Leaving the EU: North-East Exports

Part of the debate – in Westminster Hall at 4:26 pm on 25 October 2016.

Alert me about debates like this

Photo of Phil Wilson Phil Wilson Labour, Sedgefield 4:26, 25 October 2016

I beg to move,

That this House
has considered the effect on exports from the North East of the UK leaving the EU.

It is a pleasure to serve under your chairmanship, Mr Hollobone.

We all agree that the British people’s decision on 23 June to leave the EU was the most profound decision to affect this country since the second world war. I, like many in the House, very much wanted the UK to stay part of the EU, but the country, including the north-east of England, voted otherwise. That decision must be implemented, but as my hon. and learned Friend Keir Starmer has pointed out, the country voted on the principle of leaving, not on the terms. The detail is therefore important.

The referendum result has created much uncertainty about the UK economy’s long-term prospects, not just internationally but in many boardrooms around the country. I wonder how soon it will be before that uncertainty is felt in households in communities from south-east England to Scotland, from County Durham to Northern Ireland, and from Wales to East Anglia, and how soon it will be before that uncertainty spreads from the boardroom to the shop floor.

I want to use this debate to explain the importance of the European single market to the north-east of England, to raise several issues and to probe the Minister on what he and the Government think is the best option for the north-east of England in a post-Brexit Britain. I know the Minister shares the view that remain was the best option for the British people, but in our own ways we have both taken on responsibility for delivering the best deal for the UK under the circumstances, unlike the former—or perhaps the current—leader of the UK Independence party, Nigel Farage, who abandoned the field of play once he got the referendum outcome he wanted. Like all populists, he was ready to pick up the megaphone to let us know what he thought to be wrong, but when the argument went in his favour he was not prepared to hang around and take responsibility for putting right those perceived wrongs.

The Minister has the unenviable task of securing the best deal for Britain. Since he wanted to remain in the EU and the single market, how is he going to convince his colleagues that maintaining access to the single market is the best option? Furthermore, how are the Government going to implement all the promises made by the leave campaign, of which he now has ownership?

“Let’s give our NHS the £350 million the EU takes every week”— so said Vote Leave’s website. That slogan was emblazoned on the side of the campaign’s battle bus. Vote Leave committed to “hundreds of new schools” in a campaign video on YouTube, and to the abolition of prescription charges. According to a Vote Leave press release from 14 June:

“There is more than enough money to ensure that those who now get funding from the EU...will continue to do so”.

There was a promise of new roads and the expansion of regional airports, and Michael Gove even said in a Vote Leave press release from 19 April that there would be enough money for 14 Astute-class submarines. There was to be money for pothole repairs and tax cuts, and wages would be higher and fuel bills cheaper—no doubt, Brexit would be a land of milk and honey, where the sun shines and everyone lives happily ever after. The Minister is on record, in his blog, as saying:

“There was no manifesto for ‘out’”— but yes, there was, and the people voted for it.

For the people of north-east England, we must get Brexit right, because although my constituents may have voted to leave the EU, I do not believe that they voted to be poorer, to put their jobs at risk or to see their region fall further behind. If I were them, I can imagine how disappointed and betrayed I would feel if, on top of all the uncertainty, which was not there before, all the promises made by those who supported the leave campaign were not met. That disappointment would be deepened by the fact that so many of those who made the pledges not only now sit on the Front Bench, but will sit around the negotiating table to negotiate our exit. The Minister and the Government have a duty to inform the British people of how those promises are to be fulfilled—the Minister might make a start today. If they cannot be fulfilled, perhaps the Minister will be straight with the British people and say so.

The EU single market is essential to the north-east of England: 58% of the region’s trade is with the EU, which is a full 10% higher than the national average; it is the only region that exports more than it imports; more than 100,000 jobs in the region rely on trade with the continent; and, over the past five years, almost 90 European investment projects have created or safeguarded more than 6,000 jobs, and £1.1 billion in inward foreign investment has come to the north-east from EU members.

According to the North East England chamber of commerce and a report by Ernst and Young, the north-east has seen the second highest increase in foreign direct investment—sitting just behind the north-west—with a substantial 83% increase on last year in FDI projects. An EY survey of investors about the link between the EU referendum and FDI asked how important access to the single market was, and 79% of investors cited access to the single market as a key feature of the UK’s attractiveness, a higher figure than last year’s. The same survey found that 52% of investors thought that a “slight change” in access to the single market would affect the attractiveness of the UK as a destination for business; in the event of a “significantly less favourable” change, the figure rose to 55%.

The North East England chamber of commerce has major concerns about future trade deals. Membership of the single market has brought significant benefits to the north-east of England, attracting business and creating jobs. The chamber stated in its EU referendum briefing paper of July 2016:

“There are also major implications for relationships with overseas markets where existing trade deals have been negotiated by the EU and for the future of trade documentation needed by businesses. Due to the complexities of these issues, there is significant concern among businesses about the UK Government’s capacity to address these issues in the required timescale before Britain exits the EU. Many of our members are also concerned about the effective flow of information so businesses are aware of any changes they need to make to their practices. Assurances about this are vital.”

What assurances about that will the Minister give to companies in the north-east?

In the same briefing paper, the chamber also stated:

“There is also....the hope and expectation that the anticipated benefits of Brexit in being able to conclude trade deals more quickly around the world will be realised. The new department headed by the International Trade Secretary...should aim to quickly set out its plans in this regard so businesses can see that Government is seeking to get beyond a damage limitation exercise to exploit new opportunities.”

I offer this opportunity to the Minister to lay out those plans. Business needs certainty, and that would seem to be the one thing in short supply at present.

As I am sure the Minister is aware, Japanese investment is key to the north-east of England. There are about 50 Japanese companies in the region, including Hitachi in my constituency. It provides almost 1,000 direct jobs, with many more in a growing supply chain. Nissan provides 7,000 direct jobs and 30,000 in the supply chain. With 300 automotive companies in the region, the car industry in the north-east produces £11 billion in sales and is responsible for more than £5 billion in exports.