Speech delivered by Phil Wilson MP on the 25th October 2016, in the Westminster Hall debate Leaving the EU: Effects on North East Exports
I believe we can all agree the British people’s decision on June 23rd to leave the EU was the most profound decision to affect this country since the Second World War.
I very much wanted the UK to stay a part of the EU. I, like many in this House, wanted our country to remain. The country voted otherwise. The North East of England voted otherwise.
Their decision must be implemented. But as my honourable friend, the Member for Holborn and St Pancras pointed out, the country voted on the principle of leaving, but they did not vote on the terms.
Therefore it is the detail that is important.
The result of the referendum has created much uncertainty. Uncertainty for the long term prospects of the UK’s economy. Not just internationally, but nationally, in many boardrooms around the country. And I wonder how soon it’ll be before that uncertainty is shared in households in communities from south east England to Scotland. From County Durham to Northern Ireland. From Wales to East Anglia.
And how soon will it be before that uncertainty spreads from the boardroom to the shop floor?
I wanted to use this debate to explain the importance of the European single market to the North East of England. To raise issues and probe the Minister on what he, and indeed the Government, sees as the best option for the North East of England in a post-Brexit Britain.
I know the Minister shares with me the view that remain was the best option for the British people, but we have both taken on the responsibility in our own way of delivering the best deal for the UK under the circumstances, unlike the former or is it current, leader of UKIP, Nigel Farage, who abandoned the field of play once the outcome of the Referendum was the one he wanted to see. Like all populists, he was ready to pick up the megaphone to let us all know what he thought to be wrong. But when the argument went in his favour he wasn’t prepared to hang around to take the responsibility to put right those perceived wrongs.
So the Minister has the unenviable task of securing the best deal for Britain, and since he was someone who wanted to remain in the EU and also the single market, how is he going to convince his colleagues that maintaining access to the single market is the best option?
And furthermore, can the Minister tell us, in his response to this debate, how the Government is going to implement all the promises made by the Leave campaign and for which he now has ownership. Such as:
“Let’s give our NHS the £350 million the EU takes every week.” So said Vote Leave’s website and was emblazoned on the side of the campaign’s battle bus.
Or Vote Leave’s commitment to ‘hundreds of new schools’ in a campaign video on YouTube.
Then there was the abolition of prescription charges.
Then according to a Vote Leave press release on June 14th, “There is more than enough money to ensure that those who now get funding from the EU…will continue to do so…’
Then there was the promise of new roads.
The expansion of regional airports.
The Member for Surrey Heath even said there would be enough money for 14 Astute Class submarines in a Vote Leave press release of April 19th.
And then there would be money for pothole repairs, tax cuts, wages would be higher and fuel bills cheaper.
And no doubt Brexit would be a land of milk and honey. Where the sun always shines and every one would live happily ever after.
Minister, you are on record in one of your blogs as saying ‘there was no manifesto for ‘out’. Yes there was Minister, and the people voted for it.
For the people of North East England we must get this right. Because while my constituents may have voted to leave the EU, I do not believe they voted to be poorer.
They did not vote to put their jobs at risk.
They did not vote to see their region fall further behind.
And if I was them I can imagine how disappointed and betrayed I would feel if, on top of all this uncertainty, which was not there before, all the promises made by those, who supported the Leave campaign are not met. That disappointment deepened by the fact that so many of those who made these pledges now not only sit on the frontbench but will sit around the negotiating table negotiating our exit.
The Minister and indeed this Government, now has a duty to inform the British people how these promises are to be fulfilled. Perhaps the Minister can make a start today. And if they cannot be fulfilled perhaps the Minister can be straight with the British people and say so.
The EU single market is essential to the North East of England. 58% of the region’s trade is with the EU. A full 10% higher than the national average.
North East England is the only region that exports more than it imports.
Over 100,000 jobs in the region rely on trade with the continent.
Over the past 5 years almost 90 investment projects from Europe have created or safeguarded over 6000 jobs.
£1.1 billion worth of inward foreign investment, from EU members, over the last 5 years, has come to the North East of England.
According to the North East England Chamber of Commerce, and a report by Ernst and Young, the North East has seen the second highest increase in FDI investment growth, with a substantial 83% increase on last year in FDI projects, sitting just behind the North West.
In an Ernst and Young survey of investors regarding the link between the EU Referendum and Foreign Direct Investment, they asked how important access to the Single Market was. 79% of investors cited access to the Single Market as a key feature of the UK’s attractiveness. A figure higher than last year.
The same survey found that 52% of investors thought a slight change in access to the Single Market would affect the attractiveness of the UK as a destination for business. If there was a significant change that figure rose to 55%.
The North East England Chamber of Commerce has major concerns about future trade deals.
Membership of the single market has brought significant benefits to the North East of England, attracting business and creating jobs.
The Chamber states in its EU Referendum briefing paper of July 2016 that ‘There are also major implications for relationships with overseas markets where existing trade deals have been negotiated by the EU and for the future of trade documentation needed by businesses. Due to the complexities of these issues, there is significant concern among businesses about the UK Government’s capacity to address these issues in the required timescale before Britain exits the EU. Many of our members are also concerned about the effective flow of information so businesses are aware of any changes they need to make to their practices. Assurances about this are vital.”
What assurances on this issue can the Minister give to companies in the North East of England?
In the same briefing paper the Chamber said: “There is also….the hope and expectation that the anticipated benefits of Brexit in being able to conclude trade deals more quickly around the world will be realised. The new department headed by the International Trade Secretary…should aim to quickly set out its plans in this regard so businesses can see that Government is seeking to get beyond a damage limitation exercise to exploit new opportunities.”
Can I offer this opportunity to the Minister to lay out those plans today?
Business, Minister, needs certainty, and it would seem to me, that is the one thing in short supply at present.
As I am sure the Minister is aware, Japanese investment is key to the North East of England. There are around 50 Japanese companies in the region, including Hitachi in my own constituency, who now provide almost 1000 direct jobs with many more in a growing supply chain.
Nissan, 7000, direct jobs, 30,000 in the supply chain.
With 300 automotive companies in the region, the car industry in the North East produces £11 billion of sales and is responsible for over £5 billion in exports.
Throughout the referendum campaign I was clear in saying that if Britain voted to leave, companies such as Hitachi and Nissan would not immediately cease production, close their factory doors and ship out to the EU. But I still believe that if we are not part of the EU single market their potential for long term growth must be called into question.
And what growth there could be, could be at a cost to the Exchequer.
Following Britain’s decision to withdraw from the EU, Nissan’s Chief Executive, Carlos Ghosn, indicated the company may halt further investment in its Sunderland plant unless the Government would agree to compensate Nissan for any adverse financial impact from Brexit.
At the Paris Motor Show in August, Ghosn warned “important investment decisions will not be made in the dark”. He stated “if I need to make an investment in the next few months and I can’t wait until the end of Brexit, then I have to make a deal with the UK Government”.
He suggested “You can have commitments of compensation in case you have something negative. If there are tax barriers beings established on cars, you have to have a commitment for car-makers who export to Europe that there is some kind of compensation”.
Earlier this month, the Prime Minister met with Mr Ghosn in order to explore what assurances Nissan was seeking. The Financial Times reported the meeting came ahead of Nissan’s decision on whether to build its new Qashqai SUV in Sunderland, a decision which could be taken as early as November.
Following the meeting, Mr Ghosn said “Since Mrs May’s appointment, we have maintained a clear dialogue with the UK Government during this challenging time”.
He stressed “We want to ensure that this high-performing, high-employment factory remains competitive globally and continues to deliver for our business and for Britain”.
“Following our productive meeting, I am confident the Government will continue to ensure the UK remains a competitive place to do business. I look forward to continued positive collaboration between Nissan and the UK Government”.
On the face of it, these are nothing more but warm words, yet last weekend The Sun newspaper reported that Nissan is to announce they will be building the Qashqai SUV at their Sunderland plant. I hope they are. And I know that an announcement is imminent.
And if the new Qashqai model is to be built in North East England, what kind of compensation is Mr Ghosn anticipating? What price will Britain need to pay to keep Nissan in Sunderland that it didn’t need to pay before?
Don’t get me wrong, I want Nissan to stay, but I believe it is incumbent on the Government to tell us what that cost is.
Because it seems to me, that much vaunted windfall to the Exchequer from not being in the EU, won’t be available to spend on the NHS, if ever it was, because it will be needed to subsidise industry in a way we didn’t need to before.
The Japanese government is so concerned about Brexit, it published a 15 page document at the time of the G20 summit in China.
In the document, the Japanese government pointed out: “In light of the fact that a number of Japanese businesses invited by the government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”
The document also laid out several requests, such as the:
‘maintenance of the current tariff rates and customs clearance procedures”
And the: “introduction of provisions for cumulative rules of origins.”
Mr Chairman, the Japanese government has these two key reasons, and others, for remaining part of the single market and the customs unions.
My fear for the North East of England, is the consequences of all this uncertainty on the continued growth of the existing Foreign Direct Investment in the region, as well as attracting FDI in the future.
The Japanese, like many businesses in the North East, have asked for transparency in the Brexit negotiations. So you see, Mr Chairman, it is not only us Westminster politicians who are asking for transparency, it is business and the wider world too.
Can I say I agree with the Minister, when he said in a blog on his website on October 25th 2011: “A vote to come out of the EU would be to try to reverse nearly four decades of economic development….I am convinced that the advantages of membership outweigh the disadvantages.’
And as the Minister said to the BBC, just last month, “we must…. try to achieve zero-tariff access to this market of 500 million people in the EU.”
Again I agree.
But it would seem to me, in doing so, the government is setting out in a direction which they accused the Labour government of taking back in the 1970s, and upon which the Conservative Party frowned at the time.
In her closing speech at Conservative Party conference the Prime Minister said: “It’s not about picking winners, propping up failing industries, or bringing old companies back from the dead.
It’s about identifying the industries that are of strategic value to our economy and supporting and promoting them…”
Mr Chairman, that sounds very much like picking winners to me.
Let’s support our industry. Let’s develop an innovative industrial strategy, but don’t let’s write off whole industries. Millions of people may have voted for Brexit, but let’s not forget the millions that didn’t.
I am of the view that these Brexit negotiations are going to become very complicated.
And uncertainty will reign for some time to come.
So Minister, we know your preferred option is access to the Single Market.
But what form? The existing model? The Swiss model? Will we stay a part of the Customs Union? Does he agree with a report from his own government that leaving the Customs Union could cause a fall in British GDP of 4.5%? And that could reduce Foreign Direct Investment by as much as £9 billion with trading falling by as much as 15.6%?
Brexit is the defining issue of our time. And it is more than apparent that this government didn’t have any contingency planning in place to deal with the immensity of the task ahead.
The future prosperity of the North East of England, and indeed our nation, depends on getting it right.
And the answers to the questions I have asked today will give the Minister the opportunity to start to allay fears.
To provide certainty. Promote confidence and offer optimism.
To show vision and belief in our country.
Where we have the right to stand tall in the world, while acknowledging our responsibility to others.
I look forward to his response.