Wednesday, 13 March 2019
Recent Developments on Brexit: Statements
Seán Sherlock (Cork East, Labour)
The Brexit situation is fundamentally unpredictable. Few political analysts predicted that the British people would vote to leave the European Union. Few could have predicted how chaotic and torturous the negotiations would become between the United Kingdom and the European Union. Even now, two weeks before the exit date of 29 March, the British Parliament has not been asked to formally vote to express its preferences for the future EU-UK relationship. Yesterday, the House of Commons convincingly rejected the deal brokered by the Prime Minister. Today, Westminster is expected to vote overwhelmingly against a British exit with no deal. From these and previous votes, we know what Parliament does not want, but the default position remains a no deal Brexit until Westminster comes up with something else. Tomorrow, MPs will be asked to vote on extending Article 50. There have been mixed signals from the EU institutions and member states, but it seems likely that a short extension to the end of June would be granted if there is a technical reason for doing so, for example, where it was required to pass legislation. There is little appetite for allowing the current state of limbo to continue.
The Labour Party supports the position that we should not block any reasonable request from the UK for an extension, but there is no guarantee that an extension will be given or that it will last very long. There is a very real prospect that the rejection of the withdrawal agreement will mean the UK leaves the EU with no deal or with only a minimal set of arrangements in place to avoid the worst of a sudden departure. In that context, our immediate priority has to be people's jobs and livelihoods. We have spoken at length in recent months about the open border, and that remains an absolute necessity, but as Brexit looms ever closer, we must preserve jobs and keep small businesses afloat.
The Tánaiste knows the statistics. The Minister for Finance has said 40,000 jobs are at risk. We know that 40% of our exporting firms only export to the UK and are totally exposed to tariffs, quotas or other barriers to trade. Exporters are also vulnerable to a collapse in the value of sterling and the possible influx of cheaper goods from outside the EU into the UK if Britain adopts a certain type of trade policy. Certainly, the indications are that the UK intends to set zero tariffs on a wide range of goods. However, there will be tariffs on some food exports, which is bad news for the meat and dairy sectors, our major exporters. Again, the Tánaiste knows the statistics. These exports from Ireland are largely to Britain, and tariffs on food exports would be a significant blow. Even in cases where zero tariffs apply, extra competition for access to the UK market will be a major challenge to our exporters. The UK could well open its market to countries with much lower wages than Ireland. That would be a challenge which would impact on decent wages and conditions of employment here.
Additionally, we need to be very clear that Ireland imports a great deal from the UK. These imports are often raw materials for goods that we subsequently export. We do not yet know what tariffs the EU will apply to British goods entering the Single Market, but there are likely to be tariffs and perhaps quotas. We must recall that under World Trade Organization rules, the EU must apply one set of rules for all third party countries, and the UK cannot be given any favourable treatment or status in the absence of a formal trade agreement. As we know, such an agreement is a long way off. Serious negotiations on the future relationship with the UK have not yet begun because the British Government has wasted two and a half years negotiating the withdrawal agreement. Much of this negotiation has taken place inside the Conservative Party. In that context, as I said, much is unpredictable. Perhaps Article 50 will be extended for a significant period. Perhaps the UK will pass the current withdrawal agreement to buy the time an agreed transition period could offer. Perhaps the UK will end up having a general election or a new referendum, the result of either of which is genuinely hard to predict.
However, if and when it happens, Brexit will be bad for Ireland. We cannot claim to have predicted all the flows of goods and services, as well as of people, that will make Brexit so damaging for jobs and businesses. The Labour Party remains to be satisfied with the Government's Brexit preparations. While the Government has provided information and delivered a range of seminars, that is far from enough. We need now to talk about what resources will be in place to save jobs and businesses.
After the 2008 economic crash, we had to completely redesign our bankruptcy laws and our personal insolvency services. The most significant lesson from 2008 was that it can be much harder to provide someone with a new job and career than stopping that job being lost in the first place. Likewise, it is easier to keep a business afloat rather than allow someone to become bankrupt and then try to pick up the pieces.
In order to keep jobs and businesses going, we need to have funds in place. We should not allow a situation where there is any delay whatsoever after 29 March, or the end of June, where the Government needs to pass legislation or a supplementary budget to ensure funds can be spent. In this context, the Labour Party endorses the proposal of the Irish Congress of Trade Unions for the creation of a Brexit adjustment assistance fund. It suggested putting €500 million into the fund, rather than into the so-called rainy day fund. The Government's Brexit omnibus Bill has not covered this. We need to be ready, in a lawful manner, to provide state aid or subsidies to those businesses which are most vulnerable to the effects of Brexit.
The Government has said its preference is for each Department to spend money individually to its own sector. That is all well and good but the Government says it is spending €200 million. Is that enough? Why not dedicate the full €500 million to this purpose rather than putting it in the so-called rainy day fund? Is the possibility of a no-deal Brexit not enough of an emergency? The Labour Party would also endorse the call from congress for planned tax cuts in 2020 to be abandoned. We rejected these proposals when the Taoiseach made them. We double down on that rejection now. The proposed tax cuts would only benefit the top one in five income earners, as Revenue statistics showed. No benefit whatsoever would go to the lower and middle paid four out of every five workers. In any context, especially in the context of a hard Brexit, such tax giveaways would be reckless and divisive, as well as economically incompetent.
There are a wide range of other important points made in congress's report, The Implications of a No-deal Brexit. I recommend the Government studies it in detail. Time does not allow me to say much more but I will conclude by coming back to the theme of unpredictability. We just do not know what is going to happen next. A year ago, the Government was sanguine in its view that the Irish Border backstop was bullet proof and cast iron. Then the Government was sure the withdrawal agreement was a good deal for Ireland. The British Parliament, however, has comprehensively rejected the withdrawal agreement, notwithstanding the great efforts of Ministers and Ministers of State such as Deputy McEntee.
The Irish Border backstop is at the centre of the argument, especially how the open Border requires the UK to stay close to European customs arrangements and Single Market rules. It is simply impossible to predict what happens next. Accordingly, we need to be prepared for any eventuality, including a no-deal Brexit in little over two weeks’ time. The Government needs to do much more to ensure we are prepared. If we learned nothing else from the 2008 economic crash and the painful recovery, it is much easier to keep jobs and businesses in existence - even on life support - than it is to let them go to the wall and try to create new jobs and businesses to replace them. The Labour Party calls on the Government to make the necessary resources available, along with whatever legislation is needed to allow their immediate deployment, if and when, they are needed.