Brexit: Preparations

Statement

My Lords, with the leave of the House I will repeat a Statement made today by my right honourable friend the Chancellor of the Duchy of Lancaster in another place. The Statement is as follows:

“Mr Speaker, with your permission I would like to make a Statement on our preparations to leave the European Union on 31 October and the steps that we are taking to get ready.

It is the strong desire of this Government to leave the EU with a deal. Our proposals to replace the backstop were published last week. I commend the Prime Minister and the Exit Secretary for their continued efforts to ensure that we can leave the EU with a withdrawal agreement in place. We have put forward a fair and reasonable compromise for all sides that respects the historic referendum result, and we hope that the EU will engage with us seriously.

In setting out these proposals, we have moved—it is now time for the EU to move, too. If it does, there is still every chance that we will leave with a new deal. However, if the EU does not move, this Government are prepared to leave without a deal on 31 October. We must get Brexit done so that the country can move on and focus on improving the NHS, cutting crime, helping families with the cost of living and further improving school standards.

In preparing for every eventuality, we are today publishing our No-Deal Readiness Report. This document is a comprehensive summary of the UK’s preparedness for leaving the EU without a deal. It sets out the preparations that the Government have made and how they have been intensified under the determined leadership of my right honourable friend the Prime Minister, and also the steps that third-party organisations and individuals need to take in order to get ready.

The actions in this report reflect our top priority: ensuring that we maintain the smooth and efficient flow of goods and people from the UK into the EU and vice versa. The actions are also aimed at ensuring that we continue to support citizens—upholding their rights and helping them prepare for the changes ahead.

In order to prepare for Brexit, my right honourable friend the Chancellor has doubled funding from £4 billion to £8 billion. We have also published a significant volume of material relating to no-deal planning, including 750 pieces of guidance setting out the steps that businesses, traders and citizens should take in order to prepare. We have also published 31 country guides for all EU/EFTA states, setting out what UK nationals living there need to do in order to get ready for Brexit. And this morning my right honourable friend the Trade Secretary published the temporary tariff regime that will apply from 1 November. In all, it liberalises tariffs on 88% of goods by value entering the UK. It maintains a mixture of tariffs and quotas on 12% of goods, such as beef, lamb, pork, poultry and some dairy products, to support farms and producers who have historically been protected through high EU tariffs. As a result of cutting these tariffs, we should see a 15% reduction in the cost of honey from New Zealand, a 9% cut in the cost of grapes from South America and, of course, a 7% reduction in the cost of wine from Argentina.

Businesses raised a number of points in response to the publication of the original tariff schedule in March. The Government listened carefully to these representations and made three specific changes as a result. We are reducing tariffs on HGVs entering the UK, adjusting tariffs on bioethanol to retain support for UK producers and applying tariffs to additional clothing products to ensure that developing countries continue to have preferential access.

But it is not enough for just the Government to get ready; we need businesses and citizens to get ready too. Even with every government project complete, and necessary IT systems in place, flow at the border would still be affected if hauliers did not have the right paperwork. If companies do not prepare, they will face challenges in trading their goods and services with the EU. While the Government can of course lobby EU member states to improve their offer to UK nationals living in their countries, we need individuals to act as well, to register for residency and to make arrangements for continued access to healthcare. For that reason, the Government are investing £100 million in one of the largest public information campaigns in peacetime. Through both mass market and targeted advertising, we are alerting businesses and citizens to the actions they need to take to get ready. We are also providing a further £108 million to support businesses in accessing the information and advice they need.

My right honourable friend the Business Secretary is overseeing a series of events with businesses around the country, designed to provide information on all the steps that they need to take to get ready, including actions that will support the flow of trade through the short straits. My right honourable friend the Health Secretary has today established a trader readiness support unit for suppliers of medical products. This week, HMRC is writing to 180,000 businesses setting out the full range of steps that they need to take in order to import and export with the EU after we leave. Of course, in advance of 31 October, we will continue to use every means at our disposal to communicate to businesses the need to get ready.

I want to pay particular tribute to the automotive, retail and transport sectors, including authorities at the Port of Dover and Calais, as well as Eurotunnel, for the extent of their Brexit preparations. On a recent visit to the West Midlands, the heartland of our automotive industry, I was impressed by the steps that manufacturers are taking to prepare. Retail businesses have also made significant strides: Morrisons, for example, now reports that it is ‘prepared for all eventualities’ in the UK, while the Co-op says that it is ‘prepared for the worst case’. Of course, risks remain and challenges for some businesses cannot be entirely mitigated, even with every possible preparation in place. But the UK economy is in a much better position to meet those risks and challenges thanks to the efforts of those sectors and companies and my right honourable friend the Chancellor.

It is also the case that the impact of no deal on both the UK and the EU will depend on decisions taken by the EU and its member states. On citizens’ rights, internal security, data protection and the vital position of Northern Ireland, we have taken decisions that will benefit UK nationals as well as EU citizens. I hope that the EU will match the generosity and flexibility that we have shown.

Through the EU settlement scheme, we have ensured that every EU citizen resident here by 31 October can acquire a formal UK immigration status, protecting their rights to live and work in the UK. To date, 1.7 million citizens have applied and 1.5 million have been granted a status. Those who have not yet applied have until the end of December 2020 to do so. So far, very few EU member states have made as generous an offer to UK nationals as the UK has made to EU citizens. We do not believe that citizens’ rights should be used as a bargaining chip in any scenario. EU citizens in the UK are our friends and family—we want them to stay. We now hope that the EU extends the same hand of friendship towards UK nationals as we have to EU nationals.

At the same time, keeping our fellow citizens safe should be a priority on all sides. My right honourable friend the Home Secretary has written to Commission Vice-President Frans Timmermans to ensure that effective arrangements are in place on the exchange of passenger name record data, disconnection from SIS II and working arrangements with Europol, as well as the transfer of law enforcement data. We hope that the EU will respond positively, in the interests of the shared security of us all. We have also unilaterally ensured that personal data can continue to flow freely and legally from the UK to the EU and the EEA. A swift adequacy decision from the EU would reciprocate this arrangement, providing legal certainty to EU entities and UK companies.

With respect to Northern Ireland, in order to avoid a hard border, we have committed not to introduce any checks at the border between Northern Ireland and Ireland. The limited number of checks that need to take place, due to international obligations, will all be carried out well away from the border and will affect only a very small number of businesses. The Irish Government and the EU have not yet set out how they will manage the Irish border if we leave without a deal. We urge them to match our commitment.

Let me finally turn to the opportunities from Brexit as laid out in the report. For the first time in 50 years, the UK will have an independent trade policy and we will be able to take our own seat at the World Trade Organization. We will be able to introduce a points-based immigration system that prioritises the skills that we need as a country. We will have autonomy over the rules governing our world-leading services sector and continue our leading role in setting global standards for financial services. We can be a beacon for the world in setting progressive policies on farming, fishing and the wider environment and, outside the jurisdiction of the European Court of Justice, we will set our own rules, putting in place smarter, more responsive regulation.

Of course, no deal will bring challenges and I have been open about that today, as I have been in the past. It is not my preferred outcome, nor that of the Government. We want a good deal, but whatever challenges no deal may create in the short term, and they are significant, these can and will be overcome. Far worse than the disruption of no deal would be the damage to democracy caused by dishonouring the referendum result. Some 17.4 million people voted to leave, many of them turning out to vote for the first time in their lives. They voted to ensure that the laws by which we are governed are set by the politicians in this place whom they elect. They voted for a fairer immigration system which attracts the brightest and the best. They voted to end vast financial contributions to the EU budget and instead invest in the people’s priorities such as the NHS and our brave police service. That is what the British people voted for and that is what this Government will deliver. I commend the Statement to the House”.

My Lords, that concludes the Statement.

I thank the Minister for repeating the Statement which, despite what we hear from sources at No. 10, claims,

“the strong desire of this Government to leave the EU with a deal”.

It is now 76 days since Mr Johnson became Prime Minister and 23 days until 31 October, but he has failed to get a deal: a failure that he said, and for which he would share responsibility, would represent “a failure of statecraft”. So, we have no deal, but is that the fault of the Prime Minister and his incompetence? Oh no, it is the fault of those pesky Europeans; it is the fault of the unbending Irish; it is the fault of Mrs Merkel; it is the fault of those pesky parliamentarians; and it is probably the fault of your Lordships’ House. But the truth, as we now know from the ever-helpful Spectator, is that there is no desire for a deal. It is all a ruse.

The Government are spending taxpayers’ money on advertisements to promote the 31 October date and the notion that we will leave on that day even though it would be unlawful without the consent of the House of Commons. The ads and the endless repetition of the date are all to absolve this incompetent Prime Minister of his failure, and it is all about preparing for an election where he can blame everyone but himself for our continued membership. But at what cost? What would be the cost of that much-trailed no deal? The IFS says £150 billion a year for business in administration alone, while the Government themselves are spending £8 billion to soften the blow. Then there are the tariffs to be paid by exporters, consumers and some importers—although not on Argentinian wine or New Zealand honey, which are not very high on the ordinary person’s shopping list. We will see higher food prices for consumers and the ending of pet passports. I am not making this up. It is all in the misnamed document I have in my hand. This is called “readiness”, despite what we hear from Ireland, from farmers, manufacturers, exporters, road hauliers, expats, medics and small businesses—that we are woefully unready. Indeed, it makes Ethelred the Unready seem extraordinarily well prepared.

My Lords, it is very difficult to know how much of this Statement to believe. It says that the Government still think that there is a chance of no deal. The text from No. 10 from last night—which the Spectator has now published—suggests that people with influence inside No. 10 have clearly entirely given up on the idea of a deal and are moving towards an election, so we have to treat this as the beginning of a series of election statements.

The statement that we will leave with no deal if necessary is a statement that the Government will defy the law. That is also an interesting statement for the Government to make to Parliament at this point. I note that, among other things, last night’s text says:

“To marginalise the Brexit Party, we will have to fight the election on the basis of ‘no more delays, get Brexit done immediately’”.

If that is what the national interest has come down to, we are all in deep trouble. Dominic Cummings appears to text as madly and prolifically as Donald Trump tweets.

There are a number of other fantasies in the text. However, I would like to start by pressing the Minister a little more on the fantasy that he gave us yesterday in suggesting that one could have production with different standards for the domestic and export markets. I am not sure whether the Government have had any discussions with any industrial sectors about having separate production lines. Perhaps they could tell us. We know very well that cross-contamination makes that sort of thing very difficult indeed in the food industry. The pharmaceutical industry depends on global markets, global standards and global research efforts. It will cease production in Britain if we start doing things like that. Non-tariff barriers produced by the British at different standards might also get us into trouble with the World Trade Organization.

I thank the noble Baroness and the noble Lord for their comments and questions. I say to my opposite number, the noble Baroness, Lady Hayter, that what I found interesting about her lengthy contribution—she had a number of clever debating points to make—was that she said nothing at all about Labour’s policy on Brexit. Of course, as we all know, Labour is against everything: against a deal, against no deal, against revoking Article 50. One of these days, maybe even in our debates, we may get to discover what the Labour Party is in favour of.

I will correct some of the points that the noble Baroness made. She said that it is unlawful to leave without a deal. That is not correct. Leaving without a deal is the legal—

I referred to leaving without a deal without the consent of the House of Commons.

The record will show what the noble Baroness said. I wrote down that she said it was unlawful to leave without a deal, which, as she has now correctly said, is not the case. That is now for the European Council to determine as a matter of EU law. She said that businesses would lose their data flow rights; that is also not true. We have put in place substantial mitigations through standard contractual clauses. The Statement said that this will enable the transfer of data. We are urging the EU to put in place a proper adequacy decision, which should be straightforward on the basis that our regulation is, in fact, identical. We hope that it will do that.

Lastly, the noble Baroness asked me to condemn—which I happily do—the embarrassing, incorrect tweet from Leave.EU. Germany is a close friend, neighbour and ally. That comment was appalling and I join her in condemning it.

Moving on to the points made by the noble Lord, Lord Wallace, I picked up very few questions in his contribution. He said businesses would not have different production lines, but many already do. If you want to export to the Chinese, Indian or US market, you already have to meet the different standards they have. However, I readily accept his point about non-tariff barriers. He asked about the single market being an exercise in deregulation. I think that would come as a shock to many businesses that have to meet its standards. He talked about the £8 billion cost. Yes, the cost is considerable, but much of that expense would be incurred anyway. Even if we left with a deal, we would still incur the costs of leaving.

My Lords, I congratulate the civil servants and officials responsible for this document. Listening to the speeches from the Opposition Front Benches, it is perfectly obvious that they have not read it. It is very helpful indeed. The only criticism I make of the Government is that they did not give us very long to read it, but I have read it. On page 46, for example, it makes it absolutely clear that pet owners will still be able to travel to Europe with their pets after Brexit. They may need to take additional steps to prepare but it explains what these are. The opposition parties are scaremongering and making the same speeches. They have demanded to know what would happen if we left, but when a document is produced all we get are the same tired old arguments that we have heard over and again. I congratulate my noble friend and his officials on the fantastic piece of work that has been done in this document.

I thank my noble friend for his comments and join him in congratulating all the officials across government who are working on no-deal preparations. We have some excellent civil servants who are putting in a great deal of work to make sure that the country is prepared to honour the democratic decision the British people took to leave the European Union.

My Lords, at lunchtime, the BBC news reported that Mrs Merkel is looking for a customs union element in Northern Ireland in order to find some common ground. Given that Mrs May’s Government had that as a policy, and given the single market policy of the present Government, is it not possible to bring these together to find a compromise that can avoid us crashing out on 31 October?

The noble Lord makes a good point. We are seeking a compromise and have compromised considerably by conceding that Northern Ireland will remain aligned—part of the single market, effectively—for agri-foods and goods on the island of Ireland. We look to the EU to make similar compromises. No nation on earth has an internal customs border in its territory and it is unreasonable to expect the UK to do that.

My Lords, the Statement addresses the danger of dishonouring the referendum result, suggesting that 17.4 million people voted to end vast financial contributions to the EU and instead invest in people’s priorities, such as the NHS—I seem to remember that being on the side of a bus—and our brave police service. Fine, those investments would be great, but in light of the IFS’s suggestion today that a no-deal Brexit would lead to borrowing at levels not seen for 50 years and to our debt-to-GDP ratio rising to 90%, when will Her Majesty’s Government stop dancing to the tune of the Brexit Party, the Spartans and Mr Dominic Cummings, and acknowledge that the financial costs of Brexit, especially a no-deal Brexit, will outweigh any financial contributions that we have been making to the European Union?

I accept that the Liberal Democrats are quite open about the fact that they want to dishonour the result of the referendum; if only the Labour Party would be more honest, we might have more of a debate on the subject. We have accepted that there will be costs involved in honouring the referendum result and leaving the European Union. We are doing our best to mitigate those effects.

My Lords, the Minister talks about risks as well as the efforts to mitigate them. What will the Government do to support households on low incomes, particularly low-income families, if food prices rise? Will they raise benefits to support low-income families should food prices rise significantly after a no-deal Brexit?

This is an area that we shall have to look at if there is a fiscal event organised by the Chancellor later this year. The economy, however, is in great shape: we have unemployment levels that the Labour Party would have been proud of if it had been in office, the lowest unemployment for 40 years and the strongest level of growth over the past few years—even since the referendum result that Labour was always telling us would be such a disaster. Many European countries would give their hind teeth for the UK’s economic performance and unemployment levels.

My Lords, while I welcome the nature of this report, and, like my noble friend Lord Forsyth, its comprehensive approach to these matters, I have a question about the reference on page 142 to the powers of the Northern Ireland Civil Service. My understanding is that the Northern Ireland Civil Service does not have all the powers required in the event of no deal. Will he confirm whether that is so, what the consequences are, and when the Government intend to address the situation?