Motion to Agree
That, further to the resolutions of this House on 14 and 28 January, and that of the House of Commons on 14 March, it is expedient that a joint committee of Lords and Commons be appointed to consider and report on the costs and implications for the United Kingdom of exiting the European Union without a withdrawal agreement on 31 October 2019, and that the committee should report its findings by 30 September 2019.
My Lords, I have tabled this Motion, following discussions across the House, because while leaving the EU without a deal was previously viewed as a mere bargaining chip, now it looms as a real possibility. Your Lordships’ House has been clear that it opposes a no-deal Brexit as damaging to the interests of the UK, and MPs have expressed similar views.
At what could be his last appearance at the Dispatch Box as Chancellor, Philip Hammond restated that leaving without a deal would be,
“bad for the British economy”.—[Official Report, Commons, 2/7/19; col. 1056.]
Yet Ivan Rogers, who served with distinction as Permanent Representative to the EU, has predicted that, with patience running out and a new Prime Minister likely to move the goalposts, no deal is now the most likely outcome. We cannot know for certain what either Conservative leadership candidate will do come 11 pm on 31 October with no ratified deal. However, neither seems alarmed at the prospect. This is perhaps unsurprising, given that their current pitch is not to the nation but to the mere 0.3% of UK adults who are members of their party.
Boris Johnson, never one to fuss about detail, does not realise that without a deal there will be no implementation period. No withdrawal agreement means just that—no agreement. Just out. End of. But as both contenders now consider no deal a serious option, we need to be 100% honest about the implications for our economy, policing and national security, food and medicine supplies, transport, travel and every area of our lives where we currently interact with the EU.
I am grateful for the work of colleagues across your Lordships’ House on various EU committees, plus the expertise offered by hundreds of witnesses, that has resulted in many detailed reports assessing the implications of exiting with or without any agreement. Those reports will be invaluable to the proposed Joint Committee. With the deadline at the end of October and a new Prime Minister later this month, it is time to update and reassess the risks and implications.
This Motion, like others we have considered, is designed to be helpful to this House and the other place, ensuring that, when debating contentious issues, we deal with fact and not just opinion. Even those who opposed our special Select Committee on the then Trade Union Bill later confirmed its value. We also agreed a similar procedural Motion on the English votes for English laws legislation in 2015. At that time the Government refused to engage, but the stakes are so much higher now. Honest, forensic assessment is essential.
I know that there are some, even in your Lordships’ House, for whom crashing out holds no fear. If convinced of the benefits of a no-deal exit, they should also welcome such an inquiry.
One task of the Joint Committee will be to assess our readiness for and the implications of an abrupt exit. Last week we heard of the imminent departure of Tom Shinner, the top civil servant of the Department for Exiting the European Union who was overseeing no-deal planning. He follows HMRC’s Karen Wheeler, who until last week was responsible for no-deal border planning covering the Port of Dover and Northern Ireland. We also know that Oliver Robbins will cease his role; demonised by some, he remains the only person who has managed to negotiate a deal that respects both the Government’s and the EU’s red lines.
Despite the EU asserting that it will not reopen discussions on the withdrawal agreement, the two leadership candidates are busy appointing negotiating teams. Mr Johnson is relying on that man of moderation, Jacob Rees-Mogg, and Brexit Secretary Steve Barclay, who in presenting the Government’s case on the extension to Article 50 said:
“I commend the … motion to the House”.—[Official Report, Commons, 14/3/19; col. 628.]
He then voted against it—just the man to lead sensitive negotiations requiring trust. Jeremy Hunt, meanwhile, has engaged former Canadian Prime Minister Stephen Harper. Perhaps he will bring some much-needed reality to trade negotiations, given the Canadian experience. Or perhaps not, given last night’s report that Canada is refusing to roll over CETA in the event of no deal.
The National Audit Office reports that the new customs IT systems are not ready. Meanwhile, crucial legislation on immigration and trade is not on the statute book, and it is hard to see either Bill being enacted by October. While hundreds of no-deal SIs may have superficially transferred the functions of EU agencies to UK public bodies, are we truly confident that they have the capacity to deliver from day one? For example, the Health and Safety Executive would immediately take over chemicals regulation, despite never having had this responsibility before.
Many other examples exist. We should also be concerned about food and product safety if UK bodies lose access to EU-wide alert systems and databases with nothing in place to take on that responsibility. As the Road Haulage Association declared today, businesses still do not know what is expected of them, with the potential for massive backlogs at ports costing billions. A Joint Committee should be prepared to assess whether the necessary legislation, structures and organisations are in place and operational.
A committee should also consider the economic implications. The Society of Motor Manufacturers and Traders estimates that without a deal customs delays could cost up to £50,000 a minute. Some £4.5 billion of WTO tariffs would undermine our auto industry’s competitiveness just when British manufacturing is fighting for its survival. Tesco, Britain’s largest retailer, has warned that no deal in October would be more problematic than it would have been in March, given the pressures of Christmas. Other food manufacturers and retailers remain apprehensive about their ability to import and preserve fresh fruit, vegetables and other perishable goods. The Bank of England estimated an immediate hit to the economy roughly equivalent to the 2008 financial crisis and a crash in the pound, disrupting trade and closing businesses.
In an unprecedented joint letter to the Prime Minister, the heads of the TUC and the CBI warned of the dangers to the economy, stating that the shock would be felt for generations to come. The danger is real, yet Mr Hunt has said that, in the event of no deal, he would tell the owners of a bankrupt business that their sacrifice had been worth it. How? To quote him, because we would be living in,
“a country where politicians do what the people tell them to do”.
That is not leadership. Politicians should tell the truth and one way of getting to the truth on this matter would be via a committee that examines, interrogates and presents the evidence.
I hope the Minister has listened to those who represent the UK’s interests across the world, including diplomats who believe that the handling of Brexit has significantly damaged our global standing. I hope he will acknowledge that, in the event of crashing out, we will immediately cease participation in EU defence missions, leading to a loss of influence in peacekeeping and anti-piracy efforts. I also hope he has read the excellent if harrowing committee report on security and policing which outlined how the UK would lose vital security databases and schemes, many with no precedent existing for third-country access. A diminished UK does not just put our own UK citizens at risk; it also damages our privileged relationships with partners such as the USA and Canada. Such drastic changes are not compatible with the vision of an outward-looking global Britain offered in the referendum.
Given the lack of clarity and predictability, surely it is right for Parliament to be fully informed and engaged. However, despite criticising Dominic Raab for suggesting that Parliament should be prorogued to force through no deal, Boris Johnson is still toying with that idea. This would be disturbingly undemocratic and the coward’s way out. Whatever happened to the Vote Leave campaign pledge to uphold UK parliamentary sovereignty?
While we have all these and many more predictions and anecdotes, Parliament has not recently been afforded an opportunity to study and comment on them, hence the Motion today. A Joint Committee of both Houses, possibly drawn from the existing membership of our own EU Committee and the Commons Exiting the EU Committee, would examine the evidence. First, it would have the power to request the type of documents that the Government have been reluctant to make available to Parliament and the public. Secondly, it would have the authority to question Ministers, civil servants, diplomats and businesspeople. Thirdly, it could provide an up-to-date picture for the incoming Prime Minister. Finally, it would give both Houses an opportunity to discuss its findings in advance of the October deadline.
I know, as does the Minister, that there are some in Government who see this Motion in the spirit it is intended and welcome it as a positive step forward, so I hope that the Minister can tell us that the Government will accept our proposals and then diligently work across both Houses—all parties and the Cross Benches—to ensure that the committee is swiftly established and able to start work. If he does not, we cannot accept marching towards the cliff edge without an up-to-date assessment of what lurks beyond. With or without Government’s support, I urge your Lordships’ House to support this proposal to provide the House of Commons with the opportunity to consider its merits and to continue working to avoid the worst of all outcomes: a chaotic, damaging, no-deal Brexit. I beg to move.
My Lords, I thank the noble Baroness, Lady Smith, for tabling the Motion. When the idea of a Joint Committee was first suggested, I was very sceptical about it, for two reasons. First, I thought: surely it is obvious that the costs of leaving without a deal are so horrendous that there is no need to spell them out again. But that was before it became crystal clear that both candidates for leadership of the Tory party were prepared to contemplate no deal as a serious option and seemed either ignorant of or unconcerned about its consequences. So there is definitely a need for the exercise to be done.
Secondly, I thought that, even if we were to propose such a committee, the Commons would not pick up our suggestion and therefore that it would be a waste of time. But I was mistaken. There is clearly an appetite in the Commons for this exercise to be undertaken, and we should therefore set the ball in motion today.
Before looking at the effects of no deal on any specific area of the economy or public policy, we need to be clear about what it means overall for our position at the country. This was recently spelled out by Sir Ivan Rogers, the former head of UKREP. No deal, he said,
“is not a destination. It is simply a volatile and uncertain … state of purgatory, in which you have forfeited all the leverage to the other side because you start with a blank slate of no preferential arrangements, and live, in the interim—probably for years—on a basis that they legislate in their own interests”.
Leaving without a deal means that there will be no transitional arrangements and on 1 November, 17 weeks from now, we will be on our own.
Some Brexiteers have argued that nothing will change and, in particular, that goods will continue to flow freely and that no one will notice the difference. It is therefore worth reading the Commission’s take-stock report to last week’s Council meeting on preparations made in the EU against no deal. I will quote from just one item, which states:
“In the field of sanitary and phytosanitary controls, Member States have set up new Border Inspection Posts … or extended existing ones at entry points of imports from the United Kingdom into the EU”.
I may have missed something, but I assume that the only logical point of having new inspection posts is to conduct new inspections, which means delays—and these delays would not disappear any time soon.
Noble Lords may have heard an interview with the head of Fujitsu on the “Today” programme last Thursday. He explained that his company was a member of the UK Government task force looking at technological ways to avoid controls at borders. Asked how the work was going, he said that there were “many difficulties”. Asked how long before there would be any implementation solutions, he could not even begin to hazard a guess.
So, when noble Lords opposite say, as they repeatedly do, that the new border controls that will be in place for 1 November are unnecessary, they are, to put it at its politest, peddling a myth. To suggest, as they sometimes do, that we can simply dispense with customs controls altogether and let smuggling rip is not only being criminally irresponsible but ignoring the fact that even if we were to do so, the EU will not follow suit.
Fujitsu is one of 1,000 Japanese companies that operate in the United Kingdom. Last week, Tarō Kōno, Japan’s Foreign Minister, explained that no deal would,
“have a very negative impact on their operation”—
by which he means cuts in investment and employment. A Joint Select Committee would be able to confirm that that is what we would face. It would also confirm the overall impact of no deal on the economy and the public finances. According to the Government’s own estimates, published in their 26 February document Implications for Business and Trade of a No Deal Exit, a transition to WTO rules would lead to an economy that would be between 6% and 9% smaller over a 15-year period, but the decrease would be 8% in Scotland and Wales, 9% in Northern Ireland and 10% in the north-east. The Chancellor said yesterday that the cost to the Exchequer would be some £90 billion in hard cash per year.
Of course, these costs are only part of the story. Freedom of movement would end on 1 November, and British citizens planning to work in the EU would find that they had no right to do so. Equally, we would find many sources of vital workers blocked under the Government’s planned immigration policy. The Government are very fond of saying that they still want the brightest and best to be able to work here. But as far as they are concerned, this does not apply to the brightest and best care assistants, agricultural workers, baristas or lab technicians, all of whom we need from the EU on a continuing basis and all of whom would be barred under the Government’s immigration plans.
No deal would also immediately end a whole raft of mutually beneficial mechanisms for security co-operation, including data sharing, police co-operation and extradition. As a nation and as individuals, we would simply be less secure.
A no-deal Brexit would also preclude any involvement in all the mechanisms that project a shared European voice in international affairs, whether on climate change, the promotion of human rights or security and terrorism threats. These are the biggest issues facing the globe. As last week’s G20 meeting showed, Europe’s is the only powerful voice advocating policies in these areas that we and the Government strongly support, because they reflect our values as a liberal democracy. Any sort of Brexit, but particularly one without a deal, would diminish our influence in resolving them. It would also threaten the union, with inevitable renewed calls for Scottish independence and more credible calls for a border poll in Northern Ireland.
These are some of the costs of a no-deal Brexit, but what about the benefits? Everybody accepts that there would be net costs in the short term, and Jeremy Hunt for one is completely relaxed at the prospect of looking people in the eye and telling them that no deal means the loss of their job or their business. But beyond this immediate pain, for some the sunny uplands beckon. However, this nirvana is ill defined, devoid of specifics and wholly unsupported by any credible analysis. The economic costs through lost growth greatly outweigh our net contributions to the EU budget, and there is no evidence that trade deals with the rapidly growing markets outside the EU would be better than those the EU as a whole can negotiate—quite the opposite. I challenge anybody to offer even a shred of evidence that leaving without a deal would do anything but make us less safe and less secure.
What is now a Tory virility symbol was not remotely being offered in 2016 and has but minority support in the country now. In 2016 the Vote Leave campaign ruled out a no-deal Brexit and spoke repeatedly of negotiating a deal before even starting the legal process to leave. Today, in the latest YouGov poll, only 28% of the population—less than the Brexit Party vote in the European Parliament elections—supports leaving with no deal. Among 18 to 24 year-olds this figure falls to just 8%. So a policy option being clutched by Johnson and Hunt as their crucifix against the vampire of the Brexit Party is not even going to protect the Tory party from the electoral and existential threats it now faces.
Nevertheless, Boris Johnson said last week that we would be leaving the EU on 31 October, “do or die”. Jeremy Hunt on Sunday, not to be outdone, said that there was not much difference between him and Boris on the issue. There is of course, in reality, zero chance of reaching a new agreement with the EU before the end of October, and therefore leaving without one remains a growing possibility.
As this would be an act of monumental irresponsibility and stupidity, Parliament should at least prepare for such a decision with its eyes open. The Joint Committee that this Motion envisages would ensure that we did not stumble blindfold into a no-deal Brexit. It therefore has our strong support.
I agree that Mr Johnson’s Charge of the Light Brigade, do or die bravado risks disguising quite how momentous is the decision that he seems to contemplate with such insouciance. It is momentous for how the world sees us, for the prosperity of our people and for the security and unity of the kingdom. I leave these great themes to the two previous speakers. They have been well addressed. I will make four simple, factual and afraid rather familiar points and add two footnotes. My intention is simply to draw attention to the gravity of the step being considered with such surprising insouciance.
On fact one, the cliff edge, the noble Baroness, Lady Smith, has already said that without a withdrawal agreement there is no transition period. She is right, and even Mr Johnson has now spotted that. I am less sure that everyone understands that, if the Article 50 process ends on 31 October—and both contenders for No. 10 are against extending it—there is no way in which a transition period can be revived. The concept is dead because the concept is only in Article 50. Once Article 50 is discharged, there is no relevant legal base in the treaty, no specific article about ex-partnership relationships, and no relevant provision in the articles dealing with relations with third countries.
Mrs May’s withdrawal agreement is now denounced by both contenders—both the one who voted for it and the one who voted for it and against it. But if it is dead and if it is replaced by no deal, so is gradual transition. The cliff edge is a real crash out—it means crash out, straight down, on 31 October.
The second fact is that everyone I think now accepts that the decision to start the Article 50 process was a revocable decision, but I am not sure that everyone yet understands that the decision to end the process is an irrevocable decision. Article 50 spells out that, once the process ends, a member state cannot revive its membership, either wholly or in part; it can only apply de novo under Article 49 for accession. So there is no ladder back up the cliff after 31 October.
For the third fact, I am sorry that I will have to mention that GATT Article 24 Clause 5(b), even though the Government—and I pay tribute to the Minister—the Bank of England, the WTO and the EU Commission have all rightly pointed to its irrelevance on 31 October. We and the EU could not maintain the mutual tariff-free trade that Mr Johnson says he wants without having to eliminate all tariffs on all our trade with all WTO members. Clause 5(b) provides a glide path towards a customs union or a free trade agreement, provided that the destination is agreed and the schedule of reductions is approved, but it has never been used for a move in the opposite direction. The application would have to be made jointly by us and the EU, and the EU would not join us because it thinks that the application would fail and because there is no legal basis in the treaty that it could use to do so.
It follows that on 31 October we would either have to build a tariff wall against imports from our largest supplier, or remove all our tariff walls against all suppliers, or be in breach of WTO rules—from the start, on 31 October. The EU has long since said what it would do in that situation. If we go with no deal, the EU’s common external tariff will apply to us from day 1. There is no parachute for our importers or our exporters—for any of our traders there is no parachute. It will be our biggest ever step away from free trade on 31 October.
My last fact is that the legal base on which the EU could then negotiate a new relationship us would be Article 218, perhaps combined with Article 207 and maybe also Article 217. We would then find ourselves mourning the lost protection of Article 50. Under Article 50, the position of the 27 is decided by qualified majority, meaning that we cannot be held to ransom by any single member state. After 31 October, we could be. Since an Article 217 and 218 agreement would be a mixed agreement, including matters not of EU member-state competence, EU positions would require unanimity. Of the first three files that the EU has said that we would have to look at in negotiations—citizens’ rights, the money and the backstop—at least two raise issues well outside exclusive EU competence. So the whole negotiation could stall immediately. If a single member state were unhappy about how we proposed to treat its nationals or had some unrelated point, perhaps about fisheries, that it wanted to press upon us, once outside the EU, unprotected by Article 50 rules, we would find that no member of the 27 would have to persuade the others to seek a concession from us: it could insist. EU positions, up until now a majority-determined highest common factor of member-state positions, will become a unanimity-determined lowest common multiple of member-state demands. Life will be a little harder for our negotiators when the rules of the game change on 31 October.
My first footnote is this: if, acting on Mr Johnson’s proposal, we decide to withhold some or all of the money, the negotiations will not start. The EU runs on law. We made legally binding commitments, and the total has been jointly computed and agreed by our Prime Minister. Were we to resile, it would be self-defeating. It would not assist the negotiations to do so: it would prevent them. Equally, the 27 will not, in my view, agree to drop or time-limit the backstop. They take seriously their commitment to the Good Friday agreement—and outside Article 50, it takes only one of them to take a stand.
My final footnote is this: an Article 50 agreement does not require 27 national ratifications. A mixed agreement, such as any future agreement that we night have, will do. The Canadian agreement got stuck in the Wallonian Parliament; the Ukrainian agreement required a referendum in the Netherlands. The referendum requirement has two effects. First, it makes the negotiators look over their shoulders. They feel domestic pressure to use the veto given to them by the unanimity rule. Secondly, it adds a couple of years—perhaps more—after the deal is struck, for national ratification procedures, referendums or whatever. A no-deal Brexit is not just an event: it is a process. Leaving on 31 October would condemn us to a protracted period—five, seven, I do not know how many years—of continuing no deal.
I cannot see how Mr Johnson and Mr Hunt can tell us that that is what people voted for in 2016. In yesterday’s Times, Rachel Sylvester recalled the official Vote Leave campaign leaflet, ruling out no deal. The leaflet said:
“Taking back control is a careful change, not a sudden stop—we will negotiate the terms of a new deal before we start any … process to leave”.
Now we have Mr Johnson saying that we should end it with no negotiated deal. I think we know what electorate he is appealing to, but I cannot accept that it would be undemocratic to put his proposal to a wider electorate. It is so different from what he was saying three years ago that it must be right that Parliament, when it is required to take the no-deal decision, is made fully aware of the costs and implications before irrevocable decisions are taken that would have infinite effect and run for many years. So I strongly support the Motion in the name of the noble Baroness.
My Lords, I declare an interest as an adviser to two major Japanese companies.
We have heard three impressive speeches from one point of view, and it is no surprise that I shall strike a slightly different note in what I have to say about the problems we confront. I shall vote against the proposal for yet another committee—we seem to live in a world of committees—and against the opposition Motion because it aims at the wrong target at the moment. There is no sufficiently deep thought behind it and, frankly, I do not think it does credit to the great social democrat element in the Labour Party which is vital to the nation’s political health, or used to be. It is wrong because the whole idea and concept of a crude, tear-away, “one leap and we’re free” Brexit on or by 31 October is, as I shall show, impossible. It is a chimera, and shouting about deadlines and delivery, however loud, will not make it otherwise.
The reasons for this basic reality are twofold: there are political aspects and there are technical aspects. On the political side, first, it is obvious that the other place will move heaven and earth to prevent a crude, break-away no deal. Secondly, there are just too many inescapable legislative aspects to unravel to make it possible in the time available before 31 October. We just cannot expect systems of law and procedures which have grown together over 45 years, however irritating and pointless they have become, to be wrenched apart or replaced in a few weeks or days. Thirdly, a walk-away no-deal Brexit on 31 October requires half a dozen or more major Bills, according to the House of Commons Library, simply to make it possible to proceed lawfully in daily business covering trade, agriculture, fisheries, immigration rules, social service administration, financial services and a whole lot else. It is physically impossible to fit all that in before the October date. Those are the political facts. They are opinions really, but they are certainly called facts.
However, it is the technical impossibilities of a no-deal exit in the hard, brutal sense which are even more interesting and conclusive. If on 31 October we leave the Lisbon treaty complex for good under the Article 50 procedure, we remain by default within the European Economic Area agreement treaty, which is a multilateral treaty between states. No process to withdraw from the EEA under Article 127 has been triggered, whatever some Brussels lawyers, or indeed our own Civil Service advisers, may say. We remain as a contracting partner within the EEA treaty structure, which means participating provisionally, after leaving on 31 October, in the single market and leaving whenever we chose later, having given 12 months’ notice. That timing would be entirely up to us.
I ask your Lordships to give thought to some of the comments of the noble Lord, Lord Owen, who is not in his place, who has gone into this very profoundly, that for a temporary or provisional staging post post-Brexit, this is a quite comfortable place to be. It gives us a just as good—in fact, a better—space than the much-disliked withdrawal treaty and provides extensive freedoms to tackle the next phase of all the key issues, both security and economic, in the period ahead. In this period, we can have unrestrained powers to make treaties and trade agreements, just as Norway has in the EEA. We can carry on setting our global agenda. We can duly leave the EU by 31 October and the EEA by, say, 31 December 2020, but it would be entirely our say-so, not anybody else’s. We can start the long process of fisheries and agricultural reform on our own lines. Our trading terms with the rest of the EU will remain tariff-free in the single market for the interim transition, while we design a new FTA with Europe, so there is no immediate disruption and smashing up of supply lines. We have the time and flexibility to complete our practical and sensible immigration controls, which are badly needed.
The ECJ has no locus in the EEA, although we would be temporarily under the EEA court’s much lighter, consensus-based jurisdiction. We would pay the EU for our legal obligations on leaving, as is proper, but buy only into the other EU programmes that we want to join. We would have time to sort out the hopeless bind into which Dublin has talked itself, where simultaneously it must install border controls at the insistence of Brussels, as an EU member, when of course that is the very last thing that the Dublin Government want to do. There were always ways round this dilemma, even with existing technology—let alone new technology—but they were always going to take time to work out. I agree with many in this House who believe that we should be generous and helpful to the Irish Republic in its agonising choice. Our membership of the EEA for 18 months would give time for that.
The essential point to grasp is that it is going to happen anyway, and by default. Calling it a no deal is a complete misnomer, which is why I question the opposition Motion. Even if nothing is done, we become—for a limited time—a non-EU member of the EEA, giving notice of our intention to leave in due course. This is where we will find ourselves, like it or not. If Brussels tries to force us out of the EEA treaty we will have ample recourse for this, frankly, unreasonableness through the Vienna Convention on the Law of Treaties. Why should it do that? This orderly and gradual procedure is utterly in its interests, step by step. The silly mistake of the two prime ministerial candidates is to keep depicting, in blood-curdling terms, what might happen as a no deal when, in fact, a most elaborate set of deals and new arrangements will have to happen once we withdraw from the EU treaties on 31 October. It reconciles the 31st imperative with realism, orderliness and a step-by-step approach.
I know—and others have observed and will observe—that Boris Johnson has said that the chances of a hard no deal happening are a million to one against. He is wrong. There is no chance at all of a hard-line no deal. No such thing exists or can occur. In fact, the whole vocabulary of hard Brexit versus soft Brexit, so beloved by the BBC and others, is going to become irrelevant and redundant against what actually will happen if we just move on to a fixed transition period, provisionally within the EEA for 18 months or so, with a complex series of deals unfolding.
If the ERG crew in my party in the other place cannot accept this near-default reality position under a new leader and would prefer suicide, then they are to be pitied. A general election would certainly follow, wiping most of them away and leaving them to be condemned by history. As for the opposition Motion before us, instead of this sterile jousting about something that cannot happen, we should remember something that JS Mill wrote long ago about our politics that, when all is said and done, the contending parties of this nation share the truth between them.
My Lords, I appeal to both Boris Johnson and Jeremy Hunt—more in hope than in expectation, I fear—to read the cogent, cool and indisputable speech of the noble Lord, Lord Kerr. It would be a mercy for us all, if they did.
One of the principles set out in the Prime Minister’s letter triggering Article 50 was that the UK’s withdrawal from the EU would cause no harm to the Republic of Ireland. This is vital because the bilateral relationship between our Government and the Republic’s is the lynchpin of the 1998 Good Friday agreement and the peace process. Yet a no-deal Brexit would have profoundly damaging consequences for both the Republic of Ireland and Northern Ireland, which voted by 56% to 44% to remain in the EU in 2016.
Back in late 2010, the coalition Government proposed a small bilateral loan to the Republic at the height of the financial crisis. The Chancellor George Osborne then said:
“I judge this to be in Britain’s national interest … Ireland accounts for 5% of Britain’s total exports … we export more to Ireland than to Brazil, Russia, India and China put together. Ireland is the only country with which we share a land border, and in Northern Ireland our economies are particularly linked, with two-fifths of their exports going to the Republic”—[Official Report, Commons, 22/10/10; col. 38.].
Those are the words of the former Chancellor. Fully two-fifths of Northern Ireland’s exports go to the Republic.
Ireland’s economy repaid the loan and has bounced back since those dark days of 2010. Our fifth largest export destination has increased its trade with us to over £50 billion a year; 200,000 jobs here in Britain are with Irish companies; 60,000 directors of UK companies are Irish citizens; and the Dublin-London air route is the world’s second busiest. With no deal, the Republic officially foresees up to 85,000 job losses, just at the point where the Irish economy has reached full employment. A hard-earned return to budget surplus will reverse back into a deficit, with knock-on effects for public services and infrastructure investment, and of course serious damage for its close neighbour, Northern Ireland.
If Brexit really does have to happen, I will agree with the spirit and letter of the backstop arrangements—an insurance policy to ensure that the border stays open at all costs. Make no mistake: no deal means a hard border—a legal requirement of WTO, and therefore EU, external frontier rules. The impact on Northern Ireland and its fragile economy would be grave. The head of the Northern Ireland Civil Service, in measured words, wrote to the political parties of Northern Ireland earlier this year:
“The consequences of material business failure as a result of a ‘no-deal’ exit, combined with changes to everyday life and potential border frictions could well have a profound and long-lasting impact on society ... a no-deal exit could result in additional challenges for the police”.
Wales’s key port of Holyhead, the third busiest port in the UK, its work overwhelmingly with Ireland, would be especially badly hit. As the Welsh First Minister, Mark Drakeford, said,
“a no-deal Brexit would be catastrophic for the Welsh economy”.
One-third of the value of cross-border trade is in agri-food, and there is simply no way of maintaining the frictionless trade and processing of such goods—including all of Northern Ireland’s fresh milk, which is processed in the Republic—across the border in a no-deal scenario. The import duties, plus detailed rules that require certification, document inspections and checks on agri-food products crossing the border, will all but cripple the industry. Ninety-four per cent of those who trade across the Irish border are small or micro-enterprises. Few, if any, of these have the capacity or resources to implement the measures needed in a cliff-edge Brexit—still less the resources to pay sudden new tariffs.
One of the most likely means of temporarily managing the catastrophic fallout for Northern Ireland would be for the UK and the EU to invoke Article XXI(b)(iii) of GATT—the so-called “security clause”. This would allow exemption from the responsibility to properly enforce a customs border on the grounds that the reimposition of customs controls would pose a risk to the peace process. However, in so doing, we would be essentially declaring Northern Ireland unstable, insecure and unfit for normal trading or investment—in other words, doing the dirty work of the dissident republican terrorists for them.
As your Lordships’ Select Committee on the European Union has pointed out, the costs and disruptions from the customs requirements, including tariffs, that would flow from trading under the very WTO rules that hard Brexiteers, including potentially our future Prime Minister, champion,
“could severely affect the border and UK-Irish relations”.
The Good Friday agreement, recognised as a treaty under international law, brought peace after decades of horrific conflict, but it would be catastrophically damaged by no deal.
Both the Tory leader candidates yesterday spuriously suggested that novel, but so far completely unidentified, technology can prevent a hard border, but unless there are common trade regulations and customs rules on either side of the border, no amount of fancy, undeveloped technology can resolve the problem. It is not the backstop but a no-deal Brexit that will threaten the union between Northern Ireland and the rest of the UK, which is a major reason why no deal must be stopped, and stopped now.
My Lords, the noble Baroness, Lady Smith of Basildon, asked for facts. In January 2017, the National Crime Agency warned the All-Party Parliamentary Group on Policing and Security what would be lost if we left the EU without a deal. Being a trained police officer, I took contemporaneous notes. These are the facts: we would lose the Schengen Information System, meaning that police officers would no longer be able to carry out checks via the police national computer on people and vehicles on the streets of the UK, for those wanted under the European arrest warrant, for missing people, for travelling sex offenders, or for those suspected of being involved in terrorism, anywhere in the EU.
We would lose the European arrest warrant. Norway and Iceland want to be part of the European arrest warrant. They will not get full access to it, because it is against the constitution of countries such as Germany to extradite their nationals to non-EU states. They applied in 2001 and agreement was reached in 2006, but it is yet to be implemented.
We would no longer be a member of Europol, to which the UK is one of the biggest contributors. It currently has a British director and 700 staff producing pan-European action plans and organised crime threat assessments. Third-party countries have only partial access and play no part in its leadership. The UK would become a third-party country.
We would lose ECRIS, a secure messaging system where criminal convictions in the courts of one country are shared across the EU. It is also used to analyse convictions to determine patterns of offending. It will be far more difficult for us to stop foreign criminals entering the UK because we will not necessarily know that they have convictions.
We would lose Prüm, a system that rapidly compares DNA, fingerprints and vehicle registrations across the EU; for example, a DNA profile found at a UK crime scene can be compared with databases of those convicted across the EU within a few seconds or up to 24 hours. We would have to fall back on alternative arrangements under Interpol, which take months; some are never replied to.
We would lose access to cross-border surveillance where suspected criminals are kept under surveillance in other EU countries and EU suspects are kept under surveillance in the UK. For every one request from the EU, the UK makes seven requests for such assistance to the EU. We would also lose joint investigation teams that operate under the Eurojust process to tackle pan-European crime.
The existing legislative framework—for example, common data protection standards and the European Court of Justice to resolve disputes—enables greater and more effective law enforcement co-operation. A no-deal Brexit, as my noble friend Lord Newby said, would result in the UK being less safe and less secure. I am confident that a Joint Committee will confirm these facts.
My Lords, I am glad to follow the noble Lord, Lord Paddick, and particularly glad to give unequivocal support to the Motion tabled by the Leader of the Opposition; I am just sorry that it has taken so long.
Three years ago, in the wake of a referendum that had divided our country almost equally, I told your Lordships’ House that we needed a Parliament that could come together and look at the facts. I was anxious to have an innovation: a Grand Committee of both Houses. It could have been done. I like to think that had it been done, we might not be in quite the mess that we are in today. Certainly, were it not for the ending of the Northern Ireland Assembly and Executive, we would not be in this mess. Many of the points made cogently by the noble Lord, Lord Hain, would have been appreciated by many of the parties in the Northern Ireland Assembly. We have had this extraordinary dichotomy that, on the one hand, 56% of the people of Northern Ireland voted to remain and, on the other, their only parliamentary representatives who take their seats in Westminster are leavers. When the history of this period comes to be written, I think that this will be seen as one of the most significant facts.
Having been in Parliament for just over 49 years, I am very depressed for our country as we approach 31 October. Of course, I hope fervently that a deal can be done. Like many remainers on this side of the House and on the Cross Benches, I would have accepted the Prime Minister’s deal, as negotiated by Olly Robbins, to whom the Leader of the Opposition referred in her speech. I wish Her Majesty’s Opposition in the other place had realised that you cannot leave an institution and retain all the benefits of membership. This was a deal negotiated by a determined and expert team, agreed by both sides; Parliament should have accepted it.
We are where we are, but where is that? I am ashamed for my party because of the way we are conducting the leadership election. It should have been decided in the other place. I do not know what the result would have been, but whoever had been elected Prime Minister—elected leader of the party and gone to the Queen to receive the seals of office—should have been working now. We are wasting time that we do not have to waste. I thought it grotesque—I use the word deliberately—that yesterday, when we had more news of the gravest crisis in Hong Kong since the handover, our Foreign Secretary, who I personally admire and like very much, was in Northern Ireland with Mr Boris Johnson, appealing for the party vote.
The noble Baroness, Lady Smith of Basildon, said quite rightly that we are dealing with 0.3% of the electorate, but in Northern Ireland we are dealing with 500 paid-up members of the Conservative Party. What a distortion of priorities, an appalling spectacle and a national disgrace that we should be conducting this election among 160,000 people in the whole of the United Kingdom when we desperately need a Government. I honour Theresa May, but she is a lame duck Prime Minister and the Government are in a state of suspended animation while this goes on, with nobody knowing who will occupy which posts after the votes have been counted. I appeal to those who control the rule-making in my party—a party that I have hitherto always been proud to belong to and to which I have belonged for 63 years—to realise that this is not the way to choose a Prime Minister. It may be the way to choose a Leader of the Opposition but not a Prime Minister.
What can we now do? The answer is: not a great deal. I wish I could share the sanguine approach of my noble friend Lord Howell of Guildford. I admire him greatly; he has done great service in both Houses of Parliament. He is just stepping down, having had a very distinguished period as chairman of our International Relations Committee, and we are all in his debt. I hope he is right in all that he said, but I fear he is too optimistic.
What could a committee of both Houses do, composed of good men and true, as it would be, with a great deal of expertise from your Lordships’ House? The noble Lord, Lord Kerr of Kinlochard, would have to be a member of it so we would have to give him his summer holiday, but it is just possible that it could produce a persuasive report that would make whichever candidate emerges as the winner, and as the new Prime Minister, realise that above all his responsibility was to the nation.
To chase the votes of the sort of people who turned their backs in the European Parliament yesterday is totally shameful.
The Liberals were wearing yellow T-shirts.
I did not approve of the sartorial elegance of the Liberals but at least I could applaud their sentiments. Their sartorial elegance is not always what it might be but their sentiments were sound. However, the turning of the back was a shameful gesture, and one of which no true Brit could possibly be proud.
I want to be proud of my party again. I will always be proud of my country, but at the moment I am ashamed for my country.
My Lords, for the first time in my life I fear that we are marching steadily towards the break-up of the United Kingdom. I want to spend some time today on the subject of Scotland and its place in the United Kingdom, and the implications of a no-deal Brexit for that relationship. To do that, I want to go back a number of decades to orientate ourselves to what might happen.
To state the obvious, Scotland is a nation. It is a nation with commonly recognised borders, a common thread of history and, above all, a national consciousness. Over the last few centuries Scotland has obviously been a nation inside a larger nation state—within the United Kingdom—so the question of national consciousness is therefore very complex, with the development over time of what Professor John Mackintosh MP once called the “dual consciousness” of the Scottish people: part-Scottish, part-British. That balance has varied from time to time, as might be expected, but it has always been a balance. Devolution did not create that national consciousness; it was the response to its existence.
Now, as we countenance Brexit, I want to ask two questions. First, why, as late as the 1950s and 1960s, was there such a significant feeling of Britishness in that balance and such an antipathy towards separation, especially in the populous west of Scotland, which acted as a block for many years on separatist ambitions but which, counterintuitively, contains the most significant number of the descendants of Irish immigrants, who might have been assumed to have the least affection for the Crown, the union and the union jack? Secondly, what has changed since, and what implications do those changes have as we countenance Brexit?
The answer to the first question, about the strength of Britishness in Scotland 50 years ago, is complex, but I suggest it included the personal experience and fresh memories of common struggle and sacrifice throughout the United Kingdom, especially in World War 2; the lingering suspicions, especially in that populous west of Scotland, of the right-wing and in particular the anti-Irish-immigrant origins of the SNP; the resultant fear that a separation would threaten the Ulsterisation of Scotland and the ascendancy of the majority over the minority; the self-interest in jobs provided by British-wide industries in coal, steel, shipbuilding and so on; the solidarity consequently arising through the Britain-wide trade union movement and fellow employees in these industries; and, above all, the recognition that for a nation of 6 million, a United Kingdom of 60 million provided the framework for economic opportunity, security and stability, in recent decades enhanced by membership of the European Union’s additional 440 million people.
That was the position 50 years ago. What has changed? Well, social, economic and political radical change has happened. The experiences of the common sacrifices during World War 2 have diminished decade by decade. Nationalism and the SNP have moved from the right to the centre-left of politics, abandoning the anti-Irish-immigrant leanings, towards a more inclusive nationalism. The massive expansion of educational provision, opened up by the Labour Governments of the 1960s and 1970s and made available irrespective of class or ethnic background, and the growth of white-collar jobs, both provided opportunities for social advance hitherto denied, and as a result of that came the growing confidence and diminished fear of the ascendancy of one group over another. I was a beneficiary of some of those changes.
Then, from 1979, the political, social and economic effects of Thatcherism, from massive unemployment to the experimental poll tax—remember that Scotland was chosen as the guinea pig—had a profound impact on the collective Scottish consciousness. The self-evident employment benefits of the great British industries disappeared. British Steel has gone, British Coal has gone, British shipbuilding has all but gone, and there are many others. With the disappearance of these industries and jobs went the Britain-wide solidarity which the employees and the trade unions afforded. Those changes are not comprehensive but they are significant, and they led to a referendum result in 2014 where almost 50% of people in Scotland voted to separate from the UK.
This is the warning that I give to this Chamber, and to my colleagues in all parties in the other House. There were only two things remaining that stopped that 45% becoming over 50%. One was devolution itself, which afforded the Scots significant control over their own affairs, but more important than anything else was—and remains—the perceived benefit of economic opportunity and stability from remaining inside the UK, a nation state of 60 million people, and a gateway to the 500-million market of the European Union. Economic opportunity, security and stability have been the crucial factor from 1707, when Scotland joined the union after the disastrous economic failings of the Darien scheme, to 2007, when the RBS went down with a greater loss than Scotland’s annual GDP. They are the crucial pivot on which the partnership of nations which constitute the United Kingdom now hinges, but it is that very pivot that is under threat from Brexit. Of course a Boris Johnson leadership would be bad for unity—that leadership with Brexit would be even worse—but a Boris Johnson leadership tied to a no-deal Brexit is a disaster waiting to happen for the unity of the United Kingdom, precisely because it threatens that economic opportunity and stability.
The Government can of course ignore what I say, what Gordon Brown says, what Professor Tom Devine—who knows more about Scotland than anyone in either Chamber—says, or what John Curtice says. They can even ignore—my God—what Liam Fox says. Today, her own Government can choose to ignore what the Prime Minister is about to say in Scotland. Indeed, it may be that the Conservative membership referred to by the noble Lord, Lord Cormack, simply does not care. In fact it is certain that it does not care: a recent survey suggested that the membership would prefer a no-deal Brexit to the retention of Scotland or Northern Ireland inside the United Kingdom. So be it. Be careful, however, what you wish for, and please take heed of the warnings. It would be a supremely tragic irony if a course of action nominally designed to restore the sovereignty of the United Kingdom were the very vehicle that ripped it apart. Let us think on the implications of that.
My Lords, it is an honour to follow the noble Lord.
Two weeks ago, YouGov asked almost 1,700 people about the consequences of a no-deal Brexit. The answers revealed a gulf that is striking even by current standards. Of those who voted remain, 71% anticipated serious damage to the economy and only 9% did not. Among leave voters—with neat but depressing symmetry—serious damage was expected by just 10%, and not expected by 70%. Such indicators of tribal loyalty can lead fair-minded people to fatalism or despair. However, it is in just such circumstances that clear heads, reliable evidence and the power of reason are most needed.
As we approach October, which some say may be the most momentous month in our recent history—there is stiff competition—we have the chance to ensure that the constantly changing picture on no-deal Brexit is informed not just by spin, leaks and written statements but by a hard-fought parliamentary assessment, based on the interrogation of those most closely involved, that will neither exaggerate nor pull its punches. The noble Lord, Lord Howell of Guildford, referred to “yet another committee”. Well, I read with admiration the reports of our EU Committee, its sub-committees and the Exiting the EU Committee of the House of Commons. They have already convincingly covered much of the ground. However, as no deal continues its journey over the next three months, from table-top exercise to looming reality, further and more precise assessments will be needed. Here are five current developments that the proposed Joint Committee could usefully consider.
The first is the legislation gap: of six Brexit Bills that the Government said in February needed to be passed to prepare for no deal, only one has been enacted. Will we have the powers we need to regulate trade, fisheries, immigration and financial services?
Secondly, is there reality in the notion of mini-deals with the EU? This is now being put about as a managed no deal, or at least as adequate mitigation for no deal. There is, I fear, no reality in the idea that we will automatically remain members of the EEA, desirable though that may be, for the simple reason that we will meet neither of the conditions—membership of the EU or of EFTA.
The third development is the likely actions of the EU to defend its new customs and regulatory border in Ireland.
The fourth is the general state of preparedness. Was the Institute for Government right in its recent assessment that the Government are as unlikely to be ready for no deal in October as they were in March?
The fifth issue to consider is the impact on all this of recent departures from the Civil Service, including the Permanent Secretary of DExEU, Philip Rycroft, the chief of no deal, Tom Shinner, Karen Wheeler of HMRC and the chief negotiator Olly Robbins.
The economic and constitutional aspects of no deal attract most of the attention—understandably so. I hope, however, that, as the noble Lord, Lord Paddick, said, the committee will also look at the implications for our safety and security. I used to observe police officers at Dover, their hand-held devices telling them in real time via the SIS II system when incoming passengers were on continental crime and terrorism watch lists. That capability along with many others, from the exchange of DNA profiles and passenger name records to a functioning system of extradition within Europe, will simply lapse without a further deal. We will lose the advantages of a security union, which, as the Centre for European Reform reported last month, has helped the EU achieve more on security in the past two years than in the preceding decade. Perhaps that is why Assistant Commissioner Neil Basu, who leads on terrorism for the Met, has described a no-deal Brexit as “incredibly concerning” and why the National Security Adviser told the Cabinet unequivocally in a letter leaked in April that it would leave the UK “less safe”.
Some have said that it is a million to one, but the bookies were offering odds this morning of 2:1 on a no-deal Brexit in 2019. Politicians and the public need to know the facts, not as they were in the spring but as they will be in the autumn. Everyone likes a summer holiday, but no-deal preparations are being strenuously urged on others. We in Parliament should not neglect our own and that is why I shall support this Motion.
My Lords, as we all know, in 121 days we are due to leave the European Union with or without a deal. While I entirely agree that we need more facts about the implications of no deal, I part company with the noble Baroness on this Motion because I believe we cannot spend those precious days creating committees, calling for evidence, questioning Ministers and re-examining issues that have, if we are honest, been debated many times before. What is needed is something altogether simpler, more fundamental and a lot more urgent.
What people want to know, very simply, is how no deal would affect them, what has been done to prepare for no deal, what still needs to be done, and what more government, businesses and individuals should do. To give the Government credit, a lot has been done to prepare for no deal. There have been at least 750 communications of one sort or another since October alone. Print them off and you would have a compost heap of press releases, reports and statements. That is precisely my point.
As we clatter towards 31 October, Parliament and the country must be given now—not in September—a comprehensive summary that sets out clearly our nation’s overall preparedness. This summary should cover three broad areas, a few of which the noble Lord, Lord Anderson, spoke of: government preparedness, business preparedness and legislative preparedness. Let me outline just some of the major issues that we need to know about.
First, on government preparedness, how well prepared are the United Kingdom Government, including the devolved Administrations and our regulators, to keep the movement of people, goods, transport and services, including—crucially—data, flowing in the event of no deal? Are our regulators as confident as they can be that enough has been done to safeguard stability, especially financial stability? Are our police and security services ready for the changes of which the noble Lord, Lord Paddick, spoke? More specifically, in February, the NAO said that six out of the eight critical IT systems remained at risk of not being ready for a no-deal outcome in March. What is their status now? If they are not ready, what are the consequences? As the noble Lord, Lord Hain, asked, what precisely will happen on the Irish border? Then there is the channel. How well prepared are our channel ports for handling roll-on roll-off freight in the event of no deal? Last week, Peter Foster, the excellent European editor of the Daily Telegraph, reported that he had been told by the Road Haulage Association that any truck without the right paperwork would not be allowed on to a ferry at Dover. Is this the case?
That brings me to the second topic that the summary should cover: business preparedness. How well prepared are our major sectors, especially those with complex supply chains such as pharmaceuticals, food, automotive and aerospace, for no deal? In February, the Government assessed the risk in relation to trader readiness as red. As of 26 May, 69,000 firms had signed up for EORI status—fewer than one-third of the 240,000 EU-trading firms estimated to need one. EORI status is also needed if a firm is to participate in the Government’s transitional simplified procedures scheme. By the end of May, just 17,800 firms had applied for the scheme. What is the status now?
I could go on and on, but let me turn to the next topic—which the noble Lord, Lord Anderson, referred to—of legislative preparedness. How many pieces of primary legislation still need to be passed if our statute book is to function effectively on day one, were we to leave without a deal? My understanding, as the noble Lord said, is that in February the Government said they needed to pass six more Bills. Since then, however, even though today we are debating wild animals in circuses, I understand that only one of these Brexit Bills has made it on to the statute book. If that legislation cannot be passed, we need to know whether there are means to work around those problems.
Then there is the Government’s proposed tariff schedule that would apply in the case of leaving the EU without a deal. That still needs to be approved by Parliament: when will it be passed? As for EU trade and other agreements, how many of these deals have now been grandfathered over? What are the consequences of our failing to grandfather over these agreements, such as those with Canada and Japan? Again, I ask: are there workarounds? We know that the EU and member states have been preparing for no deal. Will the Government reciprocate in those areas where the EU has created arrangements to mitigate disruption? Into this category falls the all-important and much debated issue of Article XXIV of GATT, about which the noble Lord, Lord Kerr, spoke with great authority. We need to know the Government’s approach to this.
My reading of it is that both the EU and the UK—the contracting parties—will need to come an agreement if trade in goods is to continue as now. The UK and EU will also need to come to an agreement covering services if Article V of the GATS is to be triggered. What is more, my understanding is that neither Article XXIV nor Article V covers issues such as mutual recognition of standards and regulations for goods and services, rules of origin, participation in institutions such as Euratom, or, very importantly, security co-operation. So to achieve a seamless no-deal transition in which the status quo is maintained will indeed, as the noble Lord, Lord Kerr, so rightly said, be a matter for negotiation, and we know the EU’s negotiating position as it stands today. Monsieur Barnier has told us:
“We would not discuss anything with the UK until there is an agreement for Ireland and Northern Ireland, as well as for citizens’ rights and the financial settlement”.
In other words, until we have agreed what is essentially in the existing withdrawal agreement, there can be no further negotiation.
All this has a direct bearing on our no-deal preparations. If we leave with nothing on 31 October, the longer it takes to agree with the EU simply to freeze current trading arrangements, the longer we will be trading with the EU on pure WTO terms, which will indeed have a further impact on our no-deal preparedness. So this is the summary we need: a document that sets out, for the public and for Parliament, how well prepared we are and what more needs to be done. We have just 121 days to go until we are due to leave, so this comprehensive summary should be prepared now and be published before Parliament rises for the summer. Ignorance breeds fear; honesty breeds trust. We need the facts and we need them now.
My Lords, as I am going to make some mention of NHS staffing issues I should remind the House of my membership of the GMC board.
The noble Lord, Lord Bridges, in a very powerful speech, disagreed with the Motion before us. I would say to him that he has raised very important matters, but the problem we have is that there is simply no sign of the Government responding to what he has asked for. We have a paralysed Government with two candidates for the leadership of our country going around making the most irresponsible statements and promises, and at the moment Parliament is left bereft of what to do. That is why this modest proposal to establish a Joint Select Committee is worthy of support. But, goodness me, if this were to be accepted by the other place, it would have to get on with it. I agree absolutely with the noble Lord; the issues he raised are so serious that the idea that we can wait another few weeks before we actually get down to it frightens me and many others.
This Select Committee could also examine the contention of the noble Lord, Lord Howell, that it will in fact be impossible to leave in one step. All I can say is that I hope he is right. However, given that both Mr Johnson and Mr Hunt have painted themselves so tightly into a corner, the huge risk is surely where we will be if they reach that conclusion. We could reach a situation where government becomes almost impossible.
I have been listening to the two candidates; have noble Lords totted up the bill? There are tax cuts for the rich, slashing of corporation tax, stamp duty reductions, no-deal relief programmes for farmers and fisher fleets, pay rises for public sector workers, more for police, education and defence, and major infrastructure spending. We are told that this is all to come from the £26 billion of fiscal firepower that the Chancellor has reserved in case of a no-deal Brexit. As the Chancellor—and he still is the Chancellor and carries some authority with many of us, even if not with members of the Conservative Party—said yesterday, in the event of a disruptive no-deal exit, there will be a hit to the Exchequer of about £90 billion, which would have to be factored into future spending and tax positions.
As Paul Johnson of the IFS has said, these “extraordinary pledges”, adding up to tens of billions of pounds, mean that they are willing to borrow more and longer. If we do not get a deal, the economy will grow less quickly; we will lose that fiscal headroom that the Chancellor has made available and there will certainly be no scope for spending increases or tax cuts.
While we contemplate the folly of leaving the EU, the EU itself, after years of negotiation, has sealed a trade deal with Argentina, Brazil, Paraguay and Uruguay, following the deals it has already sealed with Japan, South Korea and Canada. Where will the UK be? Isolated and picking up the scraps, a minnow up against powerful trading blocs—reduced, as we have seen from what Johnson and Hunt have been saying, to slashing regulation and business tax in a desperate attempt to keep the economy going.
I want to echo two things said by the noble Lord, Lord Cormack: first, the shame of yesterday in the European Parliament—that British MEPs could do what they did; secondly, to go back to what he said three years ago, because this seems to be at the heart of the problems we face. It was a narrow referendum result, but Mrs May’s Government made no attempt at that time to pull the country together. Through the arbitrary declaration of Article 50 and the red lines which were discussed with no one outside her narrow inner circle, we have reached this position of desperate straits for our country.
I realise that Mr Johnson and Mr Hunt seem to have a very light connection to economic facts, but when it comes to just two sectors that I am most concerned about—the automotive industry and the health service—the consequences of no deal are devastating. I know that the Government, or sections of it, are suspicious of the Bank of England and the CBI, and I know that they think they know better than the people running companies who actually have to deal and trade globally. However, the Society of Motor Manufacturers and Traders spelled out the potential of a £50,000 per minute cost of hard Brexit border delays to UK automotive manufacturers, the consequence of which is that we will be forced out of being one of the top 10 global exporters, with a devastating impact on our economy.
When we look at the health service, it is the same story. Apart from issues to do with safety, dealing with pandemics, our exclusion from a whole host of European organisations, the risk of NHS staff not being recruited from the EU and our inability to replace them from elsewhere, what we also put at risk is our whole life sciences sector. Talking to academics or the pharmaceutical industry, we hear that there has already been a squeeze on the number of people coming to work in our country, partly because of Brexit and partly because of the associated actions of the Home Office and its very restrictive immigration policies.
Putting this all together, we see two vital sectors of the economy—the motor car industry and the health service—facing dire consequences, and somehow we are meant to say that it does not really matter because it is in the greater interest of achieving Brexit. This is sheer and utter madness. I believe that we in Parliament still have an opportunity to stop this and we have to do what it takes. A Joint Select Committee is not a momentous step towards that, but it is an important step none the less and I very much support it.
My Lords, it is often customary to say what a good debate people have been having. As it happens, on this occasion we have had some very good speeches—of varying quality, of course, but really very interesting—and although I may not have agreed with them, I have found some very interesting points made which deserve an answer. I am an optimist and always have been—but, like my noble friend Lord Cormack, I am pretty depressed at the moment. I have been depressed for about two years about politics, perhaps longer, and the current situation is really not good.
Brexit has turned some people in this country completely barking mad on both sides of the argument—especially the Liberal Democrats, of course; I will come to them in a minute, do not worry. We are not properly prepared, as we have heard, for a no-deal Brexit and it is a great pity because some people, including my noble friend Lord Bridges, I know worked pretty hard to get us into a state where we would be in a position to negotiate and leave in a better state. I can say absolutely categorically that I do not want no deal.
I particularly liked the optimistic point made by my noble friend Lord Howell about the EEA and I hope he is right, because I fear that that may be where we end up going. We have heard some cataclysmic speeches, which again were pretty depressing, and I hope that they were wrong, but this Motion I find somewhat unedifying. It is frankly a political ruse. It is designed to tie the hands of an incoming Prime Minister—and for the long term. The noble Lord, Lord Hunt—who, by the way, was absolutely right about the divisions that have been created—hinted that he would like to see Brexit stopped, as many people in this Chamber would.
Thank you. This House is unelected, privileged and unaccountable, and the last word is the most important. I think we should be very wary of trying to stop Brexit—which, I have just heard from the shouts of “hear, hear”, many people wish to do.
Regarding no deal, I sit on one of the EU sub-committees and we have heard about many of the preparations. Indeed, my noble friend Lord Bridges referred to the number of SIs that have been done and so on. In some places we are ready to leave; I accept that entirely. Let us take transport. A couple of years ago we were told that aeroplanes would not be able to fly across the Channel and land because it would all be hell. I think everybody has realised that that is not true.
We heard other things about how we will be queueing all the way from Dover to Lincolnshire. Nobody really thinks that and nobody really thought it at the time. A few hours ago, somebody said to me—I hasten to add in jest—that he was going to fatten up to prepare for a Brexit winter. We hear about that as well: there will not be any food, there will not be any medicine—or whatever.
But this Motion is to my way of thinking a ploy. Whether one likes it or not—I do not believe that referendums are a good idea—17.4 million people voted to leave. They did not say, “I will vote to leave just as long as we get a good deal”. We might not agree with the result, but they voted to leave. That was the decision, and the public believed that their decision would be accepted because, for instance as Keir Starmer said:
“We all have to accept and respect the referendum outcome. I campaigned to stay in the EU, and I would have expected the result to be honoured if we had won it”.
Or let us take Vince Cable, who said:
“The public have voted and it is seriously disrespectful and politically utterly counter-productive to say, ‘Sorry guys, you’ve got it wrong. We’re going to try again’”.
I have other quotes, but I will not bore the House with them—the best of all is from the leader of the Liberal Democrats.
I say to the Liberal Democrats, who are here in force, that they have form on this. The noble Lord, Lord Newby, who spoke eloquently, was on the Front Bench in 2008, and there is certainly one person here who stormed out of the House of Commons when Nick Clegg led a stunt on 28 February, I think, to protest against the fact that the amendment that the Lib Dems had tabled to have a vote on a real referendum was not accepted. That was in their manifesto of 2010. So when they say they want another referendum, let us not pretend that that has always been their position.
I go back to the fact that we are not accountable. Many of us here have never had to listen to the electorate, and we are not elected. I regret to say to people here who do not like it that the electorate have spoken. We are in a hugely privileged position which people in the country are not in, so we should not be prepared—this is the point of the Motion—to tell the little people outside, to quote Vince Cable again, “Sorry guys, you’ve just got it wrong”. That would be very unwise.
As I said, this debate has brought out some very interesting points that are worth listening to and should be addressed by the Government, which is, as the noble Lord, Lord Hunt, said, pretty much paralysed at the moment. But if we try to thwart the will of the people, which I think underlies the Motion, we will be very, very ill-advised.
My Lords, I shall try to concentrate on some factual points rather than opinions. In preparation for this debate, I looked back at previous Brexit debates. What struck me was how the situation and our expectations have deteriorated in the past year or so. I was also struck by the airy promises and assurances I received from a succession of Ministers which are now manifestly unachievable. We have been through the phase where no deal was unthinkable, through that of accepting that it was a possibility for which preparation was important, and are now in the phase where it is the preferred choice of the majority of Conservative Party members and is therefore being positively promoted by leadership candidates.
I start by talking about transport. Our whole economy rests on the shoulders of our transport industry. Looking at the industry, it is obvious how complex the process of addressing the costs of no deal would be. Let us start with the cost to government in preparation. There have been more than 60 transport-related SIs, which will have involved thousands of hours of preparation. There will be a whole new wave of them, because quite a few refer to the original 29 March date and will therefore now have to be revised. Many of our agreements with the EU on transport are limited to extending the current system for a small number of months. Those months were specified—sometimes it was September; occasionally the end of the year—so all that will have to be looked at again.
Then there is the money spent in preparation for no deal. The most commonly cited of those preparations, of course, are the ferry-less ferry services. Initially £100 million was allocated for assisting ferry companies—including the one with no ships—to provide additional ferry services. Because of fundamental errors in the way the contract was written, it has ended up with the Department for Transport having to pay many tens of millions of pounds of compensation to a fourth ferry company and to Eurotunnel. Because the other contracts specified 29 March, they too had to be scrapped and the ferry companies compensated for not getting the business, and it is now starting all over again.
There are ongoing preparations to avoid massive lorry queues into Dover. You can see the impact of Operation Brock on the M20. The initial costs were given as £7 million, but it must be a great deal more than that because it is a permanent separation of lanes to create a lorry park—with, of course, an impact on local businesses because of delays and accidents that have occurred there. In fact, the whole Kent economy is impacted by this. Think, too, about the cost to HMRC of 300 million additional customs declarations per year for our ports.
Then there are the costs to industry; many will admit that their preparations cost millions of pounds. The Government’s estimate is that there will be an 87% reduction in cross-channel trade for three to six months after a no-deal Brexit. Think about the impact of that on Eurotunnel and the freight and ferry operations. Some 16,000 lorries per day go through Dover to Calais. The impact of the queues for that number of lorries is considerable. At the moment you simply need an EU operator’s licence to transport goods to Europe. No deal could well lead to hauliers having to rely on a system of permits, of which our quota is 4,000. There are 38,000 freight operators and 4,000 permits; think about the impact on our industry. Clearly, many small operators will go out of business.
I turn briefly to aviation, which is worth £52 billion per year to our economy. Fifty-four per cent of scheduled flights go to the EU. Some operators are already moving a chunk of their business abroad, with costs to our economy, to qualify for cabotage rights in future. There have been agreements between the EU and the UK, but they are not written in a way that would prevent them being swept away in the event of a no-deal Brexit. Going through an airport at the moment, it takes 25 seconds for a British passport and 90 seconds for a third-country passport to be inspected by EU border forces. If you multiply that up, the impact of the queues on airports means vast costs to our economy.
The automotive industry is already suffering badly. The tide of Japanese investment is already flowing out; it came here only because we were in the EU. Job losses have been announced for Swindon, Sunderland and Bridgend, but remember that 160,000 people are employed in the supply chain as well—those are the hidden jobs. There are also costs to us as individuals. The noble Lord, Lord Robathan, once told me that he could not remember the international driving permit ever having existed, but people are buying those permits at the moment.
How can I ever forget? I still have my international driving permit from about 1970.
I will not go into the details of the conversation.
I briefly mention Northern Ireland, where the costs will be specifically heavy because of the land border. Translink buses go backwards and forwards across that border every day, taking people to work, education, health facilities and so on. It will have a hugely disjointing impact on the economies of both countries.
Finally, as someone from Cardiff, I remind the House of the 57,000 Welsh farmers who, under a no-deal scenario, would see an immediate application of tariff and non-tariff barriers to our exports to the EU. That would mean exporters of Welsh sheepmeat facing 40% to 50% tariffs. There would be so much damage to our economies that the costs are almost impossible to contemplate.
My Lords, my contribution to this debate will be brief, partly because I have already expressed my views on many occasions, and in part because, if I speak at any length, my anger, shame and distress at what my party is doing to this country and to itself will become too apparent. All I can say in Mr Johnson’s favour is that his policies are somewhat less destructive than those advocated by Mr Corbyn and his immediate circle. I recognise that that is a lukewarm endorsement.
I support the Motion. Indeed, I cannot see any rational reason for opposing it, certainly not the procedural reasons that I suspect the Minister will advance, nor even the sophisticated arguments of my noble friend Lord Bridges, with whom I normally agree, or the less sophisticated arguments advanced by my noble friend Lord Robathan. No-deal Brexit is not yet government policy, so the Motion reflects—indeed, underpins—government strategy. The Motion provides for a Joint Committee of both Houses, long called for by my neighbour and noble friend Lord Cormack. It implies the taking and consideration of external and independent evidence, doubtless to address the very questions identified by the noble Lords, Lord Anderson and Lord Paddick. That is highly desirable.
A report from such a source would ensure that, at a critical moment—one certain to arise—the public would be better informed about the consequences of a no-deal Brexit, which is precisely what my noble friend Lord Bridges called for, and I wholly agree. Surely, the existence of a better-informed public is a necessary condition to taking back control. Incidentally, this Joint Committee could examine what I fear is the somewhat optimistic analysis of my noble friend Lord Howell of Guildford. I normally agree with him, but I should like to know what external experts have to say about it.
To move away from the somewhat narrow terms of the Motion, I conclude with the following observations. I regard the whole policy of Brexit as an extraordinary act of national self-harm—political, economic, cultural and diplomatic—and one that will threaten the very unity of the United Kingdom, so eloquently spoken to by the noble Lord, Lord Reid. It is entirely unsupported by plausible assumptions or credible evidence. It is being driven by obsessions of a largely absurd and harmful kind.
I do not accept that the referendum of 2016 provides any democratic authority for crashing out without a deal. In 2016, the electorate was assured that Brexit would be a smooth, orderly process providing for seamless trade. That is not what will happen if a no-deal Brexit occurs. As the noble Lord, Lord Kerr, made wholly plain in a masterly analysis, now that the relevant facts are so much clearer, there would be nothing undemocratic about a further referendum. Indeed, such a referendum is now probably a necessary precondition to the revocation of Article 50, which is what I think we should now do. There is evidence from the polls of a shift in public opinion. Moreover, after three years, a new and large cohort of young voters is now enfranchised, and it is surely right that their views on their future should be taken into account.
Finally, any suggestion that Parliament should be prorogued to prevent elected Members of Parliament challenging or overruling the decisions of Ministers would be a constitutional outrage. Such a policy must be resisted by every possible proper means, including, if necessary, a Motion of no confidence. While to support such a Motion would certainly risk possible disaster, it might avert certain disaster. Those who bring forward or participate in a policy of prorogation for the purpose identified will bring lasting shame on themselves and the party to which they belong. It would almost certainly lead to their political destruction and it would subvert the basic principles on which parliamentary government rests. I am going to vote for the Motion.
My Lords, the Joint Committee that my noble friend proposes should be clear-eyed in weighing up the costs and implications of no deal by comparison with other options.
One option is still for us to leave under the terms of the Prime Minister’s withdrawal deal. Donald Tusk said yesterday that we should not expect the new leaders of the EU institutions to offer any other deal. However, the withdrawal deal is deeply objectionable to both leavers and remainers. Leavers see it as Brexit in name only; remainers think it a poor substitute for full membership.
Another option is to revoke Article 50, but the House of Commons is not going to vote for that either, and rightly so. For Parliament to repudiate the decision of the British people at the 2016 referendum would be catastrophic for our democracy. The two main parties pledged themselves to respect the verdict of that referendum. The esteem in which Parliament is held has been deteriorating throughout our political lifetimes, and Brexit has precipitated a crisis of confidence in Parliament. The House of Commons has failed to resolve Brexit, and voter support for the two main parties has never been lower. Here, as in much of the EU, we can see a more sinister politics emerging out of frustration with the main parties and parliamentary government.
A third option is another referendum. That would be a cop-out by Parliament. As Mr Heath discovered at the February 1974 election, the people do not expect their MPs to pass the buck back to them. A second referendum would be even more bitterly divisive; nor would it resolve the impasse. Whether it turned out that leave or remain had more votes, the majority would be narrow, leaving us with the same problem of consent and reconciliation as we have now.
Meanwhile, during the many months it would take to legislate and then organise and hold the referendum, the economy would continue to suffer. Uncertainty is the great enemy of markets and investment. The Governor of the Bank of England spoke yesterday of the drag from Brexit uncertainties intensifying. Our political paralysis has caused business paralysis. The latest PMI and ONS figures highlight the malaise. Do we want to extend from three to four years this vacuum in which little or nothing is done to address our uncompetitive productivity, in which businesses hoard cash, stockpile goods and defer investment decisions, and in which the number of people doing precarious and poorly paid jobs has soared, as has the number of people resorting to food banks? A second referendum is not in the interests of the poor and disadvantaged.
Alternatively, we might have a general election. This seems more likely to happen by accident than design, but there is a real possibility that an early general election could follow a vote of no confidence. If there were to be a general election, it would not take the politics of Brexit into clear water. A general election would be about more than Brexit. Neither leave nor remain could claim the outcome as vindication. The fragmentation of identity and political support among the electorate means in any case that, under first past the post, an election is unlikely to deliver a Government with a working majority.
So what other options are we left with?
Perhaps the new Prime Minister will be able, at the 11th hour, to pull a rabbit out of the hat and negotiate a new deal that is acceptable to Parliament. It is hard to foresee success in such an endeavour, but it must be right to try. In the circumstances of a serious new negotiation, possibly the EU would agree to another extension, but that is far from certain, and postponement is not resolution.
If negotiation does not work, we are forced on to so-called no deal. As is now the legal default, we could simply leave on 31 October. This is what people of a nervous disposition—and they are right to be nervous—call crashing out. Legal uncertainty, a sudden alteration of terms of trade and severance of contractual and administrative processes would indeed be disruptive and possibly very damaging in ways that even the committee my noble friend proposes could not altogether foresee. No one can responsibly advocate this. If it is what, through failure of negotiation and planning, we find ourselves having to deal with, no doubt as a country we will cope, as we have coped in other crises. Mitigations by the Treasury and the Bank, common-sense waivers of the rules and bold improvisations by Whitehall and business would limit transitional damage, but people would get hurt.
There can, however, be a relatively benign version of no deal. It is not too late to achieve a managed no deal. This is an option that the Bank envisaged in its response to the Treasury Select Committee last autumn. The Bank’s projection was that a managed no deal would provide for future growth to be only 1.5% less by 2023 than under the Prime Minister’s withdrawal agreement—no catastrophe, therefore. The Joint Committee, once it has examined the evidence, might consider that comparatively minor diminution of prospective growth a price worth paying in these circumstances, in which there are compelling objections and obstacles to all other options.
It has been grossly irresponsible on the part of the Chancellor, since the referendum, to have dragged his feet on preparing for no deal. Yesterday he repeated his adamantine opposition to no deal, but whatever he or others may have wished, no deal has always been a possibility and there are no excuses for failing to make the fullest preparations for that contingency. So much more could have been done to mitigate the risks of no deal and, of course, to strengthen our negotiating position. As President Macron also said yesterday:
“If you fear no deal you are the hostage”.
I was appalled to read in the Guardian of 11 April that, following the postponement of Brexit from 29 March, Whitehall transferred 6,000 officials who were at last preparing for no deal back to other departmental duties and stood down operational planning for no deal.
Be that as it may, we still have four months before our scheduled departure date of 31 October, and a great deal of useful preparation for a managed no deal can be made in that period to build on the reassuring plans for no deal that have already been made on both sides of the Channel in relation to transport, customs and so forth.
I know the EU believes it is politically necessary to show—pour encourager les autres—that it must be painful for a member state to leave the EU. But the 27 and ourselves continue to profess friendship. Good will, common sense and pragmatism can still, in the interests of our EU trading partners and ourselves, make no deal manageable, with much potential damage avoided.
My understanding, supported by eminent legal and academic authority and pace the noble Lord, Lord Kerr of Kinlochard, is that under Article XXIV of the GATT we can avoid new tariff barriers between ourselves and the EU, precluding the need for a hard border in the island of Ireland, if the EU makes a simple commitment in principle to start negotiations with us to achieve a free trade area.
It is a moment to remember the old maxim:
“Keep calm and carry on”.
A Joint Committee may find that, sensibly conceived and with determined preparation, no deal can well be manageable and transitional turbulence can be minimised. It may conclude that it would be the least unsatisfactory route to the resolution of Brexit.
Which would be better for our country? To pursue economic growth, regardless of other values, within an ailing EU or to nerve ourselves to seize the great prize that Brexit offers of the recovery of national self-government and the opportunity to renew our democracy and self-belief?
My Lords, since last we debated EU withdrawal in this Chamber, “no deal” has changed its meaning. It used to be a negotiating stance, but it has become a test of virility, a metaphor for how tough each candidate in the Conservative leadership race promises to be in the face of any resistance to reopen the withdrawal agreement on the table. I am grateful to the noble Baroness, Lady Smith of Basildon, for providing this opportunity to remind ourselves what no deal really means, not to the electoral prospects of prime ministerial hopefuls nor to the future of the Conservative Party, but to the people who live, and make a living, in the UK.
In any normal negotiations, no deal assumes maintenance of the status quo but in this scenario it means cutting loose from the frameworks that have defined business as usual for many decades. We have heard in so many powerful speeches today the impact on many crucial areas. I want to speak briefly about the impact on one of the sectors I know best: the creative industries.
First, no deal would end the free movement of talent on which the sector has built its success, without any replacement regime in place. This would leave businesses with no immediate route to recruit—as they do now—EU staff to plug the chronic domestic skills gaps that exist in at least 20 different creative occupations. Anyone offered a contract to work here would have to apply through the tier 2 visa system currently in use for the rest of the world. However, this route is open only for jobs worth at least £30,000 a year and many vital roles in the sector do not command a salary at that level. Some 30% of the creative workforce is freelance, but there is currently no system that allows small creative businesses to recruit vital freelance skills from non-EU countries in a way that matches their operating model—that is to say, on shoestring budgets and a project-by-project basis.
Let us not forget that freedom of movement works in two directions, allowing UK citizens the chance to work in 27 other countries with their professional qualifications recognised and key regulatory issues aligned. No deal would throw reciprocal social security arrangements up in the air, adding new paperwork, costs and risks to working in a country beyond the one in which you have residency.
Secondly, businesses would face new administrative and financial burdens in moving sets, costumes, kit and equipment across borders. Drivers would need international licences, vehicles would require permits and goods would need a carnet. This might sound like just a bit more form-filling, but the Royal Shakespeare Company estimates that the additional expense would increase the cost of taking a show abroad by 10% to 15%. Larger organisations might be able to sustain this but much of the sector is made up of small companies, many of which are reliant on a lucrative European market that pays performance fees at four times the UK rate. A combination of reduced income and increased costs will hit these companies hard.
Thirdly and finally, no deal would mean an immediate end to EU funding, including Creative Europe money, which has contributed nearly £17 million a year to UK cultural organisations and benefits one out of every three artists annually. This is the reality of no deal for the creative industries—a sector that contributes £101.5 billion a year in GVA, provides over 3 million jobs across the creative economy and is responsible for 11% of the UK’s total service exports. All those issues are echoed, and even exacerbated, in the service sector as a whole—a sector that is particularly vulnerable to no deal because of the complex web of “behind the border” rules and regulations that underpin trading across the EU. Services account for 80% of UK GDP and four out of every five jobs across the country. They are the goose that lays the golden eggs, yet in the Brexit story they are treated like Cinderella.
Of course, we would adapt in the long term to whatever changes resulted from a new relationship with the EU. Businesses with large reserves and individuals with significant resources would probably ride out any storm. However, without a transition period, smaller businesses and the people they employ would be at risk, and expert opinion is that in a no-deal scenario the economy as a whole would take a hit, impacting on tax revenues and the resources available to support the most vulnerable in our society.
Frankly, it beggars belief that with everything we know—with all the warnings that the Government themselves have pointed out—we are once again careering towards a cliff edge, as the Tory leadership contest turns no deal into a measure of machismo. The 2016 campaign never mentioned this—quite the opposite, as we have already heard. Both Houses have rejected no deal, and the latest YouGov poll confirms that there is no popular mandate either, with only 28% of the public favouring departure without a deal. Yet the likelihood of no deal increases day by day, as leadership hopefuls dice with stability and security in their efforts to win the votes of the 0.3% of the population who will choose our next Prime Minister.
Therefore, I too support the Motion in the name of the noble Baroness, Lady Smith of Basildon. It has become abundantly clear, over the last three years, that Brexit splits opinions in ways that cut across conventional party lines. Avoiding no deal seems to be the only thing on which there has been consistent alignment, in both Houses and across political divides. If we start by working together on an issue on which most of us are able to agree, who knows what might be possible? Perhaps the same group might then move on to tackle the really big question: where do we go from here?
My Lords, I respect the opinion of all noble Lords who have spoken so far in this debate but, holding a different opinion from the majority in this House, I would like to put forward some other points.
I believe that the Government were right to try to negotiate a sensible withdrawal agreement that would allow us to recover our freedom as a global trading nation with an independent trade policy yet continue to trade as smoothly and easily as possible with the EU. I absolutely cannot understand why the Government’s negotiators believed that they had to accept the EU’s demand to agree the terms of withdrawal separately before starting to negotiate the basis of our future relationship. The separation of negotiations into two parts played completely into the hands of the EU’s negotiators. We had a very strong case for refusing to separate the negotiations in this way, as Article 50 clearly states that,
“the Union shall negotiate and conclude an agreement”,
with the departing member state,
“setting out the arrangements for its withdrawal, taking account of the framework for its future relationship”.
As the noble Lord, Lord King of Lothbury, has said,
“There are arguments for remaining in the EU and arguments for leaving. But there is no case whatever for giving up the benefits of remaining without obtaining the benefits of leaving”.
I agree with him that it makes no sense to try to find a framework for our future relationship that effectively keeps us half in. Should your Lordships’ House agree with the proposal of the noble Baroness, Lady Smith, to appoint a Joint Committee, would it not be logical for such a committee also to consider the costs and implications for the United Kingdom of staying in the EU or of seeking a third extension to the Article 50 period? Many people are asking, “Why haven’t we left already?”, irrespective of whether they voted leave or remain in 2016. The uncertainty created by our failure to leave according to the expected schedule has resulted in extra costs and uncertainties for business.
In 2018, our net contribution to the EU after rebate and after £4.3 billion of public sector receipts amounted to £8.9 billion. However, moves are afoot to abolish all rebates for the next EU multiannual financial framework for 2021-27. If this were to happen and if the UK, in spite of the referendum vote, were to remain a member of the EU, our contributions, net of public sector receipts, would be likely to be in excess of £13 billion or some £250 million a week.
It is a fact that small companies have found it increasingly expensive to comply with all the EU regulation that has been transposed into domestic law over the last few years. It is true that much of this has been initiated by the UK, but where we have opposed elements of EU regulation, we have always been overruled, especially with the extension of qualified majority voting in recent years. In the financial sector, many smaller asset management companies have been forced to merge or incorporate elsewhere to avoid AIFMD or MiFID II. The proposed Joint Committee should look at the loss of revenue and jobs caused by cumbersome and expensive EU regulation and at the cost of further delaying the date when we can begin, carefully and selectively, to abolish or change regulations which damage our markets and our industry.
Another benefit of leaving with a better deal or, in extremis, without a deal, is that we would no longer be bound by chapter 4 of part 5 of the draft withdrawal agreement, which deals with the European Investment Bank. It seems extraordinary that we have agreed to accept only the return of our paid-in subscribed capital, amounting to some €3.5 billion. It is logical that we should also be entitled to receive our 16.1% share of the retained earnings. Adding this amount, the net tangible assets attributable to our stake amount to €11.1 billion, more than three times what we have agreed to accept. Worse, the repayment of our paid-in capital is to take place over 12 years, until December 2030, without payment of any dividends or interest. Furthermore, there has already been a marked decline in the funding of UK projects since the referendum, from €7 billion in 2016 to less than €1 billion in 2018. To cap it all, the UK is to remain liable for its 16.1% share of the uncalled but committed capital in respect of the EIB’s financial operations at the time of withdrawal. That could amount to a call of up to a further €35.7 billion. As a member of the EU Financial Affairs Sub-Committee—although the report was completed prior to my appointment—I trust that your Lordships’ House will have an opportunity to debate our report, published on 31 January, before the House rises for the Summer Recess.
Lastly, I suggest that the proposed Joint Committee should also look at the potential costs to the UK of a major eurozone failure, such as envisaged in the recent worrying report by Bob Lyddon for Global Britain. Seven member states have debt to GDP ratios in excess of 90%, making it most unlikely that they can comply with the 60% limit set by the EU fiscal stability treaty by 2030. Italy’s is the highest, at 132%, and it is not politically acceptable for the Italian Government even to try to comply. It is very likely that investors will recognise that the recovery and stability of the eurozone system is an illusion, concealing as much as €1 trillion of overvaluation of assets in the euro system. A new eurozone crisis could well be triggered as early as the end of next year, for example, if Moody’s were to downgrade Italy’s credit rating by one notch from its current level of Baa3. In that event, the ECB might be compelled to recapitalise the euro system for up to this amount and there are only six eurozone member states whose central banks are capable of contributing to a reset. It is inevitable that, again, the non-eurozone countries would be called upon to contribute, of which there are only three solvent candidates. Of these, only the Bank of England is sizeable and, based on its “capital key” of 13.7%, could be called upon to make a contribution to the order of €230 billion. If our finances remain accessible to the EU, we will not be able to escape the risk of an enormous hit of this sort of size unless we leave with a better deal or, if necessary, no deal.
It is not my preferred option that we should leave with no deal, but in some respects the costs and risks of leaving under the withdrawal agreement are arguably much higher. We must be prepared to leave with no deal to persuade our EU interlocutors that they should put economic common sense above their political interests and agree to negotiate a fair deal, which will protect trade, jobs and the economies of both the UK and the EU 27. I welcome the publication last week, by the alternative arrangements commission of Prosperity UK, of an interim report which offers several clear ways of solving the Irish border problem. I believe that, with good will on both sides, the EU’s negotiators will recognise that they can, and must, work hard to agree a new deal that is equitable and sensible, and which will provide the basis for a sustainable, positive, long-term relationship between the UK and the EU.
My Lords, the bad news is that Boris Johnson says he is contemplating no deal; the good news is that he does not really believe it. He knows that it would be disastrous and that Parliament will not agree to it. More to the point, he does not really believe in Brexit itself. He was against Brexit; then he was for it. He was against Mrs May’s deal; then he was for it. Anyone who knows Boris Johnson knows that the only thing Boris Johnson believes in is Boris Johnson. He is the Roman emperor for whom policy is bread and circuses for the little people.
If remaining emperor means chucking Brexit, Mr Johnson will do so at the drop of a hat. We even know the words he will use when he does so, because he has told us. Just before he came out for Brexit, he said that he was in two minds and wrote an article setting out the opposite case. Three years later, that article has stood the test of time. I will read it your Lordships:
“Think of the future. Think of the desire of your children and your grandchildren to live and work in other European countries; to sell things there, to make friends and perhaps to find partners there. … Almost everyone expects there to be some sort of economic shock as a result of a Brexit. How big would it be? ... And how can we know? And then there is the worry about Scotland, and the possibility that an English-only ‘leave’ vote could lead to the break-up of the union”.
Clearly, Mr Johnson had read my noble friend Lord Reid’s speech. He continued:
“There is the Putin factor: we don’t want to do anything to encourage more shirtless swaggering from the Russian leader … And then there is the whole geostrategic anxiety. Britain is a great nation, a global force for good. It is surely a boon for the world and for Europe that she should be intimately engaged in the EU. This is a market on our doorstep, ready for further exploitation by British firms: the membership fee seems rather small for all that access. Why are we so determined to turn our back on it?”
My Lords, why indeed?
My Lords, I hope that one of the costs that the committee will consider in its deliberations is the cost of uncertainty. Industry longs for certainty and there is a widespread, strange view among many industrialists that leaving on 31 October at least brings certainty. They could not be more wrong. As the Governor of the Bank of England told the Commons Treasury Committee, a no-deal Brexit is,
“the worst way to resolve … uncertainty”.
It is obvious why. By definition, a no-deal Brexit means that we will not have a trade deal when we leave, after which it will take long and difficult negotiations before we know what the most important part of our future relations with the EU will be. And let us please note: in such negotiations we will no longer be able to use what Brexiters always argue is a vital bargaining ploy—the threat of walking away—because we will be out, and in a very weak bargaining position.
We cannot always trust Boris Johnson’s words, as the noble Lord, Lord Adonis, has pointed out, but here is nevertheless a policy that would be very difficult to abandon. Boris Johnson says that he will not pay our divorce bill, for debts we legally owe, until we have a deal. Mr Hunt has made a rather curious suggestion that he may withhold part of the divorce payment. Leaving aside the devastating consequences of telling the world that Britain is now a country that does not pay its debts, the EU will almost certainly sue us and refuse to negotiate until we have paid. Legal proceedings, which we would almost certainly lose, will drag out for many months, probably years—so much for the early end of uncertainty.
It is time industry faced reality and recognised that there is no upside to a no-deal Brexit. As for most of the Conservative Party, they are now rushing like lemmings towards a no-deal Brexit, including many who have acknowledged that no deal would be a catastrophe. It brings to mind, as I wrote in a letter published in the Guardian last week, the old Greek saying:
“Whom the Gods would destroy they first make mad”.
My Lords, I congratulate the noble Baroness, Lady Smith, on securing this debate. When considering how to contribute, I thought there were two possible approaches to take. One, as a number of noble Lords have done, is to itemise all the aspects of no deal and how that would impact on businesses, farms and consumers, and on the pound and industry generally. The other approach would be to itemise all the reports scrutinising Europe, particularly from the EU Committee and its seven sub-committees. I do not propose to adopt either approach.
The danger of today’s debate, it appears to me, is that this is yet another occasion when we as parliamentarians are speaking to ourselves. The missing link in all this—it was the missing link in the referendum campaign and continues to be so in this debate and externally—is the voice of business. Where is it? Although there are notable exceptions, such as the food and drink industry, with which I am heavily involved, when we ask businesses to tell us what the bottom line would be, so that we can place on record the damage it would do to this country, the industry is reluctant to do so. They pray in aid their AGM, and what the impact on their share price and shareholders would be.
I shall share with noble Lords where I believe we will be in the event of no deal. I was taken by the wise words of the noble Lord, Lord Kerr, who actively set out where he thinks we will be. He should know what he is talking about because he advised many of us as Ministers or, in my case, as an MEP. We then heard from the noble Lord, Lord Howarth, who took an entirely different view and seemed to take issue with what the noble Lord, Lord Kerr, concluded. Both Houses have passed a raft of statutory instruments in preparation for no deal. No doubt, as rehearsed here, no deal would have a huge impact on the level of the pound and on businesses and industry.
I am also mindful of the situation that we found prior to the single market and the customs union coming into effect. Thirty years ago this week I was elected for the first time to the European Parliament. I remember vividly, during those first three years between 1989 and 1992, that on a small number of occasions—they did not perhaps occur every week but they were significant and memorable—I had phone calls from distraught constituents, most often those who ran businesses with perishable goods. They would phone up and say that their consignment was stuck at a frontier or a customs post, and what could I do to move things along? What could I do? We argued that instead of having perhaps 100 pages of customs form, we would have 100 boxes. I am sure the noble Lord, Lord Kinnock, will remember this only too well. We reduced the form to one page with about 120 boxes on it; if one box was not filled completely correctly, that consignment was not going anywhere. Whatever you call it, I look on that as a form of protectionism, and that is exactly where we shall be if we fall into a no-deal scenario.
My question to both Front Benches—to the noble Baroness, Lady Smith, and particularly to the Minister, is: were this Motion to pass today, what impact and legal effect would it have? What is the legal basis for the Motion before us? We all understand that it could be amendable in the other place, but what we really need is to prevent no deal happening and to ensure that we have a successful deal concluded.
I fall into the pro-European camp. I am proud to be pro-European. I am half Danish and have studied in Denmark. I commit the sin of speaking a number of European languages, and long may the next generation coming through be able to do the same. What we need is a legislative text to prevent the UK falling out of the EU.
Another hat that I wear is that I am an honorary president of the UK Warehousing Association. I know many noble Lords will be very envious; it is a fine position to have, and we had a splendid lunch last week. That organisation is worried witless, and it is the very essence of those businesses whose business is just-in-time logistics. What can we tell it will be the case after 31 October?
These are very real situations. A number of examples have been given, and the most shocking to me is that large businesses are probably in a good state of preparedness but small and medium-sized businesses are woefully underprepared and probably do not and will not have the resources in place to prepare.
My question to the outside world is: where is the voice of business? Where are all those other businesses, such as the chemical and pharmaceutical industries and food and drink businesses, that are prepared to stand up and be counted? If we do not hear from the voice of business in the few weeks that remain before we potentially crash out without a deal, the public will not be convinced. Regrettably, while I welcome this debate, and any debate where we can discuss the issues before us, I shall not support the Motion because what we really need is a legislative text on which both parties can vote to prevent the awful event of a no-deal scenario taking place on 31 October.
My Lords, I am disappointed that the noble Baroness, Lady McIntosh of Pickering, is not going to support the Motion. It is always a pleasure to follow her. As I think she implied, she is probably the only Member of Parliament in either House to speak Danish. It would therefore be important to register that point.
The words of the noble Viscount, Lord Trenchard, were very interesting. When he talked about the possibility of a euro crisis, I mused that the euro is now, in international banking payment transaction terms throughout the world, the strongest currency in the world; it is three points behind the US federal dollar and likely to overtake the US dollar fairly soon, although no one knows exactly when. With Christine Lagarde to be the new president of the European Central Bank, we will see how strong the euro is in comparison with the sad reality of the pound sterling. Since the end of the war, it has been devalued nine times, three times by government action and six in the marketplace. The comparison is too painful to go on further about.
Turning to another speech, I thank the noble Lord, Lord Adonis, for his fascinating speech, with which I agreed entirely—and he said it all through the words of Boris Johnson. Because it was so good, I forgive him his temporary lapse when he said he was in favour of a soft Brexit after all to be a candidate in the European parliamentary elections, which happened recently, as we know. I am sorry that he did not get in, although it may have been for that reason.
It is important to support the Motion, and I thank the Leader of the Opposition for putting it forward very cogently and clearly. It is essential that we do this and persuade our colleagues in the Commons to co-operate and work with us. The emergency atmosphere will now accelerate enormously and rapidly. I like the phrase “costs and implications” in the Motion because, as we know, both are enormous, damaging and devastating.
Like others, in future I will read the many books written about this tragic period since the 2016 referendum and the huge damage bestowed on the body politic, not only by former Prime Minister Cameron but by the following Prime Minister, Theresa May, after an advisory-only referendum in which millions of people were not given the facts about all the pain and agony and the ruination of this country. The Bullingdon-isation of British politics, wreaked on an innocent public by the self-seeking Tory candidates to be Prime Minister, is ongoing. There is still no shame or contrition. As one newspaper recently remarked about Boris Johnson, among his various qualities,
“Mr Johnson is a vacuous and irresponsible dissembler whose Islamophobia is uttered with a wink and a smirk”.
Theresa May having lost the so-called mandate after the 8 June election result, the notion that the Government can just go on with their bandit tactics is abhorrent to more and more people. The Government have admitted several times that Labour is bound to win an election, so we must avoid one. Presumably, as others have said, the phoney deal with the DUP has expired, at least for all decent observers, and is too painful to contemplate further.
Meanwhile we have to thank Mr Speaker, John Bercow, in the other place, for many things over the years, including his sturdy defence of the rights of the House of Commons and of individual Members, but particularly for flatly ruling out the misuse of Prorogation for crude party advantage.
Perhaps the most reckless and awful behaviour by these bandit politicians was to reduce the crucial importance of the Good Friday agreement and the value of our international presence among our 27 ever-sovereign fellow member states, which themselves are not worried about losing sovereignty, as they gain international and collective sovereignty as well as individual sovereignty by being strong, united members of the EU. Why can we not do the same? I was very struck by the words of one of the D-day veterans at a recent ceremony. A very wise 94 year-old, Mr Eric Chardin, was interviewed by the BBC and asserted that we have gone to so much trouble to collect the big European nations together that, “To break it all up now would be a crying shame”.
On Northern Ireland and Ireland, it is painful for me to remind the House that yesterday, on 2 July, with John Humphrys on BBC Radio 4 in the morning, the spokesman for the DUP in the other place, Sammy Wilson MP, said words close to this: “The Irish will always push you around if you let them, but if you stand up to them they will co-operate”. How can an official spokesman with a portfolio say such a thing in a broadcast to, I suppose, 7 million listeners?
These things are really dire now. The no-deal crash-out effects would be catastrophic for the highly technical just-in-time inter-trading of manufacturing and for services companies helping the manufacturers and their suppliers, as well as a whole host of other small companies. Also, if we crashed out with no deal, the ill will in the European Union would be massive, and the hatred among the 27 members for the damage we had done to them and to ourselves would last for years. The public would be more and more shocked and appalled by what was going on. It is scarifying that the only real alternative to a no-deal Brexit is a hard Brexit. People forget that.
Turning briefly to Ireland, in the Irish Times yesterday, Fintan O’Toole said, with some meaning:
“Brexit is nothing. It was always a negative proposition. Most British leaders, even those who wanted to stay in, never created for their people any positive vision of the European Union. It was spoken of grudgingly, and engaged with defensively. The remain campaign in 2016 essentially presented staying in as the lesser of two evils: the EU is bad but leaving it would be even worse”.
What a sad position for this great country to have reached. Now, no deal must be resisted, strongly. I am anticipating the outcome of all the discussions and jumping far ahead of today’s Motion, but at least it is a starting point to rescue this country from total perdition.
My Lords, some noble Lords say that they cannot support this Motion because it goes too far in promoting a House of Lords role in Brexit. I do not support it for the opposite reason: it does not go far enough.
Your Lordships’ House has recently been the victim of a snub, a serious breach of etiquette. People can get quite touchy about things like that. In the case of Brexit, we have already had one failure of etiquette. Our own Prime Minister was told to go to Brussels and deal with the staff: EU officials and civil servants, well below her pay grade. That is the equivalent of the American President coming to Buckingham Palace to see the Queen and being sent to the Foreign Office to meet the Permanent Secretary. Of course, the US Government would never allow that to happen to their leader, but we did. That is probably why the negotiations failed. Now this EU debacle has brought us face to face with another example of poor etiquette, and this time much closer to home: between your Lordships’ House and another place, down the corridor.
Like all humble people, we in your Lordships’ House do not mind looking up to our superiors, as long as we are not taken advantage of or taken for granted. However, as far as we are concerned, we have been the dog that did not bark in the night; not even a growl. While another place has had meaningful votes on the historic choices about our national future, we have been told to be satisfied with only take-note Motions. In fact, we agreed to that.
Under Section 13(1)(b) of the European Union (Withdrawal) Act, which many noble Lords know more about than I do, the withdrawal agreement cannot be ratified unless the House of Commons has given its approval. Apparently, this is what is meant by the House of Commons having a meaningful vote. The House of Lords does not have a corresponding meaningful vote to approve the withdrawal agreement and the framework for the future relationship. However, Section 13(1)(d) provides that the withdrawal agreement can be ratified only if an Act of Parliament has been passed which contains provisions for the implementation of the withdrawal agreement in domestic law. Yet we had no role in the failed EU talks. No Member of your Lordships’ House was a key part of the team during this painful process which brought down the Prime Minister. We constituted one of 28 people around the Cabinet table. That is 3.6% of the decision-making, is it not?
It has been said that we signed away our rights to have a view on Brexit, but that is not the case. We have the power, as confirmed by our Library, which says that the usual powers of the House of Lords will apply to the passage of any Act of Parliament to do with Brexit. That is my point. Section 13 of the withdrawal Act does not change the usual powers of the House of Lords over passing primary and secondary legislation.
I ask your Lordships to consider the historic context of this Motion. Many noble Lords will remember the passage of the House of Lords Act. My noble friends and I were then sitting on the Opposition Benches. We were told that we should not “die in the ditch” to preserve the hereditary Peers. After they had gone, the then Leader of the House told us that your Lordships’ House would be more democratic, more legitimate, more authoritative. That was what was promised to us during the passage of the House of Lords Act, but it never happened. Now it is said that if we step out of line, they will set the Parliament Act on us, or worse, abolish us altogether, so the House of Commons was left to its own devices, but none of that will help us on the day of judgment. The British public say that this has been “a complete mess” and “a total shambles”. We in your Lordships’ House cannot say, “It’s not my fault”, “I’m off the hook, there was nothing we could do to make any difference” or, “It’s not my responsibility. My hands are clean”. The result of this sorry tale of broken promises and failure to deliver on time is general cynicism and disillusionment, so well captured by my noble friend Lord Cormack. We the people are left standing like the passengers at Heathrow, forlornly looking up at that familiar notice board: “Delayed, delayed, delayed, cancelled, cancelled, cancelled”.
How can your Lordships’ House help? We certainly have the expertise. Look at the distinguished members of our Select Committee and sub-committees on Europe, and the speakers’ lists in all our EU debates, including this one. Look around the Chamber, see all the Cabinet Secretaries, the distinguished Private Secretaries to the Prime Minister, the Political Secretaries, the heads of the No. 10 Policy Unit, the No. 10 Chiefs of Staff: a fine group.
We all need a bucket of ice-cold water thrown over our fantasies every now and again. But we, the Members of your Lordships’ House, have been subjected to the political equivalent of waterboarding, a torture that leaves you weak and angry. We feel powerless. They tell us that it is not all bad and that there is nothing we can do about it anyway. They say that no matter how hard we try, it is not going to result in anything. They are a wet blanket that smothers us. I urge all my noble friends and all Members of your Lordships’ House on all Benches to assert ourselves. There is no cause for pride in what has happened in Britain in the last few years. There is no cause for self-satisfaction, but there is cause for hope and faith in our House. In our time, this House has lived with the moments of great crisis. Our lives have been marked with debates about great issues, issues of war and peace, issues of prosperity and depression. This is not about trade deals, tariffs, membership fees, et cetera. It is about the values, the purposes and the meanings of our great nation, our dignity, our good name and our sacred honour. There is no EU problem. There is no Irish problem. There is no Scottish problem. There is only a British problem. We are met here today not as Conservative or Labour, Liberal Democrat or Cross-Bench—or leave or remain—but as British people, to solve that problem. That is our purpose.
Many of the issues of Europe are very complex and most difficult, but about this there should be no argument: we cannot, we ought not and we must not wait any longer before insisting on involving your Lordships’ House in Brexit. We have already waited long enough, and the time for waiting is gone, so I ask you to join me to make this happen. I do not make that request lightly for, from where I sit, I recognise that outside Westminster is the outraged conscience of a nation, the grave concern of many nations, and the harsh judgment of history on our acts.
We need a North Star, a guiding light, and your Lordships’ House can help to provide it. Yet we are continuously told to show “humility”. What is in that word? You will hear it said that we must display modesty, restraint and reserve—admirable qualities all. That, however, is not what is meant by humility—not at all. I looked it up. It has other meanings: obedience, self-abasement, subjection, submissiveness, timidity and inferiority complex.
I am very proud of our House and what it can do. As our brilliant Library confirms, we are at a moment of maximum power for your Lordships’ House. This Motion has much merit but it does not go far enough. We must not show arrogance, egoism or self- importance. Nor will we. Let us, however, at least show boldness, confidence and pride, so that we can all hear, loud and clear, the Clerk’s immortal words in the House of Commons: “Message from the House of Lords”.
My Lords, as always I declare my European interests as detailed in the register.
We have had some very good speeches from this side of the House, but I am afraid that I have reached a different conclusion: I support the Motion in the name of the noble Baroness, Lady Smith of Basildon. In fact, it would have been desirable to have a Joint Committee earlier in this process. At this point it may be a bit late, and any report may no longer have much effect, but I completely agree that it is worth at least trying.
This Motion has support from many sides of this House—correctly so, because it is a matter not of party interest but of national interest. I am surprised every day that the ultras continue to deny the risks to this country and its economy of leaving the European Union without a withdrawal agreement. Indeed, the ultra ultras even suggest that they would prefer to leave without a deal. They propose that the UK and the EU should trade on a tariff-free basis under Article 24 of the General Agreement on Tariffs and Trade. We have already heard from the noble Lord, Lord Kerr, about the difficulties of doing that, and those who propose it always forget to acknowledge that it requires the agreement of the EU.
Most thoughtful professionals and experts advise—I do not wish to use journalistic hyperbole but it is generally accepted—that leaving without a deal is at best very high risk and at worst would have dire consequences. Surely no responsible Minister of the Crown could knowingly endanger this nation’s well-being by contemplating a no-deal Brexit. The mood of both Houses of Parliament is to prohibit such an outcome. A Government who head in that direction are defying the will of Parliament. Nevertheless, both candidates standing for leader of the Conservative Party appear to be bidding against each other to win a no-deal Brexit. I cannot believe that any Prime Minister, particularly a Conservative one, would even consider proroguing Parliament until November to eliminate parliamentary opposition—yet at least one candidate has not ruled it out.
In any event, a serious risk remains that unless we seek a further extension, to beyond 31 October, there will simply not be enough time for any renegotiation and the consequential legislative procedures. Neither of the candidates to be Prime Minister has acknowledged this lack of time. We still need a transition period and for that we need a withdrawal agreement. Insisting on 31 October as the immovable departure date will almost certainly mean a no-deal departure.
In addition to the extreme economic consequences of a no-deal departure we must be aware of the very serious additional strain on the union of the United Kingdom. No unionist of any party should ignore this point. I am sorry that the noble Lord, Lord Reid, is no longer in his place—his excellent speech should be required reading for both candidates for the leadership of the Conservative Party.
I will repeat something I have said before. With great sadness I accept that we are leaving. It must, however, be orderly and with a transition period. The Motion tabled by the noble Baroness represents, if the other place accepts it, a further attempt to demonstrate to the ultras in Parliament, and to the wider public, the impossibility of leaving without a deal. I very much hope that the Motion will be accepted—but, if formed, the Joint Committee will have to work over the summer to produce a report before it is too late.
The chances of a no-deal Brexit are increasing day by day during this leadership contest, to the detriment of the public interest. Let us as a House at least try to put the case again for an orderly exit in the national interest.
My Lords, it is surely rather astonishing that, three years after the 2016 referendum, two years after we began to negotiate our exit, and having twice flirted with withdrawing without a deal, we should need to call for an inquiry into the costs and implications of the course of action that is on the Order Paper—and which I whole- heartedly support. I note that several of those who said that they cannot support it are only doing so because they think that it does not go far enough quickly enough. So there is not much opposition to it. That is right, because one is bound to ask whether the Prime Minister knew, before she asserted with such confidence—and continually repeated—that no deal was better than a bad deal, what the costs and implications were.
Perhaps she did know by last November, when she turned her policy through 180 degrees and started to negotiate on the basis that any deal was better than no deal. Anyway, now we are where we are, and it is right that Parliament and the wider public should be told, through this inquiry, what the costs and implications might be. After all, both aspiring Prime Ministers are prepared to contemplate leaving without a deal, so it is surely time to shine a light on what the consequences will be.
I will focus today on the trade pacts, which is a field in which I have some experience, having been involved in the GATT Article 24 negotiations when we joined the European Communities in 1973. What should we expect? Our trade with the EU is 44% of our exports. There are no surprises there, because last December the Commission stated, as part of the preparations for a no-deal exit that they were undertaking with the 27 member states, that if the withdrawal agreement was not ratified, all relevant EU legislation on imported and exported goods would apply as of the withdrawal date, as would the rules on indirect taxation—value added tax. So there is not much comfort for anyone in this country who exports cars and will face a 10% tariff, for the Shropshire sheep farmer whom Jeremy Hunt apparently met on his peregrinations and who will face a 40% levy, or for exporters of fish and shellfish —the list goes on.
That will apply straightaway on the day we leave. How about the service industries, which make up 80% of our economy, as my noble friend Lady Bull pointed out—legal, insurance, finance, creative industries and so on—which have made so much of their position within the single market? Those benefits that they derived from the single market will simply disappear overnight; they will not be there. Is there any magic wheeze to escape from this trap, as the noble Lord, Lord Lilley, continually suggests to us that there is by waving some magic wand which he seems to have identified in Article 24 of the GATT? There is no chance of that whatever, because in order even to get to first base on that you need the agreement of the European Union—and the European Union will not agree to that, because it involves driving a coach and horses through the most favoured nation provisions of the GATT, which, funnily enough, this country as well as the European Union is desperately trying to save from the depredations of President Trump. The EU will not do it, in particular because, if it went down that road and it did not work, it would lay itself open to massive retaliation by the United States. So do not expect it.
Then there are all those third countries with which we currently enjoy free trade thanks to the trade agreements which the EU has: with Japan, South Korea, Mexico, Turkey and now the countries of Mercosur, among them two of the three largest countries in Latin America. There are also the 50 associate countries in Africa, the Caribbean and the Pacific; we have free trade with them, too. All that will be lost. There is plenty of work there for Dr Fox just to get us back to where we were before we started. So there will be a hefty price to pay in just this one sector to which I have referred—trade policy—and there are plenty of others that noble Lords have gone through in this valuable debate.
We need to know in detail what the costs for our exporters are likely to be. We are told by Dominic Raab, who is no longer in the race to be Prime Minister but who believed, I suppose, that he was worthy of the post, that the first rule of negotiation is to be prepared to walk away. I am not sure where he got that from, because I looked at his CV and there was not a lot of negotiation in it. Perhaps he had been reading Donald Trump’s book, The Art of the Deal—in which case, heaven help him and heaven help us. I would happily debate with him his assertion that you have to be prepared to walk away, because I have been through rather a lot of negotiations into which this country went in good faith with a determination to get a deal and did not suggest that it was prepared to walk away.
My Lords, I beg the indulgence of the House for a minute. A blindfolded march to the cliff edge is unpatriotic, irresponsible and would for ever levy the charge of our not having carried out our duty. The staunchest of proponents, on whichever side of the argument they lie, could surely not deny that our responsibility is to deliver open-eyed knowledge. It is beholden on us as parliamentarians to do our duty beholden to the only governing force, that of the just cause of patriotism and pragmatism. We in this Parliament must be in pursuance of the blindingly obvious, or pack our bags, go home or redefine a Brussels relationship. I end with just one question. Should a committee determine by the end of September that no deal is a non-starter, what mechanism will exist in Parliament to reverse the default position of leaving without a deal by the 31 October deadline—or is the possible proroguing of Parliament, as we are led to believe, an increasing reality?
My Lords, this has been an extraordinary debate. Three years after the vote to leave the European Union, it is in many ways extraordinary that we are still debating what the consequences of a no-deal Brexit could be or considering the need to set up a committee to look at them.
As the noble Duke, the Duke of Wellington, suggested, this debate is arguably rather too late. One might think that it should have happened in July 2016 rather than July 2019. During debates on the EU referendum Bill in 2015, one or two of us called on the Government to have documents that looked at the consequences of leaving the European Union and the alternatives to membership. There was some reluctance on the Government Benches to produce such documents but eventually they did so. In addition, there was of course the notorious Treasury document that raised the spectre of the massive implications of leaving the European Union.
Those were government documents and perhaps received relatively little scrutiny. During the referendum campaign, they were rubbished by the leave side. If there is a case for a committee to look at these issues, it must be a committee of both Houses of Parliament and not the Government marking their own homework. We need full information, but it requires full and frank discussion on a cross-party basis and across both Houses. There needs to be truth and there needs to be trust.
The noble Lord, Lord Bridges, eloquently articulated the urgency of this matter and the things that need to be looked at—governmental preparations, legislative preparations and business preparations. He is absolutely right, but we on these Benches draw a slightly different conclusion. They are the right questions to be asked, but surely we are not going to ask the noble Lord, Lord Callanan, just to go away, write that paper and bring it back. It requires all parties to be part of this. It is not just about the Executive; it is about the legislature as well. It is about us doing our job as a responsible Chamber.
The noble Lord, Lord Robathan, raised some concerns. He seemed to think that this was an “unedifying” Motion, asked questions about our role and thought that it was perhaps a little cynical and was simply trying to tie the hands of a future Prime Minister. From a sedentary position, the noble Viscount, Lord Hailsham, said, “Well, of course, that’s what Parliaments do”.
Is it not the case that the Liberal Democrats wish to overturn the referendum result?
My Lords, this debate is on a Motion to look at the consequences of no deal. It has been pretty clear and in almost all cases very focused. Many of us have been clear as to why we feel there should be a committee; in fact, I have heard no argument against it. The noble Lord, Lord Saatchi, seemed to suggest that the Motion did not go far enough, but were it to be asked what this House has done, surely the answer is that we have repeatedly demonstrated our concern about a no-deal Brexit, which is not in the national interest—a view that has been expressed by the other place. Now is the time to find a mechanism for us in this place to be creative about how we hold the Government to account. It is the role of Parliament to hold the Government to account. At a time of acute danger to the national interest, now is the time for us to be doing this.
It has been an extraordinary debate. The noble Lord, Lord Howell, channelled the noble Lord, Lord Owen—who is not in his place—in suggesting that we could simply stay in the EEA. Your Lordships should be prepared to be reminded by the noble Lord, Lord Callanan, that there have already been discussions and this is not on the cards.
We heard the noble Lord, Lord Adonis, quoting Boris Johnson—a Boris Johnson who was actually articulating remaining in the European Union. Of course, one of the candidates to be leader of the Conservative Party does have a tendency to change his mind on European questions, so although at the moment he is saying, “Do or die, leave on 31 October”, I will not hold my breath, because I quite fancy living beyond 31 October. We heard the noble Lord, Lord Cormack, and the noble Viscount, Lord Hailsham, expressing deep concern about the leadership campaigns in their party and, in particular, the dangers of prorogation. Stopping prorogation is not something that this House can do, but it would indeed be a constitutional outrage and it is up to your Lordships’ House and the other place to ensure that it cannot happen.
The noble Lord, Lord Robathan, said that the people have spoken, and the noble Lord, Lord Howarth, suggested we should all keep calm and carry on, but we heard about many areas of policy where the deal has not yet been sorted. We need to consider in great detail what leaving the European Union will mean and, in particular, what no deal will mean. The noble Baroness, Lady Bull, talked about the creative industries. The noble Lord, Lord Hunt, talked about the NHS. The noble Baroness, Lady McIntosh of Pickering, talked about just-in-time delivery and logistics, and my noble friend Lord Paddick talked about policing and about leaving the European arrest warrant and the Schengen Information System. There are so many areas where, if we simply leave on 31 October without a deal, this country will be in a precarious position.
It is the duty of this House to be a responsible Chamber. We may not be elected but we are responsible. Part of our duty is to scrutinise the work of government, and on this key issue of national interest we have profound reservations about the economic and political consequences of a no-deal Brexit, not only for the United Kingdom as a whole but for the unity of this United Kingdom, as the noble Lord, Lord Reid, so eloquently discussed; the noble Lord, Lord Hain, extended the implications to Northern Ireland and Wales. For all those reasons, it is vital that we take some sort of control, and setting up such a committee, or advocating to the Commons that we do so, is a matter of urgency, to respond to all the very profound questions that the noble Lord, Lord Bridges, and others raised. It is not too big a job: it is an essential job, and if it requires our working over the summer, so be it.
My Lords, if I was not worried about a no-deal exit at 3.30 pm, I sure am now. The first duty of a Government is to protect their citizens and ensure their safety and their economic and social well-being, but this House has heard that a no-deal exit risks security at our borders, loss of criminal intelligence, and loss of the European arrest warrant—even as the Prime Minister assures us it can be used to capture the Skripal suspects should they set foot in the EU. It risks an economic downturn, meaning lower tax revenues and therefore cuts to services; reduced environmental protections; and major losses to our farming community, with the NFU warning that it would be “catastrophic”. We would get poorer trade deals, as we have heard, as we negotiate for 66 million rather than as part of a 500-million strong block. There are risks to the peace process in Ireland and pressure on the union from Scotland and elsewhere.
We could see the sudden imposition of WTO tariffs, with no transition or standstill period, and there would be no mythical GATT 24 solution, which anyway would not cover services. This would need EU agreement in order to get WTO approval, as the noble Duke, the Duke of Wellington, reminded us, whereas the whole point of no deal is that there is no agreement. There would be no data transfers, on which legal and financial services, as well as trade and travel, depend. Economic uncertainty would cause reduced investment, as with Vauxhall in Ellesmere Port already, and thus fewer jobs. Car manufacturing has already fallen over each of the past 12 months, its trade body warning us that a no-deal Brexit would be a “knockout blow”, while Japan’s Foreign Minister urges Messrs Hunt and Johnson to avoid no deal, as Japanese car operations,
“may not be able to continue”.
Jeremy Hunt says that businesses going bust is “a price worth paying”, but Make UK, representing manufacturers, calls it an “act of economic vandalism”. The pharmaceutical industry says that by the time the Conservatives have chosen their new leader, there will be barely 100 days to plan and stockpile. Road hauliers, as we have just heard, are extraordinarily alarmed and the warehousing industry thinks it does not have enough space. Meanwhile, the BMA foresees,
“potentially catastrophic consequences across the health and social care sector”.
All this if we leave without a deal.
Who pays for all this? It is British citizens, is it not? Because as the WTO tariffs kick in, food prices will go up immediately. It is noticeable that while Jeremy Hunt promises to aid exporting farmers, he has said nothing about shoppers who buy imported and therefore more expensive food. There may be shortages of fresh food within days, with Sainsbury’s forecasting enormous disruption to supplies. Boris Johnson says that imports,
“would rake in €35 billion in tariffs”,
but that just means higher prices in the shops—something that does not seem to concern him.
A no-deal Brexit would further entail a loss of automatic rights to work, live and study across 27 countries; a loss of automatic recognition of driving licences and car insurance; the end of EHIC and access to free medical treatment in the other 27 countries; possible shortages of vital medicines and treatments; reduced consumer protections; higher mobile phone charges for those who still travel abroad; and cuts to vital services as tax revenues fall. For UK citizens living abroad across the 27, there would be real threats to their rights to live, work, own property, drive on a UK licence and get healthcare. So it is not just no deal, but also no impact assessment and no identification of the risks, implications or costs of no deal: it is a blind date going horribly wrong. And this at a time of maximum international insecurity, a narrowly avoided US-China trade war—we hope—with Mr Putin forecasting the death of our liberal democracy in favour of populist nationalism, against which, of course, the EU is a vital bulwark.
To those who say this is all Project Fear, I say let us see. If they are right, then there is nothing to fear from this inquiry: it will ease people’s concerns and reduce uncertainty. However, if others are right and the risks are real, not only do the Government need to know, so does Parliament and so do the public. As the Institute for Government says:
“The UK’s readiness for no deal must feature in decision making”.
The Government’s own work, on their proposed WTO schedules and the range of departure issues, is now massively out of date. Their economic analysis of Brexit and the Bank of England’s paper were eight months ago, and the Government’s Implications for Business and Trade of a No Deal Exit was in February and envisaged a March, not an October, departure. David Lidington’s June Statement on preparedness has never been subject to parliamentary scrutiny. That, I am afraid, is why the summary of the noble Lord, Lord Bridges, is not enough. It must be interrogated by Parliament in the way that the noble Baroness, Lady Smith of Newnham, has said. It cannot just be, “This is it”, from the Government; we need to be able to interrogate and test it. We must also hear from business, as the noble Baroness, Lady McIntosh, said, to know whether these predictions are correct.
That committee could also hear from constitutional experts to see whether the noble Lord, Lord Howell, is right to say that we could stay in the EEA—albeit of course still outside the customs union, and still therefore needing border controls in Ireland or elsewhere—or whether the Government and the EU’s advisers are correct, and that once we are out of the EU we are out of the EEA.
It is true that we cannot be sure of the costs and implications of a no-deal departure. I say to the noble Viscount, Lord Trenchard, that “implications” could indeed look at the benefits as well as the costs. But why not do that? Why not have this inquiry? Should we crash out, it is vital that government, local government, business, service providers, farmers, retailers, shoppers, importers, transporters, lawyers and consumers know what to expect. That is why we need this inquiry. It could start with a summary, as the noble Lord, Lord Bridges, has suggested, but that can be only a start. We must interrogate it; Parliament must be on top of it; the results of it must be before this Parliament, Government and the people. Does the Minister have one good reason why we should not have those facts and be able to interrogate them?
My Lords, as always, I am grateful for the many interesting and thoughtful contributions made on all sides in today’s debate as we address the Motion in the name of the noble Baroness, Lady Smith. It is of course for this House, rather than the Government, to determine the nature and configuration of its Select Committees and how they can best support the House’s consideration of EU exit. Needless to say, the Government will seek to support and facilitate the work of committees in whatever form Parliament agrees is most effective and appropriate.
Let me start by directly addressing the question posed by my noble friend Lady McIntosh. If this Motion is passed tonight, it will then be up to the other place, if it wishes, to take forward a similar Motion to agree to the appointment of a Joint Committee, but it would of course have no legal effect on how we leave the European Union. It will be for the two Houses to consider whether they believe that they have had insufficient opportunity and tools to consider the Government’s approach to a no-deal exit.
We should not overlook the work of the existing committees of both Houses in this respect. Indeed, we should pay tribute to that work and recognise its scale and importance. The Secretary of State for Exiting the EU, the Secretary of State for Environment, Food and Rural Affairs and the Chancellor of the Duchy of Lancaster have all recently given evidence to this House’s EU Committee covering government preparations for no deal. As I am sure my right honourable friends will attest, the committee has shown it has the will and the tools to scrutinise the Government on no deal—as, indeed, it should. For instance, noble Lords will recall its inquiry report, Brexit: Deal or No Deal, which built on evidence from government and a range of experts and stakeholders on both sides of the EU exit debate. The report and the subsequent debate made a significant contribution to the House’s understanding of the potential consequences of no deal.
The sub-committees have also considered preparations for no deal in their specific areas of remit. For example, the EU Energy and Environment Sub-Committee is examining the UK’s preparations for a no-deal Brexit and the potential impact this could have on the agriculture, fisheries, environment and energy sectors. In the other place, the Exiting the European Union Committee was appointed in July 2016 for the very purpose of scrutinising the Government’s work on EU exit. Since its formation, it has produced 16 reports, many of which have considered the implications of no deal, alongside the over 40 reports produced by the European Union Committee in this House during this Session alone. Indeed, the Exiting the European Union Committee’s inquiry on no deal is continuing; only last week, the committee took evidence from industry experts in the services sector regarding the implications of no deal. I am sure that this Motion is not intended to undermine the considerable work of that committee, the committee chaired by the noble Lord, Lord Boswell of Aynho, or the other sub-committees. However, we should recognise that there are committees already in place which can and do continue to provide the high-quality and timely analysis that the noble Baroness says she is seeking.
If we need any illustration that the structures as they stand are capable of effectively scrutinising the Government on preparations for EU exit, DExEU Ministers alone have given evidence to Select Committees on 48 occasions, spending over 4,000 minutes answering questions put to them on no deal and other EU matters. In addition, there is no need for a formal Joint Committee to be appointed to bring the particular expertise of each House together. Committees of either House can choose to hold joint meetings, including joint evidence sessions, if they so wish.
The possibility of the United Kingdom exiting the European Union without a deal has effectively been on the table since Parliament voted to support the triggering of Article 50 in March 2017. While the Government continue to believe that leaving the EU with a deal is the best outcome, the House of Commons has rejected leaving on the terms we have negotiated three times. Without a withdrawal agreement having been agreed, leaving without a deal remains the legal default at the end of 31 October 2019.
I am getting a little weary of listening to the litany of complaints from Labour and Liberal Democrat Members about the possible effects of no deal who simultaneously vote against the deal that we have negotiated. To be fair to the Liberal Democrats, which I do not generally like to be, they are up-front and honest about the fact that they want to stop Brexit. Labour, meanwhile, tells us that it wants to respect the result of the referendum. Indeed, the noble Lord, Lord Adonis, told us that during his failed MEP election campaign; the noble Lord standing on a platform of respecting the referendum result—he told us so in one of his leaflets—was one of the most enjoyable facts of that miserable campaign. Most amusing it was.
As a responsible Government, we continue to prepare for all Brexit scenarios. The delivery of much of this work is vital in both deal and no-deal scenarios: for example, the more than 550 statutory instruments to date which have been laid before these Houses to ensure a functioning statute book when we leave the EU in all scenarios. Departments continue to advance their no-deal preparations and are making sensible adjustments on the timing and pace at which certain work is progressing so that we are ready to implement necessary work in the lead-up to 31 October, if needed. The Treasury has allocated over £4.2 billion of additional funding to departments and the devolved Administrations for EU exit preparations so far, including for no deal. However, no-deal spending cannot readily be separated from deal spending, as in many cases the activities will be relevant in any exit scenario.
For nearly three years, the Government have been working to ensure that people and businesses are prepared for all scenarios. For example, the Government have published over 750 pieces of no-deal communications since October 2018, including 106 technical notices explaining to businesses and citizens exactly what they need to do to prepare. In answer to the point made by my noble friend Lord Bridges, we are continuing our work to roll over international agreements. We have currently agreed trade agreements with partners who account for over £70 billion of current trade. On 10 June, we agreed in principle an agreement with South Korea which represents another £15 billion. We have also established the EU settlement scheme, which is now fully open, with over 800,000 applications so far. This will continue to be run and to be supported, regardless of a deal or no-deal scenario.
My noble friend Lord Howell addressed the issue of EEA membership, and the noble Baroness, Lady Smith of Newnham, also raised this point. Let me say to my noble friend that our view is clear. When we leave the EU, we leave the EEA in the absence of any further action. Rejoining would require EFTA membership, which may not be a straightforward matter, and we would need the agreement of all of the existing EFTA members. I should also remind my noble friend that, when similar proposals were considered during the indicative votes in the other place, they were defeated on both occasions.
My noble friend Lord Bridges also raised the subject of business readiness. For two years, the Government have been implementing a significant programme of work to ensure that we will be ready from day one in all scenarios. The UK wants businesses to be reassured that, even in a no-deal scenario, the Government will seek to do what they can to make the transition as smooth as possible and allow them time to make significant changes. We are continuing to engage with a wide range of stakeholders to support industry preparedness, including trade bodies, ports, hauliers, ferry companies and freight forwarders. The Border Delivery Group has run and will continue to run a series of local, national and international stakeholder events, working with intermediaries in the UK and Europe, to directly engage with business and answer questions. We have held a series of domestic and international events, and webinars have been hosted to support business readiness. Online content, bulletins, leaflets, videos and other materials are being disseminated on a range of border-related subjects in several different languages to support business preparations on no deal.
The noble Lord, Lord Hain, again with great passion, raised the issue of Ireland. Let me reiterate once again that, in the event of no deal, the UK Government would not introduce any new checks or controls on goods crossing from Ireland to Northern Ireland, including any customs declarations for nearly all goods. The UK’s wider temporary tariff regime would therefore not apply to goods crossing from Ireland to Northern Ireland. This approach is unilateral and it is strictly temporary. Because these are unilateral measures, they only mitigate the impacts from exit that are within this Government’s control. These measures do not set out the position in respect of tariffs or processes to be applied to goods moving from Northern Ireland to Ireland. In a no-deal scenario, we would need to have urgent discussions with the European Commission and the Irish Government to jointly agree longer-term measures.
The noble Lord, Lord Anderson of Ipswich, referred to staffing changes in my department. Let me tell him that, when a staff member leaves any role in the Civil Service, arrangements are made so that business continues as normal, and in my department careful succession planning has been put in place to ensure the department maintains its high standards of delivery.
The noble Lord also asked about five EU exit Bills currently before Parliament. We are of course working with colleagues across the House to resolve the outstanding concerns on these critical pieces of legislation to deliver our exit, and we will look to progress them as soon as possible. However, I can assure all noble Lords that all of the necessary primary legislation needed by exit day to deliver a smooth exit from the EU is in place, including the more than 500 statutory instruments that have already been laid.
The work that Her Majesty’s Government are undertaking to prepare for no deal was set out in detail, as referred to by the noble Baroness, Lady Hayter, in a Written Ministerial Statement, from the Chancellor of the Duchy of Lancaster on 26 June 2019, which addresses many of the issues that have been raised by noble Lords this evening.
This House has played, and will continue to play, a crucial role in preparing for the UK’s departure from the European Union. It has had ample opportunity to provide comprehensive and timely analysis of all the options for our exit from the EU and has demonstrated itself to be more than capable of doing so. It is not clear what additional value this proposal will add at this late stage of the process. I am, therefore, not able to support the Motion proposed by the noble Baroness, Lady Smith, this evening.
My Lords, I am an optimist, but I have to say that this is the Minister that consistently disappoints. I found his arguments this evening unimpressive and unconvincing. We have a new exit date. We are going to have a new Prime Minister, whoever it is, who tells us they are relaxed about no deal, which makes it a very real possibility. Somehow the Minister’s argument that the Government can force a bad deal on the country to try to avoid no deal, when they promised a good deal, is totally unacceptable. He says that they have appointed people to all the positions of those who have left, but we still do not have in your Lordships’ House a Minister for International Trade.
In answer to the question what will happen if this Motion is passed tonight—I had hoped the Minister was going to say, “Yes, what a good idea”, but I should have known better—it will be reported to the House of Commons. It will then be for the House of Commons to decide whether it wants to join us in having a Joint Select Committee of both Houses to examine the implications of a no-deal Brexit, using all the information that is currently to hand with the powers it will have as a Select Committee. This provides an opportunity for the House of Commons to ensure that happens, and the committee would then publicise the information, some of which the Government have been very reluctant to admit to, of what it really means—the good, as the noble Viscount, Lord Trenchard, thinks there must be, but definitely the bad as well.
We gave the Minister an opportunity today to accept what almost everybody who has spoken in the debate thinks is a positive way forward. In view of his very disappointing response, I wish to test the opinion of the House.
3 July 2019
Division on Baroness Smith of Basildon’s Motion
Motion agreed.View Details