European Affairs

Phil Wilson Excerpts

Wednesday 14th March 2018 Commons Chamber

[Phil Wilson (Sedgefield) (Lab)]

On frictionless trade, will the future be better than what we have now or worse?

[Greg Hands]

As I said, we are seeking a good, comprehensive, deep and wide trade partnership with the EU that is as frictionless as possible. That is why the right relationship is this deep, comprehensive and unique free trade agreement with Europe, based on the principles the Prime Minister set out throughout 2017 and in her speech a fortnight ago. We should oppose Labour’s latest Brexit policy of apparently keeping the UK in the, a, or perhaps any customs union with the EU. We want the greatest possible tariff and barrier-free trade with our European neighbours, as well as to negotiate our own trade agreements around the world.

--- Later in debate ---

[Phil Wilson (Sedgefield) (Lab)]

I want to raise two areas of European affairs this afternoon.

The first is the potential impact of Brexit on the north-east of England. Some 60% of north-east trade is with the EU and 50% of the cars manufactured in the north-east are exported to the EU. Nissan employs about 7,000 people and more than 30,000 jobs through the supply chain. I have never been one to say that, for example, after Brexit the Nissan plant will close, but I am concerned about future investment in the plant. As the Business, Energy and Industrial Strategy Committee said in its report on the impact of Brexit on the automotive sector:

“It is difficult to see how it would make economic sense for multinational volume manufacturers—the bulk of the UK automotive sector—to base production in the UK in a no deal or WTO tariff scenario. The shift of manufacturing to countries within the customs union and single market will be inevitable.”

The cost to UK jobs could be in the hundreds of thousands and to inward investment in the hundreds of millions of pounds. That is another example of why many of us on the Labour Benches call on the UK to remain a member of the single market and the customs union. The same report made it explicit that the UK cannot expect an expansion of trade overseas to outweigh the loss of trade to Europe arising from a hard Brexit. It seems senseless to me to walk away from one half of the north-east’s trade without a strategic means of replacing it other than through wishful thinking.

The impact assessments the Government tried to keep to themselves reveal the potential impact on the north-east. They identify that three of the major sectors to be hit by Brexit will be the automotive, chemical and pharmaceutical sectors—all major industries in the north-east of England. The impact assessments determine that of all the regions and nations of the UK, the north-east of England will be the worst hit. This is due to the region’s strong manufacturing and industrial base, which would be exposed most to the changes and trade barriers, and because we have the greatest dependence on exports as a proportion of the regional economy.

The impact assessments say that the north-east would see a decline in its GDP by as much as 16% over 15 years. We can talk about a new customs arrangement, frictionless borders and non-divergence as much as we like, but all we will end up doing is reinventing the wheel only to discover it will not be as round as the original. It is no surprise that the north-east of England chamber of commerce issued a statement following the spring statement. Ross Smith, director of policy for the chamber, said:

“the success or otherwise of negotiations and planning for Brexit could yet render these forecasts largely irrelevant and business still have little detail to base their planning on”.

The second issue, of great strategic importance not only to the UK but Europe, is our response to Russia’s flouting of basic international law and the international rules-based systems by which the community of nations should abide. I do not think we should doubt that Russia’s intent with the continent of Europe is to divide and rule. Putin wants a weak Europe. Brexit, I believe, plays straight into his hands. Russia wants to see Europe divided, introspective and prepared, ultimately, to play the international game by his and Russia’s rule.

Bully-boy tactics are always the result of the weak. The Russian state is weak, economically no larger than Italy. Its population is ageing. Its military strength may be perceived to be great, but it lacks depth.

[Jenny Chapman (Darlington) (Lab)]

I thank my hon. Friend and colleague from the north-east for giving way. I just wanted to point out that, although the north-east voted substantially to leave, it shares his concerns about manufacturing, jobs and security.

--- Later in debate ---

[Phil Wilson]

I thank my hon. Friend and constituency neighbour. She is right. I think there is a shift in opinion now—that Brexit could damage job prospects for tens of thousands of people in the north-east of England.

Putin does not want kinetic action with NATO, but he does want us weakened, distracted and inward looking. That is why the warfare that Russia wants to adopt is hybrid. It can be social, anti-democratic and economic warfare—trying, for example, to influence democratic elections. From funding populist movements, such as Marine Le Pen’s Front National, now called National Rally, is it any wonder Nigel Farage sees Putin as one of his favourite leaders? I endorse the Prime Minister’s actions today, but the Salisbury incident is about more than just spies.

The use of a chemical weapon on the streets of a city of the UK is also an attack on the principles by which we stand and they must be defended. Members of all parties in the House must declare on which side they stand. This is about defending our way of life, which is internationally protected by a rules-based order that we need to preserve and that Russia seeks to undermine—from its indiscriminate military action in Syria, to the Ukraine and Crimea, to the boosting of its enhanced nuclear capabilities, to a failing economy run by oligarchs who use London as their plaything and to the troll farms of St Petersburg, which spread news of a dubious nature throughout Europe and the US. Russia is trying to shake our confidence in our way of life. Engage and beware, yes, but to give it the benefit of the doubt is ridiculous. It is trying to undermine liberal democracy in the west—the special relationship with the US, NATO, the UN and, dare I say it, with the EU. Those bilateral or multilateral institutions have served us well for decades.

I say to the Minister that our leaving the EU helps Putin. Putin has always resented what he sees as the belittling of Russia after the collapse of the Soviet Union. He wants to return to a world where Russia helped to call the shots. It cannot do that now, so the next best thing is to weaken those who are sitting at the table. It interfered in the US election. It welcomes the Catalonian independence movement. It supports the Front National in France. It welcomes the extreme stance of Hungary’s Prime Minister and the AFD in Germany. Then, of course, there is Brexit.

Putin believes that the east has disintegrated since the Berlin wall came down. Now it is the turn of the west and he will play any game, hold any card and roll any dice to ensure that happens. Eventually, the UK, one of the most principled critics of Russia in Europe, will not have a seat at the table in the EU. That is good for Putin. Of course, we will continue to engage with the EU, but it is better to have a seat at the table than not.

Let us not forget that NATO is a military alliance, and the EU, not NATO, has the ability to impose sanctions against Russia. I agree with the findings of the Foreign Affairs Committee’s “Global Britain” report: the Prime Minister needs to come to the House to lay out what a “global Britain” actually means. Now is the time to defend ourselves as a country proportionately and offer a rallying cry for what we believe in as a country. We may have created difficulties for ourselves, but our stance today is the right one on Russia, because the whole argument comes down to values. I see myself as a real Labour man who, in the mould of Clem Attlee and Ernie Bevin, is prepared to make the difficult decisions. I think today is the time to make them.

I believe in Britain as a force for good in the world. We on both sides of the House need to stand up for the principles that underpin our way of life—democracy, human rights and the rule of law. These have been the foundations of the west for decades. We need now to stand against the forces, at home and abroad, that seek to undermine those principles.

Leaving the EU: North-East Exports

Phil Wilson Excerpts

Tuesday 25th October 2016 Westminster Hall

[Phil Wilson (Sedgefield) (Lab)]

I beg to move,

That this House has considered the effect on exports from the North East of the UK leaving the EU.

It is a pleasure to serve under your chairmanship, Mr Hollobone.

We all agree that the British people’s decision on 23 June to leave the EU was the most profound decision to affect this country since the second world war. I, like many in the House, very much wanted the UK to stay part of the EU, but the country, including the north-east of England, voted otherwise. That decision must be implemented, but as my hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) has pointed out, the country voted on the principle of leaving, not on the terms. The detail is therefore important.

The referendum result has created much uncertainty about the UK economy’s long-term prospects, not just internationally but in many boardrooms around the country. I wonder how soon it will be before that uncertainty is felt in households in communities from south-east England to Scotland, from County Durham to Northern Ireland, and from Wales to East Anglia, and how soon it will be before that uncertainty spreads from the boardroom to the shop floor.

I want to use this debate to explain the importance of the European single market to the north-east of England, to raise several issues and to probe the Minister on what he and the Government think is the best option for the north-east of England in a post-Brexit Britain. I know the Minister shares the view that remain was the best option for the British people, but in our own ways we have both taken on responsibility for delivering the best deal for the UK under the circumstances, unlike the former—or perhaps the current—leader of the UK Independence party, Nigel Farage, who abandoned the field of play once he got the referendum outcome he wanted. Like all populists, he was ready to pick up the megaphone to let us know what he thought to be wrong, but when the argument went in his favour he was not prepared to hang around and take responsibility for putting right those perceived wrongs.

The Minister has the unenviable task of securing the best deal for Britain. Since he wanted to remain in the EU and the single market, how is he going to convince his colleagues that maintaining access to the single market is the best option? Furthermore, how are the Government going to implement all the promises made by the leave campaign, of which he now has ownership?

“Let’s give our NHS the £350 million the EU takes every week”—

so said Vote Leave’s website. That slogan was emblazoned on the side of the campaign’s battle bus. Vote Leave committed to “hundreds of new schools” in a campaign video on YouTube, and to the abolition of prescription charges. According to a Vote Leave press release from 14 June:

“There is more than enough money to ensure that those who now get funding from the EU...will continue to do so”.

There was a promise of new roads and the expansion of regional airports, and the right hon. Member for Surrey Heath (Michael Gove) even said in a Vote Leave press release from 19 April that there would be enough money for 14 Astute-class submarines. There was to be money for pothole repairs and tax cuts, and wages would be higher and fuel bills cheaper—no doubt, Brexit would be a land of milk and honey, where the sun shines and everyone lives happily ever after. The Minister is on record, in his blog, as saying:

“There was no manifesto for ‘out’”—

but yes, there was, and the people voted for it.

For the people of north-east England, we must get Brexit right, because although my constituents may have voted to leave the EU, I do not believe that they voted to be poorer, to put their jobs at risk or to see their region fall further behind. If I were them, I can imagine how disappointed and betrayed I would feel if, on top of all the uncertainty, which was not there before, all the promises made by those who supported the leave campaign were not met. That disappointment would be deepened by the fact that so many of those who made the pledges not only now sit on the Front Bench, but will sit around the negotiating table to negotiate our exit. The Minister and the Government have a duty to inform the British people of how those promises are to be fulfilled—the Minister might make a start today. If they cannot be fulfilled, perhaps the Minister will be straight with the British people and say so.

The EU single market is essential to the north-east of England: 58% of the region’s trade is with the EU, which is a full 10% higher than the national average; it is the only region that exports more than it imports; more than 100,000 jobs in the region rely on trade with the continent; and, over the past five years, almost 90 European investment projects have created or safeguarded more than 6,000 jobs, and £1.1 billion in inward foreign investment has come to the north-east from EU members.

According to the North East England chamber of commerce and a report by Ernst and Young, the north-east has seen the second highest increase in foreign direct investment—sitting just behind the north-west—with a substantial 83% increase on last year in FDI projects. An EY survey of investors about the link between the EU referendum and FDI asked how important access to the single market was, and 79% of investors cited access to the single market as a key feature of the UK’s attractiveness, a higher figure than last year’s. The same survey found that 52% of investors thought that a “slight change” in access to the single market would affect the attractiveness of the UK as a destination for business; in the event of a “significantly less favourable” change, the figure rose to 55%.

The North East England chamber of commerce has major concerns about future trade deals. Membership of the single market has brought significant benefits to the north-east of England, attracting business and creating jobs. The chamber stated in its EU referendum briefing paper of July 2016:

“There are also major implications for relationships with overseas markets where existing trade deals have been negotiated by the EU and for the future of trade documentation needed by businesses. Due to the complexities of these issues, there is significant concern among businesses about the UK Government’s capacity to address these issues in the required timescale before Britain exits the EU. Many of our members are also concerned about the effective flow of information so businesses are aware of any changes they need to make to their practices. Assurances about this are vital.”

What assurances about that will the Minister give to companies in the north-east?

In the same briefing paper, the chamber also stated:

“There is also....the hope and expectation that the anticipated benefits of Brexit in being able to conclude trade deals more quickly around the world will be realised. The new department headed by the International Trade Secretary...should aim to quickly set out its plans in this regard so businesses can see that Government is seeking to get beyond a damage limitation exercise to exploit new opportunities.”

I offer this opportunity to the Minister to lay out those plans. Business needs certainty, and that would seem to be the one thing in short supply at present.

As I am sure the Minister is aware, Japanese investment is key to the north-east of England. There are about 50 Japanese companies in the region, including Hitachi in my constituency. It provides almost 1,000 direct jobs, with many more in a growing supply chain. Nissan provides 7,000 direct jobs and 30,000 in the supply chain. With 300 automotive companies in the region, the car industry in the north-east produces £11 billion in sales and is responsible for more than £5 billion in exports.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Nissan is the UK steel industry’s largest customer in the automotive trade, purchasing most of its steel from Tata in the UK, largely from Port Talbot and the strip-producing sites. What does my hon. Friend think about the potential barriers to trade if energy imported from the European Union via interconnectors were to carry a World Trade Organisation tariff for the United Kingdom in future? What will happen to large manufacturing plants and energy-intensive industries when they face larger tariffs on energy imports?

[Phil Wilson]

My hon. Friend makes an important point. So much of Brexit has to be sorted out, and I do not know the answers, but I hope that the Minister will enlighten us. There will, however, be major consequences for industry in this country, but especially in the north-east, where a lot of our manufacturing industry is. It employs a lot of people there and provides skills that we need to revitalise the economy in the region.

Throughout the referendum campaign, I was clear about saying that if Britain voted to leave, companies such as Hitachi and Nissan would not immediately cease production, close their factory doors and ship out to the EU. I still believe, though, that if we are not part of the EU single market, the potential for long-term growth must be called into question. Furthermore, what growth there might be could come at a cost to the Exchequer.

Following Britain’s decision to withdraw from the EU, Nissan’s chief executive, Carlos Ghosn, indicated that the company might halt further investment in its Sunderland plant unless the Government agreed to compensate it for any adverse financial impact of Brexit. At the Paris motor show in August, Ghosn warned that

“important investment decisions will not be made in the dark…If I need to make an investment in the next few months and I can’t wait until the end of Brexit, then I have to make a deal with the UK Government”,

and he suggested:

“You can have commitments of compensation in case you have something negative. If there are tax barriers being established on cars, you have to have a commitment for car-makers who export to Europe that there is some kind of compensation.”

Earlier this month, the Prime Minister met with Mr Ghosn to explore what assurances Nissan was seeking. The Financial Times reported that the meeting came ahead of Nissan’s decision on whether to build its new Qashqai SUV in Sunderland, a decision that might be taken as early as November. After the meeting, Mr Ghosn said:

“Since Mrs May’s appointment, we have maintained a clear dialogue with the UK Government during this challenging time”,

and he stressed:

“We want to ensure that this high-performing, high-employment factory remains competitive globally and continues to deliver for our business and for Britain.”

He added:

“Following our productive meeting, I am confident the government will continue to ensure the UK remains a competitive place to do business. I look forward to continued positive collaboration between Nissan and the UK Government.”

On the face of it, those are nothing more than warm words, but last weekend The Sun newspaper reported that Nissan is to announce that it will build the Qashqai SUV at its Sunderland plant—I hope so—and that an announcement is imminent. If the new Qashqai model is to be built in the north-east, however, what kind of compensation is Mr Ghosn anticipating? To keep Nissan in Sunderland, what price will Britain need to pay that we did not need to pay before? Don’t get me wrong, I want Nissan to stay, but I believe that it is incumbent on the Government to tell us what the cost is. It seems to me that the much vaunted windfall to the Exchequer from not being in the EU will not be available to spend on the NHS—if ever it was—because it will be needed to subsidise industry in a way we have not needed to before.

The Japanese Government are so concerned about Brexit that they published a 15-page document at the time of the G20 summit in China, pointing out:

“In light of the fact that a number of Japanese businesses, invited by the Government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”

The document also laid out several requests, such as maintenance of

“the current tariff rates and customs clearance procedures”

and the introduction of

“provisions for cumulative rules of origin”.

The Japanese Government gave those two key reasons, and others, for the UK remaining part of the single market and the customs union. I fear the consequences of all this uncertainty for the continued growth of existing foreign direct investment in the north-east of England and the region’s ability to attract FDI in the future. The Japanese, like many businesses in the north-east, have asked for transparency in the Brexit negotiations. It is not only Westminster politicians who are asking for transparency; business and the wider world are too.

The Minister wrote in a blog post on his website on 25 October 2011:

“A vote to come out of the EU would be to try to reverse nearly four decades of economic development…I am convinced that the advantages of membership outweigh the disadvantages.”

I agree. He said to the BBC just last month that

“we must…try to achieve…zero-tariff access to this market of 500 million people in the EU”.

Again, I agree, but it seems to me that in so doing, the Government are setting out in a direction that the Conservative party accused the Labour Government of taking back in the 1970s and upon which it frowned at the time.

The Prime Minister said in her closing speech at the Conservative party conference:

“It’s not about picking winners, propping up failing industries, or bringing old companies back from the dead. It’s about identifying the industries that are of strategic value to our economy and supporting and promoting them”.

That sounds very much like picking winners to me. We should support our industry and develop an innovative industrial strategy, but don’t let’s write off whole industries. Millions of people may have voted for Brexit, but let us not forget the millions who did not. I am of the view that the Brexit negotiations will be complicated and uncertainty will reign for some time to come.

We know that the Minister’s preferred option is access to the single market—if not membership—but in what form? The existing model? The Swiss model? Will we stay part of the customs union? Does he agree with the report by his own Government that said that leaving the customs union could cause a 4.5% fall in British GDP and a reduction in foreign direct investment of as much as £9 billion, with trading falling by as much as 15.6%?

Brexit is the defining issue of our time, and it is more than apparent that the Government did not have any contingency planning in place to deal with the immensity of the task ahead, so I doubt very much that this will be the last Westminster Hall debate on how the issue affects the north-east of England, let alone the rest of the country. The future prosperity of the north-east of England, and indeed our nation, depends on getting this right. In answering the questions that I have asked today, the Minister will have the opportunity to start to allay fears, provide certainty, promote confidence and offer optimism, and to show vision and belief in our country. We must have the right to stand tall in the world while acknowledging our responsibility to others. I look forward to his response.

[Several hon. Members rose—]

--- Later in debate ---

[Phil Wilson]

I thank all hon. Members who have contributed to the debate, especially my colleagues from the north-east of England. I want to make one or two points. The Office for National Statistics may have said the £350 million figure was wrong, but people believed it. They did not consult the ONS’s website to see whether it was accurate, they just accepted it.

I picked Nissan as an example of the issues that will arise. As my hon. Friend the Member for Hartlepool (Mr Wright) said, the north-east is about the automotive sector, steel, chemicals, pharmaceuticals, and research and development. It is on the coast, and we have two ports facing Europe. Europe is important, because 80% of the raw materials and parts we need for industry comes from there. Brexit is a big issue, and I worked tirelessly to try to ensure that we stayed in Europe. This is bigger than party—it is about more than just the Conservative party and the Labour party. It is about the future of the country.

My hon. Friend the Member for Sunderland Central (Julie Elliott) said that the issue is partly a cross-party one. We must hold the Government to account, but we must also work together when necessary, because this issue is for all people whether they voted to remain or to leave.

Question put and agreed to.

Resolved,

That this House has considered the effect on exports from the North East of the UK leaving the EU.