Queen’s Speech

Viscount Trenchard Excerpts

Wednesday 28th June 2017 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I, too, congratulate my noble friend Lady Anelay on her challenging new appointment, and I thank her for introducing today’s debate in a sincere and open manner.

Many people have commented that the repeal Bill has lost its greatness. The Minister told me that “great” could never be part of the formal title of a Bill or Act of Parliament, so why do we have Magna Carta? Many noble Lords claim that the result of the general election shows that people do not support the Prime Minister’s kind of Brexit. But as your Lordships know, 84.2% of those who voted in the election supported parties in a Brexit that involves at least withdrawing from membership of the single market.

Since the general election, the Labour Party has tried to differentiate its position on Brexit, arguing that it wants a Brexit that maintains free access to the single market, but that is the same as what the Government want and what is clearly in the interests of both sides in our negotiations with the EU. Research by Civitas indicates that in the event of no free trade agreement, no deal with the EU, UK exports to the EU 27 could be expected to suffer tariff costs in the region of £5.2 billion, but exports from the EU 27 to the UK would bear tariff costs in the region of £12.9 billion. Of course, in terms of proportionate effect on GDP, the hit to the UK economy appears greater, but the fact that the absolute cost to the EU would be two-and-a-half times larger means that there is a huge incentive, especially for Germany, to ensure that the EU 27 continue to enjoy tariff-free access to the UK market. I can certainly envisage deals that are even worse than no deal, and I agree with my right honourable friend the Chancellor, who said on “The Andrew Marr Show” that while no deal would be very bad, a deal that sought to punish the UK for withdrawal would be worse than no deal.

I turn to the City and the financial services industry. I find it surprising that other than a few, predominantly British, City leaders and economists, nobody seems to be extolling the merits of escaping from the increasingly cumbersome and throttling yoke that we bear as a result of subservience to the European supervisory authorities. Not so long ago, the City was strongly resisting a significant amount of new European regulation, such as parts of the UCITS regime, the whole of the alternative investment fund management directive, the ban on short selling, parts of MiFID II, and other regulation.

The panoply of European regulation certainly provides enhanced protection for investors, but professional investors do not need all of it, and the increased costs that result have already diverted a considerable amount of business away from the City. Financial markets are global, not European. The UK is by far the most global in reach of all European countries. It is right that our escape from subservience to the ESAs will allow our regulators, the FCA and the PRA, to resume their position at the top table of regulators, and this will enhance rather than diminish their influence in shaping optimum rules for the conduct of financial business on a global basis.

As Jeremy Browne said in his article in the Daily Telegraph, the City of London is the only world-class financial centre, located in Europe’s only global hub city, London. But the City is not just Europe’s asset, it is the world’s asset. It is hosted by the UK in the same way we host the Wimbledon tennis tournament. It is manifestly not in the interests of the EU to try to damage it. Fragmentation of the City would have an adverse effect on the financial stability and financing of the European economy. Our negotiators need to persuade their interlocutors not to put narrow political objectives in the way of reaching an agreement that continues to provide access for European financial firms to UK financial markets, and vice versa.

Finally, I agree with much of what the noble Lord, Lord Teverson, said concerning Euratom. I regret that leaving the EU necessitates our also leaving Euratom, and I believe that it is very important to negotiate some kind of associate membership or transitional arrangement so that our nuclear trade is not affected. I look forward to hearing what other noble Lords have to say.