European Free Trade Association

Debate between Stephen Hammond and Lord Dodds of Duncairn

Wednesday 7th February 2018 Westminster Hall

[Stephen Hammond]

My right hon. Friend, the Chairman of the Treasury Committee, is right. One great virtue of what we are talking about today is that we are looking at where the UK is at its best, in that we are looking at the economics rather than becoming obsessed with ideology about some of the political points. This proposal solves many of the legal arguments and gives economic certainty to businesses and citizens, which is clearly what the House wants.

[Nigel Dodds (Belfast North) (DUP)]

I, too, congratulate the hon. Gentleman on securing this important debate, and I thank him for his generosity in taking so many interventions. Can he clarify that his position is to join EFTA in order to remain or be part of the EEA, or does he contemplate being part of EFTA without EEA membership?

[Stephen Hammond]

One point that I am making is that there is a range of options for us as a Government and a country to consider. Personally, I would argue for the EFTA-EEA arrangement, which I think gives us a huge number of advantages. It gives some certainty to British business. It allows us to do what the Government want to do in having a bespoke EU-UK deal and would allow that to be negotiated in a timely way. It would give us advantages in relation to free trade. We will not be in “the” customs union. If we chose to do so, we could establish “a” customs union. It seems to me that the EFTA-EEA arrangement is absolutely a good place for the United Kingdom to start as we leave the EU. Whether that is the choice of the House, if it comes to be discussed on the Floor of the House of Commons, is another matter. My point is that there is a range of options. Personally, I will argue for the EFTA-EEA arrangement; I think that is the best arrangement.

Let me deal with the point that the right hon. Member for Belfast North (Nigel Dodds) may have wished to come on to—I am getting close to the end of my remarks, Mr Gapes, but you will have noticed that I have taken a fair number of interventions so that colleagues can be heard.

Understandably, free movement of people will be a concern for many, notwithstanding the fact that EU migrants are net contributors to our economy and that the last set of figures available—official statistics—showed that net EU immigration was down to about 9,000 a year. It is true that, under protocol 15 and articles 112 and 113 of the EEA agreement, EFTA states can suspend free movement of people on a reciprocal basis. It is important to remember that. Some will say that that is only theoretical, but it is important to remember that the European Commission agreed, during the pre-referendum negotiation, that the UK would be justified in applying the proposed emergency brake for similar reasons. Therefore, the protections enshrined in articles 112 and 113 of the EEA agreement would undoubtedly apply should we choose to join EFTA, because the precedent has already been set.

As for EU budget contributions, which would be another concern, they would of course be subject to negotiation, and we have already conceded the concept of paying for access if we deem that to be in our interest. The EFTA-EEA countries make a financial contribution to the EU in two ways. They contribute, first, towards European cohesion efforts and, secondly, towards the programmes in which they participate. The House of Commons Library has been frequently quoted by hon. Members on both sides of the House to justify their position, so I would guide people to the Library’s estimate that if the UK were to join the EFTA-EEA arrangement, the contributions to the EU would be 25% less than any contribution that we make now or would make during any transition period.

The concern has been expressed that the current EFTA members might have reservations about one of the big G8 economies joining. However, as I said in response to an intervention, the indications that I have had, from quite powerful authorities, are that we would be welcome in EFTA. It would be a chance for EFTA to be renewed and revitalised, with better prospects and new aspirations for arrangements with other countries. The argument that the EU is trying to tell Norway not to move forward—as we have seen from what the Norwegian ambassador to the EU has said—may be a bit of a game and role play, but the reality is that the United Kingdom would be welcomed back into EFTA.

I ask the Minister to ensure that the Government keep open the option of re-joining EFTA. I see no reason why it would not fulfil the Government’s ambition. It provides the Government with the flexibility they say they require—and I agree—in negotiating to get the best deal for Britain, but I remind hon. Members that there is nothing in EFTA membership that seems to go against any of the plans the Government have set out so far.

Finally, in a national crisis—and this is a national crisis—the British political class has always had the ability to put aside ideology, reach a national consensus and act in the national interest. Surely that is in the ability of this generation’s political class. We must be able to stand up and show that we can match our forefathers. We should be seeking to build that national consensus and achieve the best outcome for Britain. It is abundantly clear to me that there is no model that will satisfy all sections of the British public. I believe—I have said this many times—a no-deal scenario would be bad for our economy. However, this approach would fulfil the result of the referendum. It would satisfy a large—I think overwhelming—majority of the British public and perhaps, importantly, this House of Commons, and go a long way to healing the divisions that were there. I recognise that EFTA is not a universal panacea, nor does it have all the benefits of membership of the single market and the customs union, but I believe, and I hope this whole House believes, that Britain’s negotiating position and its economic position post-Brexit will be improved by joining EFTA.