Bench speech will now apply.

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[Matt Warman]

I give way to my right hon. Friend, who—

[Mr Speaker]

Order. Before the right hon. Lady intervenes, can I make this point? People are perfectly entitled to intervene, but if they keep doing so, particularly those who have already spoken, they do so knowing that they are stopping other colleagues speaking. Let us be clear about that. Does the right hon. Lady still wish to intervene?

[Anna Soubry]

No.

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[Geraint Davies (Swansea West) (Lab/Co-op)]

Resisting a customs union and the single market without a mandate from the voters, which we have not, would be an act of grotesque economic irresponsibility. Being in the customs union means that we are part of team Europe when we negotiate with big blocs such as the United States, China and Japan. If we leave, we will be one player against a whole team. The idea that we can negotiate better terms is farcical. The idea that we can get more trade to compensate for the trade lost as a result of turning our backs on the EU in terms of the single market, tariffs, product standards and barriers, is absurd.

People may be aware of the economic model of trade called the gravity model, which says that the closer and bigger a market is, the more there is trade. Empirically, over the past 140 years, it has been found that the relationship is: halve the distance and you double the trade. That basically accounts for the fact that 50% of the UK’s trade is with the EU, while for Wales, the north-east and Yorkshire the figure is 60%.

In Britain, some of the poorer areas that voted for Brexit will suffer much more if we end up out of the single market and the customs union. Some people still believe, because of Government spokespeople, that we can boldly go and trade where others have not been before, when in fact we are already trading there. The former permanent secretary at the Department for International Trade likened leaving the single market and the customs union to swapping a three-course meal for the promise of a pack of crisps. He was right, and why did he say that? Because if we look at the big markets, where the opportunities are, are they there? In the United States, Donald Trump said in his inaugural address that he would stop foreign countries ravaging his economy and taking jobs, and would stop the country importing more than it exports. We have seen with Bombardier, EU steel and tariffs on China that the US will act against anyone who thinks they can gain an advantage, and the US is much bigger than us alone, as opposed to us as part of the EU. What is more, the US will try to export its standards, be they in chemicals, food, the environment or workers’ rights, which will prevent us from exporting to the EU.

We have already heard that the Germans export four times more to China than we do. We can do that on our own. Again, China will be much more powerful. The Chinese have demanded that they build Hinkley Point, even though the cost of energy is sky high, and have already negotiated to build HS2. They will be coming in, taking our jobs—exporting our jobs—and we will be like putty in their hands, without any ability to negotiate on human rights, carbon and so on.

On Japan, the EU is doing a trade deal that will embrace a third of the economy of the world. If that trade deal is secured after March next year, we will not be part of it. Forty per cent of Japanese investment in the EU is in the UK. We will lose that, and it is not just cars. I am talking about financial services, and 80% of our exports are in services. The EU-Japanese deal will include financial services and we will be out of it. Therefore, a centre of gravity for financial services will grow in Europe, with the axis of yen and euro, and that will hurt the City of London.

As for third countries, 14% of our trade is with them. Chile, South Korea and Australia have already said that they want to change the terms of trade, and so will the others. When it comes to the timing, we will end without any trade deals in the transition period. We will basically close the door behind us and it will be a complete nightmare. After March we will have left, and Wallonia can just vote down whatever we agree and we will end up with no deal.

So why are the Government doing this? Why are they like a doctor prescribing cigarettes to someone with anxiety, knowing that ultimately it will kill them? The answer is that the Government know that the only hope for Brexit voters is believing that there will be these trade deals, and the Government know that there will not be. That is why Lord Patten, Lord Heseltine, Lord Lansley and Lord Willetts have all put country before party, and the people out there know this is too complex, and too costly, and too much time—

[Mr Speaker]

Order.

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[Tom Brake (Carshalton and Wallington) (LD)]

It is a pleasure to follow—

[Mr Speaker]

Order. I am sorry—I should have formally announced a four-minute limit. It is in effect but I should have announced it formally. The right hon. Gentleman has four minutes from now.

[Tom Brake]

Thank you, Mr Speaker.

It is a pleasure to follow the hon. Member for Totnes (Dr Wollaston). I agree that we need a dose of Brexit reality. In fact, I agree with everything she said. I am sure she will share my concern about the recent figures on the number of EU nurses who have gone off the register, and indeed the number who have left the country, just at a time when we have significant vacancies.

Just as I agree with everything the hon. Lady said, I disagree with everything said by the hon. Member for Vauxhall (Kate Hoey), who is no longer in her place. However, at least she had the courage to be here to present that hard Brexit line. Where are the hard Brexiteers on the Conservative Benches? Where is the Foreign Secretary? Where is the Secretary of State for International Development? Where is the Leader of the House? [Interruption.] Oh, there is one. They should be here to hear what they are inflicting on the country. Perhaps the reason they are not here is that they did not want to hear some very well-judged, measured contributions from Members on their own Benches explaining precisely the damage that they are causing.

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[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

In my constituency, 4,000 jobs—16% of the total employment—are in manufacturing. Does my hon. Friend agree that for the Government not to consider a bespoke customs union is both reckless and a huge risk?

[Mr Speaker]

I emphasise that if there are further interventions, which are legitimate in parliamentary terms, the time limit will have to be cut for remaining speakers.

[Stella Creasy]

I completely agree with my hon. Friend. Our car industry imports 60% of its components, so a British-made car probably has a German exhaust, Spanish-designed seats and French windows.

We have talked a lot about trade, but I also want to talk about people. It is clear that leaving the customs union will damage the lives of thousands of people in Northern Ireland and Ireland. We know that to be clear because we have no alternative. Ireland has 208 border crossings—more than the EU has with the rest of Europe. There will clearly be change. The consumers who may get cheaper goods are the same workers who will face the race to the bottom that will result from leaving the customs union and entering into the mythical free trade deals that we are being offered. We have heard that £25 billion annually will be lost to GDP.

Please, Minister, on this day of all days, listen to Ma Creasy and eat the frog—admit that the customs union is the best option, not just for our economy and British business, but for all our futures.

[Mr Speaker]

Happy birthday to Mummy Creasy.

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[Several hon. Members rose—]

[Mr Speaker]

Order. After the next speaker the time limit will have to be reduced to three minutes.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I welcome this debate and I support all the excellent points raised by those who, like me, support the motion—I will try hard not to repeat them. I am not alone in being somewhat bemused that the party in government is the party that generally prides itself on being pro-business and anti-bureaucracy. Nevertheless, the Government appear to be ignoring the pleading of businesses large and small, and they are leading this country towards a tsunami of additional paperwork as we move towards leaving the customs union and the EU, given the implications of all that paperwork for trade deals that we will now have to put in place for our trade with the EU. Leaving the customs union means the introduction of tariffs and non-tariff barriers to trade in goods with our largest trading partner. That involves 40% of our trade, and it means, as businesses tell us again and again, added delay and costs for manufacturers.

Before the recess I had the pleasure of visiting Honda in Swindon with the Industry and Parliament Trust. It said that

“outside a customs union, there is no such thing as a frictionless border.”

Motor manufacturers will be subject to 10% tariffs on cars, and 4.5% on components and parts, plus additional delay. Currently, if someone takes their car to the dealer because they need a new exhaust pipe, the order goes in today, and tomorrow the dealer will have that part and be able to fit it. I understand that once we are outside the customs union there will be a wait of up to five days for that new exhaust pipe. That is not just inconvenient for the car owner—it has an economic cost for the owner of a van who uses that van for business.

It was also good to see how Honda’s presence in Swindon has transformed that town since I was last there many years ago. There is no doubt that Swindon’s low unemployment rate and well-paid jobs—not just at Honda but at all its suppliers—are directly based on Honda being there, which is probably linked to the message that, as we have heard, Margaret Thatcher gave to the Japanese Government many years ago when she said that Britain would never leave the customs union. Now all that is at risk.

We will not see big-bang announcements by big manufacturers in those key sectors—not just the automotive industry, but pharmaceuticals and many others. Instead, we will see incremental decisions and loss of capacity, and incremental elements of production going to Europe where the biggest market will be. That will be a long-term cost for our economy. We cannot afford that.

Briefly, on borders and Northern Ireland, many of us will have seen in our Twitter feed the map of Switzerland and the hundreds of customs points. I remember County Fermanagh in the old days, before the Good Friday agreement, and we cannot go back to that.

I support the motion, calling on the Government to establish an effective customs union with the EU, and like other Members I believe we should stay in the single market as well, because 80% of our economy is in services.

[Mr Speaker]

Order. A three-minute limit now applies.

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

I thank my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) for securing the debate. This is clearly not an abstract debate; it is extremely serious, given the impact that this policy will have on us.

The question of the customs union is important because it strikes at the heart of our trade policy, our business exports and imports, and the strength of the UK economy. The prospect of our not being part of a customs union poses, I believe, an existential threat to the UK car industry, and therefore to the wider UK economy. What businesses in that industry and those more generally are calling for is certainty, clarity and, of course, urgency. Their representatives—the CBI, the Institute of Directors and the Federation of Small Businesses—are doing the same.

We know that many businesses have complex supply chains and production processes that are integrated across Europe, with parts and assembly travelling back and forth across the continent. Frictionless trade is essential to those operations, and a customs union helps to facilitate that. We also know that increased customs checks could lead to delays. We have heard about—we saw them for ourselves—the eight-minute delays on the US-Canada border. We have heard about delays of up to 15 minutes at the Norway-Sweden border and the additional costs that are incurred. We know about the infrastructure—the huge X-ray machines that check every few vehicles to confirm their contents—and, of course, we know that Northern Ireland relies on a frictionless border for the continuation of peace. The symbolism of a manned or marked border between Northern Ireland and the Republic puts at risk the peace secured by the Good Friday agreement. For all those reasons, it is vital that we remain in the customs union.

As the Member of Parliament for Warwick and Leamington, which is at the heart of the car industry, I cannot stress enough how critical this issue of the customs union is, and how costly our departure from it will be for the sector. Some 79% of all components used in the UK car industry come from Europe or other countries abroad. If WTO rules are applied, there will be an incremental cost of £1.8 billion for our exports and £2.7 billion for our imports. It is no wonder that the Japanese invested in the UK in the 1980s. That happened because we were part of the customs union, and we very much welcome their investment here.

I believe that we can remain part of the customs union at the same time as increasing our trade with and exports to markets outside Europe. That is what we should plan to do, and that is why I support the motion.

[Mr Speaker]

Order. The winding-up speeches of up to eight minutes each will begin now.

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[Mr Speaker]

I am not certain that I am in a position to confirm anything today. What I would say to the hon. Gentleman, having just heard his point of order, is this. There is a compelling logic in such an arrangement and an equivalence of treatment between this, the first debate under this parliamentary architecture involving the Liaison Committee and co-operation between it and the Backbench Business Committee, and the arrangement that has come to apply in respect of motions passed after Opposition day debates. I repeat: there is a compelling logic in such an arrangement, and it might be thought—I say this with my beady eye on the Financial Secretary to the Treasury, who is an unfailingly courteous individual—that it would also be a courtesy for the Government to oblige the House with such an explanation. I think we will have to leave matters for today, but I use the word “compelling”—one might also use the word “inexorable” or “irresistible”—for the logic of which I speak. I hope that is helpful to the House.