Outcome of the European Union Referendum - Motion to Take Note (Continued)

Part of the debate – in the House of Lords at 5:25 pm on 6th July 2016.

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Photo of Lord Howell of Guildford Lord Howell of Guildford Chair, International Relations Committee 5:25 pm, 6th July 2016

My Lords, it is an honour to follow the speech of the noble Baroness. I must say, having listened to many of the speeches by your Lordships yesterday, it is crystal clear to me that this House has a great deal to offer towards the lowering of tensions and finding the nation’s way through the thicket of complex issues confronting us.

However, one aspect of the unfolding scene was not, as far as I can see, mentioned yesterday, or even today. While we wrestle with our European neighbourhood problem, the wider world is going through a gigantic and revolutionary transformation in the whole pattern of trade, commerce and exchange. It is not just goods’ trade which has been globalised. In this digitalised world, almost every product and process has become part of a vast connected supply chain that winds from one continent to another. Whole industries have been upended, corporates and middle-men bypassed and smaller businesses given a unique entry into global supply chains they never had before. This is creating major upheavals, both of peoples and employment patterns, which are already shaking the EU to its foundations with populous upsurges, breakaway and secessionist impulses and a migrant movement of millions coming from failed states, poorer and war-torn areas up and across into Europe of which I am afraid we have only just seen the start.

Not only is almost everything nowadays made everywhere, but everyone can sell into every market if they can compete. Tariffs hardly make any difference and where they do, are cancelled out by exchange rate differences. The non-tariff barriers are the remaining defence.

I did not agree with everything my noble friend Lord Lawson said yesterday, especially the rather winner-takes-all, slightly uncompromising attitude. However, I believe he was right that when it comes to trade nowadays in its modern form, you do not have to be a member of the EU to sell successfully into the European market, and so was the noble Lord, Lord Howard, right when he spoke just now. China pours massive flows of goods into France, for example, and is investing everywhere from Warsaw to Cardiff and from Athens to Lisbon. Looking at it the other way—from within the EU—Germany is far more deeply embedded in the supply chains to Asian markets than we are.

The single market of today is nothing like the original protected cocoon of the last century. No one is copying that top-down economic model round the world, because it does not work in the digital age. It is clear that the ruling minds in Brussels have not grasped all of this, although shrewder people in the national capitals have certainly done so. That is why I personally believe that Jean-Claude Juncker’s days are numbered, together with those of an inward-looking EU Commission, which is trying to keep yesterday's EU afloat in the modern world. So, do we face some insoluble dilemma of single market access versus free movement, as it was suggested in the debate yesterday? Not really.

First, access—if not membership—is always there, although with special and practical arrangements in our case, since we are by history and geography in Europe and we clearly need to sort out the banking passports issue. We need to have our daily power supply through interconnectors keeping our lights on as we trade every half hour with the European continent. That is an area—energy—where we need more “Europe” in physical terms and a lot less in policy interference.

Secondly—the other side of the argument—the unfettered free movement principle is anyway bound to collapse or be vastly modified as migrant millions swell and swell. It is already being re-examined through Europe at this moment. It is not a forecast—that is happening at this moment.

Meanwhile, I agree that the die is cast. We are now on a separate track and for us the broad direction is quite clear. First, we and especially if I may so—there is irony in this—the Brexiteers, must become really good Europeans who are supportive in the EU’s hours of trial, friendly with every member state and supportive even as the basically unworkable euro staggers from crisis to crisis—as it is about to do again—until it eventually shrinks back to the old deutschmark zone. I strongly agree that trying to bargain over the status of EU citizens here versus our citizens in the rest of the EU is absurd. It is a typical Home Office ploy. All should be reassured, perfectly amicably, and there is no need to go on with this argument.

Secondly, we must focus on our really big and new markets as never before. The US is by far our largest market outside the EU, but China and Japan—our best friend in Asia, as we often forget—are catching up fast, as are Latin America and Africa. The immense Commonwealth network is the gateway to most of these areas.

People ask me whether the Commonwealth could be an alternative to the EU market, but that is to compare apples and oranges on a grand scale. They are completely different in character, nature, structure and behaviour. Yet, strangely, it is the unstructured grass-roots-driven Commonwealth network, with its common language, common commercial law and common accounting standards, which is probably more favourable to this age of knowledge and data-dominated trade in services than the more centralised EU model.

To cope with all this, even to get a coherent position together from which to initiate Article 50, we need a leader and a Government of bridge builders to build new bridges and get old ones repaired. Bridges there have to be with our real European friends, who are to be found in the member state capitals, where they realise that the fundamentals have to change and that the era of centralised integration is over; bridges between leavers and remainers to bring this nation together, showing that the winner does not take all, as the noble Baroness who has just spoken reminded us; and bridges between the overwealthy and those who feel left out—bridges which some of us have been arguing for four decades should be built through wider capital ownership and new forms of sharing capital. That is how we can meet the concern of too much inequality, as the most reverend Primate the Archbishop of Canterbury rightly spoke about yesterday, although too little wealth creation is part of the same problem. Then we need bridges with Scotland to support it in its dilemma of wanting to remain within the EU, yet finding itself inside a Brexit UK. We need bridges, too, to Northern Ireland and Dublin.

The task requires consummate skill but it is possible. Disraeli said that Britain was an Asian power. We now have to become an arch-network power to survive and prosper. I remain resolutely optimistic that it can be done.