My Lords, as a member of the EU Committee and its Financial Affairs Sub-Committee, I thank our chairmen, our chief clerk and their team for the superb work that they have done: 40 respected reports since the referendum, guidance on the detail of documents from the EU and the Government and many well-organised visits. I know from my business life that one sees a different perspective at the front line. I also know from business how important it is to have a plan B in case the various Commons votes consign us to gridlock and no deal. So I am glad that the EU Committee is moving on this month to look further at no-deal preparations.
A lot more has been and is now being done to prepare for no deal than has, I think, been appreciated. I know from my time at the Treasury that work started very early there and at the Bank of England. Outside financial services, things are gathering pace: Michael Gove says he is now spending 40% of his time on no deal and I know that it is more than that for many EU-facing civil servants. Indeed, I was somewhat reassured back in September when I heard a complaint from the horticulture industry that the portaloos used by food farms had all been hired by Whitehall for use by lorry drivers on the M20 after Brexit day. This House can play and is playing its part in responsible preparation. So the Trade Bill is due to resume on
I turn to the Labour amendment, which calls for an emphatic rejection of hard Brexit. To my mind it would be difficult to devise a more misguided suggestion. Advancing such a proposition will have only one effect; namely, to encourage the EU to become even more intransigent, on the basis that we will accept whatever they offer. Perversely, it also makes no deal more likely since the EU will be encouraged to overplay its hand, which arguably it already has. So I believe the Government are right to be accelerating no-deal planning.
I want to dwell on future opportunities post Brexit, but I will comment briefly on the withdrawal deal. My conclusion, like that of some others today—the noble Lord, Lord Grocott, and my noble friends Lord Dobbs, Lord Forsyth and Lord True—is that it does not represent a satisfactory way forward at present for a number of reasons. The Irish backstop is the most prominent. I have been astonished to hear government lawyers advising that circumstances could arise, which we would be powerless to prevent, in which there would be no legal way for the UK ever to exit the backstop, but that it was right to press ahead because these circumstances would probably—probably—not arise.
The time to say no and negotiate the key detail is at the marriage, or in this case the divorce. We have leverage now that we will not have again. Under the agreement, we are paying over £39 billion in the next two years and countenancing a leisurely return to the UK of our €3.5 billion share capital in the European Investment Bank. This rundown will take until 2030, during which time we will receive no benefits. While the political agreement contains some good features, it is very general, has omissions and is not legally binding. Unfortunately, it also puts the EU, led by a new EU Commission, in an even stronger negotiating position than hitherto. I am sure we will be asked to pay heavily for anything substantive.
Another disadvantage is that it will prevent us developing trade relations with non-EU countries—for many years, at any rate. This is a great pity since, if Brexit is to be a success, we need to do things differently. I fear that the mindset of those conducting the negotiations has been wrong. They appear to have assumed that the closer we are to the EU, the better. I am among those who believed that we would have been better remaining in the EU as a full partner and I voted accordingly. But it does not follow that the next best thing is to be as close as possible to the EU, especially when we have lost the ability to influence the direction of travel and the detailed rules. A half Brexit is a recipe for frustration and long-term failure, and I fear that that is what is on offer.
I have a different vision, which is to use our independence to build a more successful, less divided nation, which looks after its own people and shares the fruits of their success. There are risks and it may take more time than I would like, but I believe we must seize the opportunity of Brexit to become more inventive and entrepreneurial and to increase clarity, simplicity and efficiency in the way we govern. It is depressing to hear Ministers competing to declare how such and such a regulation will remain in full effect after Brexit or that controls and regulations will be added to.
A second opportunity is to foster enterprise. The most recent example is the EU plans to force us to make hundreds of thousands of small businesses pay more VAT. We should not be reducing but doubling the threshold at which businesses pay VAT. I have been reading a book by the opposition MP for Birmingham Hodge Hill, Liam Byrne, about the talent, risk-taking and value creation of British entrepreneurs from Matthew Boulton to William Lever. They would never have achieved so much and remoulded business and Britain under today’s blanket of onerous and ever-changing rules. The UK has a strong digital sector, but it is no accident that today’s leading innovators mainly come from the US. A free Britain—not under Jeremy Corbyn, I hasten to add—can build a tax and economic framework that supports investment. We must look to ensure that new rules and regulations favour smaller and scale-up businesses and the middle-sized companies that do so much for the German economy—rightly highlighted by the noble Lord, Lord O’Neill.
Thirdly, we need a sensible system for the movement of people. I believe that the failure of the EU on this visceral issue was a prime reason for the Brexit result. I am worried that the Home Office’s latest proposals are also doomed to failure. I believe the warnings of the noble Lord, Lord Green of Deddington, are given too little weight.
Fourthly, and related, we need a decent infrastructure and skills based on honest projections of future population. Advances in housing, transport, education, health, digital and data and an apprenticeship system that works to help the younger generation could all be part of a post-Brexit dividend.
Finally, on security, it is in everyone’s interests for the UK to continue to have a collaborative relationship with the EU. But in any likely scenario we will be giving every bit as much as we receive. Demonstrating less enthusiasm might be a better approach.