It is a pleasure to serve under your chairmanship, Mrs Moon. My remarks will first address the petition. They will then address the Government’s approach and advocate for an alternative to their binary position of either securing a great deal or crashing out with no deal at all. The petition paints the starkest picture of what a truly hard Brexit would look like. A few colleagues have flirted with the idea of taking World Trade Organisation terms or leaving the European Union without a deal, but I do not believe any of them would advocate doing so without even attempting to strike an agreement with our European partners.
The petition calls on the Government simply to walk away, despite the announcement of sufficient progress in December. It is apparent that the supporters of the petition support the hardest of hard lines on Europe, but there is a far greater number of people for whom the picture is less clear. Many a remainer voted to stay, despite concerns about how the EU operates, and many leavers voted to leave despite legitimate worries about the potential impacts.
What is being proposed? Were the petition’s proposals adopted, there would be several impacts. There would be a significant hit on our economy, our international reputation and British citizens living in the EU. We must separate the two different no- deal concepts. The idea of reaching no deal after negotiations—in other words, a deal to have no deal—would be different from the no deal envisaged by the petition.
Just walking away would see massive disruption to our businesses, such as our airlines and our nuclear safety industry. We risk planes being grounded and nuclear power stations grinding to a halt if basic agreements are not in place. The economic impact would be significant, especially on our world-leading financial and business services industries. Tariffs on goods and services would be imposed and we would need to re-establish our own schedules at the WTO before we could even begin to set the agenda. Exports of goods and services to the EU27 in 2016 totalled £236 billion, amounting to 12% of GDP. Financial and business services constituted £51 billion. Leaving with no deal on goods or services would be a huge hit to our world-leading industries
The Bank of England estimates that no deal could lead to 75,000 jobs being lost, so it is vital to negotiate to try to secure an agreement. Likewise, some estimates say we could lose £10 billion a year of tax revenue from no deal. Even some non-EU trading partners rely on EU regulations to define the legality of their trade—the REACH regulations for chemicals, for example, would be most likely to be at risk. That would significantly impact sectors relevant to the north-west. The chemical, car and energy industries are all big employers in the north-west, where my constituency of Eddisbury is located.
There is also a human impact. Crashing out with no deal would mean any decision on EU nationals would be unilateral, leaving Brits in the EU in the lurch and the subject of whatever immigration laws applied to
non-EU citizens in the countries where they resided. Furthermore, those situations would change overnight. It would cause great uncertainty and alarm for the million-plus Britons living in the EU. People who have set up their lives in another country, who are living there peacefully and legally, would have to uproot everything if the suggestions in the petition were followed.
I agree with my hon. Friend the Member for Sutton and Cheam (Paul Scully) that we should support the Government in trying to achieve their aims in the negotiations. I support the Government’s commitment to building a deep and enduring partnership. The announcement of sufficient progress last month throws this petition into sharper relief as it shows that a deal should be possible and that it could be more favourable than the cliff edge or crashing out. I am pleased that my hon. Friend the Member for Wycombe (Mr Baker) stated that he wanted the eventual deal to be,
“of greater scope than any such existing agreement.”
That is encouraging, as it is apparent that existing trade deals such as the deal with Canada or the CETA deal do not go far enough to meet our demands, needs and interests. The issue is vital as the WTO working paper found that an ordinary FTA would cut UK exports of both goods and services to the EU by 40% relative to the current regime.
I welcome the commitment to building a global Britain, a nation committed to free trade across the globe. However, to have better arrangements with a country on the other side of the world than with the EU just the other side of the channel would be unwelcome. For Brexit to be worth it, we must see new trading partners come in in addition to, not as a replacement of, existing partnerships. I press the Minister to make sure that any deal includes the free movement of services as well as goods. The British economy is reliant on some of its financial and professional services industries for jobs and for tax revenue. Financial services exports to the EU, worth, as I have already outlined, £51 billion, are vital to our prosperity. London’s global pre-eminence and the financial services sectors in Liverpool and Manchester benefit the country as a whole.
On plan B of the WTO, my hon. Friend the Member for Sutton and Cheam spoke about using our time imaginatively, sensitively and constructively to make sure we do not crash out. I agree with that, and there is an alternative plan, a back-up plan, should no deal be achieved. An off-the-shelf deal of any nature would require compromise from Members of all parties. None of the options is perfect, but nor is any pragmatic proposal or plan. In fact, the European Free Trade Association would allow us to fulfil our commitment to respect the will of the people and the referendum vote. We would be outside the common agricultural policy and the common fisheries policy. We would be free of the risk of ever-closer union, which concerned some remainers as well as leavers. Some people, even some Members, raised concerns that they were misled over what kind of body the UK was entering into in the 1970s. Yet EFTA has shown itself to be clear. The organisation is strictly an economic grouping. It would also protect our economy, ensuring full access to the single market, including services.
Joining EFTA would give us access to its free trade agreements spanning 38 countries and more than 900 million customers. Access would come at a significantly
reduced cost compared with EU membership. Norway’s net contribution in 2015 was €115 per person compared with €214 per person for the UK. This would also give our services sector a significant degree of protection. The negative impact would be small, as compared to no deal on financial services, the costs of which I outlined earlier. I cannot think of a better way to demonstrate that we are leaving the EU but want to remain engaged with Europe than by joining EFTA.
Likewise, joining EFTA would have a beneficial impact on our long-term agreements with the EU, as many EFTA institutions are already recognised by the EU and relationships already exist between them. It might seem strange, but I am not alone in my positive view of EFTA. Indeed, many notable figures from the other side of the referendum debate were very positive about this arrangement.
“Wouldn’t it be terrible if we were really like Norway and Switzerland? Really? They’re rich. They’re happy. They’re self-governing”,
said Nigel Farage.
“The Norwegian option, the EEA option, I think that it might be initially attractive to some business people”,
said Matthew Elliott from Vote Leave and Business for Britain.
“Increasingly, the Norway option looks the best for the UK”,
said Arron Banks.
Daniel Hannan even wrote a paper for the Bruges Group entitled “The Case for EFTA”. My constituents were told that the single market was not being put at risk, that there was an option to be self-governing and to take back control and have all the benefits of the single market. They were told to vote leave because we could stay in EFTA, so I do not understand why the WTO is now plan B and not EFTA.
I hope I have made it clear from my remarks that I view the proposal of this petition as potentially devastating for jobs in my constituency. It would be a road to ruin. It endangers our prosperity and our international standing, as well as putting in jeopardy the rights of our countrymen who live on the continent. I am pleased that the Government are moving in the opposite direction to the petition, with their ambition for a deep and enduring partnership with the EU. I very much hope they are able to meet their goals and I will do what I can do support that.
I would, however, caution that this agreement must include a deal on free movement of services, especially financial and professional services, which are the basis for so much of our prosperity. Should the deal not be everything that the Government hoped and promised, the solution would be closer involvement with other international bodies such as EFTA, and not to turn our back on the liberal international order and try to go it alone.
5.8 pm