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My Lords, when we debated the Chancellor’s Spring Statement not very long ago, it became clear that the Government had spent the entire Brexit contingency fund on election promises. I remind the House that that was a contingency fund not just for a no-deal Brexit but for the damage that any form of Brexit would commit to our economy.
UK in a Changing Europe has pointed out that the Johnson version of a deal—which I assume will be incorporated in language that we may see later today—which requires a departure from the customs union and rejects the level playing field, a really critical issue, would hit the UK’s GDP even more than the May deal. It drops its running rate by about 2% on a long-term basis, which would have a really serious impact on the prosperity of this country. The aerospace, automotive, chemicals, food and drink and pharmaceutical sectors, which employ more than 1 million people, have warned that the Johnson determination to abandon the level playing field and essentially eliminate regulatory alignment with the EU poses a “serious risk” to the manufacturing sector, and go on to talk about how it would disrupt the supply chain and undermine UK exporters. To underscore the consequences, the automotive sector has confirmed that one in three firms is already shedding jobs. On its website, it makes it clear that this has little to do with the global turndown and everything to do with Brexit.
I speak for a party that, if put into power in a general election, would end Brexit and the damage it inflicts on the UK economy. My colleagues and I can commit significant new money for public services, welfare and proper long-term funding for infrastructure, including housing, broadband and transport; we can take measures to boost skills and productivity and to support growth businesses all across the regions; and we can provide the investment and safeguards necessary to achieve net zero carbon by 2040, because we will not do the damage of Brexit. And, because we are willing to raise taxes, including 1p in the pound on income tax hypothecated to the NHS and social care and the reversal of cuts in capital gains and corporation taxes, we can do so with the complete assurance of fiscal responsibility and stability, which is crucial to future economic growth. We alone have no Brexit burden and do not ask for a magic money tree.
The Queen’s Speech reads very clearly as a Tory election manifesto. I find even the titles of the Bills fascinating—because, let us be honest, they are dog whistles—such as “foreign national offenders”. Somebody worked really hard to get the words “foreign” and “offenders” in the same phrase. They tell us who, in the view of the Tory party, is now its core voter: people who will respond to a right-wing message. That, of course, is reinforced by what is left out of the Queen’s Speech: any measures to relieve children in poverty, to expand youth services or to increase social housing, because those are not considered appealing to the now hard-right Conservative Party.
As I look at the description of the financial services Bill, I see the words “new opportunities”. We all know what that means. It is regulatory dilution: an appeal to the casino element of the financial services industry, which has been chafing at the safeguards imposed after the 2008 crash, to which those casino financiers so powerfully contributed—casino players who have put so much money behind the Brexit campaign. The good companies want none of the reputational damage that comes from regulatory dilution. Financial services as an industry have minimal interest in “new opportunities” where that means “regulatory divergence” from the EU. Every sliver of regulatory divergence makes even more tenuous the hope to negotiate long-term equivalence across the sector. New opportunities fail to make up for even a small part of the business the UK is losing. The financial services industry has spent in excess of £4 billion on Brexit, trying to protect its customers and its operations, both current and future. To give just one example, Lloyd’s of London is moving so many insurance and reinsurance policies—everything with any EEA connection—to Lloyd’s of Brussels that, even working at top speed, the process will not be complete before the end of 2020.
Can the Minister confirm that about 15% of the financial services industry has already been shifted to the EU 27, with another 15% lined up to leave if Brexit happens, regardless of a deal? Many have gone to Frankfurt or Dublin, some to Brussels, Amsterdam, Luxembourg, Madrid or Milan, seeding them with the know-how to become serious competitors, but interestingly, trading—which in so many ways has been the distinctive flagship of London—has chosen Paris, where it is now working closely with, AMF, the French regulator. More than 35% of firms have announced their relocation. Historically, this is the part of financial services that has contributed most strongly to the UK tax base, and where trading goes, asset management and treasury operations eventually follow. Certainly, the measure on overseas investment funds, which seems to be the highlight of this weedy little financial services Bill, is an exceptionally sad little response to what is, frankly, a major calamity. I assume it is a sop to Jacob Rees-Mogg, who has been politically embarrassed—though not embarrassed in the pocket—by Somerset Capital’s decisions to site new funds in Dublin.
There is nothing but nothing in the Bill to assist the fintechs, who are the future but who cannot afford multiple locations and so will be among the hardest hurt by the loss of passporting, the e-commerce directive and the prospectus directive. Even more than the big players, they will suffer from the ending of freedom of movement, which has supplied so many of the entrepreneurs as well as at least 30% of staff. Even if they qualify for a visa, these people, who are in demand all over Europe, will not come to the UK on a visa that is limited by time, does not let their partners work and prevents older children from living with them.
This has to be one of the most insubstantial Queen's Speeches I have ever seen. Even for a lazy manifesto committee, the descriptions of most of these Bills are essentially a void. It really is a revelation to see so graphically that the Brexiteer vision for Britain has no substance and certainly nothing that would provide a framework for a successful economic future. It is all hubris. It is all nostalgia for a past that never was. I have never been more convinced that this Government do not deserve to govern, and that we have to stop Brexit.