Brexit: Trade in Goods (EUC Report)

Lord Triesman Excerpts

Tuesday 18th July 2017 Lords Chamber

[Lord Triesman (Lab)]

My Lords, I start by drawing attention to my interests as declared in the register, which are principally in merchant banking. I suppose that rather over two-thirds of my work is structuring trade agreements and commercial agreements between businesses in this country and other countries. It is a niche in merchant banking that is to do with international trade much more than domestic trade. I make that point because inevitably it colours some of the things that I want to say today.

I join everyone else in thanking the noble Baroness, Lady Verma, for the way in which she chaired this committee, as well as the staff, who deserve profound thanks for an extremely detailed and complex piece of work, conducted frictionlessly—I think that is one of the occasions when I can use the word safely. I also thank my colleagues on the committee because I felt it was an extraordinary adult education class, with a huge amount learned in every session of it. I deeply appreciate that.

What I want to say next is not really a criticism of what some Conservative politicians and Peers have contributed to the debate; it is straightforwardly a criticism of the Government. I share the regret that there has not been a response. I suspect that another date will be needed to debate whatever response there is, because I cannot imagine that it will be uncontroversial or that we will not want to pay attention to it if it ever materialises. However, I have come to the conclusion, because of a batch of evidence, that it is not being withheld from us out of some spirit of malice or unhelpfulness; rather, nothing is being said because the Government really do not have anything to say. That was evident from the Ministers who were good enough to provide us with their time. They certainly cannot be faulted for having stayed on message; that is something I was never particularly good at but, my goodness, they were extremely good at it. They said that Brexit—well, your Lordships know what they said. They said the same things time and again and said them with a certain panache, and added more or less nothing to our knowledge.

However, Ministers produced a set of excuses for why nothing was going to be said. The first was, “We don’t reveal our bargaining hand, but later in the process we may”. As someone who has spent his life negotiating, I do not accept that. Generally, as you get deeper into a negotiation, it becomes more complex. As you get closer to the detail, and the difficulty in striking the final deal is what is in the front of your mind, that is when you do not talk about it—that is when it is hardest to talk about it. At the beginning, you could say what the architecture is of the objectives that you are seeking. So I did not accept that that was an excuse. I also did not accept that we should not worry because it will all be all right in the end, which did not seem to be the most compelling argument I had ever heard either. As I have said, I draw the conclusion from all that that they did not actually have a huge amount to say.

I fear that the approach that is being taken infantilises us, at both ends of this building. It treats us as though we were a group of children who could not take a mature discussion of mature difficulties—the sort of discussion that we all of us probably in one sense look forward to. It often sounds almost like an appeal to the Tooth Fairy: “It will all turn out all right. Something will turn up and deal with the issues”.

I make that point because I want to address the idea that for the most part we did not speak to people who were in favour of Brexit; on the contrary, to claim that would be a travesty. The officials and others who assisted in the inquiry made sure that there was a very wide spectrum, so I hope there is no imputation that there was an attempt to screen out different voices; that was far from the case. In general, though, as the noble Lord, Lord Horam, was saying, there has been a certain lack of listening to the kinds of arguments that demonstrate the complexities. Although I do not mean to put words in anyone’s mouth, the noble Lord, Lord Livingston, made essentially the same point: that we have not really listened very carefully to the counterparties in the whole of this process. As the noble Lord said, we are in a rush and they are not, and that is the worst negotiating position that you can ever find yourself in. I am quite sure that he avoided it at BT as far as he was humanly able.

Those who have done the job of trying to negotiate, not only in business, as many of us have, but also in government, negotiating major international deals, will know just how hard it is. I remember, in the period before the state visit of President Lula, the work that had to be done to try to pull together at least a minimum number of agreements that could be signed off with a flourish on that occasion. I will confess to the House that it took me about three years to get a cultural agreement to allow musicians to move freely between Brazil and Britain, which you would not think of as being the most complicated thing you would ever have to do in your life—not least because when the Brazilian negotiators came over they included Gilberto Gil, who sang pretty much through all the negotiations. It was none the less an extremely difficult job. We never really got to the end of the ethanol negotiations, and on services and education, we were miles apart after years of work. The Doha process was taking us more or less nowhere. I do not predict that we would never have arrived at a conclusion, but I am under no illusion about how difficult it is.

So I am not up for any fanciful claims about what can be done. I am not up for any alternative facts about how everyone else will respond to us, because it does not accord with any of my experience in business or international relations, and we have to be real. We have to be real about who is capable of conducting negotiations. I have met many people in business and in trade unions who are very good negotiators; commercial lawyers are often extremely good negotiators; but I have met only a handful of politicians who can do the job, and they are not among the best and most natural negotiators whom I have met in my professional life.

Where is the capable force that will do the job illustrated by the report? Where are the people and how will they be found to do a job of this complexity in this short time? The great advantage of taking part in an inquiry of this kind is that you get to grips with a lot of detail. It is important to remember that the detail was provided by the witnesses—not by us but by the people who came to speak to us. They provided information which I think the Government would be unwise not to read through carefully, understand and talk to them about rather better.

It is unfair to pick on any particular witness for excellence, but Mike Hawes from the automotive industry was a very good example. His discussion of the character of the value chain and border crossings—which has implications in a different industry for Northern Ireland, which is worth reading off from what he had to say— was essentially about automotive assembly. It raises critical questions in a world in which the smoothness of the supply chain is critical to business and building more warehousing to use as a buffer, as he described it, is not a practical solution.

We did not take particular evidence on this, but I know that many here will be familiar with the difficulties that Airbus is already experiencing in working out how it will move massively complicated parts of aircraft from north Wales and Lancashire to the continent. I do not say this as a harbinger of doom, but it will surely at some stage say, “This is not the best way to do it”, and start making it close to where it will assemble it. It would be foolish not to take that step.

Noble Lords will see that the report reaches some obvious conclusions: almost everything is unknown; almost everything that affects investment decisions will continue to remain unknown; and the timetable is very problematic, as many noble Lords have said—it is not that it is short, it is a strangulation. I cannot see how anybody can make a deal work to do all the things expected of it. Incidentally and paradoxically—a point made by several noble Lords—when people are taking investment decisions, they need a long run-in, particularly for significant decisions about large sums of money. They need to be taking them now. The more high-tech we are, the more we are interested in those businesses, the more that that is a problem. As the Israeli entrepreneurs said, the lifetime of products of leading-edge, high-tech businesses is between two-and-a-quarter and two-and-a-half years before they are superseded. If decisions are not being made about such investment today, the products will not be there when the two years are up. If they are made much later, they will not be there for several years beyond that, and we will not be competitors in those markets. I suppose one ought also to say that sterling is on a giddy ride; that does not help to create a sense of stability.

I know that the noble Lords, Lord Inglewood and Lord Bilimoria, have been making essentially the same sort of argument, but my final point is that if we are to be global, we will have to think global. We will have to change our mindset and think in a very different way. In doing that, we should not beguile ourselves with things which will not turn out to be accurate. I have heard the arguments about how the digital world is transforming everything. I have also noted from what the automotive industry said that we will have not just to read labels but to look inside the packaging. We will have to make checks, even if it is of samples, to ensure that the things as labelled or electronically tagged are what is inside. There were electronic labels on hamburgers which turned out to be little to do with beef and a great deal to do with horse and pork. They were labelled and electronically readable, but what was in the package was not what it said on the outside. These things will be complicated. When we consider the Northern Ireland food industry and the movement backwards and forwards across that border, we can see what the complexities will be.

I understand the point about value chains and the integration between services and production of goods. There are great benefits in that spread in the digital world, but this is not an unproblematic development. It is a development of technology which has allowed for far more efficient crime and untrackable currencies, facilitated criminal-scale child abuse and can close and hold to ransom businesses—and the NHS and Parliament less than a month ago. It may very well be that people want to intervene in that digital space to protect themselves rather better, certainly before it is allowed to distort the outcome of the election to the presidency of the United States