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EU: Plans for No Deal

Volume 803: debated on Tuesday 2 June 2020


Asked by

To ask Her Majesty’s Government what contingency plans they have in the event of a deal not being agreed with the European Union by the end of the transition period.

The Question was considered in a Virtual Proceeding via video call.

My Lords, at the end of this year we will have recovered our economic and political independence on the basis of the agreement that we reached in October. Whether our relationship is on a Canada model or an Australian one, we will be leaving the single market and the customs union at the end of the year. As such, there is a fixed baseline of guaranteed changes for government, citizens and businesses to prepare against in these areas.

My Lords, no one could have foreseen that the Covid-19 pandemic would take place when the withdrawal agreement was drawn up. Does the Minister agree that if there is a no-deal Brexit there is no contingency plan that can prevent enormous damage to the economy, jobs, business and industry? Furthermore, is he not aware that every reputable body and commentator says that we ought to extend the timetable in order that we can get a better deal for this country? Surely that is the way forward.

My Lords, I do not agree with the noble Lord in the picture that he presents of either unpreparedness or impossibility. We will seek and are seeking a free trade agreement with the European Union and we are carrying on negotiations in a number of areas, including one that I know is important to him: we are committed to seeking reciprocal agreements with the EU, for example, for family reunion of unaccompanied children. This work goes on and it can be done.

My Lords, given that the Social Market Foundation has calculated this week that the regions that will suffer most from the double shock of a no deal plus the pandemic will be the north-west and the Midlands, as well as sectors crucial to the economy such as finance and insurance, what plans do the Government have to mitigate the damage that this will do to such vital areas of the country and the economy?

My Lords, the Government seek to extend the opportunities of our being outside the European Union and to enable businesses and citizens to prepare for the change for which the people of this country voted and for which Parliament legislated. Of course, in our strategy of levelling up, we will have particular regard to any parts of the country that are affected in particular ways.

My Lords, in his evidence to your Lordships’ House’s EU Committee last week, the UK’s Brexit negotiator, Mr David Frost, said that

“the Canada and Australia outcomes are similar”

if not identical. These are of course shorthand for a free trade agreement and no deal. Why are the Government so minimalist in their aims compared to the goal of

“an ambitious, broad, deep … partnership … with a comprehensive … Free Trade Agreement at its core”

that they signed up for in the political declaration last October?

My Lords, I watched the evidence given by my right honourable friend the Chancellor of the Duchy of Lancaster and by Mr David Frost. I thought that they came over—I hope your Lordships will agree —as people who were seeking a responsible and reasonable agreement with the European Union. I am confident that those negotiations will succeed.

My Lords, Goldman Sachs has estimated that Britain’s economy has already lost 2.5% of GDP since the referendum. According to the Government’s own calculations, Brexit will cost 6.7% of GDP, or £130 billion, over the next 15 years. What assessment have Her Majesty’s Government made of the combined economic cost to the UK of Brexit and Covid-19?

My Lords, I am a veteran of listening to baleful predictions about what might happen if the British people made the decision that they did. The Government have made it clear that they will invite evidence and opinions from a range of economists and others as to what the future might hold, but our position is that this is an opportunity and a duty, and we intend to deliver it.

My Lords, does the Minister accept that if no progress is made soon with the EU on farming and animal welfare standards, which is an issue of great concern to Parliament as well as to the country, it must surely inhibit our negotiators in the US FTA in maintaining those same standards and is therefore likely to lead to an inadequate mini-deal?

My Lords, the noble Earl is quite right to refer to the importance of agricultural products, which is obviously a matter being discussed in the ongoing negotiations. I am not following him into any linkages. My interest and that of the Government is to secure the best outcome in the negotiations that are going on as we speak.

My Lords, yesterday’s EU Committee report described the continued uncertainty and lack of time for a deal, combined with the pandemic, as

“a potent threat to economic prosperity and political stability in Northern Ireland.”

Businesses still do not know what to expect by way of customs processes, regulatory checks and exit summary declarations on goods from GB to Northern Ireland. Without a comprehensive free trade agreement, the consequences for Northern Ireland could be seismic. Can the Minister outline plans to advise businesses in Northern Ireland and GB and help them prepare for the future in case such an agreement is not reached by the year end?

My Lords, I read with great interest your Lordships’ report on the Northern Ireland protocol. I do not agree with every judgment in it, but it was very valuable and the Government will make a response in due course. I said—I think when I answered the noble Baroness on a previous occasion—that a business engagement forum in Northern Ireland is imminent. A process of engagement with business across the country is of great importance, is ongoing and will be intensified.

My Lords, the Minister in his first Answer said that we are negotiating on the basis of the agreement reached last October. Earlier this year, we had a number of authoritative briefings, presumably from No. 10, to say that the decisive result of last December’s general election in effect sidelined the political declaration and that we were now negotiating on what the Minister also described as a more minimalist arrangement. The political declaration talked about an “overarching” framework and a continuing security, foreign policy and defence relationship, which is a great deal more than Canada or Australia. Have we now abandoned the political declaration, or are we still, as the European Commission would like, negotiating on the basis of that agreement?

My Lords, we have put into law a withdrawal agreement, including the NI protocol, and that is the basis of our continuing policy. The Government have published a number of documents which have been laid before your Lordships’ House on our approach to negotiations and, most recently, on the Northern Ireland protocol. That is the basis on which we are proceeding, in good faith and hope.

Does the Minister agree that the only contingency worth considering at this moment is that if we stay tied to the European Union beyond 31 December, we face paying into a dramatically increased EU budget next year, with new taxes? It has been estimated that staying in might cost us £380 billion over the next two years. Is it not time to make sure that we get out by 31 December?

My Lords, I am not going with any particular prediction on this question, as I did not on an earlier one—there will be a range of opinions—but I fully agree with the noble Baroness that, were we to stay attached to the EU beyond December, we would face uncertain, unknown but substantial costs in terms of our duties to make payments to the European Union.

My Lords, I cannot give a particular figure in reply to the noble Baroness, but, as I have tried to stress to her before, the Government recognise fully the importance of securing the internal market with Northern Ireland and will do all in their power to assist with that and to maintain the position that exists now.

My Lords, the time allowed for this Question has now elapsed. I thank all noble Lords who have taken part in Question Time. That concludes the Virtual Proceedings on Oral Questions. The Virtual Proceedings will resume at a convenient point after 12 noon for the Private Notice Question on Hong Kong.

Virtual Proceeding suspended.