Brexit: Withdrawal Agreement and Political Declaration - Motion to Take Note

Part of the debate – in the House of Lords at 8:58 pm on 9th January 2019.

Alert me about debates like this

Photo of Lord Lamont of Lerwick Lord Lamont of Lerwick Conservative 8:58 pm, 9th January 2019

My Lords, Charles James Fox once observed that no man worth his salt ever lost a night’s sleep over the fate of the nation. I cannot say that I have lost a night’s sleep over Brexit, but I worry because we do indeed face an extremely serious situation.

In principle, if possible, I would like to support the Prime Minister’s deal, but it is very difficult. However, whatever criticisms may be made of the Prime Minister’s deal, to my mind it has one great advantage. On 29 March, we will be well and truly removed from the threat of any further political union. I voted leave in the referendum primarily for political, not economic, reasons. Like, I suspect, millions of other people, I did not like the transfer of power away from our own national institutions to ones I regarded as less effective, less accountable and in which we had only a partial say. I voted for sovereignty.

Although I did not vote primarily for economic reasons, I do not accept the view, which has been the common assumption in this debate, that we will be worse off outside the EU. Those who argue that have to explain certain points. How is it that Switzerland, with such a high standard of living, is more integrated with the EU than we are and exports, per capita, four to five times as much as we do? How is it that non-members of the EU, such as the US, Japan or Australia, have increased their exports to the single market since it was created by considerably larger amounts than us, who are members of it? No doubt I will then be referred to the forecasts by the Treasury and the Bank of England. Leaving aside past criticisms of their forecasts, these forecasts, of course, have not been universally accepted. They have been trenchantly criticised by the noble Lord, Lord King, the former Governor of the Bank of England; Paul Krugman, the Nobel Prize winner; Andrew Sentance, formerly of the Monetary Policy Committee; and Roger Bootle. Among the points they have made have been the apparently exaggerated border costs of being outside the customs union. To some, those seem excessive when compared with Switzerland’s estimate of the cost of border compliance with the EU as only 0.1% of its trade.

Members on the Liberal Democrat Benches scoffed when the noble Lord, Lord Howarth of Newport, pointed out that the Bank of England forecasts did not actually show a reduction in living standards, as had been claimed, but a slower increase. He was, of course, quite right, but I accept that that poses the question: is this a risk worth taking, and is it likely to be proved right? It is worth noting that the calculations of the Bank of England and the Treasury came up with some very small differences in outcomes for different policies. They then multiplied them by a figure of eight years or 15 years in order to get a more visible, tangible number. It used to be said that economists put decimal points in their forecasts to show they had a sense of humour. Obviously, these economists took that point very seriously; does anyone really believe that it is possible to forecast what will happen to the economy 15 years ahead?

The key point about our economic future, is that the importance of external trade can be exaggerated. Trade matters of course, but our future does not depend on trade alone, let alone trade with the EU. Our future and what our living standards will be in 15 years, as the noble Lord, Lord Macpherson, has pointed out repeatedly, depends much more on the domestic policies that we follow: supply side reforms, investment in infrastructure, increasing competition and having sound finances. Our future is in our own hands.

The Prime Minister’s proposed deal, alas, seems largely likely to fail in the House of Commons because of the Irish backstop. I shall not repeat the objections, other than the inability of the UK to withdraw unilaterally from the backstop with no fixed date. Does this matter? Some noble Lords have argued that they would never have expected a unilateral right of termination, but many trade deals have such a right of termination, and the absence of one leaves us in the position where, having paid our ransom money of £39 billion, we are highly exposed in the next stage of the negotiations. If, by any chance, the negotiations did drag on, as some forecast, for many years, could we really accept that for all that time, companies in the UK would not be able to send goods to another part of the UK without checks? We are rightly very sensitive about the border between Northern Ireland and the south, but we should also be sensitive to unionist concerns about an invisible border in the Irish Sea. The Prime Minister seems to have signed up to something she said no Prime Minister of the UK could sign up to. We are told, “Don’t worry, the EU won’t want the back stop to continue indefinitely”. If so, why does it not alter it? We need a change in the mechanism or the exit from it. I believe many MPs who at present cannot accept the deal would swallow it if there were changes in the exit mechanism and it could be shown that the backstop was temporary. If the backstop were temporary, many things that are objectionable in the deal would also be temporary.

The Government seem in a terrible muddle over no deal. The Prime Minister says that it is this deal or no deal, which she implies means chaos. Why did she ever say that no deal is better than a bad deal? If she did not believe it, it is hardly surprising that it did not carry any weight in the negotiations. If she did believe it, she must have believed that preparation was possible in the time available, and, if so, why have the Government not made proper preparation? Or perhaps the situation is as a civil servant has written in a national newspaper: “We’ve made preparations but the Government do not want people to know that”.

No deal or trading on WTO terms has never been my first option, and I do not say that there are no issues, but it has been ridiculously demonised—almost literally so by the most reverend Primate the Archbishop of Canterbury, who seems to think that anyone who supports it should go to hell. No deal might be challenging, and I accept that there might be problems with it, but the director-general of the WTO, Mr Azevêdo, has said that changing to WTO terms,

“doesn’t mean that we’ll have a vacuum or a disruption”.

There have been a lot of Don Quixotes tilting at imaginary windmills. If Parliament rejects the withdrawal agreement and we leave the EU without a deal and have to trade on WTO terms, that is not the only or automatic option for trading with the EU. In those circumstances, we should keep all tariffs with the EU as they are now—at zero—and say that we would like to take up Donald Tusk’s offer to negotiate a free trade agreement with the EU. Provided that both sides agree that they want to negotiate such an agreement, under Article XXIV of the GATT agreement both sides would be able and allowed legally to keep tariffs as they are, at zero, for a prolonged transitional period. It should not take that long, as we start from a position where we have already harmonised regulation and free trade.

I wait to see what comes out of the Prime Minister’s talks. I hope that there will be something that makes the agreement more acceptable, but we should not talk ourselves into a crisis and imagine problems that will not be as great as are sometimes portrayed. The solutions and answer are there and in our own hands.