My Lords, last week I had the great pleasure of being in Brussels with the noble Baroness, Lady Noakes, and my noble friend Lord Whitty under the very good chairmanship of the noble Lord, Lord Boswell. We had a very interesting time, but I fear that I came away from the visit with a great deal of pessimism. My view is that we will return from our Summer Recess to find us heading for the deepest political crisis our nation has faced since the Second World War. It could so easily transmute into an economic crisis, a sterling crisis and an investment crisis once business suddenly comes to terms with the awful fact that the Brexiteer bluff of no deal might soon become—admittedly, I think, by accident—a reality.
No deal will have very serious consequences for 60% of our trade—not just trade with the EU, but with all the other countries the EU has trade agreements with—which now includes Japan. I do not share the optimism of the noble Baroness, Lady Noakes, about trading on WTO terms. No deal would mean a breakdown in aviation and energy markets from day one; an immediate loss of broadcasting rights from the UK as programmes no longer comply with country of origin rules; potential chaos at all our borders as agricultural inspections, customs, rules of origin, regulatory checks and up-front VAT payments are imposed; legal uncertainty about contracts and business licences and authorisations issued by EU agencies; disruption to data flows; and some really awful things, such as confusion about the status of EU citizens living in this country and British citizens living on the continent. What on earth would happen to the Irish border in the event of no deal?
Quite a lot of people have said, “Oh, there is no majority for no deal in parliament and it is not going to happen”—I wish I was so confident. The no-deal amendment, which twice passed in this House by huge cross-party majorities in the then European Union (Withdrawal) Bill, failed in the Commons when its otherwise wholly admirable mover—the right honourable Dominic Grieve—chose to fall on his sword in the interest of Conservative Party unity.
On the customs Bill last week, the Prime Minister chose to whip her parliamentary party to vote for several Jacob Rees-Mogg amendments which directly contradict the White Paper that she had produced only days before. The facilitated customs arrangement is a fantasy but it is possible that if it had simply been confined to the UK, the Government might have been able to persuade the European Commission to go along with the possibility that—at some stage in the long, long term—it might become technologically feasible, and that we would accept remaining in the customs union until that day happened. The fact is, however, that the Rees-Mogg amendment totally scuppers that possibility, because there is no way whatever that our European partners are going to adopt this plan themselves when, to be polite, it involves a massive increase in bureaucracy. One of the strange things about Brexit is that most of its keenest supporters also support a low-tax, small state. But what are we going to see with Brexit? There will be a massive increase in the size of the Civil Service and bureaucracy. This arrangement would certainly involve a big increase in bureaucracy, with untested technology and an invitation to commit fraud. No one else will go along with it and it is therefore not going to work as a proposition.
Last week left me feeling in a very bad way. I said to myself: is there no instance in which a clear-cut national interest can trump the unity of the Conservative Party as a higher cause? Will the Conservative Party ever not put its own unity first, before the national interest? Sadly, there is a group of misguided Labour MPs—and some of my colleagues here—who are totally oblivious to the pain that a hard Brexit will inflict on their poorest constituents. They are prepared to back Brexit in any form.
While we all hope for an agreement in October, I fear the political dynamic is moving in totally the wrong direction. I am not a fan of the White Paper. It should have been published 18 months ago, before we invoked Article 50, and it completely neglects the services sectors, where so much of Britain’s economic future lies. But if you were to ask me as a European adviser, the model of a customs union plus a single market in goods might have worked as the basis for an agreement with our European partners, as long as the UK was prepared to make concessions in other areas. Those would include: a more clearly defined role for the ECJ; binding rules to implement future single-market legislation; some continuing EU budget payments; and a preference for EU citizens in new labour mobility rules.
Instead of signalling the possibility of flexibility, however, the Cabinet postures that it has no more room for manoeuvre. Mrs Leadsom says we have gone as far as we can. Mr Raab protests that we will not pay the divorce bill—for which we have already signed up, incidentally—unless we are promised the trade agreement that we demand. Even the eminently sensible Mr Lidington uses the argument inside the Conservative Party that Parliament would, under Mrs May’s plan, retain its sovereignty to reject EU laws. Yet David Lidington knows, as well as I do, that the first principle of a common rule book for a common market is that members have to live with laws they do not like to benefit in the round from laws that are in their interests. We cannot trade frictionlessly with Europe on the basis of some pick-and-choose formula. Far too many on the Government Benches—