UK-EU Summit: Policy Priorities

Business and Trade Committee

We now come to the Select Committee statement on behalf of the Business and Trade Committee. The Chair of the Business and Trade Committee, the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), will speak for up to 10 minutes, during which time no interventions can be taken. At the conclusion of his statement, I will call Members to ask questions on the subject of the statement; these should be brief questions, not speeches. I emphasise that questions should be directed to the Select Committee Chair and not the relevant Minister. Front Benchers may take part in questioning.

I rise to speak to the House today on behalf of the Business and Trade Committee on our sixth report—a road map for the EU reset. I hope you will forgive me, Madam Deputy Speaker, for using this moment to share my profound thanks to the members of the Committee, who are both diligent and hard-working.

From our earliest days together as a Committee, it was clear to us all that our relationship with the European Union had been trapped in the logic of the past, and that although not all of that past was bitter, the present was clearly unsatisfactory, and the future could be richer if we collectively chose to reset that relationship with more ambition. That, we sensed, was also the analysis of His Majesty’s Government. We asked ourselves what could be done to move this relationship forward—not distracted by fantasy, but informed with a real, hard-headed and pragmatic focus.

We travelled to Brussels, Belfast and Geneva. We listened to businesses, trade unions, diplomats and officials in the European Commission. We looked at border posts, trade barriers and, I am afraid to say, an awful lot of lost opportunities. We asked one simple question: how can we make these arrangements better? We sought not to reopen old wounds, but to open new doors.

What surprised us was that it was not difficult to find 21 different ways in which our relationship with the European Union could be reset in a manner that would make our country richer—with steps that would support our security, deepen our energy ties, and cut the red tape that is throttling trade with the EU. These were not abstract aspirations. They were grounded, practical and deliverable, and they were supported by an overwhelming coalition of business groups that we met. In short, the proposals we presented were backed by business, because they were good for business and therefore good for our country.

We divided the work into three ambitions: first, to defend our prosperity; secondly, to defend and advance energy co-operation; and, thirdly, to cut the red tape strangling trade at the border.

Does my right hon. Friend agree that consistency and clarity are exactly what businesses require to grow and thrive? That is why the Government should consider the report’s recommendation to consult with industry on rejoining the pan-Euro-Mediterranean convention. PEM membership could support tariff-free trade, simplify rules of origin and reduce trade barriers for key sectors such as automotive, manufacturing, chemicals and food production. By joining PEM, British business would expand its preferential market access to 25 countries, thereby strengthening supply chains and boosting the competitiveness of British exports.

My hon. Friend made that point repeatedly during the Committee’s deliberations. What has been especially welcome is how she consistently brings the perspective of local businesses in her Dudley constituency —the home of the industrial revolution, as we all know. She is right that, subject to consultation, in particular around the implications for the electric vehicle industry, rejoining the PEM convention could deliver us some rules of origin that would radically cut red tape for many businesses in her constituency and across our country. Frankly, it would also lower costs at a time when that is much needed.

I thank the right hon. Gentleman and his Committee for their extensive piece of work and for the report he has presented today. He mentions the wide range of different asks that the UK Government had and that he recommended that they pursue. Does he agree that it is disappointing that out of the areas that the UK wanted to achieve agreement on, movement for touring artists and participation in EU defence spending are left unagreed, while the UK Government seem to have agreed on and traded one of our most valuable areas in the negotiation: access to our fishing grounds?

The hon. Lady will know, as I do, that although fisheries and the fishing industry constitutes quite a small part of our economy—about 0.04% of GDP—for many coastal communities it is a vital industry. Nevertheless, we felt—I certainly did—that the prize of an SPS agreement, which could be worth a huge boost of up to £3 billion to £4 billion a year according to Aston University and that allows for shellfish exports to the European market, was potentially a prize was worth having.

However, the hon. Lady is right to say that the biggest concern that we should have had was defence industrial co-operation. We cannot defend Europe in the way that we should, and we cannot spend the increases in our defence spending in the way that we should, unless we reorganise Europe’s fragmented defence industrial base. We cannot be stronger together unless we build that shared defence base together. I very much hope that we will hear of progress on that in the strategic defence review and the national security review when those strategies are presented to Parliament before the summer recess.

Our Committee’s report covered how we can help agrifood businesses export to the EU, and I was delighted to see Salmon Scotland and the National Farmers Union Scotland come out in support of the deal this week. Does my right hon. Friend agree that it was baffling to see the SNP stand with Reform and the Tories in opposition to the deal?

The consensus when we published the draft of our report was overwhelming, and the measures we proposed were backed by an enormous majority of business groups across the country, including groups across Scotland. What business saw was a practical, hard-headed, common-sense set of recommendations that should be supported by not only the Government but those in public life across our country.

I thank the right hon. Member for his leadership and hard work on the Committee. I welcome the move this week, and the set of aspirational statements of intent that go in the right direction. That is great, but does he agree that we should focus on the big stuff? Proportionately, the deal with India will get us 0.1% of GDP growth by 2040 and the American pact takes us to a position that is worse than where we were six months ago, so Europe is where it is at. Europe represents 45% of our trade versus 12% with the US, but of the beneficial 21 recommendations that the Committee set out, maybe five or six have been hit. The key thing is to go for the big stuff, such as being back inside the customs union. That would make a big difference.

The report could not have been as well written or as strong and robust in its recommendations without the hon. Member’s input. We are grateful for the hard work he put into getting the report right. As he knows, a bespoke customs union was not a proposal we made, perhaps because it would not necessarily have swept up the Committee in unanimity. What is striking is that the measures set out in the report would have been significant enough to offset the economic damage we will suffer because of the tariffs introduced by President Trump. The hon. Member is right that in economic matters it is always wise to focus on the big numbers, and the big numbers in trade come from a better, closer, stronger relationship with the European Union.

I congratulate my right hon. Friend on his report and his stewardship of the Committee. My inbox was full of emails from local businesses in Redditch, relieved that after years of hesitation and no progress we are finally in a dialogue with the EU about improving access for businesses. Does he agree that, as the report states, by continuously speaking to the EU we can finally start getting rid of the red tape, as was promised to businesses by many on the pro-Brexit side, and get proper access to the markets that world-leading companies in Redditch really should be able to access freely?

My hon. Friend has consistently been a strong voice for the business community in Redditch since he joined us in the House. He is right that what has been lacking for a long time in the relationship with the European Union is the kinetic energy required to drive any bureaucracy forward.

A number of working groups were set up because of the trade and co-operation agreement. In a cross-party spirit, I should say it is important to note that the mood in Brussels changed significantly under the last Prime Minister, with the progress made in the Windsor framework. However, unless significant amounts of political attention and energy are invested, things will not move forward, and there is still a long way to go. The Committee has set out in the report where some of that progress still needs to happen, but ultimately politics is what changes things. I hope that the political energy that went into Monday can be sustained for the future.

I thank the right hon. Gentleman, whose tremendously adroit chairmanship of the Committee has allowed a lot of cross-party working, which has been really refreshing and very good. This is a moment of regret: the Committee did flag up how fragile coastal communities could be damaged badly by a multi-year deal on fishing, and the 12-year deal is beyond anything anybody imagined. It will hammer fragile communities right across Britain, and particularly in Scotland; that is unfortunate. Does he agree that achieving an SPS deal must be balanced with the deals with India, America and so forth that are coming down the tracks—I am sure the Committee will look at this—and that we must have due care for ensuring that the Brexit freedoms that allow us to strike those deals are not damaged?

The hon. Gentleman is right. As we were composing the report for the House over the last few weeks, he consistently underlined the risks that coastal communities would confront if the deal were to go the wrong way. We are all incredibly grateful to him for the voice he provided

We must ensure that we enshrine certain standards that allow us to draw closer to Europe without compromising the alliances already coming into place and those that we still need to strike in order to restore our role as the great free trading nation on this planet. The way in which the Government seek to tessellate the agreement with the trade deal with the United States, with our leadership of the comprehensive and progressive agreement for trans-Pacific partnership, with the deal with India and with the deals that are still to come with the Gulf Co-operation Council, Korea and Switzerland needs to be very carefully balanced. It looks like the Government have just about got it right. However, I know that the hon. Gentleman, like me, will want our Committee to keep an extremely close eye on that as the trade talks proceed.

I thank my right hon. Friend for this excellent report that is rooted in pragmatism and practical steps, which I know my constituents welcome. He has highlighted a gap—as he sees it, it is a first step —and there is a lot more to do. Will his Committee undertake to monitor the gap between what the Government have committed to and where he would like the Government to be, and will he and his Committee continue to make recommendations to the Government?