Leaving the EU: Negotiations

Vince Cable Excerpts

Tuesday 10th July 2018 Commons Chamber

[Sir Vince Cable (Twickenham) (LD)]

I beg to move,

That this House believes that the Government’s negotiations to leave the EU have not progressed to the satisfaction of the people of the UK, with polls indicating that 69 per cent of the people now believe the exit process is going badly; calls on the Government to engage in cross-party discussions with a view to establishing a government of national unity; and further believes that the people of the UK should have the final say on the UK’s relationship with the EU through a people’s vote on the deal.

It is a pleasure to be able to introduce this Liberal Democrat debate on the Government’s handling of the Brexit negotiations, the pleasure being greater because the opportunity is rather infrequent. I am aware that the House has had a pretty unremitting diet of Brexit, Brexit and more Brexit, but we judge that another helping is necessary because of the events that have taken place over the past few days. Yesterday we had an opportunity to question the Prime Minister on the Chequers agreement, but this debate gives Members an opportunity to develop their arguments in rather greater detail.

Of course, all this is being discussed in a Westminster bubble, and we will frequently be reminded that there is such a thing as the popular will. However, the popular will, as manifested in surveys of public opinion, suggests that at present about 70% of the public judge that the Government are handling the Brexit negotiations badly, and that figure has been on an increasing trend for pretty much the past year.

A lot of that disillusionment has to do with the way in which members of the Government have been conducting themselves. Over the past few days, we have had a treasure trove of quotations from senior members of the Government about what they really think about the Government’s negotiating position.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

It would be seriously disrespectful and utterly counter productive to have another referendum. Talking about quotations, does the right hon. Gentleman agree with himself?

[Sir Vince Cable]

I am perfectly happy to respect the referendum that we have had, but it is utterly respectful, and quite common practice in many countries, to have a confirmatory referendum when a Government have produced a deal. That is good constitutional practice and good politics, and Liberal Democrat Members argue for it strongly.

[Tim Farron (Westmorland and Lonsdale) (LD)]

My right hon. Friend will of course remember that the right hon. Member for Haltemprice and Howden (Mr Davis) proposed exactly the same course of action whereby one could have an initial referendum and another that confirmed it later on. Does he agree with the right hon. Gentleman?

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[Sir Vince Cable]

Yes. I think that most members of the Government, at various points, have subscribed to that perfectly correct constitutional position.

[Sir Desmond Swayne (New Forest West) (Con)]

How does the right hon. Gentleman believe that the announcement that there was to be a second referendum would influence the negotiating position of our counter-parties? Would it incline them to be more forthcoming with the negotiations?

[Sir Vince Cable]

Since we are being pedantic about numbers, we are actually talking about the third referendum on this subject. The impact on the European negotiators would, I am sure, be absolutely negligible. They are fully aware of the chaotic and disorganised position of the Government and defining their negotiating position on that basis.

I turn to what senior members of the Government felt about the policy that is now being put forward. A couple of days ago, the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), as I suppose we should now learn to call him, spoke to The Mail on Sunday, which I know from experience to be a very reliable newspaper, describing the Government’s policy as being like “polishing a turd”. He was also reported to have met the former Prime Minister—his fellow old Etonian—to discuss the problem a few days ago: the two gentlemen who have probably done more than anything else to precipitate the chaos we now have. Between them, they agreed that the Government had produced

“the worst of all worlds”.

In the slightly more dignified language of his resignation letter, the right hon. Member for Uxbridge and South Ruislip described Brexit as “dying” and Britain being reduced to the status of a “colony”—less than an overwhelming vote of support for the Prime Minister. The right hon. Member for Haltemprice and Howden (Mr Davis) expressed his argument in somewhat more measured terms, saying that we have reached a point where we will be exiting the European Union in name only. If that is indeed what is happening, why on earth is Brexit proceeding, and can we not find a way out of it?

The striking thing about the comments that resigning members of the Government have made is the way in which they are managing to poison their own well. It is extraordinary the extent to which the word “betrayal” is entering the narrative. We risk getting to a point in a few months’ time—if Brexit happens; I think it is an if rather than a when—where the many people who regard Brexit as a disastrous error will be pointing out the many problems that arise from it, while those who have devoted their lives to fighting for Brexit will be arguing that it is a disaster because it is a betrayal. If Brexit day ever happens, it will be a day of mourning, and it is very difficult to see where the positive story is going to come from to help the country to turn over a new leaf.

[Rebecca Pow (Taunton Deane) (Con)]

Talking of betrayal, the previous Member for Sheffield, Hallam campaigned for a “real referendum on Europe” before the 2010 general election. A 2008 leaflet stated:

“It’s been over thirty years since the British people last had a vote on Britain’s membership of the European Union…Whether you agree with Europe or not, it is vital that you and the British people have your say in a real EU referendum.”

We have had that referendum. I put it to the right hon. Gentleman that the people have had their say and we have to abide by it.

[Sir Vince Cable]

My party has never had any problem with the idea of having referendums on the European question. We have always argued that on questions of major constitutional change—for example, entry into the monetary union or signing the Lisbon treaty, which has already happened—it is appropriate to have a referendum. It is common practice in many EU countries to proceed in that way, and we have no objection to it. We argue that there must be a proper process, which involves consulting the public on the general principle—that has happened, and there was a narrow majority one way—and then having a confirmatory referendum at the end to decide whether it is a satisfactory way to proceed.

[Steve Double (St Austell and Newquay) (Con)]

I understand that the reason many people voted leave in the referendum was that they were fed up with the establishment telling them all the time that it knew better and that their voice and opinion did not matter. Does the right hon. Gentleman not understand that by making this proposition, the Liberal Democrats are just confirming to those people that they were absolutely right—the Lib Dems think they know better than the people—and that the people’s voice no longer matters to them?

[Sir Vince Cable]

If people do in fact feel that way, they will presumably vote the same way again. We take the risk that we lose. That is the democratic spirit.

[Graham Stringer (Blackley and Broughton) (Lab)]

Why did the right hon. Gentleman not take the opportunity to vote for a referendum on the Lisbon treaty?

[Sir Vince Cable]

We did press for a referendum on the Lisbon treaty, as it happens. That was not the view of a majority in the House at the time, but we had no problem with the concept.

Let me try to be a bit more positive about what the Government are trying to do. The first remark I want to make is about the conduct of the Prime Minister. I was going around the radio and television studios yesterday following Conservative MPs and commentators, none of whom had a good word to say about her. It is important to put on the record that she has pursued her course of action, however misjudged it may be, with a grim determination that is rather heroic. I have some admiration for the way in which she is going about her job. She may be wrong, but she is pursuing it in a rather steadfast way.

The second point I will make is about the content of the Government’s announcement. It is clearly an advance on where they were before. There is a recognition now that the Irish border question has to be addressed and that there has to be frictionless trade for industrial and agricultural products. That is now understood. The Government appear to have heard the message from the Jaguar Land Rovers of this world, which have complex supply chains, that it is not possible to stay in the UK if there is interruption of trade, so industrial and agricultural products will have to flow freely.

There is also an implicit acknowledgment that the default position of crashing out of the European Union is less and less plausible, and the reason for that is the changing international environment created by our visitor on Friday. The idea that the UK can fall back on World Trade Organisation rules in the default position is made increasingly untenable by the fact that the WTO has progressively less authority. The United States is not willing to abide by its rulings or to staff its judicial panels. As an organisation, it is completely hollow. Were we to fall back on WTO rules, we would effectively be falling back on anarchy. There is at least some recognition in Government of the dangers of that approach.

Those are the positive things. There is one other positive achievement by default, which is that the Government have effectively scuppered any prospect of reaching a bilateral trade agreement with the United States.

[Kevin Foster (Torbay) (Con)]

indicated dissent.

[Sir Vince Cable]

Well, there are Members of the House—I am one, and the right hon. and learned Member for Rushcliffe (Mr Clarke) is another—who have experience of dealing with the United States through negotiations on the Transatlantic Trade and Investment Partnership. Several things were very clear. First, although the United States is important, it is considerably less important than the European Union in terms of our trade—it is about 18% versus 43% of our exports. There are undoubtedly some benefits to be obtained through a completely free trading arrangement with the United States; for example, there are few high-tariff points. However, by far the largest obstacle is public procurement, which is decided in the United States at state level, not federal level. The potential benefits of opening the US market are actually very limited.

The key point is that the United States made it very clear then and is now making it even clearer that it is only interested in entering into a bilateral trade agreement if it opens the market to American agriculture. That is not compatible with the Government’s commitment to maintain the regulatory rulebook on food safety and agricultural products. It is to the Government’s credit that they have agreed to do that, but it almost certainly makes it impossible to reach a trade agreement. Indeed, Wilbur Ross, the Trump Administration appointee, has made it clear that the United States will not enter into serious negotiations if freer agriculture for foodstuffs through regulation is not permitted.

[Stephen Lloyd (Eastbourne) (LD)]

On that basis, is not one of the challenges that the severe Brexiteers never mention the fact that the Americans use a great deal of chlorine in the preservation of food, and unless we have a proper regulatory framework, as we do currently, there is a real danger that those kinds of foodstuffs will come into the United Kingdom?

[Sir Vince Cable]

Yes. There is a whole series of well-known instances relating to beef hormones, genetically modified foods and chlorinated chickens. I do not know how well based the arguments are scientifically, but clearly that will demand a repudiation of those European standards. The Government’s stance—again, this is a positive—makes it clear that concessions cannot now be given on those items and that it will be impossible to reach a trade agreement with the Trump Administration in practice, if not in theory.



The negatives are even clearer than the positives. One of them is the sheer workability of the arrangements. The right hon. Member for Haltemprice and Howden has said quite categorically that the arrangements he has been involved in designing for months are simply unworkable, and it is very clear why that is the case. If we have a differential tariff system, it is very cumbersome to enforce. There is an obvious temptation to smuggle. A company producing within the European Union but not in the UK will import through the UK at a lower tariff, and it would be necessary to have a sophisticated tracking system to identify where the product has gone. In complex supply chains with hundreds of widgets flying backwards and forwards, it is impossible to see how that could be done in practice. The right hon. Member for Haltemprice and Howden was well aware of that, and the European Commission is well aware of it, which is why it almost certainly will not pass to the next stage.

[Layla Moran (Oxford West and Abingdon) (LD)]

I sit on the Public Accounts Committee, and last February we went to Washington, where we had private briefings with State Department representatives about the trade deal. They were very clear that we must be absolutely clear about, for example, country of origin rules and that they do not want a part of a small trade deal—they will not “do skinny”, in their words. If that was their case last February, what does my right hon. Friend think they are making of the chaos of this Government now?

[Sir Vince Cable]

The European Union over many years has developed a sophisticated rules of origin system in order to develop an answer to precisely the problems presented by the complex nature of modern trade. They are quite right to say that in an environment of uncertainty, there is very little merit in pursuing an agreement.

The other major disadvantage of what the Government are proposing is, as several Members pointed out yesterday, the complete neglect of the services sector. It is not just 80% of the British economy, but includes extremely important industries—notably financial services, but also creative industries, the digital sector and entertainment, and of course much manufacturing happens through services exports. Rolls-Royce earns as much from its maintenance contracts as it does from selling its engines. When we send cars to the European Union, we sell them with a package attached to financial services. It is not at all clear how the Government propose to unscramble those very complicated relationships.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

Does my right hon. Friend remember that when I was junior Minister to him as Secretary of State for Business, Innovation and Skills, we spent a long time arguing for more liberalisation of services, because it was in the UK’s interest to widen and deepen the services market in the EU? Is it not therefore ironic that a Conservative Government want to turn their back on service liberalisation and put up barriers? We could not get a more anti-business approach from the Conservative party.

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[Sir Vince Cable]

It is a lot more than ironic, because this goes back a long way. There has been consensus among successive Governments, starting with Mrs Thatcher and Lord Cockburn through the Blair Government and the coalition Government, on accepting that services exports to the European Union were a major objective of British Government policy. I recall being sent to Berlin and elsewhere to denounce the Germans for their failure to open up their market for services trade and the mutual recognition of qualifications. For example, European countries currently decline to accept British ski instructors, as they do not have mutual recognition of qualifications. A great deal has, however, been achieved, and the Government are now inclined to turn their back on it.

The reasons the Prime Minister advanced for doing so yesterday are partly simply foolish and partly bogus. The folly lies in saying that any services transaction that involves people crossing the border, however valuable, is adding to our net immigration target and is therefore unacceptable, regardless of the economic merit. The bogus argument is to say that this is a problem within the European Union, but it is not going to be a problem if we have trade deals with other countries, because we will be able to proceed with services agreements with them.

However, we already know from the two failed attempts so far to negotiate an outline agreement with India that services trade, wherever it is—within the European Union or outside it—involves the free movement of people, and the Indians are insisting that if we are to have a bilateral trade agreement with them, part of the package will be importing Indian services in the form of IT consultants and much else. If we look around the other big emerging markets—Brazil, Indonesia, Pakistan, Nigeria—we can see that what they have to export is people. This is going to be an enormous obstacle to the Government reaching any kind of agreement with any country outside the European Union.

[Sir Edward Davey]

My right hon. Friend is being generous in giving way yet again. Does he remember that when he and I served on a Cabinet Committee looking at trade, we pushed just the arguments that he is now making, and the one person getting in the way of those arguments was the then Home Secretary—now the Prime Minister—who stopped a major trade deal that would be in this country’s interests?

[Sir Vince Cable]

My right hon. Friend is absolutely right. We could of course have had a trade deal with India already under the auspices of the European Union, as we do with South Korea, Canada and various other countries. The country that blocked the deal was the UK, because increased services trade would involve increasing numbers of people crossing over to the UK.

I was struck by the comment by one of the more strongly pro-Brexit Conservative MPs—the hon. Member for Gainsborough (Sir Edward Leigh)—when he was being critical of the Government yesterday. If I am correct, he said that he had no objection to cherry-picking, but that the Government are picking “the wrong cherry”. Actually, services are fundamental to our trade, and the Government have put us in a very difficult position.

The question now is: what should be done? The first step is for those on both sides of the House who believe that we should maximise the closeness of the economic relationship through the customs union and the single market—there are people of a similar persuasion in all parties—to try to achieve that. The right hon. Member for Haltemprice and Howden says we have a customs union already, which is exaggerating, but we can certainly converge on having a common approach. Of course, the nearer we get, the more the question arises of why on earth Brexit is happening at all. That leads us back to the question we started with about the need for the public to have a say on the final deal.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The right hon. Gentleman is making a compelling case. I imagine that, like me, he gets a steady trickle of emails from Brexit supporters, all of whom say that the 17.4 million people who voted leave in June 2016 knew exactly what they were voting for, because the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) had spelled it out for them. Yet the former Foreign Secretary now only uses four-letter words to describe the proposed deal with the EU, and is so appalled by it that he has resigned from high office to spend more time with his photographer. Does the right hon. Gentleman agree with me that no one knows how many of the 17.4 million now support the Prime Minister’s approach, and the only way to find out is precisely to have a people’s vote?

[Sir Vince Cable]

That is exactly right, and the current numbers suggest that a substantial majority believe that there should be a vote on the final deal.

If the Government were totally rational, they would see the arguments for doing so from their own point of view. The Prime Minister could say, “I’ve done the best I can to achieve a deal. It’s obviously difficult with the Conservative party in disarray, but I’ve done the best I can. I have negotiated hard with the European Union”—we would all believe that, because she is obviously conscientious—“and this is what I’ve got. Do you, the public, who voted for this originally, want to accept it, or would you rather stay where are and be in the European economic union?” That would be a perfectly honourable and sensible way for her to proceed politically, and it is constitutionally sensible. It reflects the fact that conditions have changed enormously since the original vote. I strongly recommend that approach to the House, and I look forward to hearing contributions from Members on both sides of the House in this debate on the Chequers statement.

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[Jenny Chapman]

There are parties in this House—we are hearing a lot from them this afternoon—that do not accept the outcome of the referendum. The Labour party is not one of them. We accept the outcome of the referendum and all the challenges that it poses.

[Sir Vince Cable]

Does the hon. Lady not accept that there is a difference between accepting the referendum when it happened, and looking at the circumstances now, two years on, when the situation is utterly changed—not least because of the revelations, which were not available at the time, about large-scale cheating and criminal activity?

[Jenny Chapman]

If I believed for one minute that another referendum would be a well-informed discussion among the people of this country about customs, trade, tariffs and the economy, I might take a different view. Unfortunately, that is not what I expect to happen. Labour is not calling for a second referendum because we believe that doing so at this stage would make it harder to get the right deal for Brexit.