European Union (Withdrawal) Bill

Baroness Falkner of Margravine Excerpts

2nd reading (Hansard - continued): House of Lords
Wednesday 31st January 2018 Lords Chamber

[Baroness Falkner of Margravine (LD)]

My Lords, it is a pleasure to follow so many excellent speeches on this historic Bill, but it is a Bill that I nevertheless wholeheartedly wish was not before us. But it is, and it is our duty to play our part in ensuring that withdrawal from the EU is as orderly as possible.

I agree with most noble Lords that the Bill is flawed. I have reservations about several aspects, including on the scope of ministerial power and the appropriateness of empowering the Executive to such a degree, particularly in the light of devolution. Moreover, I share some concerns about the level of parliamentary scrutiny needed, and at what level. Speaking as chair of this House’s EU Sub- Committee on Financial Affairs, I will seek clarification from the Government as to how they envisage different levels of EU law and regulatory guidance being implemented in the UK. In this area, detailed parliamentary scrutiny may or may not be appropriate, depending on the level of decision we seek to transpose in our quest for regulatory alignment—something that we should surely seek to do where it is appropriate.

However, it is the amendment proposed by my noble friend Lord Adonis that I wish to address. I think of him as my noble friend because some 25 years ago, I delivered leaflets on his behalf when he was a candidate for the Liberal Democrats, so we go back a long time. I have enormous respect for him as a historian, a senior Member of this House and a thought leader on many of the thorniest issues that our country faces. I admire the passion with which he has engaged his campaign for a third referendum, but I wonder to what extent he has reflected on developments on the other side of the English Channel.

For the EU, while Brexit may have been a distraction, it is continuing a business-as-usual model, which is why we have seen such unity. Its priority is rightly to secure the financial stability of the eurozone, and work is continuing apace in that regard. The completion of the eurozone project, the banking union and the capital markets union has significant implications for the UK’s financial services sector. Moreover, ambitions for an EU Finance Minister and a eurozone monetary fund, and Mr Macron’s vision for a separate eurozone parliamentary caucus, present different challenges for our sovereignty and clout in the EU were we to remain.

The EU budget is also undergoing change. The High Level Group on Own Resources, led by Mr Mario Monti, to whom my committee spoke during his deliberations, has now reported. Among its recommendations are new ways to raise direct EU resources, such as a:

“Reformed VAT-own resource … corporate income tax-based own resource, financial transaction tax or other financial activities’ tax”.


It suggested measures relating to the energy union, and to environment, climate and transport policies, including a CO₂ levy, proceeds from the European emission trade system, and an electricity tax, a motor fuel levy and other measures. I set this scene just to remind ourselves that the EU we think we might stay in will not be the EU we were in prior to 23 June 2016. Crucially, the important decisions on the budget, the future of rebates, the future of the eurozone and changes to parliamentary accountability are taking place now and will do so in the period before mid- 2019, when a new Commission and Parliament will commence. Therefore, leaving aside the question of whether we should have another referendum, to which I am opposed, I argue that the opportunity for one is now behind us.

If I correctly understand the amendment of the noble Lord, Lord Adonis, he seeks a referendum on the terms of the withdrawal agreement. I have two principal thoughts regarding that, as other noble Lords have also supported the view that we need a referendum on the withdrawal agreement. The first is that, if the withdrawal agreement is negotiated by October or November this year—as we have been told by Mr David Davis—the referendum presumably would be after that option is agreed or rejected by both Houses of Parliament, or rejected or agreed by the Commons, which has supremacy. In effect, therefore, the decision to hold a referendum will be legislated for in late 2018 or early 2019, with a referendum impossible till late spring 2019. The Electoral Commission requires six months from a decision till polling day. On that time line, the proposed referendum will be held after we have legally left, or are in transition under a different status, and we would have to reapply to join the EU.

If so, even if the noble Lord, Lord Adonis, then secures a yes vote—and I am pleased to see him back in his place now—we will almost certainly re-enter on different terms than those that pertained before 29 March, 2016, when we triggered Article 50. The UK rebate, the Schengen opt-out, the 35 or so JHA opt-outs and opt-ins, and, most importantly, the hard-fought renegotiation will all be off the table. The only other basis for us to remain in during the referendum period in 2020 would be if we did not withdraw and negotiated an extension to the Article 50 period, as permissible under Article 50. This would prevent the UK from striking any trade deals during the extended period, which is material.

While this is a possibility, we would only prolong uncertainty, and the change in Europe that I have described in 2019 would surely mean that there would be no final decision on the UK’s status for a further two, three or four years. All this while, businesses will have made decisions to relocate, investment will have fallen further and legal uncertainty will have been prolonged even further. The result would be a prolonged period of drip-drip decisions being made by businesses and institutions, which could only achieve a very diminished result for the UK, whether it were in or out. On that basis, I have come to the conclusion that we have to do the best that we can with withdrawal. I will expend my energy in making it a success to whatever extent I can, starting with this Bill.