Leaving the EU: No-deal Alternatives

Kevin Hollinrake Excerpts

Wednesday 21st February 2018 Westminster Hall

[Antoinette Sandbach]

I absolutely share my hon. Friend’s concerns. There are concerns in relation to intellectual property and the vast majority of our service industry, which is a huge contributor to our balance of trade. He is quite right to outline the deep flaws that a WTO Brexit would bring.

The most preferable option in terms of a Government deal is the Government successfully completing their negotiation with the EU and securing the “deep and special partnership”. I support the Government’s work and the comments by the Brexit Secretary in his speech yesterday that we need to ensure a broad base of mutual recognition of standards. Without those, we would risk many of the drawbacks that we would face under a no-deal Brexit, especially with regard to the non-tariff barriers that are in fact the biggest concern for our economy. However, I press the Government to ensure that the service sectors are included in the deal that they strike. Services make up nearly 80% of our economy. Service industries such as legal services, insurance services, consultancy services, the music industry and the aviation industry contribute to our balance of payments surplus in service trade with the EU. A failure to strike a deal could cost us about 75,000 jobs and £10 billion in tax revenue.

Some hon. Members may think that simply remaining in the EU is an option. Rather than pressing for this currently unachievable choice, I would encourage hon. Members to see if we can deliver a Brexit that removes us from ever closer union and the political institutions of the EU, while seeking to maintain our prosperity and our trade links, which brings me on to my final option. This final option is the one that, aside from the Government’s plan, would be the best for Britain. Re-joining the European economic area/European Free Trade Association would be a bold step towards preserving our prosperity and provide many answers to the questions that are currently vexing Ministers.

EEA-EFTA would give us access to its free trade agreements spanning 27 countries. EFTA has free trade agreements with, among others, Turkey, Canada, Columbia, Mexico, Egypt and Israel. There are ongoing negotiations with India, Indonesia and Vietnam. These agreements, as well as EEA membership, would give a market of over 900 million customers for our products and services.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I congratulate my hon. Friend on securing this important debate. Is she proposing EFTA-EEA membership as a transition or a permanent safe harbour?

[Antoinette Sandbach]

I am proposing a permanent safe harbour. If we went into EEA-EFTA, we would have an opportunity to shape and influence that trade body going forward. It delivers what many of my constituents originally voted for in the 1970s, an economic free trade area, but its great benefit and advantage is that it removes us from the ever closer union, which is what many of my constituents who voted leave were concerned about.

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[Stephen Kinnock (Aberavon) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate the hon. Member for Eddisbury (Antoinette Sandbach) on securing this important debate.

As the Government’s own analysis shows, a no-deal outcome would mean that growth would be 8% lower nationwide, 10% lower in Wales and 12% lower in the midlands, Northern Ireland and the north-west—and the north-east would take a huge 16% growth hit. Tariffs would be 10% on every movement along the supply chain of an industry such as the automotive industry, which is so vital to the steel industry in my constituency. It would crush not only that industry but connected industries.

[Kevin Hollinrake]

Anybody—any hon. Member—can see those figures in the Treasury report, but the report caveats them by saying that that is without any other Government interventions or reaction of businesses in adjusting to a new world of trade with the European Union. Does the hon. Gentleman accept that?

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate my hon. Friend the Member for Eddisbury (Antoinette Sandbach) on securing this debate.

The alternative to no deal is, of course, a deal, and that is what the Prime Minister has set out to get. I was pleased to hear her support a deal that will mean free and frictionless trade in goods and services between the UK and the European Union.

That is a perfectly sensible position. Why would the European Union not want to adopt it? We have a trade deficit with the EU, particularly with Germany, of course, so it is sensible economics that the EU would give us a deal. That is a win-win situation, as Dr Stephen Covey said in his book, “The 7 Habits of Highly Effective People”, which is a habit that I aspire to but will probably never achieve. Nevertheless, win-win is hugely important.

Stephen Covey also refers in his book to the “dialogue of the deaf”. That is when one negotiator is speaking one language—I am not talking about foreign languages—and the other negotiator is speaking a different language. The difficulty is that we are, quite rightly, talking sensible economics, yet the EU is talking politics. It is talking about the politics of survival of the EU. For us to leave with a good deal would almost undermine the very fabric of the EU, which calls into question the EU’s ability to agree a deal. Therefore, it is difficult to get the deal that the Prime Minister is setting out to achieve. It is possible—politics is the art of the possible—but it will require compromise on all sides. That has to be the key to this negotiation.

None of us should accept being locked into the EU or it holding us to ransom by threatening us, for its own reasons. That is not an emotional point; it is simply a point of the negotiations. We cannot be held to ransom in achieving and delivering on the objective that the British public gave us of leaving the EU.

That is the reason I did not support the “meaningful vote” amendment to the European Union (Withdrawal) Bill. We have to accept at all cost the deal that the Prime Minister negotiates with Europe, and the EU needs to understand that. We will then give effect to the decision of the British people.

[Nigel Huddleston]

On the question of a meaningful vote, does my hon. Friend agree that we may as well at least discuss the EEA option? The political reality is that, at either the 2022 or the 2027 general election, one of the major political parties is highly likely to adopt it as a potential option, depending on how the scenario plays out in terms of the Brexit deal. Why not have that discussion now, because it is almost certainly going to come back to us in a future election?

[Kevin Hollinrake]

My hon. Friend makes an interesting point. My point is that I will accept the deal that the Prime Minister negotiates. We will get a deal. I guess that it will not be the deal that we are all hoping for, but we will get a deal and I will accept it in Parliament. However, others may not and that is where plan B possibly comes in.

We should look at other options. Clearly, EFTA and the EEA have been discussed as an option and promoted by my hon. Friend the Member for Eddisbury as a return to the Common Market. There are difficulties, however, with regard to timescales and non-tariff barriers, which would still be an issue in terms of customs checks, border checks and sanitary and phytosanitary checks. The Northern Ireland situation has improved to some extent but it is still an issue, with the potential for a hard border. We are potentially rule-takers, of course, but there are fewer rules—we currently have to take 20% of the rules, according to the House of Commons Library. Free movement of people is a consideration, of course, although there are potentially some ways to control that, using articles 112 and 113. Another question is: is the proposal a transitional arrangement or a permanent state?

Ultimately, leave we must and therefore compromise we must, in order to deliver on and honour the decision made by the British public. I call on all sides in this debate—by which I mean Members of our party and of the Opposition—to look at all possible options, be willing to compromise over a deal that comes back, and consider where we will get to. Hopefully we will get the deal we want, but if we do not we have to consider a sensible plan B and I think that is what my hon. Friend the Member for Eddisbury was alluding to.

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[Paul Blomfield]

I really love the pedantry of this. I was clear that we are talking about a customs union that serves the needs of the British economy and British manufacturing.

As my hon. Friend the Member for Greenwich and Woolwich argued previously, the EEA-EFTA model raises challenging issues and would need to be supplemented by customs arrangements, but it should not be lightly discounted, because there are features of the EEA-EFTA model that we would want to see as part of any final deal.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Paul Blomfield]

I was just about to mention the hon. Gentleman, so I am delighted to give way.

[Kevin Hollinrake]

I await with anticipation what the hon. Gentleman will say. When he said he would not lightly discount EFTA and the EEA, does that mean the official Opposition are not discounting it as an option?

[Paul Blomfield]

I think that is fairly clear: we want to keep options on the table, in an economy-first Brexit negotiation. I was going to say that the hon. Gentleman’s points about the political ideology of the EU27 were reflected, ironically, at the weekend in Munich by the Prime Minister, when she warned the European Union not to let “political doctrine and ideology” stand in the way of a good deal on security—the hon. Gentleman is nodding. She was right, but if that is good enough for security, why is it not good enough for the economy? Political doctrine and ideology from the European Research Group has framed the Government’s approach from day one, ignoring not simply the 48%, but so many of the 52% who did not vote for an extreme and destructive Brexit.

We have now had two of the series of Cabinet speeches apparently defining the “road to Brexit”, and they highlight the depth of divisions. We had the Foreign Secretary’s damp squib, setting out his ambition for regulatory divergence, contradicted yesterday by the Brexit Secretary, who tried to reassure everybody that little would change. Tomorrow, of course, the Cabinet will try to resolve the differences.

At this moment, out of the shadows, comes the European Research Group again, with a letter echoing the one co-ordinated by the Minister when she was its chair, seeking to derail the Government’s policy on the transitional period, and with it to ensure that the country stumbles towards the extreme and destructive Brexit that the vast majority of people simply do not want. Perhaps the Minister will take the opportunity, having not yet replied to my letter of several weeks ago, to reject that approach, and make it clear that she supports Government policy on the transition.

There has been a lot of common ground in today’s debate. The Opposition hope, even at this late stage, that the Government can reach out to the common ground in Parliament and in the country, with a sensible approach to the negotiations that face us in the few short months that we have left, seeking a Brexit that puts the economy first and keeps all options on the table.