European Union (Notification of Withdrawal) Bill

Viscount Trenchard Excerpts

2nd reading (Hansard): House of Lords
Tuesday 21st February 2017 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, it is a great privilege to be able to take part in this debate, which is of such enormous historical importance. In 1975, believing that we had joined a trading bloc, I voted in favour of remaining a member of the EEC. However, it has been clear for many years now that we have been somewhat reluctant passengers on the European train, and our partners have been irritated by the brake that we have sought to apply to the political and federalist aspects of the project. As Sir Winston Churchill said in 1953 in relation to the embryonic European institutions,

“we are with them, but not of them”.—[Official Report, Commons, 11/5/53; col. 891.]

I have spent a large part of my working life overseas, especially in Japan. I was always clear in my mind that the firm I represented, Kleinwort Benson, derived its standing and the trust of its clients in no small part from the fact that it was a British firm headquartered in the City of London. It was nothing to do with the fact that the UK was a member of the EU.

I have also worked in Brussels as director-general of EFAMA, the trade association for the investment management industry in Europe. By 2006, it was already clear that the European regulators, the predecessors of EBA, ESMA and EIOPA, were intent on harmonising regulation across Europe. The diminution of the UK’s influence over European regulation accelerated after the financial crisis and the eurozone crisis, but it is increasingly at the global level that the interconnected major financial markets will develop the optimum regulatory framework and the influence of our own national regulators will surely be restored and enhanced after their subordination to EU regulators comes to an end.

Unlike the noble Baroness, Lady Kramer, I believe that the City’s success owes nothing to the EU and its future prospects are brighter and more secure freed from the European yoke and its somewhat dirigiste ways. My experience in Brussels increased my doubts that the UK could ever commit to the vision of Europe to which the European institutions aspire. However, I believed that the UK could and should reform the EU and our relationship with it from within. David Cameron tried to do this, but what he was offered as a new settlement was too far away from what I believe would have been in the UK’s interest. With some reluctance, I abandoned hope that we could reform the EU and our relationship with it from within, and decided to support the campaign to leave.

It was very clear from debates in your Lordships’ House and in another place that the European Union Referendum Act was not intended to ask the people to advise. It was clear that Parliament agreed to ask the people to decide this question. I agree with what Charles Moore wrote in the Daily Telegraph on Saturday:

“The judges in the Supreme Court and the Divisional Court had the greatest difficulty in understanding the point—plain to the most ordinary voter—that a government decision to invite the people to decide something by referendum is of great constitutional significance, not a sort of footnote”.


It seems clear that Tony Blair suffers from a similar difficulty. The noble Lord, Lord Kerr of Kinlochard, was wise in his drafting of Article 50, in so far as it provides that the Union shall negotiate the arrangements for a member state’s withdrawal, taking account of the framework for its future relationship with the Union. This clearly means that the UK’s future trading relationship with the Union, in both goods and services, should be agreed alongside the terms of withdrawal. One idea which may well have merit is that we should enter into a treaty of collaboration with the EU which would govern our future bilateral relationship and would contain a number of pillars within which we would commit to collaborate as closely as our mutual interest will allow.

I would ask the Minister if he thinks that proposing such a treaty has merit in that it could help create a more positive background for the negotiations that lie ahead, helping to facilitate the best possible agreement on free and unencumbered trade between our markets in both goods and services. It goes without saying that the rights of EU citizens who have made their homes and lives in this country must not be altered in any way, but I shall oppose any attempt to amend this Bill because I believe that would restrict the Government’s flexibility in negotiating the best possible agreement for our future relationship. Furthermore, the Government have made a commitment that both Houses will be asked to approve both the terms of withdrawal and the agreement before they are put to the European Parliament.

I do not underestimate the challenges that lie ahead, but I am confident that the Government will find the right way forward and that the opportunities that this historic decision will unlock outweigh the disadvantages of being shackled to a regional trading bloc with a different outlook on the world to our own.

Outcome of the European Union Referendum

Viscount Trenchard Excerpts

Tuesday 5th July 2016 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I agree wholeheartedly with the views expressed by my noble friend the Lord Privy Seal in her opening remarks. It is not helpful that some noble Lords seem to be suggesting that the question of whether we stay in or leave the EU can be reopened or should be subject to additional conditions being met such as a parliamentary vote or a referendum on the terms of our departure. The position is clear. One year ago the Government were elected on the back of a promise to hold a referendum on the subject. The Prime Minister stated that the question was of such importance that the people should take the final decision. Your Lordships’ House and another place assented to the Prime Minister’s view and the referendum was held. It produced a clear majority vote to leave. Members on both sides of the debate have made exaggerated claims. Surely it is now incumbent on noble Lords to play their part in securing the best way forward for this country and to make the most of the new opportunities that our decision to leave offers us.

The country needs a Government who are confident in our future and will act with confidence. I was fortunate to represent a British bank in Japan during most of the 1980s. The high regard in which the United Kingdom under Baroness Thatcher’s leadership was held by Japanese leaders of business and government during that period was of inestimable assistance to me in my task of securing access to the Japanese financial markets for the firm I represented, and through the British Chambers of Commerce and the European Business Council in Japan for other foreign businesses. I will travel to Japan next week and will meet the leaders of several companies that are major investors in this country, and shall carry a positive message about the future opportunities for them.

Of course I do not want to give the impression that I think it will all be plain sailing. Like other noble Lords, I welcome the creation of the new unit of government under my right honourable friend Oliver Letwin to negotiate Brexit. The unit must immediately be given powers to obtain full information from all departments of state on our interactions with the EU so that decisions on how to proceed can be based on hard facts and not on myths. I agree with the most reverend Primate the Archbishop of Canterbury, my noble friends Lord Lawson and Lord Lamont and others that the Government should give immediate and clear assurances about the endurance and permanence of the rights of residence of the citizens of other EU states who are living here and who have made this country their home.

There is much anxiety about the single market and what will happen to our trade with it in both goods and services if we leave. Some people argue that we should leave the EU but remain a member of the single market. They argue that our trade in goods and financial services will be seriously harmed if we do not negotiate continued access to the single market. If membership of the single market is so important, why has its trade with many non-EU countries grown so much faster than ours has? We can continue to grow our trade with the EU under WTO rules as a fallback position in our negotiations. If free movement of people is a prerequisite of access to the single market, we should walk away from it.

In any case, why is free movement of people essential to a free trade area? Is it only essential because the leaders of the European Commission and other European institutions think that the EU is a state and that its citizens obviously therefore have the right to live and work anywhere within its borders? Freed from EU procurement rules, the UK Government will again be able to level the playing field and award infrastructure contracts to British companies rather than state-owned foreign companies which can circumvent state aid rules. There are many harmful directives governing the way we run our businesses, such as the EU utilities directive. Social legislation, such as the working time directive, which is damaging to job creation, can be repealed or amended.

I was delighted to learn that the Chancellor has continued his policy of lowering corporation tax in a giant downwards move of 5%, to a rate of 15%. That level is not so different from the Irish level of 12.5%. Perhaps the Irish will decide to rejoin the United Kingdom, with equivalent status to Scotland, when their EU membership requires them to harmonise their corporation tax rate at a much higher level. That would of course remove any talk of a “hard border”.

Freed from EU regulation the Government could do more to help the economy. How about creating tax-free enterprise zones around ports and airports? And the Government really cannot put off a decision on the third runway at Heathrow any longer. The Government could create tax-free or low-tax enterprise zones, some of them linked to the northern powerhouse project. We will be able to take many such new initiatives when freed from the shackles of EU rules.

Trading with the EU under WTO rules as a fallback position would not be so bad, given that the total paid in tariffs would be considerably less than the cost of our EU membership. The lower pound would also help our exporters reduce the deficit. It is highly questionable whether the single market in services is about trade liberalisation at all. As the late Ronald Stewart-Brown of the Trade Policy Research Centre concluded in his excellent report of March 2015, the single market in services, especially financial services and insurance, is much more about EU integration through EU-wide supervision and regulation.

As for passporting, the European regulator has recommended that the EU’s fund management passport should be extended to Guernsey and Jersey. If the regulatory regimes in these two non-EU states are good enough for ESMA, surely our own FCA should be good enough too. In any case, passporting rights are significant only for the fund management and insurance sectors, whose aggregate exports to the rest of the EU, at £5.9 billion in 2013, were less than 9% of the UK’s financial services and insurance exports worldwide, at £68.5 billion.

The Swiss Government are shortly to start renegotiating their trade agreements with the EU, following the decision of the Swiss people in a referendum to end free movement of people. That means that the two largest financial services markets in Europe will be setting up new arrangements for trade at the same time. This will surely provide an incentive for EU negotiators to honour the commitments they have made under the GATS, which confers rights on all WTO members.

We will have a very strong hand in negotiating a comprehensive new trade agreement with the EU covering goods and services. It should not be as difficult as many claim. After all, we start from a zero-to-zero tariff position. Furthermore, we might decide not to terminate our annual net contribution of some £10 billion immediately but to run it down over a reasonably small number of years. We will surely also wish to remain a member of European programmes such as the Horizon 2020 science programme, of which there are 15 non-EU members.

I hope that the new Government will move swiftly to start to work out a new relationship with the EU, which is what the people voted for and what many on the remain side also want. That would be good for industry and for the City and we will even get on better with our European neighbours, too.