2018 09 – Parliamentary Notes

Parliament Notes

by Dick Barry

Future Relationship Between the UK and the EU 18 July 2018

The opening speech by Dominic Raab, Secretary of State for Exiting the EU, has been omitted to enable inclusion of Keir Starmer’s reply for Labour.

Keir Starmer (Holborn and St Pancras) (Lab) The Prime Minister insists that her Brexit plan will deliver a “smooth and orderly” exit from the EU. Anyone looking in over these past few weeks will be bound to conclude that nothing could be further from the truth. The Chequers agreement took two years to reach and two days to unravel and, even in the past hour and a half, the Secretary of State for Exiting the European Union has said that we should get behind it. The right hon. Member for Uxbridge and South Ruislip called it the “miserable permanent limbo of Chequers”

to great cheering from that part of the Chamber.

A White Paper that should have been published before article 50 was invoked arrived late for the statement last week and, after this week’s votes, lies in tatters. There have been daily resignations and knife-edge votes, and we see a Government clinging on literally vote by vote by using, as I understand from last night, threats of no-confidence votes and of a general election to achieve a result and, it seems, by breaking pairing arrangements with an MP on maternity leave. I listened carefully to what the Prime Minister said about that earlier, but I ask the Secretary of State to explain how the Tory party chairman, the right hon. Member for Great Yarmouth (Brandon Lewis), accidentally voted on two crucial votes and yet managed, presumably deliberately, to abstain on the others as agreed.

Now the Secretary of State is trying to sell a White Paper that he had not seen until last week and in which, in many respects, it is hard to believe he really believes. It is already dead in the water. That is before he has even had the chance to meet Michel Barnier.

Although some Brexiteers predicted that the negotiations with the EU would be the easiest in history—that was the Secretary of State for International Trade—and that new trade agreements would be signed by March 2019 with countries totalling 10 times the geographical size of the EU, which was the corker from the former Secretary of State for Exiting the European Union, most of us recognised that, in honesty, the Brexit process would be very complicated and very difficult. I have always accepted that negotiating Brexit would be a challenge for any Government.​

What we have seen in the past few weeks is not just a weak Government struggling with the inevitable complexities of Brexit; this is simply the latest battle of a political party at war with itself. A war once contained in the Conservative party now threatens to engulf the country. For 30 years or more the Conservative party has been engaged in a civil war over Europe, and the national interest has been the collateral.

The European question has brought down the Conservative party’s last three Prime Ministers, and it could well bring down this one. Margaret Thatcher was completely at odds with her Cabinet on the exchange rate mechanism, and it eventually led to her downfall. John Major grappled with his Maastricht rebels, and we know how he referred to them. Indeed, that accidental recording of John Major’s comments has resonance today: “The real problem is one of a tiny majority…a party that is still harking back to a golden age that never was, and is now invented.”

Then we had David Cameron, the man who told his party to stop “banging on about Europe” before calling a referendum, losing it and then riding off into the sunset.

While the Tory party fights with itself over Europe, as we have seen in the past couple of days, inequality continues to grow, the housing crisis spirals out of control, our NHS and public services groan under the cuts to their budgets, and any principle to guide our foreign policy has fallen by the wayside.

Frankly, most people are sick and tired of this Tory war. Whether they voted to leave or remain, most people look on aghast at the mess the Government are making of Brexit; we have all had those comments made to us in the past few days.

People are aghast at the threat that that approach poses to jobs, the economy, peace in Northern Ireland and our place in the world. So I have a simple message to the Prime Minister and to the Government: this has got to stop. The Tory party has no right to risk the wellbeing of our country in this way or to plunge our politics, our Parliament and the wider country into the kind of chaos we have seen in recent weeks.

Anybody who has looked in on the past two days and seen the infighting on the Conservative Benches would  question whether that process cannot start with the Tory party. I have laid out the history because this is a deep divide, which has been at the heart of the Conservative party for decades. It has been waiting to break out since the referendum result. It has been contained time and again, but now it has broken out. Now it more than risks the Conservative party; it risks the future of our country, and that is why it has got to stop.

The flaws in this White Paper and the mess the Government find themselves in do not just stem from the history of Conservative party splits over Europe—there are mistakes of this Government, too. After the referendum, we needed decisive leadership to bring a divided country together—to honour the result, but also to speak for those who voted remain. We needed a vision where everybody could see their future, and we needed to ensure that the social and economic causes of the referendum were addressed. Instead the Prime Minister set out, in October 2016, impossible and extreme red lines: no customs union; no single market; having nothing to do with a European Court; having no common EU agencies. She also had no plan to avoid a hard border in Northern Ireland. In addition, she pushed away Parliament. There was a moment when she could have sought its backing, but she pushed it away and avoided scrutiny. None of the speeches she has ever made on Brexit—the “House speeches”—have been put to a vote in this Parliament to see whether they would be approved. She has rejected sensible amendments and proposals from across the House to make Brexit work. What is the result? It has taken two years to produce this White Paper and it has lasted less than a week.

I turn to the facilitated customs union arrangement, because it demonstrates how unworkable the White Paper is. It is based on the idea that traders can reliably  distinguish at the border between goods intended for the UK and goods intended for the EU. Paragraph 16a of the White Paper says that “where a good reaches the UK border, and the destination can be robustly demonstrated by a trusted trader, it will pay the UK tariff if it is destined for the UK and the EU tariff if it is destined for the EU.”

The idea is that, at the border, someone can safely distinguish between goods that are going on to the EU and those that are not and then apply different tariffs and different regimes to them. Whatever “robustly demonstrated” means is not set out, but it is a complicated two-tier system, which is why business has been so concerned about it. It involves the idea that we will account to the EU for the tariffs that are collected. If the destination of goods is not known, the higher tariff is paid at the border and recouped at some later stage. That is a hugely complicated two-tier system, with a third system overlaid for goods the destiny of which is not known.

I have heard it said that, happily, for 96% of goods, the destiny will be known on the border. The reference for that is footnote 6 on page 17 of the White Paper. I do not know whether the Secretary of State has chased that footnote, but I have. I challenge him to explain on some occasion—now, if he can—how that 96% figure is arrived at, because it is not at all clear from that footnote. However, the important point is this: whether it is 96%, or some lesser percentage, there will need to be checks to ensure the integrity of the system and to avoid abuse.

The solution that the Government have put forward is the tracking mechanism that was floated last summer. It is an interesting idea; it is a shame that it does not yet exist. It is no good Ministers on the Front Bench shaking their head. If the position is that there will be no checking at all after the event to see whether the right tariff was indeed paid, to avoid abuse or to protect the integrity of the scheme, I will let the Secretary of State intervene on me to say that the proposal is that, as goods pass the border, that is it—no check. If that is not the case, he must accept that, as with any system, whatever the percentage, rightly designated or not at the border, there will have to be tracking systems to check that the correct tariff was paid; otherwise, it is very obviously open to gross abuse.

Alex Chalk (Cheltenham) (Con) The right hon. and learned Gentleman is giving, as one would expect, a forensic and detailed scrutiny of these proposals, but the end point of his argument must be that there should be a customs union. I understand the point, but has he made any assessment of the extent to which, in the country, there would be a sense of betrayal, which would place the disquiet that has taken place in this House into a cocked hat? Does he have any assessment of that?

Keir Starmer The referendum answered the question, “Do you want to stay in or leave the EU?” We are now grappling with the question of what the future arrangements should be. We have to safeguard the manufacturing sector and we have to keep to the solemn commitment that there will be no hard border in Northern Ireland. Anybody who has looked at the issue has accepted that the only way to keep to that solemn commitment on Northern Ireland is to have a customs union with the EU.

The second half of the intervention by the hon. Member for Cheltenham (Alex Chalk) implied that anybody who voted leave would not countenance a common rulebook on goods; well, that is in the White Paper, because we have all had to work through the practical consequences of the referendum. It is no good to take such an extreme interpretation of Brexit that we wreck the manufacturing sector, abandon the service sector and abandon the solemn commitment to Northern Ireland. We have all been grappling with those issues for two years and we have to stop this suggestion that to put forward any practical arrangement for moving forward and safeguarding our country is somehow to frustrate or betray the referendum.

Let me go back to the facilitated customs arrangement. It is a complicated, two-tier arrangement that involves different tariffs being charged at the border and, if it is not known what tariff should be taken, it involves the tariff being reimbursed later if it was wrong.

It is no good the Secretary of State shaking his head, because that is what it says in paragraph 16 of the White Paper. It is complicated. It is no wonder that businesses have said that they are sceptical about it and it is no wonder that the EU has said that it does not think it can operate such a system. It is no doubt for that reason that paragraph 17(a) says, after a description of the arrangement:

“However, the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

There is no reading of that other than, “This is so complicated and bureaucratic that we know the EU will not be prepared to do it and we are not going to ask it to.” There is no other reading of that sentence.

Enter Monday’s European Research Group new clause 36, which says: “Subject to subsection (2), it shall be unlawful for HMRC to account for any duty of customs or VAT or excise duty collected by HMRC to the Government of a country or territory outside the United Kingdom”, unless “arrangements have been entered into by Her Majesty’s Government and that government under which that government will account to HMRC for those duties and taxes collected in that country on a reciprocal basis.”

In other words, it will be unlawful for us to collect and account for taxes at our borders unless other countries and territories—the EU27—collect tariffs and account for them for us. It will be unlawful. The White Paper says that we are not going to ask the EU to do it, but new clause 36 says it will be unlawful if the EU does not.

Dominic Raab indicated dissent.

Keir Starmer I invite the Secretary of State to intervene if he wants to quibble with that analysis. By that amendment, the Government have cut across their White Paper and inevitably made it more difficult for the Secretary of State to negotiate with the EU when he goes there tomorrow, because the EU has said, “This is not attractive to us and we don’t want to do this.” The White Paper says that we will not ask the EU to— presumably, as part of that discussion, that makes sense as the logical next move—but Monday’s new clause, which was a wrecking amendment, has now made it unlawful for a sensible way to be found through.

This is not just a forensic challenge to the White Paper; it is fundamental. Absent a workable customs arrangement, the Government have no answer to the question of how they would protect the manufacturing sector. Absent a workable customs arrangement—

Dominic Raab The right hon. and learned Gentleman’s analysis is not that forensic, because—inadvertently rather than deliberately, I suspect—he omits the key words from the White Paper:

“The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue. On the basis that this is likely to be the most robust approach, the UK proposes a tariff revenue formula”.​

That, of course, will be agreed as well; that is what the negotiations are for. It is set out plainly and squarely in the White Paper, and I think he knows that.

Keir Starmer I anticipated that challenge, and I anticipated that sentence. Let us read the sentence:

“The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue.”

Will it be reciprocal, or not? If it is not reciprocal, it will be unlawful; that is the difficulty. If it is intended to be reciprocal, what is the point of the sentence reassuring the EU that

“the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK”?

Whatever the arrangement is, we know one thing about it: it will not involve the EU applying UK tariffs and trade policy at its border. Otherwise, what is the point of that qualification?

Dominic Raab I am afraid that the right hon. and learned Gentleman is making a false distinction. The key line in the paragraph is that “the UK proposes a tariff revenue formula, taking account of goods destined for the UK entering via the EU and goods destined for the EU entering via the UK.”

That is the most explicit statement of reciprocity. What more could he expect?

Keir Starmer I invite the Secretary of State to intervene just one more time. What is the point of the sentence that follows the one that he has just read out?

Dominic Raab It is the exception to those arrangements, which is that we are not requiring the EU to levy the tariffs.

Keir Starmer This must be my failure to comprehend. There is an arrangement whereby tariffs are applied at the border and accounted for. The UK is not proposing that the EU applies the UK tariffs and trade policy at its border for goods intended for the UK, so how is it going to account for them?

Unless there is a customs arrangement that works for manufacturing, there is not an arrangement that works for manufacturing. The Government last night voted down an amendment to say, “If we cannot make something else work, we will have a customs union.” So if this does not work, there is nothing for manufacturing. Equally, if this does not work, there is nothing for Northern Ireland.

The Secretary of State shakes his head, but if this does not work, what is the plan? If he wants to intervene, that is fine. If this plan does not work—if this facilitated customs arrangement is not acceptable—the default, according to the Government, is not a customs union. What is the plan?

Dominic Raab This model will work. I gently say this to the right hon. and learned Gentleman: if he cared about it that much, why did the Labour party go into the last election committed to having an independent trade policy, which can only mean leaving the customs union?

Keir Starmer I really do not like the Secretary of State saying, “if he cared about it that much”. The suggestion that we are not both engaging in a difficult analysis of the White Paper with the interests of our country at heart is not fair. I care about this greatly, because without the right arrangement, I genuinely believe that manufacturing in this country will be at risk. Having worked in Northern Ireland for five years, I genuinely believe that, without a working arrangement, the solemn commitment to no hard border in Northern Ireland may not be kept. It is really serious, and point scoring about whether one is serious about it or not does not help; doing so demeans the Secretary of State in his role. It is not the way to conduct such debates.

It is not just the manufacturing sector; the White Paper’s proposals on services reveal a huge black hole. Likewise, the proposals on rights and protections are simply inadequate. On social rights, employment rights and environmental rights, there is a non-regression approach: we will not necessarily keep up and we will not necessarily improve, but things will not necessarily get worse.

There is no clarity on the role of the European Court of Justice. [Interruption.] The Secretary of State says, “It ends”, but it clearly does not end. The European Court has two different primary jurisdictions: first, dispute settlement; and secondly, reference. That is the jurisdiction that it has had, as he very well knows, with his experience. The second of those is being preserved for everything in the common rulebook. That is why it has caused such difficulty within his own party. The jurisdiction of the Court would exist on reference procedure for that wide range of issues, and he well knows it. It will operate, I should imagine, in precisely the same way that it operates now. That is, there will be a reference to the Court, the Court will decide the question before it, it will give a ruling and an interpretation, and that interpretation will be binding, because if it is not, there is no point in that reference procedure, as he knows.

Dominic Raab indicated dissent.

Keir Starmer Well, if the Secretary of State is going to suggest that the reference to the Court is for a ruling that is not binding, I will be very interested to hear about it, because there is not much point in referring something to a court for a ruling and then saying, “Well, it’s very nice but we’re not going to apply it.” The whole thing only works if the ruling of the European Court can be binding.

The proposal for the labour mobility framework says things about business trips and tourism, but is completely silent on the terms under which EU citizens will be able to live and work in the UK and UK citizens in the EU.

The grim reality is this: it has taken two years to get to this point, yet, on analysis, there is nothing there—or, more accurately, there is nothing that the warring Conservative party can agree on. The Prime Minister’s plan is exposed as unworkable and unacceptable to her own party, but she cannot move forward, as Monday night showed, and she cannot move backwards, as last ​night showed. That is not taking back control; it is no control—stalemate. But the country cannot keep paying the price for these divisions in the Conservative party. We need a Brexit plan that can unite the country and protect jobs and the economy, and I am sorry to say that this White Paper is not it.