UK-EU Trade and Co-operation Agreement: Regions and Industrial Sectors

Question

Asked by

To ask the Minister of State at the Cabinet Office (Lord Frost) whether Her Majesty’s Government still plans to commission an impact assessment of the United Kingdom–European Union Trade and Cooperation Agreement on regions and industrial sectors when the economy returns to normal.

My Lords, the Government routinely publish a wide range of analysis on the UK economy and will continue to do so as appropriate. Many bodies, such as the OBR, also regularly publish economic analysis on the impact of our trade deal with the EU. All this contributes to the public debate in this area. We keep this matter under review, but meanwhile we will continue to take full advantage of the opportunities available to us as an independent trading nation.

My Lords, the ONS publication on Tuesday this week detangled the impacts of Covid and the impacts of the TCA by comparing quarter 1 2021 figures with quarter 1 2018 figures—the last period in which

“relatively stable trade patterns were observed.”

Non-EU trade for the UK fell by 0.8% over that period; EU trade fell by an enormous 23.1%. That shows clearly the difference between Covid-19 and the TCA. How can the Minister explain the difference in that fall?

My Lords, I read the ONS report with interest. It confirms the position on trade, which I have set out on several occasions before: that there are a number of factors prevailing here. It is true that 2018 may well have been the last full year of normal trading conditions, but we are still in a pandemic. Economies have not returned to normal, so it is not entirely surprising that trade figures have also not returned to normal at the moment.

My Lords, perhaps the most pressing issue facing the country, other than Covid, is discerning the best way forward post Brexit, economically and in other ways. Whether drawing up an impact assessment would be the most helpful method is doubtful in this case. However, does my noble friend the Minister agree that a full evaluation of the new opportunities that he has mentioned is now essential?

My Lords, I agree with my noble friend that there are huge opportunities from Brexit, and we are taking those forward as set out in the Government’s legislative programme: a subsidy control Bill, a procurement Bill, a National Insurance Contributions Bill, a freeports programme and so on. These are all huge opportunities. It might be premature to do an immediate evaluation of the effect of all those before they have been introduced and brought into force, but of course impact assessments will go with the necessary legislation in this area.

My Lords, I am sure the Minister is well aware of the excellent work of the Centre for European Reform under its director, Charles Grant. I would like his reaction to the latest report authored by its distinguished economist John Springford, published on 12 May, about the first quarter of trade data. The conclusion is that

“leaving the single market and customs union had reduced UK trade by 11 per cent in March 2021. That is on top of a 10 per cent hit to trade between the referendum and leaving the single market.”

He goes on to say that several more months have to pass before we can be certain of these impacts, but that

“it is becoming clearer that the impact cannot be dismissed as temporary.”

Does the Minister agree? Is he proposing to set in hand immediately a review of how these problems can be mitigated?

My Lords, I looked at the CER report with a lot of interest. It is one in a series of reports that has, I think, been subject to some methodological debate, at least. I am not sure I personally think it entirely valid to set up a kind of mock economy based on other parallel economies and draw conclusions from that, which I understand to be the methodology. I do not think we dispute that there have been changes in trade patterns in recent months, but as the ONS said in its report published on Tuesday:

“It is difficult to fully detangle the impact the coronavirus and EU exit had on UK and international trade while they are still having an influence.”

That remains the case.

Can the Minister include, in any assessments he can be persuaded to carry out, the loss of EU nationals in sectors such as horticulture and social care? It is reported that workers may be brought in from Belarus and Russia to pick our fruit and veg, in replacement for EU nationals. Can he rule that out? Do the Government not think it better to invite some of the EU nationals back to help us in those sectors, rather than let them be detained and deported when they come for a job interview, as permitted under the Immigration Rules?

My Lords, one of the great benefits of ceasing to be a member of the European Union was that we could establish our own immigration system, and indeed we have done so, on the basis of the points-based system that has been extensively discussed and implemented. The advantage of that is that it gives us control of who we wish to let enter the country, either temporarily or permanently. Obviously, when we make that assessment we look at the industries, the economics and the broader situation. We will continue to do so when we make those judgments.

The Minister and the Prime Minister seem to claim that they did not know quite what the protocol would imply and how tricky it would be to make it work. In front of our European committee last week, the Minister confessed that he was a bit surprised about how disruptive it was, and said it could remain

“a bit bumpy … for some months”.

Is it possible that, because the vigorous work was not done before that protocol was signed, he is surprised by the implications of it? Even now, it might be helpful if he publishes the legal advice that was available at the time.

My other question is this. Given that there are still very many decisions to be taken, both by the Government in implementing the agreement and together with the EU in the Partnership Council, can he undertake that there will be proper impact assessments before big decisions are made and that these will be published and discussed widely, so that he has the benefit of the wisdom of Charles Grant and others before big decisions are taken?

My Lords, on the Northern Ireland protocol, the issue is that the protocol is a very delicately balanced document designed to support a very delicately balanced agreement—that is, the Belfast/Good Friday agreement. When the protocol is implemented it needs to have regard to that balance and the set of provisions that try to protect this delicately balanced situation. At the moment, in our view, the protocol is not being implemented in a way that reflects that balance. It does not reflect the full dimensions of the Good Friday agreement, east-west and north-south, and that is at the root of the difficulty. That is not what we expected when we agreed it, but we still hope that we can get into that situation in discussions with the EU in the weeks and months to come.

On future impact assessments, when legislation is needed to implement reforms or changes, whether these result from the TCA or from anything else, there will of course be an impact assessment. That is the usual practice.

Does my noble friend agree that it is absurd to attempt to measure the impact of Brexit in such a short term, as suggested by the noble Lord, Lord Purvis, and others, and that other factors will be difficult to separate from Brexit? Above all, new policies, whether they be domestic policies or trade agreements, take time to build up, and the impact of Brexit over one year, five years or 15 years will be very different. Do all these questions not sound suspiciously like attempts to rerun the Brexit referendum, and is it not time that we all recognised that the result has to be accepted and we should move on?

I agree with my noble friend. These questions have been extensively debated over the last five years and the range of views on that subject has possibly not changed significantly over that period. Our view is that the medium-term benefits of being a full democracy, of having control over our own laws and regulations and having the ability to tailor them to our own requirements as a country, will be of huge benefit to us, so we are very confident that those benefits will materialise. However, he is right that five months after the end of the transition period is a bit soon to be 100% clear about that.

My Lords, all supplementary questions have been asked.