Brexit: Negotiations

Baroness Hayter of Kentish Town Excerpts

Thursday 7th September 2017 Grand Committee

[Baroness Hayter of Kentish Town (Lab)]

My Lords, we heard from my noble friend Lady Smith of Basildon and indeed from the noble Lord, Lord Hannay, and other noble Lords, in Questions this morning and here this afternoon, of dissatisfaction with the Government’s record of reporting back on negotiations. In that light, our Motion on Tuesday will call on the Government to lay before Parliament a Statement of the strategy and principles which underpin the negotiations on withdrawal, transition and future relationships, accompanied by a plan for the full involvement of the devolved Administrations, together with consultation on consumer, employer and trade union organisations.

It must be clear to everyone who reads the papers that Parliament, business and wider society do not feel they are being listened to. We saw the CBI’s statement this week and the London Chamber of Commerce warning that,

“business confidence has been hugely impacted by uncertainty”.

The telecoms industry is dismayed at being classified as a “low priority” for the negotiations. Those sorts of concerns from outside Parliament are legitimate for us to raise with the Government. Beyond us, there is almost anger from the Welsh Government for their exclusion. There is an absence of any forum for consumer representatives to voice their concerns. All of this points, as the noble Baroness has just said, to a Government who seem unwilling to level with the very people whose futures depend on the specifics of the outcome of the talks.

Indeed, as well as wanting engagement with consumer bodies, the Chartered Trading Standards Institute is concerned that the Government’s hierarchy of priorities may fail to pick up detailed areas where maintaining legislative arrangements in day one of Brexit will not deal with the co-operation between agencies and across networks that currently keeps consumers safe and treated fairly. To raise those sorts of questions is not to question the outcome of the referendum; it is to challenge how the Government are proposing to move us out of the European Union. So it is time for the Government’s “no questions please” approach to stop. Indeed, if I could make one recommendation to the Minister it would be to listen to her noble friend Lord Balfe, because some of his proposals for that dialogue would benefit the whole House.

I also feel that the Government have to stop giving more information to the press than they seem willing to give to us. The leak of the immigration paper may simply be a leak. Harold Wilson said, “You leak, I brief”; it may have been a briefing rather than a leak. Aside from that, we heard from Sky News and the Guardian that Cabinet Ministers, speaking directly to them, seem to accept that the EU will not be able to say in October that sufficient progress has been made in phase one to open talks on the substantive issue of Britain’s future relationship. That may not even happen until Christmas. If that is the case, why not tell Parliament, rather than Sky News and the Guardian, and spell out what this means for a transitional period, as well as for the final agreement, rather than pretend that all is going swimmingly well, in the wonderful definition of optimism?

My plea, to add to that of the noble Lord, Lord Dykes, for regular reporting to Parliament, is for meaningful reporting to Parliament. There will be the meaningful vote at the end, though just as I think the noble Lord, Lord Balfe, said—sorry it may have been the noble Lord, Lord Teverson—if you treat the European Parliament correctly, then it is more likely that it will respect what goes to it. That goes for our Parliament too. We need to be treated with respect so that our meaningful vote at the end is based on the results of good dialogue.

Update on the Progress of EU Exit Negotiations

Baroness Hayter of Kentish Town Excerpts

Tuesday 5th September 2017 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I thank the Minister for repeating the Statement. In fact, I welcome her back from what has been a busy summer for her—but as nothing to what is to come over the next 18 months. While any progress, however limited, with regard to EU citizens is welcome, how much better it would have been if the Government had heeded our call 12 months ago, made clear our commitment to those living here and got down to the details at that stage, rather than recently. The matter needs to be resolved urgently.

More broadly, however, the overall Statement is rather like a piece of lace trying to protect the Government’s modesty but with rather more gaps than fabric. The Minister’s office kindly sent me the future partnership papers over the summer and at times I wondered whether those rather bland papers—almost non-papers—really represented the true extent of the Government’s thinking, or simply the very least they dare get away with without waking the slumbering Rees-Mogg.

Just yesterday, the Irish Foreign Minister said that the Secretary of State’s plan for the Irish border,

“needs a lot more work”,

and that,

“unless there is progress on that issue, we are not going to get to phase two”.

The mood music from Brussels and across the capitals tells us it is very unlikely that the EU will decide in October that “sufficient progress” has been made to move on to the all-important talks on our future relationship with the EU—our nearest and largest market. So while David Davis claims he remains optimistic that a seamless trade deal can be struck with the EU, Michel Barnier speaks of “no decisive progress” and says that “frictionless trade” is not possible outside the single market and customs union.

Even the Government are unclear on how trade outside a customs union could be frictionless. They have dropped after just a few weeks their untested blue-sky thinking—it sounded more psychedelic to me—for a track-and-trace system, using technology and trust to replace customs controls. Anyway, we understand that the IT for any new customs checks is not anticipated until January 2019, just two months before our supposed departure date. We all know about government procurement of that size.

Looking beyond the EU, Liam Fox now seems to be saying that he is turning down free trade deals because we do not have the capacity to negotiate them, and that instead we should try to duplicate the EU’s trade relations with third countries, with a sort of rollover of existing deals. This cut-and-paste job is, I would have thought, hardly worth the efforts of a Fox negotiator, who is now without his Minister here in the Lords. In January, the Secretary of State claimed to be aiming for,

“a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have”.—[Official Report, Commons, 24/1/17; col. 169.]

Can the Minister let us have the Government’s current thinking on this?

Can the Minister also tell us where we are on a transitional agreement and whether the words she just used about not having to negotiate twice suggest that the transitional agreement will be on the same terms as now? I hope she and her colleagues have finally come to accept that there can be no bespoke transitional arrangement. There will be no time to negotiate that and the sensible thing is to remain in a customs union with the EU and operate single market rules, which are key to our vital industries, while the long-term relationship is agreed and given time to bed in. Can she also tell the House whether the Government will publish the Treasury’s analysis, which reportedly shows that the economic benefits of future free trade agreements will be less than the economic costs of leaving the customs union and single market?

Can the Minister also update the House on the involvement of the devolved authorities? The JMC, which brings together Scottish and Welsh Governments and, in theory, the Northern Ireland Government, has not met since February and will not convene again until mid-October, There has been no substantial response to the joint letters of 14 June and 23 June from the relevant Ministers, Mark Drakeford and Mike Russell. Despite the terms of reference for that JMC committee being to seek to agree a UK approach to Article 50 negotiations and to provide oversight of negotiations with the EU, the Government published their summer papers with absolutely no consultation and little advance warning. This means that the Scottish and Welsh Governments have had no opportunity to provide any oversight of the negotiations.

The clock is ticking. Industry, farmers, supermarkets, airlines, road haulage, lawyers and accountants are all coming to me; I am sure they are going to the Government as well. They are all concerned about the lack of clarity and certainty, while consumer representatives are getting virtually no access to Ministers and fear that their interests are being overlooked. It is not just the EU that has to decide whether “sufficient progress” has been made. This House and Parliament must do so, too, and question whether the direction of the Government’s thinking, as well as its speed, is up to the task ahead. I fear that this Statement offers little reassurance.

[Baroness Ludford (LD)]

My Lords, I also thank the Minister for repeating the Statement. I am afraid the Government have shown themselves to be insufficiently prepared and, at times, even undisciplined and undignified in throwing insults at Brussels. They have rather squandered the 14 months since the referendum, including an unnecessary court battle to prevent parliamentary accountability and three months on an unnecessary general election.

There have been some steps forward, with the useful publication of the position papers—albeit in recess and given to the media several hours before they were made available to members of the public, including parliamentarians—and the acceptance of a transitional period, although without specifying how long the Government want that to be and with no acceptance of whether it would mean being in the customs union and the single market. Like the noble Baroness, Lady Hayter, I was intrigued by the reference in the Statement to it not being in either of our interests to run aspects of the negotiations twice. The only way I can see that happening, unless the Minister can contradict me, is if we stay in the customs union and single market during the transitional period and in the long term. There has also been some progress on EU citizens and an acceptance of some role for the European Court of Justice. In July, there was an acceptance of financial obligations from commitments made while we are a member state. These acceptances, however, were all inevitable. It would have been better if they had not had to be dragged out of the Government.

There are still, however, several impractical red lines and there have been some rather backward steps. The Home Office has sent letters to a significant number of EU nationals threatening them with immediate deportation, which hardly makes for good mood music for the negotiations, apart from being obviously distressing for those individuals. We have had a repeat from the Prime Minister of the “no deal is better than a bad deal” mantra, which we had hoped had been put to bed. There was an agreement on the sequencing of the talks; now that acceptance is put up in the air again by the Government. We understood that the Government had accepted the principle of the financial liabilities; now all that is also being challenged.

This fickleness and lack of reliability is fomenting some distrust of the Government. It makes it much harder for the EU to agree a linkage between the elements of the Article 50 divorce arrangements and the future relationship. For instance, if the Government would state the period of transition they seek, the status, in terms of the customs union and the single market, and what continuing contributions they propose to make in respect of that status, that might facilitate an agreement on the liabilities or the existing commitments. If the Government said that they wanted to stay in the customs union and the single market, that would at a stroke resolve many of the worries over Ireland we are in the course of debating this afternoon.

While the Government rather go round in circles, businesses are having to make relocation decisions now, affecting jobs, the pound drops and the economy slows. The Government keep reproaching the EU for not coming up with concrete suggestions for flexible solutions, but if the Government cannot specify what end goal they are seeking, how can we expect Brussels to come up with flexibility to fit what the Government want? It is Catch-22.

It was suggested that the customs solutions put forward in the paper about three weeks ago were innovative, but they were not practical or thought through, and even the Secretary of State called them blue-sky thinking a mere couple of weeks after the paper was published. That hardly gives a good solid basis on which Brussels can engage with those suggestions. If the Government have a strategy, as opposed to a series of delays, reactive statements and outbursts, will they share that strategy with Parliament and the British public? Are we not secondary to an audience of the ideologically obsessed hard Brexiteers in the Tory party’s ranks and outside them who are not happy? I see that Arron Banks is trying to unseat Tory MPs, including Amber Rudd. Perhaps that accounts for the Prime Minister repeating the “no deal” mantra. It is unhelpful and petulant to raise, even as a possibility, a chaotic, “falling off a cliff-edge” Brexit. Will the Government level with Parliament and the public and be honest about the fact that, as we are proposing to leave the EU club, the UK cannot expect to retain the full benefits of club membership? We cannot have our cake while eating it. The fact that they need us as much as we need them is untrue, and we need to compromise. It is up to Britain to set out in detail its preferred destination and how to get there. As one journalist put it:

“The departing ship is watched”—


by the EU—

“with both sadness and concern, but there is no rush to take on its navigation problems”.

Will the Government please tell us their proposed destination and how they are going to navigate?

Brexit: Trade in Goods (EUC Report)

Baroness Hayter of Kentish Town Excerpts

Tuesday 18th July 2017 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I add my thanks and congratulations to the noble Baroness, Lady Verma. I share her regret at the absence of any response to a report which is key to the future of our economy. As we have heard, the EU is our nearest and biggest trading partner, taking nearly half our exports. How we trade with it after Brexit will determine our economic well-being. We do not necessarily have to agree with the FT’s rather apocalyptic vision of 29 March 2019, with drivers at St Malo having to pay VAT and import duties, and—should the truck be carrying lamb—suddenly finding it can only be taken into France via a registered border inspection post. But we do have to recognise that, as a third country, outside the customs union and without an agreement, we would see customs duties, quotas, border checks, non-tariff barriers and perhaps unsafe toys and unhealthy food—and import duties would make consumer goods cost more here, on top of price increases already happening because of the falling pound.

Even enthusiastic Brexiteers who claim that we can replace lost EU trade through trade deals with faraway countries acknowledge the hit we will take, by first seeking to replace existing EU trade before building up additional orders. It is with fingers crossed that they hope a knight in shining armour—Donald Trump or Malcolm Turnbull perhaps—will ride to our rescue. Saner commentators admit that, as noble Lords have said, any deals will take time. Indeed, the Australian Prime Minister, although happy to see a post-Brexit trade deal, said that this would come only after one with the EU.

So the Government must start being realistic and put childish dreams to one side. An unpublished Treasury paper concluded that the costs of a hard Brexit would far outweigh any potential gains from Liam Fox’s free trade strategy. It said that it is “idle thinking” to imagine that two dozen bilateral agreements could compensate for the loss of trade with the EU and with the agreements covering a further 11% of our exports with the 60 countries already mentioned, such as Korea, Mexico, South Africa, Turkey and—in the future—Japan and Canada. When Donald Trump supposedly offered the UK a “very, very big”, “very powerful” trade deal “very, very quickly”, such a deal, even if it could be drafted fast, is simply not his to enact—as the noble Lord, Lord Inglewood, reminded us. It has to go through the Senate, which is even more protectionist than President Trump.

As we have heard, trade deals take years to negotiate and then come on stream. They are cold-hearted affairs. They are not about favours to foreign friends; they are about gaining market access for domestic producers. Since the UK has a trade surplus with the US, any deal will be about the UK making concessions to the US, not the other way round. Big countries, such as the US, China and the EU, have more cards than small ones in such deals. I am afraid that Britain is a small country—as the CIA put it, “slightly smaller than Oregon”. As the noble Lord, Lord Horam, described, even after a deal is signed, it takes time and hard work for exporters to develop new markets on the other side of the world. Whatever happens there, we will always need strong trade ties with our closest market, the EU. So the Government’s priority should be to safeguard these ties, especially given the Maltese Prime Minister’s warning that any deal must be “inferior to membership”.

We have been warned about the lack of trade negotiating skills in the UK, since it is nearly 50 years since we have had to use them—added to which, the world has never seen a trade deal like the one we will need. Every other deal is about reducing barriers to trade, whether they are duties, quotas or other things, but this will be about increasing barriers. How prepared are the Government? The FT describes a “sense of disarray” while Brussels is briefing about us “dithering chaotically”. Michel Barnier said:

“I don’t hear whistling, just the clock ticking”—


but I am hearing whistling from the Government. They are whistling in the belief that all will just turn out right, that things do not need hard work, or the compromising referred to by the noble Lord, Lord Livingston, or working with our partners and stakeholders. But trade is too important to be left to the whims of badly briefed negotiators, continuing along the lines of Lancaster House despite the election outcome, while Ministers fight among themselves, their attention fixed more on extreme Eurosceptics—whether on their Back Benches or in the tabloids—than on the country’s interests.

By contrast, business knows the risks involved, with industries hard hit if there is no comprehensive UK-EU FTA similar to the single market and customs union. Along the lines of the Nissan example given by my noble friend Lady Armstrong, if you look at the Ford Fiesta, there is a potential 2.7% tariff on engine components imported from the EU, a 4.5% tariff on the 65,000 UK-made engines exported to the EU, and a 10% tariff on the 120,000 finished Fiesta cars reimported for sale here. When will the Government tell us the full details of whatever deal is done with Nissan?

I will take another sector that has been mentioned—namely, pharmaceuticals. This is a world-leading exporter that uses multiple imports and exports to and from the UK before a final medicine is completed. This industry is key to our economy, with life sciences notching up a turnover of £60 billion, with a £3 billion trade surplus. No wonder it wants a new free trade and customs agreement with the EU that takes into account its specific needs, which Ministers need to understand.

Other sectors are demanding to be heard, not least the creative industries, which contribute some 8% of GDP—more than the arms trade, although of course they kill nobody—with that 8% likely to grow substantially over the next decade. This high-skill, technological and creative sector needs to recruit talent, exploit IP, attract inward investment and trade freely if it is to continue to support so much of our wealth creation.

A different issue faces the chemicals industry, where exports and imports from heavy industrial chemicals to ingredients in toothpaste and shampoo could cease if we fall outside the EU’s REACH regulations. Meanwhile, we have heard already about agricultural import duties on the 70% of our imports coming from the EU, which could see food prices rise while harming the £20 billion-worth of exports, making our UK farming less competitive.

I need hardly explain to the House how crucial transport is to trade. Airlines, ports, shipping companies, hauliers and railways need to know at least a year ahead what regulatory regime they will face in March 2019. In fact, airlines need to agree schedules by this autumn. They cannot wait any longer as they need regulatory certainty. But where is the Brexit plan for transport? This is just one area where the calls for transitional arrangements are siren, and should have been on David Davis’s agenda last weekend—had he taken any papers with him, or indeed spent more than 30 minutes in Brussels.

It is not simply that we are a long way from agreement, when the EU 27 have been preparing for 12 months and already know what they want and how to achieve it. As Professor Alasdair Smith of the UK Trade Policy Observatory stressed, a UK-EU FTA cannot be negotiated in 21 months, even once it has been started—and that cannot happen until progress is made on the withdrawal items. As he said, a two-year completion timetable would not be ambitious or challenging, simply “completely impossible”. The EU has never completed one in under five years—“dreamland”, I think the noble Lord, Lord Bilimoria, called such an ambition.

Our prosperity depends on trade, but the Government are listening to neither business nor consumers. Such meetings as have taken place laid bare the lack of preparation within government. The big “summit” at the Foreign Secretary’s retreat led to no concrete policy announcements, while, despite the Chancellor, the Business Secretary and the Brexit Secretary supposedly being committed to fortnightly meetings with a smaller group of business leaders, these have yet to happen. Meanwhile, there have been no meetings at all with consumer representatives, leading the three largest consumer groups to write to the Prime Minister on 22 March,

“calling for a cross-Government high-level working group focused solely on securing the best possible deal for UK consumers”.

Sadly, the PM’s reply omitted any positive response to this.

It is clear from the debate today and even from Brexiteers such as the noble Lord, Lord Leigh, that a transition period is essential, and the knowledge that it will be there is needed now, before contingency plans, especially as regards relocation, are implemented. We cannot live in a fantasy world which imagines that a substantive free trade agreement needing only some phased implementation can be reached by March 2019. There will be no agreement by then, let alone the customs procedures and new ways of working needed to accommodate delays to supply chains, not least in food and drink, where the current efficient supply chains enable almost a third of supermarket food to be imported from the EU and be on the shelves within two days. Meanwhile, our ports lack the facilities or staff to cope with new customs inspections, duties, VAT collection and assessment of conformity of goods with regulations, foretelling movement grinding to a halt as vehicles wait to be processed by customs authorities, as suggested by the noble and gallant Lord, Lord Stirrup.

Many questions have been put to the Minister today, but the most urgent of these is surely about a transitional agreement—that there will be one high on the Government’s agenda and that they will give certainty on that sooner rather than later. Too much depends on it for us to sit around waiting. It is time to hear about that now. I look forward particularly to the Minister’s answer on that but also on all the other questions that have been posed to her.

Brexit: United Kingdom-European Union Parliamentary Assembly

Baroness Hayter of Kentish Town Excerpts

Wednesday 12th July 2017 Lords Chamber

[Baroness Anelay of St Johns]

My Lords, the latter point about matters affecting the wider geographical range of Europe is an interesting one. It is not for the Government to intervene with regard to rolling up existing parliamentary bodies. We have colleagues across the House who have made a great impact in the parliamentary assemblies of both the Council of Europe and the OSCE, particularly recently. I commend those who attended because they stuck the course, whereas some representatives from other countries left a wee bit early.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I was in Rome, as it happened—where I was introduced to tiramisu—when there was a “parliament of parliaments”: a gathering of the European Parliament with representatives of the then 15 member states during the process of the intergovernmental conferences. Parliamentarians at that stage were about to vote on what was emerging from those conferences. We now face similar complicated intergovernmental negotiations in which, in due course, as the noble Baroness says, both we and the European Parliament will vote on ratification. Although I appreciate that it is not a governmental issue, could the Minister use her best efforts with some of her friends to see whether there is a way of facilitating early discussions which would be helpful later in the process when both they and we come to vote?

[Baroness Anelay of St Johns]

My Lords, the noble Baroness makes an extremely valid point: that better exchange of information leads to better understanding in negotiations. That is why, as Ministers, we have not only engaged thoroughly with our counterparts around the European Union but encouraged Select Committee visits. I know that those visits have been thorough, and if they have been to the European Parliament, they have been supported by the secretariat and the European Parliament. The worst thing is for newspaper articles to appear giving misleading information, not necessarily intentionally but just because we have not had the opportunity to discuss with colleagues the real issues.

Brexit

Baroness Hayter of Kentish Town Excerpts

Tuesday 4th July 2017 Lords Chamber

[Baroness Anelay of St Johns]

My Lords, the negotiating framework looks very carefully at how we can ensure that we will continue to be able to recruit the brightest and best here and that those who have employment in specific fields where they need to go across borders are able to do so. That underwrote of course some of the paper on citizens’ rights which we published recently. The noble Lord raises an issue which goes to the heart of all the considerations about how we then protect employment rights. Protection of employments rights was one of those 12 principles which were set out so clearly by the Prime Minister.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I am delighted that the noble Baroness has talked about partnership. Does she agree with her DExEU colleague, Steve Baker, that the EU is an “obstacle” to world peace and “incompatible” with a free society? Is that what her department thinks?