Brexit: Domestic and International — House of Lords, 2016-10-27
Topic: Macroeconomics
John Horam (Conservative, Centre-right): My Lords, I do not always listen to the Whips, but I will endeavour to do so on this occasion I thank my noble friend Lord Leigh for this debate. As an economist, I certainly appreciate an economic debate, although I do not think "It’s the economy, stupid" all the time. None the less, I think we are glad to have an economic discussion. I also congratulate my noble friend Lord Gadhia on his maiden speech. We will be very glad to have his particular experience in the House of Lords over the coming years I agree with my noble friend Lord Leigh that free trade is indeed extremely important. As someone who has founded a company which exports more than 80% of its products—even more than the famous company of which the noble Lord, Lord Bamford, is managing director—I am certainly in favour of free trade and always advocate it when possible. However, I would point out to the House that there are losers as well as winners in the free trade argument. Although there can be a net gain from free trade, none the less some people lose. We saw that in the Brexit debate I am, like my noble friend, an optimist. That may be something that is just natural to our personality—I recognise that in him—but I also feel that we are right to be optimistic in the present situation. None the less, we are in a difficult situation, and I think the noble Lord, Lord Haskel, made the point in his opening speech that uncertainty is the enemy of business. It is, and we have already seen the Chancellor make the point, on a number of occasions, that the uncertainty of the present situation is deterring future investment. Present investment is going ahead, but there is a deterrent effect on business investment. That is why I hope that, in the coming Statement next month, we will have an increase in government investment to make up the gap in business investment. I certainly hope that that will happen because it is necessary We are now poorer. We are now poorer than we were before the referendum took place. We are poorer because sterling has gone down and food prices have gone up. I would make the point, which the Prime Minister has made at some length, quite well in my view, that it is the people at the margin who are suffering So what do we do in these circumstances? I believe the right approach in these circumstances is to remain a member of the European Economic Area and, if possible, rejoin the European Free Trade Association. That may not be possible—I fully understand that—but if we cannot do that, I would certainly want a bespoke agreement which is as similar as possible to the existing arrangement. Under the EFTA arrangements, we would have immediate clarity. If the Government said in their expected Green Paper that they would be pursuing a course of action whereby we would remain in the European Economic Area, that would give immediate clarity to all investment decisions. Immediately, people would say, "Well, there we are. We know where we stand. We can carrying on investing" The advantage of that is that, first, under the EEA agreement, you can action Article 112, which allows you to deal with immigration if there are societal problems with it. That could quite easily be invoked. Secondly, the European Economic Area agreements do not involve the European Court of Justice. Therefore, both those elements of the Prime Minister’s red lines are met. Finally, carrying on as a member of the European Economic Area would relieve us of the frankly crushing burden of having to renegotiate all our trade and tariff barriers in the WTO. There are some 160 members of the WTO. As the noble Lord, Lord Davies of Stamford, said, it would take at least five to 10 years, if not longer, to renegotiate all that Those who advocate a hard Brexit say, "We should take the risk, the risk is worth it", but I would argue that it is not we who are fairly well-off—some of us are extremely well-off; I do not include myself in that—who will bear the burden the burden of that risk; it is the poor, the people at the margins of society. As the Chancellor rightly said, they did not vote for Brexit to get poorer.