Brexit: Withdrawal Agreement and Political Declaration

Baroness Falkner of Margravine Excerpts

Thursday 6th December 2018 Lords Chamber

[Baroness Falkner of Margravine (LD)]

My Lords, I will speak briefly on the report of the EU Select Committee on the withdrawal agreement, which was introduced in this debate yesterday by our chairman, the noble Lord, Lord Boswell. As I chair the sub-committee responsible for the EU budget and the financial settlement on withdrawal, I will say a word or two about that.

The UK Government estimate that the net cost of the bill will be in the region of £35 billion to £39 billion. This includes the cost of paying into the EU budget as if we were a full member for 21 further months after withdrawal, which would come to £16.3 billion according to the Office for Budget Responsibility. This leaves an exit bill of roughly £22.4 billion as the figure which has in effect been “negotiated” by the UK Government. We agree with the Government’s position that the UK needs to pay its dues. That is the right thing for the United Kingdom as a leading member of the international community to do. No one would ever trust our good faith if we were not prepared to fulfil our past obligations.

I turn to the possibility that, if this agreement fails, plan B would be the Norway-plus option. The EU Select Committee has looked at the EFTA/EEA options over various periods in the past year. While membership of the EEA gives full access to the single market, including for services, it requires complying with the four freedoms, including free movement of persons. Its proponents have talked up the fact that it offers a brake on free movement, but they do not tell us that the brake is so heavily circumscribed as to be virtually meaningless. In order to invoke it, one would have to demonstrate,

“serious, economic or societal difficulty”.

How would that be demonstrated? How, for example, would we define “societal difficulty”? Moreover, they tell us that this is a unilateral power. It is not; it has to be negotiated with other EEA partners. Those who lament the withdrawal agreement resulting in endless negotiation need to wake up to the fact that a state of negotiation is actually more desirable than being shut out of the room and getting your instructions by fax or email, as in the case so powerfully put by a Norwegian Minister in the Financial Times.

What of the tie to full regulatory alignment? The EEA comprises 6,000 legal Acts so far, since 1994. The UK would have to adopt approximately 300 per year without any say whatever in their formation. It is not entirely surprising that the Governor of the Bank of England felt the need to spell out that the UK’s financial services sector is unsuited to being a rule taker indefinitely. Which Government would render a sector that contributes 11% of GDP, which is 20 times bigger than Norway and has higher standards than the EU after lessons painfully learned after 2009, a rule taker? Which Government would be prepared to risk a country’s financial stability—moreover, its future prosperity—in the hands of EU technocrats without even being in the room? This has to be a complete travesty of the referendum result, and I entirely agree with the noble Lord, Lord Kerr of Kinlochard, in his description of the technical difficulties of even going into Norway, never mind Norway-plus.

However, the unattractiveness of Norway-plus does not end there. Its advocates need to dispense with fictions. Yesterday we were told on the “Today” programme that we would pay substantially less into the EU budget under this option. The reality, when the EU committee looked into this in March this year, is that Norway paid €115 per capita while the UK paid €79 per capita in 2015, the year for which we have the latest figures. Today the Library has confirmed to me that the figures for 2017 are that Norway paid £144 per capita while the UK paid £112 per capita. Naturally, we got a better deal because of our rebate and our incoming receipts from the EU. So the maths is straightforward, and it behoves the advocates of this option to be honest about that.

I turn to the “plus” part of Norway-plus: the need to stay in the customs union. The EU’s common commercial policy not only prevents us from doing trade deals but seriously circumscribes our ability to even engage with bilateral investment treaties. It also requires us to accept the parameters of future trade deals that the EU makes with other countries without us having a say in them or being able to represent our own interests, be they farming, fishing, goods or services. The word “vassalage” has been used a lot recently to describe the withdrawal agreement. I argue that the Norway-plus option, because of the complexity of our economy and the reach of our services, is where the more accurate description of the vassal state lies.

I conclude with a few thoughts on the calls for a second referendum that have been made across the Chamber in the last two days. I have read the 585 pages of the withdrawal agreement—not in absolute detail, but I can say that I have read it well. The idea that the country could be asked to make a choice and vote on the details of this agreement is with the fairies. That is not to disrespect the ability of the electorate; it is in fact because I respect the will of the electorate that I voted for the Government in triggering Article 50 and the withdrawal Act. But we now know what is on offer. We have had broad instructions from the electorate, and broad instructions are all that can be expected from a referendum question. The detail of it was always a task for Parliament, and that is where the responsibility should lie.

Should Parliament be unable to accept this agreement —although I will support it—there is a viable option. It would not involve disregarding the referendum result. Parliament has respected that. It has given the Government its approval for the Article 50 process and the withdrawal Act, both of which I supported. If Parliament does not agree with the outcome and with the Government’s best endeavours to secure a satisfactory deal for the UK, rather than reverting to another referendum, it should put to itself the question of whether the withdrawal of Article 50, but with the reversion to Mr Cameron’s deal, is the optimal outcome. The negotiation—which was quaintly titled A New Settlement for the United Kingdom Within the EU—provided far more benefits, even on free movement, than the Norway-plus option does, and it retained a special status for the UK, with all its privileges.

In conclusion, I advocate accepting the Government’s compromise withdrawal agreement. But, failing that, I would go for “Mr Cameron’s-plus” rather than Norway-plus. I will therefore follow the line of the noble Lord, Lord Butler of Brockwell, on the Motion.