King’s Speech

Lord Liddle Excerpts

Thursday 14th May 2026 Lords Chamber

[Lord Liddle (Lab)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Hunt, whose brand of Conservative politics I have always personally admired. He raises very important questions about the steel industry. However, I will make just two points. First, I agree that there is a case for a sovereign capability in steel, and we have to work out a strategy as to how best and most efficiently to do that. But, secondly, it has to be part of a European policy. We have to be there because we have integrated supply chains in the steel industry. A lot of our exports—something like two-thirds—go to the European Union, and there is a similar flow in the other direction, so we cannot have an effective policy without it also having a European dimension.

I want to focus my remarks on the gracious Speech’s commitment to building a much closer partnership with the European Union. I strongly support the Government’s proposed legislation but urge them to make fast progress. As the Prime Minister said, we need to be at the heart of Europe, and it seems to me that that is the only way forward to meet the frightening new geopolitical challenges that Britain now faces. It is also a necessary, but in my view not sufficient, precondition of restoring broad-based economic growth in our country, which has eluded us since the financial crisis, and more particularly since the 2016 referendum.

As we approach the 10th anniversary of the Brexit referendum, we need to ask ourselves what benefits positively have been realised. I am not aware of any respectable economic analysis that demonstrates positive benefits. How much have the so-called Brexit freedoms delivered? Some people here refer to the ability to make our own free trade agreements. My noble friend made an excellent speech this morning and referred to those Brexit freedoms. Let me just point out to the House that the benefits in economic growth to which she referred amount to about 0.5% of GDP per year, when the loss as a result of Brexit is something of the order of 4%, and some economists say far, far higher.

For some people on the other side, none of these questions of fact about the impact matters because what matters to them is that, with Brexit, Britain has regained its sovereignty. In a technical sense in constitutional law, that is correct, but what is worth while about technical, legalistic sovereignty if all that does is impose additional costs and burdens, as in the chemical industry and many other sectors, on whole swathes of our business? This is the challenge that the alignment Bill will address, and I think we should get it through this House as quickly as possible.

The noble Baroness, Lady Finn, made a very good speech, even if I did not agree with it. She asked why we should align ourselves with a stagnant European Union. I have two points about that. First, 40% of our trade is with Europe. Most people think that geography is what determines trade, particularly trade in services, which is our great strength. The reality is that Europe is going to be by far our biggest trading partner for decades ahead, and we have to have a better relationship simply in those terms. I agree with what Chancellor Merz says about the need for regulatory reform in Europe and think the Draghi report is excellent. I would like to see some of its lessons applied in the United Kingdom. One of the reasons why we may find support in key member states for our alignment Bill is that I think Chancellor Merz will see Britain as a potential ally in future on the need for pressing for that regulatory reform.

What we are trying to do is difficult. Nothing to do with the European Union is easy, as I have known for a long time, having worked on these issues. First, we have to face the issue of budget contributions. We have to find a formula that can be applied relating to our share of joint GDP and the economic significance of the particular sector we are talking about.

Secondly, we have to have flexibility on freedom of movement. I think the youth experience scheme is an excellent idea. This House has demanded freedom of movement for artists and performers in Europe, one of the key things that we have lost. The same applies to professional services. I would make these movements on freedom of movement in return for closer co-operation in tackling illegal migration. I find it odd, by the way, that people on the other side can criticise freedom of movement. As soon as they got Brexit, what did they do? They implemented the biggest wave of immigration that we have seen in the post-war era. One of the reasons for the rise of Reform today is that the Conservative Party did exactly the opposite of what it promised in the referendum as far as immigration was concerned.

Thirdly, we have to raise our game in Europe and all that means for rebuilding our Brussels capabilities, having strong co-ordination machinery domestically, having the political will to impose solutions from the centre—from No. 10—where departments disagree, and having a Cabinet that takes the Europe relationship seriously and spends time on it. We have a lot of common interests in joint EU-UK co-operation—in defence procurement, in a joint approach to the regulation of artificial intelligence, in trade and in technology, where we have so much to offer. Jean Monnet said Europe was born in crises; we are certainly living through a big crisis now. We have to think boldly, and I would like to see the possibility of a commitment to rejoin the European Union in the next Labour manifesto.