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Brexit: No-deal Preparations

Volume 796: debated on Wednesday 20 March 2019


My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given in the other place by the Parliamentary Under-Secretary of State for Exiting the European Union, the Member for Daventry. The Statement is as follows:

“The Government have always been clear that leaving the European Union without a deal is not an outcome that we want. Last week Parliament voted against leaving with no deal, signalling a clear majority against this outcome. However, the legal default is that the UK will leave the EU without a deal unless an alternative is agreed. Any agreed extension does not change this fact. As well as not changing this fact, a longer extension would entail the holding of European Parliament elections in the UK, and, as the Prime Minister has stated in her letter to Donald Tusk, we do not believe that it would be in either the UK’s or the EU’s interests for the UK to hold these elections.

The Government have undertaken significant actions to prepare for a potential no-deal scenario. We have published 450 pieces of no-deal communications since October 2018, including information on reciprocal healthcare arrangements with the EU, driving in the EU after EU exit, and even how to take your pet abroad. We have contacted 150,000 businesses that trade with the EU to help them get ready for no-deal customs procedures, and held meetings, briefings and events with stakeholders across the economy, including around 300 engagements last month alone. We responded to stakeholder feedback on making sure that communications are clear by updating around 1,300 pieces of GOV.UK content, based on their input. More than 11,000 people are working on EU exit policy and programmes across government. We have launched a public information campaign, including information on GOV.UK, to help citizens and businesses prepare for leaving the European Union. TV adverts started today, while radio, press and outdoor poster advertising is ongoing. Furthermore, the Treasury has provided £4.2 billion for EU exit preparations, including for a no-deal scenario, and the Home Office has been allocated £480 million to ensure that it is fully prepared.

Getting ready for this scenario depends not only on government action but on action from a range of third parties, including businesses, individual citizens and the European Union itself. Despite government mitigation, the impact of a no-deal scenario is expected to be significant in a number of areas.

Leaving the EU with no deal is the legal default until Parliament passes a deal or agrees an alternative. We are focused on achieving that, but until it has been achieved we will continue to prepare for no deal and would advise businesses to do the same”.

My Lords, I was about to say that the preparations are a bit like moving the proverbial deckchairs around the “Titanic”. The amount of money that the Minister has just mentioned sounds as if they were gold-plating them before they sank. We know that a no-deal exit would, at the very least, need a longer lead-in for business, which is currently in despair about all this dithering. Even with a no-deal exit business would need time to prepare for the new tariffs, checks, rules, permits and so forth. As we heard earlier today, however, that would clearly be under another Prime Minister, since Mrs May said that she would not agree to any extension beyond 30 June, and this afternoon Mr Tusk left open the possibility of a longer extension if the deal does not go through and we faced no deal.

We are in this position because the Government keep offering only either the Prime Minister’s failed deal or no deal, both of which have been rejected by the Commons. So we have to ask again: given the diplomatic and political crisis to which this Prime Minister has led the country, is it not now time to find a third route—to work to find a deal that is acceptable to Parliament and ends this no-deal farce?

Well, of course we have been endeavouring to find a deal acceptable to Parliament. We have spent two years negotiating it. But I repeat that it is the legal default, and until there is another deal in place, or another decision is taken, we will continue to prepare, because that is the responsible thing to do. I remind the Labour Party that it voted against the deal we have negotiated, and so far we have seen no constructive suggestions from the party as to what would replace it. I think Labour has said that it agrees with the withdrawal agreement, while continuing to vote against the deal.

First, can the Minister tell us why the Government are not pursuing the route they said last week that they would follow, notably in the words of the Deputy Prime Minister, Mr Lidington. He said that if Parliament had not agreed the deal by today, a long extension would be sought. Is not the Prime Minister siding with the Brexiters and sticking with her over-the-cliff strategy, rather than trying to avoid it?

Secondly, the Government say that any agreed extension would not change the legal default of leaving the EU without a deal, presumably on 29 March. Surely if there was an extension, we would remain in the EU under EU law. If there was no SI to change the exit date, we might lack a domestic legal framework to give effect to our EU membership obligations. Can the Minister confirm whether my legal understanding is correct that since EU law is supreme over domestic law, we would still be in the EU if there is an extension?

If there is an extension, we would still be in the EU, but if we did not change our domestic law, which states that the European Communities Act comes to an end, and the legal snapshot would take place, we would clearly be in contravention of our legal obligations for being in the EU.

My Lords, given that the EU has said that it will not grant a short extension unless the deal is passed, and given that the Prime Minister has said that she is opposed to a long extension, is it therefore the case that if Parliament rejects the deal next week, the Government believe we should leave without a deal?

I think we will have to wait to see what happens next week. It remains our view that Parliament should pass the deal because we think it is the best deal available, but we will await the outcome of the Council this weekend before commenting further.

My Lords, is the Minister aware that a Paris political website is reporting that President Macron is not minded to support this deal because of the lack of clarity? That being so, we would be crashing out a week on Friday. Do the Government believe that that is practical, given what they have already said about the need for more time?

It is difficult for me to comment on rumours on the internet or on Twitter. I would be surprised if that was the case, but any EU member state can veto an extension and if one does, as I have said, the legal position under Article 50, as voted for by Parliament, and under the EU withdrawal Act, voted for by this Parliament, is that we would leave on 29 June.

My Lords, the House of Commons has twice rejected the Prime Minister’s deal, so it obviously thinks the deal is a bad deal. Does it remain the case, as it says in the Conservative manifesto, which is not yet two years old, that no deal is better than a bad deal?

We do not believe that our deal is a bad deal. We think it is a good deal, and we continue to hope that the House of Commons will agree to it.

Is my noble friend aware that the key element is the preparation by British industry and commerce? Is he further aware that I had the privilege of representing part of the East Midlands? I have spoken to industrialists, hauliers and other traders in that part of the UK. All of them many months ago realised there was a prospect of no deal. They have not waited for Her Majesty’s Government. They made those preparations, and any of us who have ever worked in industry or commerce would have done exactly the same. What they are waiting for is a decision, and they urge Her Majesty’s Government and Her Majesty’s Opposition somehow to make a decision so that they can get on and develop industry and commerce in this great country of ours.

My noble friend make a very valuable point. Business is getting on with things. Businesses are used to disruption and to learning how to make good. We have contacted about 150,000 businesses to make them aware of the possibility of no deal, but clearly we want to provide certainty and we believe that that would be best provided by agreeing the deal.

Does the Minister agree that, given that the House of Commons has made it very clear that no deal is not an option and that this House overwhelmingly agrees with that, if we are faced with that prospect next week, there will be no other option but for the House of Commons to revoke Article 50?

No, I do not agree with the noble Lord. This House has resolved against no deal, as has the House of Commons, but even I am getting bored of hearing myself repeat that that does not change the legal default. I do not believe that there is a majority in the House of Commons to revoke Article 50, and this Government certainly will not do so.

My Lords, I have received the information that businesses have received and to which the Minister referred. The information from HMRC issued this morning at 8.33 am states that at 11 pm on 29 March 2019 the UK will no longer be a member of the EU. This is the basis on which businesses are asked to be prepared. The very first thing that HMRC asks businesses to have, which is necessary for them to continuing trading the day after, is an economic operator registration and identification number. The most recent official figures from the Government suggested that only one-sixth of British businesses had that number. Will the Minister update us on the current level of preparedness of British businesses? If the position is not that 100% of British businesses have that registration, if we crash out next Friday, not all British businesses will be capable of trading the day after.

I do not have the up-to-date figures in front of me, but my information is that the uptake of these ERO numbers, as they are known, has increased markedly in recent days. This applies only to businesses that would need them, which exported only to the EU and did not already export outside it. I do not have the up-to-date figures, but I know there has been a sharp uptake in applications and the granting thereof.

My Lords, I stress that I very much hope the deal will be accepted in the other place. If it is not, given the overwhelming view in both Houses that we should not leave without a deal, would it not then be sensible to use the delay requested by the Prime Minister to have some indicative votes in the other place and come together on a deal that can command parliamentary support? I hope that is not necessary—I support the Prime Minister—but if the Commons rejects it again, that would surely be the prudent way forward.

That would depend on whether the EU was prepared to agree an extension in such circumstances. If so, we would need to table some secondary legislation in both Houses, on which there will be further opportunity for discussion in this House.

My Lords, absent from this Statement is any sense of contrition or responsibility that we have been brought to circumstances in which we could crash out of the European Union in a matter of days. Do the Government not accept and understand their responsibility in this matter?

Yes, the Government accept their responsibility in this matter. We negotiated what we thought was a good deal but have so far been unable to convince the House of Commons of this.