Brexit: Withdrawal Agreement and Political Declaration

Potential tariffs on livestock could reach 40% on beef and lamb in particular. That is the greatest threat to hill farmers across the four nations of the United Kingdom. These farmers, whom I grew up with and then represented for a number of years, play a key role in feeding the nation and delivering the biodiversity of the countryside. They could never be replaced. The most drastic change we would see on leaving on World Trade Organization terms would be border checks on paperwork and the application of tariffs and non-tariff barriers. Let us consider nomenclatures for a moment: that means we have to identify every item in every individual product. We have to describe it and recognise and state the provenance and its content. Only then can we attach the appropriate tariff to the finished product.

The impact is not just of tariffs but of non-tariff barriers and other regulations, such as paperwork. I remember when the 120 pages that used to be issued in the European Union were replaced by one page with 120 boxes—what had actually changed? These checks could result in delays at borders, which could destroy perishable goods such as foodstuffs.

In considering the options before us today, in my view, the Prime Minister’s deal is preferable to crashing out without a deal, to a second referendum and to a general election, which would probably return a similar result to now, with no overall majority.

In the long term, we should seek the closest possible relationship with the EU that delivers frictionless trade, such as is enjoyed by countries who are members of the EEA and EFTA, leading to access to the single market but with the added benefits of a customs union to be negotiated through a separate protocol. In the short term, if the Prime Minister loses the vote on the deal, I see no alternative but to apply for a short pause in the Article 50 process. The elections to the European Parliament are an issue, but we could apply for observer status for those British MEPs, or at least some of them, currently serving there. They could then oversee the arrangements in the intervening months.

A second referendum holds no attraction for me. Why repeat the exercise when the last one was so divisive and inconclusive, and resulted in the murder of an MP, Jo Cox? The final say has to rest with the House of Commons and the democratically elected representatives of the people. The House of Commons must be allowed to vote on each of the options available; you simply cannot expect the electorate to enter into the minutiae of policy detail. What else would taking back control really mean, other than restoring parliamentary democracy?

Brexit is a pivotal challenge for the environment. Some 80% of our current environment law stems from the EU and a no-deal Brexit would sweep away the current effective systems of enforcement of environmental law, and the existing rights of the public to environmental information, to public participation and to access to justice. With a no-deal Brexit there is a real risk that, as part of a desperate scramble to sign trade deals, the UK would be pressurised into a post-Brexit bonfire of environmental standards. As my noble friend Lord Whitty outlined, the Government have promised a whole framework of primary and secondary legislation for the environment, but none of it can come into place quickly, if at all, under a no-deal Brexit. This is simply one area that I have knowledge of where black holes will open up under no deal. We must avoid a no-deal Brexit at all costs.

I believe that your Lordships’ House must be the voice of sanity. We should vote vigorously against the Prime Minister’s deal and stop a no-deal Brexit. We must not be like Thelma and Louise, heading off a cliff, intoning, “It’s the will of the people”. I would go further than our Front Bench and ask the other place to revoke the Article 50 notification. Some say that resiling from a Brexit that looks highly unpalatable under closer examination, and which has in reality proven politically unachievable, would destroy faith in the political system. But there is no faith in the political system. Many of those who voted to leave did so because they felt politics had not delivered social and economic results for them, and because they had already lost faith in the political system. The time has come for men and women of good will across the parties to abandon this Brexit, which will impact particularly on those who are poorer and less able to cope, and focus on forging a national engagement and agreement to address the real issues of the day: future prosperity, economic and social inequalities, and the safeguarding of peace.

In his speech on 5 December, the most reverend Primate talked of the importance of healing, and last week spoke of the need for reconciliation. In both instances the whole House agreed with him. I fear that another referendum stands a substantial chance of seeing considerable unrest and the opening and reopening of many awful wounds—Anna Soubry MP got a personal gypsy’s warning of this, which reached the front page of the Times last week. In any event, I agree with the many noble Lords who have suggested that such a referendum is unlikely to settle the issue permanently.

The third way out of the maze is to seek to renegotiate. At the start of November, the Select Committee visited Brussels for two days, immediately before the announcement of the potential deal. As ever, we met substantially all the various interlocutors whom we had got to know through the process. I had the strong impression that both sides were at their limits and that the appetite for further negotiations was very low. In addition, the apparatus that the EU negotiates through is very clunky. Behind Monsieur Barnier is a committee structure which involves all the EU 27. We sat through a lengthy meeting with that committee’s secretariat and learned through practical examples of the great difficulties and sheer length of time it takes to achieve consensus on even small issues among the EU 27. We are, therefore, out of both negotiating time and negotiating appetite. Accordingly, there is a strong likelihood that an attempt at a substantial renegotiation will make little, if any, significant change and push us towards no deal.

However, during that same Brussels trip I was much encouraged by our lengthy visit to the Canadian embassy. They told us how they were already making small incremental and mutually beneficial changes to their brand new treaty agreed only in 2017. We had a similar report from a very senior Swiss official at an informal meeting in London the following week. Both commented that concluding a treaty was not the end of the matter but the start of a conversation. I fear the backstop less than many because of those two sessions. Thus, at the start of December I felt that the correct route was to accept this pretty unpalatable deal. It represented the lowest risk to the UK, our fellow citizens’ lives and jobs and the 3.5 million EU citizens living among us. But the Prime Minister seems likely to face defeat tomorrow so, accordingly, I will comment briefly on how one might conduct a renegotiation which stood some chance of succeeding.

It seemed to me in early December, and still today, that there would have to be a strong body of agreement among MPs on the ask—and that that ask must be simple. In cricket, or at least junior cricket, the wicket-keeper is covered by the backstop. The backstop is covered by a longstop, the date after which the backstop would fall. I am sure a winning, simple ask might be found in that thought. In this, I am encouraging the Prime Minister to have another go following today’s exchange of letters. I would also say, just out of interest, that most insurance policies that I have ever been involved in have had a cancellation provision.

On a serious point, I would submit to the EU that in a no-deal situation the economy of the island of Ireland would have a very high risk of significant damage; that would itself threaten the Good Friday arrangements; and that, accordingly, such a longstop was thus more consistent with the Good Friday arrangements. Going into any negotiation, however, is still jettisoning the bird in the hand, and from the menu with less than one right answer I think we should take this deal.

“In … a no deal scenario … we won’t be installing a border between Northern Ireland and Ireland, and everyone knows that”.

Mr Junker reassured the Irish Parliament that:

“If negotiations fail … the European Union will not impose a border, customs posts or any other kind of infrastructure on the frontier”.

And Britain has said it will not,

“require any infrastructure at the border … under any circumstances”.

We already tackle smuggling of tobacco, alcohol, red diesel and drugs without border checks, so the UK can certainly stop illicit trade in Dyson vacuum cleaners if our regulations deviate from those of the EU. Finally, once we all resolve the Irish border issue administratively, we can take up Tusk’s offer of a free trade deal for the whole UK.

Not one of the noble Lords who has railed against no deal in these debates has addressed these benefits of a WTO Brexit, even to refute them. More remarkable, only two or three noble Lords have spelled out specific concerns about a WTO Brexit. The others simply demonised it with a lexicon of lurid adjectives which were last deployed to warn against leaving the ERM, not joining the euro or the millennium bug.

Let me address the specific concerns that a couple of noble Lords have raised. The first was given by the noble Baroness, Lady Smith of Basildon, opening the debate in December, who said, “Planes will be grounded”. She was apparently unaware that on 13 November the European Union Commission had already promised legislation allowing air carriers from the UK to fly over, to and from the EU provided the UK reciprocated. The Commission also announced that hauliers will continue to get licences, that Airbus can export its wings, that the UK will be swiftly listed as a safe country to allow entry of live animals and animal products from the UK, and more.

The other concrete concern came from the most reverend Primate the Archbishop of Canterbury. While temporal Lords have been demonising a WTO Brexit with odium theologicum, it took a Lord spiritual to bring us down to earth with the request for proof that it would not have a significant negative effect on people in his diocese, such as when Operation Stack has been in force. Of course it is impossible to prove a negative or that Operation Stack will never be necessary regardless of Brexit, as it has been invoked on 211 days over the past 18 years, although without any archiepiscopal moral censure of those responsible.

I can explain why Brexit should not add significantly to such delays. First, HMRC expects roughly the same number of physical checks of vehicles at Dover as at present because its checks are based on risk, notably of smuggling tobacco, drugs and illegal immigrants, none of which will increase because of Brexit. Moreover, HMRC promises to prioritise flow over compliance. That means waving lorries through even if their declarations are incomplete.

The concern in the past has been not about Dover but about Calais. However, the good news, brought to the most reverend Primate’s attention by my noble friend Lord Forsyth, is that the chairman of Calais ports says that they too will have no more checks than at present. They are determined and confident that traffic will flow freely—not to be nice to Britain but to avoid losing trade to Zeebrugge, Rotterdam and Antwerp. They are installing three extra lorry lanes, an inspection post for animals away from the port and a scanner for trains moving at 30 kilometres an hour. Monsieur Puissesseau was indignant that the British Government were—quite unnecessarily in his view—hiring ferries to take trade away from his port to other ports.

Problems one prepares for rarely happen, as we discovered with the millennium bug. The Government are now being rather coy about how advanced their preparations are for leaving on WTO terms because they want to frighten MPs into voting for their deal, but I am confident that if we leave on WTO terms on 29 March events will be far closer to a damp squib than the apocalypse. That may disappoint some fanatical remainers in this House, but they will get over it.

If there were a similar result as before, we would be no better off than we are now. If the result were marginally the other way for remain—this point has already been made, so I need not labour it—there would be more people coming back for yet another referendum. Just look at the SNP’s arguments on this: it always wants another referendum. It would have one a week until it won, and that will happen with both sides of the Brexit argument if we are not careful. That is why I see another referendum as a last resort. It may have to happen if the House of Commons cannot get on top of this and sort out an alternative. I would also be worried about what the question or questions would be and how quickly it could be got through the House of Commons and how quickly it could get the approval of the Electoral Commission, which has to agree to it. At the end of the day, Burke was right. Britain works best with representative democracy. Do not have referendums. One thing that got us into this mess was a referendum when the Prime Minister of the day had not worked out what he would do if he did not get the result that he wanted.

That brings me to the major point I want to make, which is about the political declaration. I see it as the long-term way forward. As many people have said, the political declaration is fairly woolly. Of course it is woolly. It should have been produced about two months after the referendum. Had it been produced just after the referendum, it would have been a negotiated document, and we would be in a rather better position than we are in at the moment. If we can get to a situation where we have a deal with the European Union—and I do not know whether we can and make no predictions about it as the crisis is too serious and unpredictable—then we can use the political declaration to build up that ever-closer relationship which we need. As the noble Lord, Lord Skidelsky, said in a speech I agreed very largely with, Europe not just is but needs to be travelling at more than one speed so that those who are going for ever-closer union continue to do so.

I would like to see the development of a single state on the European continent, however defined, federal or whatever. It is necessary, not least for defence and foreign policy issues, where it is daft that 450 million well-educated people in the modern economies of Europe cannot stand up to 150 people in the corrupt and despotic regime in Russia without the help of the United States, which will not be there for ever. Although I do not want to see the end of NATO or the EU, bear in mind that what is happening in Europe is long term. We have to be part of it. We cannot be right out of it, but right now we cannot be right in it. Whatever happens in the House of Commons—and it has to decide, not us—we should use the political declaration to move things forward.

Finally, I was delighted to see, in that document and in the agreement, recognition that we need close development between the two Parliaments. That is a proposal I made in this House about two years ago, just after the referendum. If the Minister will stand up and say that we will do that and will get on with it as soon as we have the immediate situation under control, I will buy him a drink.

On the economics, while I am an economics professor at the LSE and president of the Royal Economic Society, I stress that I speak personally, not on behalf of those institutions. I shall focus on the medium term. The markets have spoken: since the referendum in 2016, the exchange rate has been around 15% lower, indicative of a perceived weakening of medium-term prosperity. Business has described no deal as a wrecking ball. Serious economic modelling whether in international institutions such as the IMF and OECD, our own Treasury, the CBI or in research institutions and universities, has indicated medium-term losses—that is 10 to 15 years from now—from a no-deal Brexit of 5% to 8% or more of GDP. Of course, we cannot predict with certainty, but the evidence points overwhelmingly one way.

The losses arise in large measure from the new barriers—both non-tariff and tariff—erected by such a Brexit to our trade and investment with our major partner. The losses from the barriers embedded in the PM’s proposition would also be large, albeit somewhat less. Let us be clear: the losses are likely to be most severe for the poorest people.

Markets, business, economic analysis and, common sense all point the same way. A no-deal Brexit produces great harm in the future and still more harm for decades to come. It cannot be a serious option. The best we can say about the PM’s proposition is that the damage is a bit less.

We are British, of course, and we would, I hope, keep calm and carry on, and make the best of it. But what is the point of self-harm? Some appear to think that the substantial short-term damages from no deal would just be uncomfortable initial steps on the road to some sunny uplands. It is remarkable that hardly any credible analysis is offered for such a story. It is just bluster, embellished by the odd confused number or modelled argument.

For example, we are told that £10 billion or so in saved net EU contributions would cover any costs of a no-deal Brexit. That is nonsense, when potential medium-term costs of 5% plus of GDP could be £100 billion to £150 billion a year or more. We are told, probably correctly, that other markets will grow faster than the EU. However, there is little evidence that trade with those markets would be enhanced by being outside the EU. Indeed, investing in and trading with the UK is much more attractive if we are inside the EU and a gateway to its markets.

A rational, analytical assessment of the evidence leads inexorably to these conclusions: no deal is deeply damaging; the Prime Minister’s proposition would diminish us economically, politically, socially and internationally; both are greatly inferior to what we have within the EU. Given that the people voted in a referendum in 2016, given that we now have, as we did not have then, a specific proposition, and given that we now know so much more, we must, as a matter of responsible, open and informed democracy give the opportunity to the people of the UK to vote on the Government’s deal versus staying in the EU.

I venture to suggest that what most people in this Chamber—the remainers—are really scared about is that no deal might be a damp squib. It might all happen with only minor problems. I think that is really what keeps them awake at night.

Other dangerous myths and distortions have been introduced into this whole debate and we have heard some of them in the contributions in this House. The whole business of Project Fear and attacks on experts is deeply damaging to our political debate. I was very interested to see in last week’s Sunday Times that David Smith, the economics editor, had analysed different forecasts from the experts. Almost at the top of the list came the Office for Budget Responsibility, which got 10 out of 10 on all the points that it had forecast for 2018. Second on the list came the much maligned—from the Brexit side—CBI, which got nine out of 10. Just out of interest, who came bottom on the list? It was one Patrick Minford, of the Liverpool Research Group and founder member of Economists for Free Trade, who got three out of 10 for his forecasts for 2018 and had a similar result in 2017. Many things have been said but this attack on policy by evidence-based activity is deeply damaging to British politics and government, and I hope the attacks on experts will cease.

Another issue—which I regard as largely mythological —is covered by Clare Foges in today’s Times. She talks about the left behind and refutes the suggestion that they voted in protest against the metropolitan elite. It is very amusing that the metropolitan elite making this accusation have been educated at Eton, Dulwich College and other such places, yet they have the brass face to attack Members of the other House and this place for being elitist.

The fact is that over decades Governments of all parties have poured in money through development corporations. The noble Lord, Lord Heseltine, has probably done more than any other person in this country to try to help the areas hit by industrial change and the wind-down of the old industries, not just in Liverpool but everywhere in the country. It is simply not true to suggest that people have voted against the EU just because of 30, 40 or 50 years of decline in those areas; the issue is much more sophisticated and subtle than that. A great deal has been done and they should not be described as the left behind.

The noble Lords, Lord Skidelsky and Lord Soley, referred to the powerful arguments that Brexiteers have mounted. Some of us, including me and many on these Benches, take the view that this is not just about the cost of customs. We have an internationalist view of the world, in which we believe that co-operation between countries is the best way to solve the problems facing us, and such co-operation is needed now probably more than it ever has been. That being the case, we believe in co-operating with others through institutions such as the EU. That is the basis of our commitment to the EU. It is not to do with the price of exports and the market; it is about people working together.