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Queen’s Speech - Debate (5th Day)

Part of the debate – in the House of Lords at 4:42 pm on 28th June 2017.

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Photo of Lord Adonis Lord Adonis Labour 4:42 pm, 28th June 2017

My Lords, I beg to add to the Motion for the humble Address the words,

“but regret that it contains no proposal for Her Majesty’s Government to seek to negotiate continued membership of the European Single Market and Customs Union”.

Perhaps I may first extend my sincere condolences to the Minister on her new appointment. The noble Baroness has an unenviable task. Brexit is a revolution that devours its children. It has consumed three Prime Ministers: Margaret Thatcher, John Major and David Cameron; it is now on to its fourth, Mrs May. In the past year alone, it has decapitated a Chancellor, neutered a Foreign Secretary, and two of the four Ministers in the Department for Exiting the European Union have already exited. I advise the Minister to join them as soon as possible and seek a less demanding job, like Secretary- General of the United Nations.

The reason that Brexit is so difficult is that the policy of withdrawal from the central economic institutions of the EU is so unviable. It will cause deep and lasting damage to the UK’s trade, investment and international standing. It is a hard-right, nationalist policy, and it is no more viable as a governing idea than the hard-left socialism of Tony Benn and Arthur Scargill in the 1970s and 1980s.

Nothing demonstrates this unviability more than the fact that those of its proponents who have held responsible offices under the Crown never advocated it while they did so. Margaret Thatcher signed the Single European Act—just as she created more comprehensive schools than any other Education Secretary, she did more European integration than any other Prime Minister. The noble Lord, Lord Lawson, was her right-hand man throughout. Indeed, he wanted to go further and join the exchange rate mechanism. At his right hand was the noble Lord, Lord Lamont, who delights the House in explaining why he was so pro-European then and is so anti-European now. The noble Lord, Lord Owen, tells us very decisively that we are better out, but we have all enjoyed the celebration of the Gang of Four in the West End play “Limehouse”, and the Limehouse Declaration promised that Britain would be,

“a constructive and progressive force”,

within the European Community. As for Boris Johnson, 20 days before he led the leave campaign, he was Mayor of London, urging an expansion of the single market in services and capital and unrestricted migration within the European Union.

Running through fields of wheat may be a terrible thing, but when, on the most important issue facing the country, politicians say one thing but do another, the public really should beware, particularly when they keep political company with Nigel Farage, Geert Wilders and Marine Le Pen. My mentor and lodestar was Roy Jenkins, arguably the most successful Minister of the last generation besides Margaret Thatcher. His political maxim was: “On great questions always go for principles, not details; and always argue to solutions, not to conclusions”.

On the European question, the detail is fearsome. Like other noble Lords, I have been wading through the detail of the EEA, EFTA, the WTO, the single market and the customs union; what it means to be inside the EEA, EFTA and the single market, but outside the customs union, like Norway; or inside EFTA and the customs union but outside the EEA and the single market, like Switzerland. I have read with profit an erudite paper by the noble Lord, Lord Owen, on whether the UK automatically leaves the EEA on leaving the EU, because one clause makes Her Majesty the Queen a contracting party, whether we are in or out, while another appears not to allow the actual territory of the United Kingdom to join the EEA if we leave the EU. Amid all this turgidity, I did at least experience one moment of pure joy: EFTA, which some Brexiteers recommend as our staging post out of the EU, has an equivalent of the European Commission: it is called the Surveillance Authority. I look forward to that Orwellian construct being sold to the Daily Mail.

Rising above the detail, there is one overriding principle: if we are leaving the EU, we should not jeopardise our trade with the EU, because upon it depends the jobs and prosperity of tens of millions of British people. As a rule of thumb, trade halves as distance doubles. Some 44% of our exports of goods and services go to the EU, because the EU 27 comprises all our largest neighbours. The solution here is clear and simple: stay in the customs union. Furthermore, our greatest relative trade advantage is in services, where non-tariff barriers are the main obstacle to trade. To reduce those barriers, there has to be a regulatory union, not just a tariff union, which is precisely what the single market is and why Margaret Thatcher pioneered it. The solution here is also clear and simple: stay in the single market.

There is a notion put forward by Ministers that, in the foreseeable future, our neighbours could be replaced or overshadowed as our major trading partners by the extremities of the world. This is pure fantasy. Even if it were a principle of action worth pursuing, it is negated in practice by the fact that the customs union itself is our gateway to trading with the rest of the world. The EU has 45 trade agreements covering 74 nations outside the EU. In addition to the 44% of exports going to the EU, a further 17% are covered by these 45 agreements. That figure of 45 will rise to 46 this Saturday when the EU’s free trade agreement with Canada takes effect. So, in total, more than 60% of our trade is with the EU or third countries where we enjoy free or preferential access by virtue of customs union and single market membership.

To take but one example of what this means in practice, in the first four years of the EU’s trade agreement with South Korea, which came into force in 2011, the UK’s exports of cars to Korea rose from 2,000 to 13,000. That is through just one preferential trade agreement. Liam Fox has to renegotiate that one plus 45 others just to get past first base in boosting non-EU trade, and he has to do that once he has secured a new treaty covering all our EU 27 trade in the first place. All this has to be done by a Department for International Trade which as yet has only a handful of experienced trade negotiators and whose Permanent Secretary is still Her Majesty’s consul-general in New York.

The Government’s Brexit policy is basically one of trying to fill a swimming pool with a teaspoon. It is an interesting and very challenging idea, but do not jump in for about three centuries. A recent cartoon in a Dutch newspaper depicts the Prime Minister whacking herself over the head with a mallet, with a bubble saying, “No deal is better than a bad deal”. All this would be comic if it were not so serious. The noble Lord, Lord Price, the International Trade Minister, told your Lordships’ European Union Committee recently that he and Dr Fox are making “trips around the world” to find out,

“how we might mitigate the impact”,

of Brexit. The way to mitigate the impact of Brexit is not by the gratuitous accumulation of air miles. It is by staying in the customs union and the single market.

As for the notion that everything is going to be solved by technology—that we can set up border controls in Northern Ireland, Dover and Calais but they will be magically invisible and frictionless—that policy would last about as long as the Government’s social care policy when the frictionless and invisible border controls become queues of trucks on the M2 and M25 stretching to Watford.

I turn to the vexed question of immigration. Last June, the British people did not vote for fewer jobs and more poverty, but they do appear to have voted for more control over immigration. This is a difficult issue for me. I am the proud son of a Cypriot immigrant—a postman for 35 years, who loves this country and who put far more into the Treasury than he ever took out. The anti-immigrant rhetoric of the leave campaign, particularly Nigel Farage’s disgraceful “Breaking Point” poster, made me—and, I think, many others in the House—physically sick.

However, I approach this, too, from a point of principle. Any state worth the name must have control of its borders. Here is the crucial point: an absolute, unlimited right of free movement is not an indispensable requirement of free movement of goods, services and capital. The doctrine that we cannot have one without the other is a false doctrine—we are not dealing with the Holy Trinity, one and indivisible; we are dealing with EU doctrine, which is mortal and fallible—and is in fact contradicted by the most cursory examination not only of other customs unions but even some federal states.

I agree with President Macron’s adviser Jean Pisani-Ferry, to whom the noble Lord, Lord Hunt, just referred, who said recently:

“There can be no doubt that the Leave campaign tapped into seams of genuine concern about the scale and speed of immigration. Free movement of workers is not indispensable for the smooth functioning of economic integration in goods, services and capital”.