My right hon. Friend is right. There is agreement across leave and remain, and I hope that this is an issue that can unite the House and that the Government will reconsider.
Last Thursday, I was in Berlin discussing Brexit with a German Government Minister, and he asked me what I thought the Government would do next on customs and trade. It was hard enough to talk about—would it be max fac, buffer zones, double-hatted regulations, backstops, front-stops, any possible customs arrangement or partnership, and so on? What was even more embarrassing, however, was that, even as we were speaking, I had to admit that I did not know whether by the end of the meeting the Brexit Secretary would still be in place—he was in and out of No. 10, apparently about to resign—and the Foreign Secretary was promising meltdown and telling us all, “Don’t panic!”. We are embarrassing ourselves across the world with this “Dad’s Army” version of Brexit. We are in danger of turning ourselves into a national joke by not facing up to the real issues.
The Government say they do not agree with the Lords amendments on the customs union and the EEA, but we still do not know what they want instead. As others have said, the new customs arrangements amendment is a further fudge that just kicks the can down the road again, even though the road is running out.
Ministers should accept that, although they have been wrestling with this issue and with each other for 18 months, none of their customs options works, either for Northern Ireland or, crucially, for manufacturing industry, which is the spine of our economy. The technological max fac will not be ready for years; it does not solve the problem of rules of origin checks, nor can it avoid camera infrastructure at the Northern Ireland
border. It will leave businesses with what Her Majesty’s Revenue and Customs now says could be a £20 billion annual bill for the bureaucracy involved in explaining where all the ingredients and components come from in a fully integrated supply chain.
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The customs partnership is both bureaucratic and incomprehensible. Only a customs union will give manufacturers the deal that they need. Manufacturing towns across Britain voted to come out, not to lose out. This week, Yorkshire and the Humber CBI and TUC joined local businesses and representatives—both leave and remain—to argue for a customs union as the best deal for Yorkshire manufacturing. Moreover, only a customs union will even give us a chance of addressing the issue of the Northern Irish border. We are the custodians of a peace that was hard won, not by us but by so many others who came before us. We must not be the ones who carelessly throw it away.
Let me now say something about the single market, because we have not yet debated it properly in the House. I will refer to various Lords amendments, and to both amendment (a) and amendment (b), tabled by my right hon. Friend the Member for Leeds Central (Hilary Benn).
At the heart of the single market is the concept of the level playing field, enabling businesses to compete on equal terms, giving workers proper rights so that they are not undercut, and protecting environmental and health and safety standards. I understand why the hardest of free marketeers will oppose that. It is also the case that people voted to be outside a political union, and outside membership of the EU. However, I still believe that there is a majority across the country and across the House—and there would probably be a majority in the Government if individual Ministers were allowed to be honest about the issue—in favour of a close economic relationship, even from outside the EU. That means some version of single market participation: not just access but participation, or as close to it as we can get in the negotiations.
Some Members on both sides of the House have concluded that they cannot support either the EEA or any single market model, because they believe that we need immigration reform and because of the European Commission’s response that the four freedoms must be indivisible. I understand that position. For many years, as well as calling for more support for refugees, I have called for reform of free movement, even from within the EU. While I believe that immigration is crucially important to our future, I also continue to believe that change is needed. I believe, for example, that we need to tackle the problem of some employers’ use of free movement as a reserve pool of low-skilled labour to undercut terms and conditions; and we need reforms to rebuild consent and consensus around the immigration system. However, instead of turning that into a reason to rule out trying to get as close as we can to full participation in the single market, we should be having a serious debate about what the real options and objectives for our country might be, and the difficult choices and trade-offs that might be involved.
Our Select Committee, the Home Affairs Committee, is trying to do that. It is looking into immigration and trade options and trade-offs. It concerns me greatly that
so far we have had nothing from the Government in that respect, although immigration was one of the central issues debated at that time of the referendum.
Yesterday the Committee heard about a range of immigration options that might be compatible with single market participation in some form or other. We heard about safeguarding measures, including emergency brakes under article 112 of the EEA agreement; permanent safeguarding measures and caps negotiated by Liechtenstein; the current measures negotiated by Switzerland, with requirements to advertise jobs locally first; the previous immigration caps operated by Switzerland in 2012 and 2013, based on its 1999 negotiation; the separate arrangements for Ukraine as part of its association agreement with the EU; new options for emergency brakes or safeguards, put forward by Professor Ambühl, himself a former Swiss Foreign Secretary; the registration scheme operated in Belgium; the benefits regime proposed by Germany; reforms on posted workers proposed by France; reforms on agency workers; and labour market measures from Scandinavian countries, Switzerland, and even Germany and France that prevent undercutting.
I am not today advocating any particular measures, because our Select Committee inquiry is still under way. Nor am I claiming that each and any of them is either the answer to British challenges or achievable in negotiation, and I do not pretend that any of them will give any one of us exactly what we want, but compromises are going to be needed, and the point is that those with some of the most experience of negotiating on free movement in Europe told us yesterday that they think these options could potentially be part of a single market deal. That is why my right hon. Friend the Member for Leeds Central, the Chair of Brexit Committee, and I have tabled our amendment which adds “appropriate safeguard measures” to the EEA amendment to make it clear that the Government’s objectives can and should include both a close single market relationship and immigration reform.
Let me turn now to whether the EEA is the right option or the best model. From the evidence we heard yesterday, it is clear that the EEA as it stands is not the ideal arrangement for Britain, that it would be better to have our own version, and that there are real challenges that have to be addressed on future rule taking. especially on services. But we may have more flexibility, as witnesses recommended to us yesterday, in a bespoke arrangement as Switzerland has, or an association agreement as the European Parliament has suggested. However, this will draw on, and have parallels with, much of the existing EEA regime. I also do not think we should be ruling out the EEA as the backstop, especially if the future partnership takes longer to resolve. It would prevent us from crashing out not just in 2019 but in 2021, without a new deal in place. We accept that we need a backstop for Northern Ireland, but we should be looking at a backstop more widely for all the other issues as well.
I accept that we are not heading towards consent or consensus on this today, however. This reminds me a bit of a 2003 debate we had on reform of the House of Lords. There was an overwhelming majority in favour of reform of the House of Lords, but seven options were put to Parliament and everybody voted in different ways on different ones, and none of them got through, and we have had no reform of the House of Lords since then. That is similar to the situation we are in now, and we are going to have to work harder if we are going to
reach consensus among those of us who believe in a close economic relationship and come up with something that can pull us together rather than divide us. I accept that people are interpreting this amendment from the Lords in different ways—either as the objective or as the backstop, as I think it should be—but if we are going to make progress we must work at achieving consensus.
My right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) the shadow spokesperson on Brexit has asked us to abstain. This is a difficult decision for me, and I feel very uncomfortable in doing so. However, in the interests of getting that consensus at the next stage when something comes back from the Lords or when we get to the Trade Bill, I will do as he asks today, although I have huge sympathy with those who will choose to do differently. But I ask my Front-Bench team in return to look very seriously at this issue of the backstop, because this is crucial and the clock is ticking. The Government keep kicking the can down the road; we cannot all keep kicking it down the road as well. We cannot carry on like this; we have a responsibility.