Brexit: Negotiations

Lord Davies of Stamford Excerpts

Tuesday 20th November 2018 Lords Chamber

[Lord Callanan]

This is only within the backstop itself. As I said, we hope that the backstop will not be required and that we will be able to put in place future arrangements that will render the backstop unnecessary. There are some regulatory differences now between Great Britain and Northern Ireland. But it is true that under the backstop, if it comes into operation, Northern Ireland will align with many parts of the single market acquis that are necessary for the creation of a borderless Ireland.

The declaration reached common ground on services and investment, including financial services. It also ensures that we will be leaving the common agricultural policy and the common fisheries policy. The UK will become an independent coastal state once again.

We have been able to agree on key elements which will help keep our people safe. These include effective extradition arrangements, as well as mechanisms for data exchange on passenger name records, DNA, fingerprints and vehicle registration data. We have also agreed a close and flexible partnership on foreign, security and defence policy.

[Lord Davies of Stamford (Lab)]

I am very grateful to the Minister for giving way. What precisely are the arrangements on financial services that have been agreed? I have failed to find any concrete measures in the large amount of paper in front of us.

[Lord Callanan]

I have a copy of the document here. There are three paragraphs on financial services in the outline declaration. The noble Lord will find them on page 2. I could happily read them out but time is short. Obviously, we will be fleshing out the future partnership document this week and we hope to publish more details on that shortly.

[Lord Davies of Stamford]

That document does not contain any specific measures at all.

[Lord Callanan]

It contains measures for protecting financial stability and market integrity, and for the commencement of an equivalence assessment, which is extremely important to many in financial services. But, as I said, this is one of the things that we are fleshing out. This is an outline declaration and the final details are being negotiated as we speak.

--- Later in debate ---

[Lord Davies of Stamford (Lab)]

My Lords, the Brexit negotiating process has been an unmitigated and historic shambles. I am quite sure that, for decades to come, in business schools and schools of international relations around the world it will be taken as a test case of how not to conduct a negotiation.

I fear that the Government have still not learned even at this stage what the problems are that they ought to face up to. During his speech, I asked the Minister about the new financial services regime, which was held out as a result of the agreement. Of course, I knew that no such agreement had been reached, and he just gave me some PR verbiage taken from the document. We, and business, need to know whether we will be able to do corporate lending from London. Will we be able to manage in London the funds of institutions resident in and regulated on the European continent? Will we be allowed to sell retail financial products without an establishment in the country concerned? These are urgent questions of enormous economic importance. A lot of people are now sitting on contingency plans, wondering whether they should implement them. Only when they know the answer to questions such as those will they be able to take a decision.

This is not just about financial services. It is about the whole services sector, which noble Lords will know makes up 80% of the economy. It is simply waiting for answers. Nothing—nothing—is said on the subject in these jejune and hopeless documents. Let us take broadcasting, for example. We are very good at it—probably the best in the European Union. Will the broadcasting directive effectively continue to operate, under which, if any programme is broadcast anywhere in the EU, it can be automatically broadcast anywhere? Will that happen or not? We need to know the answers to these concrete, precise questions.

The Prime Minister has made a lot of mistakes. One fundamental mistake was to argue and campaign for a project that involved impoverishing the country—although not as much as leaving without an agreement would, as was pointed out by the noble Lord, Lord Stern. Nevertheless, whether we lose £50 billion or £200 billion, we will still lose money. The Government are supposed to focus on improving the economy, employment, living standards and so forth. We are headed in a completely perverse direction. After the referendum, the Prime Minister’s mistake was not going for full and permanent membership of the single market and customs union, both of which were entirely negotiable.

At the time, the Prime Minister said that she could not do that because she needed to come up with something that was endorsed by, or had the blessing of, the referendum. She then made a complete nonsense of her argument by coming up in August with this extraordinary Heath Robinson contraption called the Chequers agreement. Of course, that has evolved and been tinkered with since—but by no conceivable stretch of the imagination could it be regarded as something endorsed by or consistent with the referendum. It is something that no one at the time of the referendum could conceivably have thought of. So I am afraid that her credibility, not surprisingly, is almost at the bottom of the thermometer.

I fear that the Prime Minister is now about to make an even worse mistake. There are rumours that she intends to manipulate House of Commons procedure such that the Commons will get a vote, with no amendments or alternatives, on only two possibilities: either her deal or coming out of the Union without any agreement at all. It is what you might call the “dog in a manger” approach, or the “spoiled child” approach: unless she gets what she wants, she will ruin the party for everybody. That is not the sort of thing I would have expected from the Theresa May I knew all those years ago when I sat with her on the Tory Benches in the House of Commons, and indeed in the shadow Cabinet for two or three years. I hope that her better instincts will prevail because, if she went down that road, she would both incur the economic costs of going through with Brexit and cause something even worse: a profound political and constitutional crisis in this country.