Iain Duncan Smith rejects amendments to Article 50 Bill

7th February 2017

Iain Duncan Smith rejects amendments to the Article 50 Bill which are back-door attempts to prevent or delay the Government triggering Article 50 and getting on with implementing the will of the British people as expressed on 23 June last year.

 

I do not intend to delay the Committee, as most of these amendments are narrow and address the very specific point that the hon. Member for Greenwich and Woolwich (Matthew Pennycook) raised.

I have a simple concern as to why there is such a peculiar sense of the vital importance of these particular forecasts, which give huge credit to the Treasury’s ability to forecast where we may be going in almost every sector. As my hon. Friend the Member for South West Wiltshire (Dr Murrison) said, many of the forecasts have been fundamentally wrong in the past, so I asked the Library how accurate the Treasury forecast of May 2016 turned out to be. It is worth relating exactly how accurate it turned out to be, even when the Treasury had such a huge array of figures and possibilities before it:

“In May 2016, the Treasury published forecasts for the immediate economic impact of voting to leave the EU. It forecast for a recession to occur in the second half of 2016, with quarterly GDP growth of -0.1% in both Q3 2016 and Q4 2016 forecast (a second ‘severe shock’ scenario was also shown with a deep recession occurring; under this scenario growth of -1.0% in Q3 2016 and -0.4% in Q4 2016 was forecast). In reality, the economy continued to grow at its pre-referendum pace, with quarterly growth of +0.6%”.

Now the figure has been adjusted again by the Governor of the Bank of England to close to 2%, with the prospect of further adjustments.

 

On the quarterly growth statistics, I understand that even knowing what is happening right now is often very difficult for the predicting entities. In fact, I believe they have had the correct numbers four times in 270 quarters.

 

The range of prediction from the Office for Budget Responsibility had nearly a £90 billion margin for error over the previous seven years; that £90 billion went from £50 billion on the plus side to £40 billion on the minus side. The problem we face is the sense that these forecasts give us any strong, real indication of what may happen in the economy. I raise this issue because the new clause and other amendments relevant to it make triggering article 50 contingent; it cannot be done officially until these forecasts are laid. This is not about consulting on them or their being made as a matter of the Government providing information. In other words, the article 50 letter cannot go until these are laid. All they do is inform the debate depending on what the forecasts are. From talking to economists, I am of the general opinion that we have had seven years of growth, and normally within the cycle we would expect to have a flattening at some point after this long period of growth. That would be the normal prospect, but economists will tell us that we are defying the normal prospects. Whether or not we have a natural process of slightly lower growth directly as a result of this longer period of growth, and what happens to the world economy and what is happening in the EU, is almost impossible to forecast with any great accuracy.

My point is that new clause 5 states:

“The Prime Minister may not give notice under section 1 until either HM Treasury has published any impact assessment…HM Treasury has laid a statement before both Houses of Parliament”.

With respect, I say to the hon. Member for Greenwich and Woolwich that this is not just a helpful attempt to get information to the House; it is exactly what he said it was not. It is clearly a back-door attempt to make it almost impossible for the Government to get on and trigger article 50. As my hon. Friend the Member for Dover (Charlie Elphicke) said, the referendum verdict was to trigger article 50. The people were not asked, “Shall we trigger article 50 only after we have laid various reports of notables who believe the economy is good, bad or indifferent?” They were asked, “Do you want to leave or do you want to stay?” They chose to leave and we have to get on with it. The idea that the Government are going to go into a negotiation without any idea about what they favour and what they think will, by and large, on the margins, be better for us is ridiculous.

The other point to make is that the House must recognise it is going to be swamped with information of this sort; every forecasting agency is going to be in the game of telling us where we are, and none will be the wiser. Everybody in the House will take the worst or best one, depending on what they want. If the OBR has a margin for error of £90 billion, people can take whatever position they want. But it does not change anything, because we are leaving. The nature of the agreement that we get with the EU, if we get one, is not going to be based on a bunch of forecasts. It will be based on what those negotiating for the EU think is in their general best interest and what we from the UK manage to persuade them is in our mutual best interest. That is what a negotiation is about.

Anybody who has been engaged in negotiation in business will know that you start with your base, bottom line, worst case for you and try to improve upon that, and the other side does the same. This is not going to be about one side saying, “I tell you what my forecast comes to. It tells me we are going to be better off. What does your forecast tell?” and the other side saying, “Ours says we are going to be better off and you will be better off, so which forecast are we going to take?” The battle of forecasts is a ludicrous and pointless exercise.

 

Of course this is not, as the right hon. Gentleman characterises it, going to be a battle of forecasts. But the forecasts are based on the same thing as the assessments people make when they are judging what will or will not be in their interests. They have a mental model, and sometimes these models can be put into mathematical form, and sometimes that is useful. Surely that is precisely what the City of London is doing when it says to the French, Germans and Italians, “You need us more than we need you.”

 

Yes, but the point is that we will be none the wiser. Members might think that a set of forecasts would somehow really inform their view, but after 25 years in the House, I would be astonished if they were right. Debates in this House are rarely really informed; they are mostly based on the judgment of individuals.

 

My right hon. Friend is making a very impressive case. [Interruption.] Given the reaction from the Opposition, I am tempted to quote from “Carry On Up the Khyber”—they don’t like it up ’em! I am sure that, like me, my right hon. Friend was impressed by the candour and honesty of the chief economist of the Bank of England, Mr Andy Haldane, when he pointed out that the economics had had its Michael Fish moment last year, when so many predictions about the dire consequences of Brexit were proven to be wrong within weeks and months. Given the candour of one of the most distinguished economists in this country, should not those who call for impact assessments, attributing certainty to them, show similar humility?

 

I agree, and I am tempted to refer to my predecessor, Lord Tebbit, who said, “When they’re screaming, shouting and laughing, carry on, because you must be in the right place.”

The head of the Office for Budget Responsibility is on the record as saying that in the end, almost all forecasts are wrong—

 

What does he know?

 

Exactly; he was wrong most of the time, so he has a little knowledge of being wrong, as do many in this House. The point is that the new clause is not really about being informed; it is about delay. It is an attempt to be able to say later, “We’re not satisfied with that. It doesn’t quite comply with what we passed in the new clause, so you’re not able to trigger article 50.” The honest truth is that the Government have to go away with their best will and best endeavour and try to arrange to get the best deal they can.

We should look around us and listen to what various politicians in Europe are saying. We keep forgetting that their position is really what will end up setting the kind of arrangement we get. I was interested to read 24 hours ago that the German Finance Minister has changed his position. He has now said that there is no way on earth that the Germans should have any concept of trying to punish the United Kingdom; quite the contrary, he said that they need the City of London to succeed and thrive, because without it they will be poorer. He went on to say that they will therefore absolutely have to come to an arrangement with the United Kingdom, because it is in all of our interests. That is the best forecast we can get, because it is about what people believe is in their mutual best interests.

 

Further to that point, has my right hon. Friend seen the comments from the Bundesverband der Deutschen Industrie, which is the German equivalent of the CBI? It, too, makes the point that there should be no attempt whatsoever to punish the UK for Brexit, because it is aware of the adverse consequences that that would have for German industry.

 

Exactly. It is interesting that it is only since my right hon. Friend the Prime Minister made her excellent speech in which she set out the 12 points that were subsequently fleshed out into a White Paper, and made it clear what the British Government were not going to be asking for—any special pleading about the single market and so on—that we have begun to see engagement from some of those throughout the European Union who have a vested interest in seeing the best deal.

The other day, I had the privilege of engaging with a company in the pre-packaged potato industry that turns over €400 million a year. Although it sells all over the world, 39% of its product is sold to the United Kingdom, and it does very well out of that. Even as we speak, it is grouping together to cajole the relevant Governments and persuade them that the very last thing it wants is to have its business wrecked by some artificial attempt to put up a block to the United Kingdom. These things are already in train, and they are nothing to do with forecasts and all to do with people caring about their futures and jobs.

 

I agree entirely with my right hon. Friend, but these new clauses come before any such rational intervention by reasonable business people across Europe. They are based on the fact that Opposition Members genuinely believe in their doomsday forecast, and they are just waiting for it to play out. That is the whole point of delaying the process—it is in the hope that when the sky falls in, the British people will change their minds.

 

Order. I am the most mild-mannered and tolerant of men, but interventions are becoming slightly overlong. Interventions, even in Committee, are interventions, not speeches.

 

Thank you, Sir Roger, for that explanatory intervention. May I say to my colleagues that I am still prepared to take interventions should they wish to keep them short?

 

We have just spoken about the power and the necessity of the City of London. Does my right hon. Friend realise that the other major capitals, Paris and Frankfurt, do not have the same infrastructure? Frankfurt, for example, has only one foreign language school, and Paris has restricted labour laws.

 

That is an important point, and it plays hugely into the Government’s hands. It was the head of financial services in Frankfurt who was over here just before Christmas. When he was interviewed by the BBC, he was asked whether he was over here trying to get people to take up jobs in Frankfurt’s financial sector. To the journalist’s utter horror, he said yes. The journalist then said, “Therefore that means, presumably, that you think that after Britain leaves the European Union, the City will be finished, and that Frankfurt is looking to take its business.” He almost laughed and said, “Oh, no, no, no. We absolutely need the City of London to thrive and prosper, because it is the way that we keep our capital cheap. We cannot replace it, as its business will go somewhere outside Europe.” He said that London is the only global city in Europe. The point that he was making was that, although we move around and trade jobs, the expertise and ability to make capital deals lies here in London, and Frankfurt wants to make sure that the United Kingdom Government, the European Commission and the European Council reach an agreement that is beneficial to both sides, with access to the marketplace.

I make no bones about this: I am an optimist. There is nothing in the new clause that would in any way help the Government. Even more importantly, it would not enable the House to reach any kind of measured conclusion, such as letting the Government trigger article 50. I will conclude now unless somebody wants to intervene.

 

I thank my right hon. Friend for giving way. He is making a passionate speech. When it comes to forecasts, there is another real-life example that has not yet been mentioned, which is that the referendum in Scotland for independence was predicated on the oil price remaining high. Shortly afterwards, the oil price dropped dramatically, which would have left Scotland in dire straits had it voted for independence.

 

I agree. The head of the OBR has said that, in the end, most forecasts are wrong. On that basis, it would not really help the House in any way suddenly to have a Treasury forecast, any more than if we had a multitude of forecasters here saying where they think the economy will go. I do not blame them for being wrong, because there are far too many moveable parts in economies as complex as the United Kingdom or, for that matter, the European Union or even the global economy.

Ultimately, if the Opposition are really honest, these new clauses and amendments are really about making sure that the Government’s hands are tied, and slowing down the process in the vague hope that, somehow, people’s opinions will change and it will all look too difficult. These forecasts will then allow everyone to go out and say, “Oh my God, this is so terrible. Look what will happen if we do not get this arrangement or that arrangement.”

 

My right hon. Friend is being generous in accepting interventions. He has just talked about a sort of buyer’s regret. As I understand it from my experience on the doorstep, most people just want us to get on with the job. In fact, polling shows that Brexit is slightly more popular now than it was at the time of the referendum.

 

I will not carry on for much longer, but that is exactly the point. All that will happen if we amend the Bill and tie the Government’s hands so that they are slow in triggering article 50 is that the British people will get frustrated and angry.

 

What if actually everyone in the House—whether they are Brexiteers or remainers—wants the best deal for the country, and in order to make good decisions and have a good debate, they want to know what analysis the Government are doing of the implications of making particular decisions? Surely that, and not delay, is what this is about.

 

I say to the hon. Lady, for whom I have a huge degree of respect, that if that were the explicit purpose of new clause 5, I would agree with her. The difference is in the line that restricts the Government from invoking article 50 until the matter is laid before the House. That line alone makes it very clear that informing good decisions is not the full intention behind the new clause. If the new clause just said, “We will invoke article 50 and it would be good for the Government to put forward their various predications and forecasts”, I would probably have said, “I don’t think the Government would have a problem with that.” But that is not what the new clause says. If the hon. Lady reads it, she will realise that it is about delay and prevarication.

 

I thank my right hon. Friend for giving way right at the end of his speech, to which I have listened intensely. Despite decrying some forecasters, would he like to make a forecast that, at the end of the process, the vast majority of the people in Scotland will welcome Brexit?

 

As I have just condemned pretty much every forecast, I will not make that forecast. I will say that once Scotland gets back to domestic policy, it is almost certain that the Scottish nationalists will be seen for what they are doing: running down education, health and the economy. Let us get back to the real forecast.

I do not wish to sow the seeds of dissention, so I simply say that the new clause and the related amendments, which would put another set of shackles around the Government’s hands and stop them getting on with what the British people voted for on 23 June last year, must be rejected, because the Government must seek the best deal they can in line with what is good for the EU and for the United Kingdom.

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