European Economic Area: UK Membership

Wera Hobhouse Excerpts

Monday 6th November 2017 Commons Chamber

[Sir Edward Leigh]

Actually, I said precisely the opposite, if the hon. Gentleman had been listening. I have made it absolutely clear that I am a committed parliamentarian, and I am absolutely committed to a vote.

[Wera Hobhouse (Bath) (LD)]

Is it not true that this House is here to debate, and is it not proper that, as we debate, we come to new conclusions and new ways of looking at things? It is perfectly legitimate for people to start thinking about different outcomes from the ones they were thinking about at the beginning, because more things are coming to light.

[Sir Edward Leigh]

That is a very fair point, and I entirely accept it.

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[Stephen Timms (East Ham) (Lab)]

The hon. Member for Gainsborough (Sir Edward Leigh) has been courteous and thoughtful, but I just remind him that he won his seat in 2015 on the basis of a commitment to keep the benefits of the single market for the UK.

I warmly welcome this debate, and I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on the motion he has proposed. A German Foreign Office official told me earlier this year, “If you want the benefits of the single market, you have to obey the rules of the single market.” Ever since the referendum, Ministers have been telling us that we will have the benefits of the single market but that we will no longer have to obey the rules. Unfortunately, that will not be the outcome of these negotiations. If, by some extraordinary fluke, the Secretary of State for Exiting the European Union was able to persuade Michel Barnier to agree to such an outcome, it would immediately be voted down by other European Parliaments—certainly by the Bundestag—and by the European Parliament as well.

I think that that recognition is starting to dawn on Ministers. At the start of this process, they told us we would get barrier-free access to the single market, but I notice they do not use that phrase any longer; they now say we will have access with a minimum of friction—whatever that turns out to be. We are not, sadly, going to get the barrier-free access they said at the start that we would get, but we need barrier-free access. If we are to leave the European Union, we need to find a way, in conformity with the rules, to maintain the economic benefits—the very large economic benefits—for the UK of our membership of the single market, so my hon. Friend is on to something extremely important.

Membership of the European economic area comprises an EU pillar and an EFTA pillar. With the UK exiting the European Union, membership of EFTA is, as we have heard from the hon. Members for Carlisle (John Stevenson) and for South Suffolk (James Cartlidge) and from my hon. Friend, certainly something we should consider, and it may well prove to be the right way forward. However, there are some disadvantages to EFTA membership, and my hon. Friend the Member for Ilford South (Mike Gapes) touched on them. In particular, because EFTA countries are not in the customs union, the grave problem at the land border with the Republic of Ireland would not be resolved by joining EFTA. The Government are telling us two things about that: first, that we will not be in the customs union; and secondly, that there will be no infrastructure at that border. Sadly, those two assertions are contradictory; they will not both be true, and one of them will have to not be true. We have a serious problem at that border, and joining EFTA would not deal with it.

I was interested by a proposal made in a paper presented recently to the Confederation of Norwegian Enterprise by Sebastian Remøy, who used to be an official in the EEA co-ordination unit in the EFTA Secretariat, suggesting that, alongside the EU pillar and the EFTA pillar in the EEA, there should be a third pillar—a UK pillar—which would allow greater flexibility and overcome the disadvantage of EFTA membership. It might also deal with some of the difficulties that Norway might raise about the UK joining EFTA and unbalancing the current structure and modestly sized secretariat. I just put that idea on the record—I do not know whether it is the right one, but it needs to be looked at, alongside membership of EFTA, as a way forward.

In the referendum, leave campaigners dismissed serious concerns about the economic consequences by describing them as “Project Fear”, but as we have heard in the debate, those fears are starting to be realised. The letter from business organisations said they needed certainty about the transition by the end of this calendar year, but they are not going to get that.

[Wera Hobhouse]

Does the right hon. Gentleman agree that it is time we dropped the term “Project Fear” and replaced it with the term “Project Reality”?

[Stephen Timms]

We certainly need some hard-headed economic realism as we face the decisions ahead—the hon. Lady is absolutely right.

We are not going to get certainty by the end of the year. The Secretary of State said to the Select Committee that we would have details of the transition by the end of March 2018 and that he hoped that for the sake of three months businesses would hold off implementing their back-up plans until then. But for much of the financial services sector, an announcement of plans by politicians in the absence of legal certainty is completely useless. They have to—the regulator requires them to—put in place their back-up plans if there is no legal certainty about the transition by the end of March next year. We are going to start to lose significant numbers of jobs. I mentioned the figure of 75,000 that is an estimate of the number of jobs that the financial services sector will lose from a hard Brexit. It looks as though—I have seen an estimate—15,000 of those will go if we do not have legal certainty about the transition by the end of March next year. That will impose a grievous economic blow upon us. My hon. Friend the Member for Aberavon is making an extremely important case that the House needs to heed.

--- Later in debate ---

[Jim Shannon]

I thank my hon. Friend and colleague for his comments. We hear that today from Members who have a different opinion in relation to remain and inject fear into the whole debate. I am very positive about leaving the EU and leaving the EEA. When we are out and away, we are going to be better off. Let us have a positive outlook and we will be successful.

Do I believe that the best economic benefits are to be found as a non-EU member of the EEA? The bottom line is that EEA membership involves a range of obligations, including free movement of people, financial contributions to the EU, and accepting EU rules with no direct say over them. In short, we get the immigration issues, the tariffs and the charges, but very few benefits. Some Members have referred to the comprehensive trade deal, which I believe we can negotiate—I hope so. I have great confidence in the ministerial team and in what we are trying to achieve.

[Wera Hobhouse]

May I ask the hon. Gentleman what will happen to his opinions and his positive outlook if we cannot get the positive trade deals that he is hoping for?

[Jim Shannon]

I am a “glass half full” person. I look on the bright side of life, because that is what we should do. Some people have a “glass half empty” outlook, and they look at everything negatively, but I do not look at things in that way. I am positive about what we are doing, the way forward and the ability of our ministerial team to achieve what we want. We have to agree to differ about how some things will come together, and that is part of life.