European Union (Notification of Withdrawal) Bill - Second Reading (2nd Day) (Continued)

Part of the debate – in the House of Lords at 7:41 pm on 21st February 2017.

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Photo of Lord Giddens Lord Giddens Labour 7:41 pm, 21st February 2017

My Lords, bananas. I am just trying to get the attention of noble Lords at this point in the proceedings. “Bananas” was the response given by a member of the audience on the BBC’s “Question Time” to explain why she had voted to leave the EU. The essence of her point was that there are too many rules and regulations—it comes to something when the EU decides what shape of banana we can buy in the shops. The bendy banana is, of course, a favourite of the anti-EU media as well. Pressed on the issue, she added, on a more positive note, that “there are opportunities out there that we ought to seize as a country”. She immediately became a Twitter star and showed herself to be an articulate, feisty person.

There are indeed opportunities out there, but they will not take the form of a leap to freedom from burdensome regulation. The banana trade is a huge business and heavily contested, as anyone who is familiar with the banana wars will know. Outside the EU, Britain will be faced with the same need for detailed regulations concerning how that particular fruit and a multiplicity of other goods are to be defined and traded. It will not be magically released to determine these regulations, which are fought over and decided both bilaterally and within the WTO. The wrangling often goes on for years. Britain has much more chance of influencing the outcome as a member of the EU than it has acting in isolation, because the bargaining power of the Union is far stronger than that of an individual nation. So the case of the bendy banana actually shows the opposite of what is often claimed.

The situation is no different in the case of migration. There is no magical la-la land waiting for the UK outside of the EU here, either. Any significant bilateral trade deals made after leaving the Union will almost certainly mean us making concessions on freedom of movement. We can all agree that the anxieties felt about migration, especially in poorer communities, must be responded to. The causes of the resentment involved are complex and the policy responses must be as well.

The Government have declared that Britain will leave the single market and will try to negotiate a pick-and-mix agreement with the rest of the EU. The obstacles, both political and economic, standing in the way are huge. The phrase “global Britain” is trotted out as a mantra, but it is dangerously misleading. It is absolutely not the case that distance has become irrelevant to trade. The noble Lord, Lord Kerr, touched on this point in his magisterial speech, but he did not develop it. Trade is strongly influenced by proximity and by effective regulation, especially in the case of services, which make up the bulk of Britain’s exports. It is a mistake to suppose that the advances in global communications have altered all that.

The results of a recent study carried out by a non-partisan body, the National Institute of Economic and Social Research, on this issue are both revealing and disconcerting. The author calculates that quitting the single market will reduce UK total trade in the long term by 22%, even if Britain manages to set up a free trade agreement with the rest of the EU, an outcome that is itself far from certain. She estimates that trade gains from the much-touted possible free trade deals with the BRICS would amount to no more than 2%. Those set up with the US, Canada, Australia and New Zealand would be only fractionally larger, at under 3%. The single market has been very successful at reducing non-tariff barriers, so important for trade in services, but crucially she concludes that free trade deals reached with non-EU nations are by contrast almost wholly ineffective in reducing such barriers. Services free trade agreements tend to be limited in scope, especially as regards financial services, and fall far short of the passporting rights of the single market. These are troubling conclusions indeed for the British economy, given that services make up the bulk of our exports.

A total of 16.1 million people voted for Britain to stay in the EU, versus 17.4 million to leave. We do not know what proportion of those who voted to leave wanted to abandon the single market, since the leave option was left empty of content, or made deliberately ambiguous. There was no forward plan at all. If even 10% of leavers were attracted by the Norway or Switzerland models, there was no majority for hard Brexit. I echo what other noble Lords have said about the assertion that no deal for Britain is better than a bad deal for Britain. No deal would be a very bad deal indeed, not least for what remains of this country’s manufacturing industry and for all smaller farmers too. I shall therefore support amendments which keep open the chance of the UK staying in the single market, and I hope that many other noble Lords will do the same.