Oral evidence: The economic and financial costs and benefits of UK membership of the EU, HC 499Monday 9 May 2016
Oral evidence, 9 May 2016.
Witnesses
Matthew Elliott, Chief Executive, Vote Leave, and Oliver Lewis, Research Director, Vote Leave, gave evidence.
Chair
Thank you very much for coming to give evidence today. We are certainly glad to see you. I think I should put it in the public domain that the Committee was forced to summon you under a parliamentary order to get you here. This is the first time that I have ever felt the need to issue such a thing to secure a witness. It is the first time that I have ever seen it done in any Committee I have served on, and I have been on Select Committees for most of the 19 years I have been in Parliament. I think, frankly, that the difficulty of getting you here is scarcely consistent with the application that you put in to be the lead campaigner for leaving the EU. I will just quote one part of that application. You say that you are “conscious that playing a leading part in such an important moment in our national democracy is a very significant responsibility.” Do you now accept that it was a mistake to muck Parliament around as you did?
Matthew Elliott
I regret the fact I was not able to attend when Dominic Cummings gave evidence a number of weeks ago and I am very grateful to you for accepting my apology so gracefully. Then, when it came to the other opportunity to attend, I was sorry that my—
Chair
There are two of those, aren’t there?
Matthew Elliott
I was sorry that my diary could not be rescheduled for me to be here, but I am delighted—
Chair
There are two of those, now you raise it. The first was that you decided to go to Switzerland—to meet some Swiss politicians, you told my office—rather than coming here. Isn’t that correct?
Matthew Elliott
I had a trip to Switzerland to see a number of groups, including politicians, business groups—a whole host of activities, yes.
Chair
Do you think that is consistent with your duty to Parliament?
Matthew Elliott
That was arranged or I was invited at about 48 hours’ notice. I did not feel it was appropriate to change my diary at such short notice.
Chair
You were notified on the Friday; it was not 48 hours’ notice.
Matthew Elliott
I didn’t receive it until the Monday.
Chair
Your office was notified at 2.45 on the Friday before, so it was not 48 hours’ notice but four or five days’ notice. It is important that you give accurate evidence to this Committee. If your organisation is incapable of passing on a message, that is scarcely our responsibility. Do you have any appreciation of what it looks like to a group of MPs when you tell them you would rather go to Switzerland than turn up?
Matthew Elliott
I can only apologise again for not being able to turn up at that point.
Chair
Okay. What about the following week? We asked if you would come the following week, and we had a message to say you were too busy.
Matthew Elliott
The key objective for Vote Leave has always been to make sure that you get the best possible evidence for your inquiry into the economic and financial benefits of Britain’s membership of the EU. For that occasion, we suggested that our former chairman, Lord Lawson, might attend in my place. As I say, he is a former chairman of Vote Leave and a former Chancellor.
Chair
Did you ask him first?
Matthew Elliott
I suggested it to him over the weekend.
Chair
You have had ample opportunity to come. You declined two very clear and straightforward opportunities and then declined a third for personal reasons, which we immediately accepted as a Committee. Has your organisation discussed this? It has a core group and a campaign committee, doesn’t it?
Matthew Elliott
It does.
Chair
It has two groups, with the core group meeting daily and the campaign committee meeting weekly. The core group is chaired jointly by Michael Gove and Gisela Stuart. I was not intending to go into all this; I was hoping you would just accept it was a mistake not to attend and we could move on. Did that core group discuss your attendance or non-attendance at any time?
Matthew Elliott
It was discussed by the board of Vote Leave but not by that core group.
Chair
Okay. Who chaired that board meeting?
Matthew Elliott
It was chaired by Gisela Stuart.
Chair
What advice did she give you?
Matthew Elliott
She said that what was most important was that we gave the best possible evidence to the Committee and sent across the best possible witnesses, to give you the best possible facts in this area. I know that she suggested a number of other people who might attend, either alongside me or instead of me. I am very pleased to be here today. I am glad we have been able to schedule this.
Chair
I have heard that, but what I want to know is whether they told you to turn up or not.
Matthew Elliott
It was discussed at board level.
Chair
Did they tell you to turn up?
Matthew Elliott
The board discussed the letter we sent to you about having the best possible evidence for the Committee.
Chair
Did they tell you to turn up?
Matthew Elliott
No.
Chair
Did they tell you not to turn up?
Matthew Elliott
No. We discussed the best way to proceed so I could come here at the earliest opportunity, which was always my intention, and I am very pleased to be here now.
Chair
You need to realise that the only other witness, certainly in a Committee that I have chaired, who decided he didn’t want to attend, in the six years I have been chairing Select Committees, was the Prime Minister before the Liaison Committee—and he thought better of it reasonably quickly. We have had considerable difficulty getting you. Now that we have had this further exchange, can I just go back to what I said earlier? Do you now accept it was a mistake not to come?
Matthew Elliott
On the first occasion I wasn’t able to attend, I don’t think it was a mistake, no. I wasn’t able to be here. I am very pleased that we—
Chair
We have accepted that point.
Matthew Elliott
Okay.
Chair
You have had two further opportunities. Do you accept that it was a mistake not to have accepted one of those opportunities and instead to have argued, as you did, that you should attend with somebody? In fact, you refused to attend with the other leave group, Leave EU, point blank, which required us to hold two sessions. We could have forced it, but we decided not to bother—just to get on with our business. Do you accept that all of this—the mucking around of Parliament that you have gone in for here—was a mistake?
Matthew Elliott
I regret that it has dragged on longer than I would have hoped, and I am very pleased to be here today.
Chair
I find it astonishing that you don’t just say, “Yes, it was a mistake. I understand. Let’s move on and discuss something else.” I’m not going to pursue it further, but I think people watching this session will note that the message still doesn’t seem fully to have got through about how close to the wind you have sailed. Can I move on to discuss the budget—the EU budget and budget savings? In the Taxpayers’ Alliance document—you were a chairman of the Taxpayers’ Alliance, weren’t you, or maybe you had some other title?
Matthew Elliott
I was the founder and chief executive, yes.
Chair
Yes. You headed it up. You produced a document called the “EU Fiscal Factbook”. Do you remember that document?
Matthew Elliott
I don’t recall that document, no.
Chair
Okay. Well, it was only in September 2013 that you put that out. In the foreword, you write, “This EU Fiscal Factbook provides a clear overview of the big picture: How much cash do we hand over every year? Where does it go?…Voters want clear facts as we move towards an EU Referendum”. If you don’t even recall the document, you won’t know, but I have the document in front of me—as a matter of fact, although this hard copy was provided to me by staff, I did dimly recall that the Taxpayers’ Alliance put something out on this. You published a figure in that capacity for the gross contributions to the EU budget. Rather than wasting any more Committee time on this, let me just say that the figure you published was the figure after deducting the rebate. I think—as I think almost anybody looking at this would conclude—that that is the reasonable figure to use. Why is it that the body that you are now campaign director for has set that approach aside and has decided to put out what most people would consider to be a bogus figure for the gross contributions by the UK to the EU budget?
Matthew Elliott
I think it’s worth saying that when that document, which I do recall now, came out—I think you said in 2013—I wasn’t actually the head of the Taxpayers’ Alliance at that point. I seem to recall that I wrote the foreword as the founder, so I can’t actually remember the precise page you’re talking about, because I was heading up Business for Britain at that point, but I accept the general point about—are you suggesting we didn’t include the rebate in this case?
Chair
Yes: this is page 3 or 4. It occupies a full page, with lots of illustrations. We are not talking about some footnote here. I am not going to present it to a wider public for these purposes—that is unnecessary—but this is right at the heart of this paper. I think anybody looking at it would agree. I’m very surprised that you don’t recall it, bearing in mind that you have put a figure that is demonstrably at odds with it at the heart of your campaign. You published a figure in 2013 that looks defensible—at least, the figure in this document is very defensible—but you are now publishing and continuing to propagate a figure that hardly anybody considers defensible.
Matthew Elliott
Since that publication was published, things have moved on to some extent. Let me give two reasons why I think the rebate should be included when we talk about the costs of the EU. First, my opposite number in the Britain Stronger in Europe campaign—Will Straw, whom I know also gave evidence to this Committee—wrote for the IPPR think tank, not in a document that he added his name to but a publication that he wrote himself in October 2012, that the rebate should be abolished. I think that the fact that one of the leading lights of the remain campaign talks about abolishing the rebate is extremely concerning. That means it is right that it is discussed in this referendum. It should not be seen as something sacrosanct or something that will always be there.
Chair
That’s rather a long way away from the question I asked. The question I asked was not, is he adopting a position that the overwhelming majority of British people might disagree with, which is that we should somehow surrender the rebate? My question to you was about the way you are presenting numbers to a wider public in this campaign. Perhaps the core number—certainly a core number—
Matthew Elliott
It is the core number.
Chair
It is the core number—you are agreeing—of the leave campaign official group strategy, and it is tantamount to bogus. The IFS says that ignoring the rebate does not seem sensible. The UK Statistics Authority calls the use of these figures in this way misleading. I could go on like that with a good number of others who say pretty much the same thing. Common sense tells us it is misleading, which is no doubt why the Taxpayers’ Alliance didn’t use it. Why are you persisting with this number? It can’t be just because Will Straw wrote a paper in 2012, or whenever it was.
Matthew Elliott
I think it is worth looking not only at Will Straw but at a greater authority than Will Straw—the Chancellor of the Exchequer. I know that he himself has appeared in front of this Committee, and he talked about how the rebate isn’t set in stone. Perhaps I could quickly read out a quote from his evidence to the Treasury Committee back in December 2014: “It is not a unilateral decision of the British Treasury or the British Government to just say, ‘This is our rebate. We are entitled to it. Pay up’. The way this works and has always worked is there is a negotiation with the European Commission.” So it isn’t a figure set in stone that we are guaranteed to get back. It is subject to a negotiation with the European Commission.
Chair
That is an interesting point, and it is one on which this Committee has published an opinion. I would like to end with a clarification of one point, which may well be trivial—no doubt you will be able to clear it up very quickly. Until October 2015, you were listed at Companies House as a director of a company called the Yes Campaign Ltd, and another company called Britain in Europe Ltd. Those two companies were registered on the same day, so I presume that the Yes Campaign refers to something to do with Britain in Europe. Is that correct?
Matthew Elliott
The position of Business for Britain in this debate—
Chair
Sorry, could I just have clarification? Is the Yes Campaign the same company set up with the same purpose, or a very similar purpose, to that called Britain in Europe?
Matthew Elliott
It was set up so we could register the name—so we could keep the name “the Yes Campaign”. Indeed, I think I am still a director—perhaps not now—of the No Campaign as well. It was set up to register the name of the company.
Chair
So you were yes and no at that time. You were both sides of this campaign.
Matthew Elliott
The position of Business for Britain was always “change or go”. We wanted to see what the Prime Minister came back with. He talked about radical reform of our membership of the European Union with full-on treaty change. He talked about this sort of thing. He didn’t come back with that sort of deal, so Business for Britain, which was the principal group I was heading up, took the view that Vote Leave was the best way forward.
Chair
So your view is that if the Prime Minister had come back with the bacon in these renegotiations, you would be campaigning to remain in Europe.
Matthew Elliott
Had the PM come back with a deal where powers would flow back to the member states, where the UK had full control over trade negotiations and where we had full control over our borders, yes of course I would have been happy to support staying in the EU on those terms.
Chair
So your decision to campaign for withdrawal rests solely on the quality, or lack of quality and substance, in the renegotiation led by the Prime Minister in recent months.
Matthew Elliott
Absolutely. We took some considerable efforts to publish a publication called “Change, or go”, which ran to some 1,000 pages, to look into both sides of the debate and look into the different changes that we needed in the EU.
Chair
That is a helpful clarification.
Helen Goodman
On the Vote Leave website, it is described as a fact that EU regulation costs the UK £33 billion a year, and you go on to state that “there are nearly £33 billion worth of savings to be found in repealing just 100 EU laws.” Do you stand by those numbers?
Matthew Elliott
If I am correct, that number comes from Open Europe and a report that they did.
Helen Goodman
It does.
Matthew Elliott
As you will know, Open Europe is a very respected think-tank in this area. Indeed, its two previous directors now work in government: Neil O’Brien works for the Treasury and Mats Persson is the PM’s leading European policy adviser. It is a well-respected think tank, so I think we are right to take its work seriously.
Helen Goodman
You may be right to take its work seriously, but I’m asking you another question, which is: do you stand by the numbers—that the cost is £33 billion and there is potential to repeal 100 laws, which would save the British people £33 billion?
Matthew Elliott
I stand by the fact in their report that the cost is £33 billion. On the second point, the key point about this campaign is the fact that it is all about taking back control, and it will be MPs sitting in this room today and also your colleagues in the wider House of Commons and the House of Lords who will decide what the regulatory framework is for Britain when we leave the EU.
Helen Goodman
If I might say so, the second part of your answer was somewhat evasive. You have said to people who are voting in the EU referendum that they could have £33 billion-worth of saving through leaving Europe and repealing these laws. Now you are saying, “Well, the cost is £33 billion, but whether or not all that cost is lost is a matter of conjecture.” Is that correct?
Matthew Elliott
I think it is fair to say that we could have that much saving, but whether we would or not would be up to parliamentarians in Parliament.
Helen Goodman
Let’s look at it in a little more detail. Do you think the UK should not have any capital requirements on its banks? That is worth £7 billion of the £33 billion. Do you think it is necessary to continue with capital requirements for the banks?
Matthew Elliott
I think that will be very much up to the MPs in this Committee and the wider House of Commons.
Helen Goodman
I am surprised that you say that, because the capital requirements come from the agreements that we take from Basel, which is an international agreement. Do you think it would be sensible for British parliamentarians to cut across an international agreement that goes way above the EU agreement?
Matthew Elliott
I think it is likely that MPs will decide to continue with those capital requirements, but there is a really key point here. If we are looking at having, possibly, another financial crisis, it is far better if we take back control so that MPs here can make sure that people in the UK—
Helen Goodman
What is the benefit of that, if we are still going to follow the same capital requirements rules that we are following anyway, because they are mandated through Basel?
Matthew Elliott
Because MPs, who are accountable to voters in the UK and are not unelected, will be able to decide whether they are appropriate for the UK. And it is not just the capital requirements, of course; it is a whole wider piece when it comes to financial services regulation.
Helen Goodman
There seems to be a slight inconsistency, if I might say so, in the weight that you put on MPs taking decisions and the importance of parliamentary sovereignty and your difficulty, as the Chairman was describing a little earlier, in finding time to come to this Committee. Do you not think you have been perhaps a touch inconsistent in your behaviour and your responses?
Matthew Elliott
Our intention was always to make sure that the Committee had the best possible witnesses from Vote Leave to give you the best possible evidence for this inquiry. I am very humbled that you think I am the best person at Vote Leave to give that evidence when we have a former chairman who was one of the greatest Chancellors of the Exchequer that this country has ever had.
Chair
You are challenging again who we have called as witnesses. You should realise that what we wanted, which you prevented, was one hearing with those organising the Stronger in Europe campaign and one hearing with those seeking to represent the Vote Leave campaign. It is because you have been mucking us about that we have found ourselves first of all having to have two hearings with the leavers, and now finally three. As for the suggestion—
Matthew Elliott
I am sorry—Aaron Banks has never represented the Vote Leave campaign.
Chair
He is running a campaign and was seeking to obtain—
Matthew Elliott
He was on the leave side of the referendum. I understand; sorry.
Chair
As for whether we should call Ministers or former Ministers, we have called the Prime Minster and the Chancellor of the Exchequer once; he is coming again. We may call a Treasury Minister to give evidence on a third paper he has published. And we have called the Mayor of London on the other side. But in any case, this is a matter for Parliament, not for you, and I would be grateful if you would get back to addressing the questions that Helen Goodman is asking you.
Helen Goodman
Mr Elliott, you said a minute ago that you wanted to give us the best possible evidence. When Mr Cummings was here, I asked him what he thought of the statement from Glaxo that, “Europe has gone from 27 fragmented, independent, not talking to each other regulatory authorities in the healthcare space to one.” I asked him what the impact of this was. Mr Cummings’ response was, “Big businesses use regulation to crush entrepreneurs and competition and small businesses”. They “love the EU...precisely because it allows them to lobby and crush their competition.”
Matthew Elliott
Could you remind me of the page number? I have the evidence in front of me.
Helen Goodman
It is Q1394 to Q1397. I went on to ask him whether he did not understand that you have to have large companies because they have to do large-scale drugs trials following the R&D. Mr Cummings said, “Totally wrong. I think you do not understand what is going on... the premise of your question is completely false.” So I asked him again, “Do you not understand that the reason that Glaxo think it is a good idea to have one regulatory standard across the EU is that it means that they can, at an economic price, produce drugs for the whole EU, whereas if and when there were 27 different sets of standards it was uneconomic to produce the drugs to the quality that people need for the benefit of their healthcare?” Mr Cummings responded, “I think that is complete rubbish.” Do you agree with Mr Cummings’ responses?
Matthew Elliott
I do. I think he is right in what he said to you. The logical extension of your line of questioning would be that we would have some sort of worldwide regulatory framework when it came to pharmaceuticals. You could extend that to lots of different areas—not just pharmaceuticals but other areas of product regulation—and I am not sure that anyone is suggesting that we have worldwide regulation or worldwide governance, but I do agree with the—
Helen Goodman
Do you understand that when a company like Glaxo wants to export into a market, the drugs regulators of that market go to inspect the factory? Can you understand, therefore, that the fewer regulatory structures there are, the fewer of these inspections—which are extremely expensive and take several days at a time—the pharmaceutical company has to subject itself to? So you think it is good for the pharmaceutical company to be inspected by a multiplicity of countries’ regulators.
Matthew Elliott
I can understand why a multinational pharmaceutical company like GlaxoSmithKline would rather deal with one regulator and one body that is unelected than with democratically elected Governments, yes.
Helen Goodman
We are not talking about whether people are elected or not. That is a whole different issue—
Matthew Elliott
An important issue, though.
Helen Goodman
—about the structure of the European Union. It has democratic and bureaucratic elements, I give you that, but do you not feel at all put off your stride and your confidence in saying that you are happy for the UK to exit the EU drugs regulation by the letter that Sir Andrew Witty and 92 other leading life science figures signed yesterday? In that letter, they say, “We see significant advantages for the life sciences sector in the UK remaining part of the EU. This would enable the sector to continue to operate within an established and harmonised regulatory approval system, ensuring that UK patients benefit from medicines more quickly”. Even after this further intervention from the industry and life scientists, you still feel that your understanding of the best way to run pharmaceutical industries is superior to theirs. Is that what you are telling me?
Matthew Elliott
I think it is best to look at all the facts in this area. There have been quite a few deficiencies with the clinical trials directive, which wanted to harmonise clinical trials. There are various academic studies that I remember Dominic referring to in his evidence which concluded that, within 18 months, it resulted in the doubling of the cost of running the trials, leading to huge inefficiencies in the area and delays in the trials as well. So I do not think it has been all good, as those press releases that you refer to might suggest.
Helen Goodman
It is not a press release; it is a letter from the chief executive of one of the largest pharmaceutical companies in the country. Do you dispute that the UK’s life sciences sector is second to none?
Matthew Elliott
I am not an expert on the UK life sciences sector. Dominic is far more familiar with science than I am.
Helen Goodman
I just wonder whether, in making these statements—that the premise on which they are operating is completely false, that it is all complete rubbish and that businesses are using regulation to crush competition—you feel that, on balance, that is the best prospectus that the Vote Leave campaign can give us to make us feel that leaving the EU would indeed be good for the 220,000 people who work in pharmaceuticals and for the large number of people who benefit from their drugs.
Matthew Elliott
Dominic has his own way of expressing things, and I would defend to the death what he has done for the campaign. If you look at what he has done in his career as a campaigner—
Helen Goodman
I am not interested in Mr Cummings’ career. I am asking you whether you think that, given your knowledge and understanding of the pharmaceutical sector, you are giving British voters and taxpayers a realistic picture of how life would pan out in your world.
Matthew Elliott
I think Dominic did, yes. He referred to a number of Nobel prize-winning scientists who had made comments in this area and had concerns about the clinical trials directive, and I think he was very much on top of the figures. Like I say, I would not express it in perhaps the same way as he did, but—this is a crucial point—I think that what Dominic has contributed to politics in the UK, be it keeping Britain out of the euro, or indeed the work he did with Michael Gove on schooling, has been second to none.
Helen Goodman
That is an extremely bold statement. Another large number in this £33 billion is the protection given to people through the Data Protection Act. Are you suggesting that that should be repealed?
Matthew Elliott
Which question are you referring to now?
Helen Goodman
The £33 billion number that you cite on your website includes a £1.1 billion cost due to the introduction of data protection legislation. Are you suggesting that that should be repealed as well?
Matthew Elliott
Like I say, it would be up to parliamentarians to decide what the regulatory framework in the UK was. There might be areas where there would be less regulation. There might be areas where there would be more regulation outside the EU. But the key point is taking back control so that parliamentarians who are elected can decide.
Helen Goodman
Of course, parliamentarians are elected, as you say, and the majority of parliamentarians want to stay in Europe, so I am not sure whether you would get the £33 billion that you seem to be suggesting to people, in this campaign, is available for them to spend and use on other things from parliamentarians. That being the case, do you think that this campaign has authenticity and integrity?
Matthew Elliott
I do not think that we suggested all that money could be spent on other things. What we have said is that that is the cost, a cost calculated by a think-tank that is so eminent that—
Helen Goodman
I am sorry, Mr Elliott, but that is precisely what your website suggests. It says that there “are nearly £33 billion-worth of savings to be found”. I am surprised, given that we have been discussing and asking you and your colleagues about the cost of regulation for some time now, that you are still maintaining these bold statements on your website. Let’s take another example: social, employment and health and safety legislation, with a current annual cost of £9 billion. Are you proposing that we should repeal anti-discrimination legislation?
Matthew Elliott
Not at all. I think it is worth—
Helen Goodman
Are you proposing that we should repeal the entitlements to maternity pay and maternity leave?
Matthew Elliott
Not at all.
Helen Goodman
In which case, how can these savings, either the current annual cost of £9 million or what Open Europe calls “feasible annual savings of £5.6 billion”, possibly be achieved?
Matthew Elliott
Can I refer the Committee to a speech that I think was made just before—
Helen Goodman
No. Can you answer my question? Then we will come on to the speech. How can you possibly claim that you can save something between £5.6 and £9 billion when you cannot name a single piece of social or employment protection legislation that you think should be repealed?
Matthew Elliott
What I am saying is pertinent to your question, so if I may I will refer to the speech that Michael Gove made, which is perhaps a seminal speech about the intellectual framework behind Vote Leave. This speech was made about two weeks ago, on 19 April—
Helen Goodman
Ah, this is the speech in which he proposed we borrow the Albanian model.
Matthew Elliott
He says in the speech, about regulation—
Helen Goodman
Is it that speech?
Chair
Let Mr Elliott reply to the earlier question.
Matthew Elliott
He says, “The cost of EU regulation on British companies has been estimated by the independent think tank Open Europe at about £600 million every week”. He goes on to say, “Now some of those costs are incurred in a good cause”, so we are up front in what we say; that some of the costs of these regulations are done for good causes. We are not saying it is all a cost. We are acknowledging that some of these regulations are good and would presumably stay afterwards. He goes on to say, “But many EU regulations—such as the Clinical Trials Directive”—which I referred to before—“which has slowed down and made more expensive the testing of new cancer drugs, or absurd rules such as the minimum container sizes for the sale of olive oil, are clearly not wise, light-touch and proportionate interventions in the market”. So there are two already, cited by Michael Gove, one on olive oil and one on the clinical trials directive, that are questionable to say the least.
Helen Goodman
I would like to ask you two further questions. First of all, what discussions have you had with the pharmaceutical industry about your concerns about the clinical trials directive and your highlighting of this as a place where deregulation would be generally beneficial?
Matthew Elliott
I have not personally talked to the pharmaceutical industry about this.
Helen Goodman
Has anyone in your campaign?
Matthew Elliott
We are asked to give lots of evidence to different companies—
Helen Goodman
Yes, but this would be more a question of asking them for their view, rather than telling them what you think.
Matthew Elliott
I don’t think we have, no. But bear in mind that we have been going since last October, and the clinical trials directive goes back to 2005—it came through quite a few years before Vote Leave was set up.
Helen Goodman
It did indeed. Mr Gove is suggesting that there could be some savings from some deregulation, but that some regulation that appears within the European framework needs to stay. So I am afraid that I just come back to my original question: in that case, why are you saying that there are £33 billion-worth of savings to be found?
Matthew Elliott
We are saying that the cost of the regulation—
Helen Goodman
No, you’re saying that there are nearly £33 billion-worth of savings to be found. That is what you say.
Matthew Elliott
I feel that we are very explicit that there is a cost. Like I say, I refer you back to this speech, where we acknowledge that some of that is costs—or those costs are incurred—for a good cause.
Helen Goodman
Do you think that you might go away, recost it and stop using this £33 billion figure, and this £600 million a week figure, between now and 23 June?
Matthew Elliott
The £33 billion figure was produced by the independent, well respected Open Europe think-tank.
Helen Goodman
But you are reiterating it, aren’t you? You are trying to give it currency, aren’t you?
Matthew Elliott
I cannot promise that over the next 45 days of the campaign, with the research team scaling up for the biggest referendum that this country has ever held, we will have time to produce a new costing of all the regulations.
Helen Goodman
Don’t you think that the cost of regulation is quite an important, central part of your campaign? Don’t you think that is one of the main planks of your approach?
Matthew Elliott
I would not say it is; it is not one of the figures that we refer to time and time again. I think that the Chair is right to pick up on the figure of £350 million a week—yes, we use that figure again and again—but the cost-of-regulation figure has not been central to the campaign, and it has not been used on very many of the materials that we have produced.
Helen Goodman
So you would not really lose any face by producing more accurate figures, would you?
Matthew Elliott
We are quoting an Open Europe figure. You might ask the Prime Minister’s European advisers to ask Open Europe to produce a new figure.
Helen Goodman
I might do a number of things, but I will stop asking you questions now.
Chair
You say that this figure has not been used in much of your literature. Are you suggesting, therefore, that it should be ignored?
Matthew Elliott
I am not suggesting that the figure should be ignored—
Chair
What is the relevance of saying, since it is not as prominent as the £350 million figure, that we should not worry about it?
Matthew Elliott
I will pass over to Oliver after this, because he has indicated that he wants to come in, but I think it is worth saying that Governments of all colours and, indeed, the European Commission themselves, have acknowledged that there is a problem with EU regulation—some people call it red tape. The latest European Commissioner on this, Timmermans, has launched a fight against EU red tape. So if people acknowledge it, it is worth looking at the cost of it.
Chair
Okay, many of the people around this table would agree with you—probably the overwhelming majority of people would agree with you—but it might be helpful to use a figure that is at least in some way justifiable. This figure is not remotely justifiable, is it? The £600 million a week figure is disowned by the very body that you described as an eminent think-tank. They have clarified on their website that the maximum feasible annual saving would be £12.8 billion, not £33 billion. Why are you persisting with £33 billion? Since you have defended it, I just want to see whether you have an answer to that.
Matthew Elliott
In the original report, they talked about £33 billion. I know that they have produced a clarification since, where they admit that the report was badly worded in many areas—but the top-line figure of the costs, I think, they stand by.
Chair
In their original report, they qualified it—they made it perfectly clear that that figure was a gross figure and did not take account of the benefits that there might be from regulation. That is exactly the point to which Helen Goodman has just been referring, but in using that figure in your literature, you do not qualify it. You just shoot with the £600 million a week figure. I have got your literature in front of me here, and I can quote passage after passage from it. You say it is only a minor part of your work compared to other numbers that you are using, but most people would argue that it is pretty central. Don’t you think that while there is still time, it would be sensible to get to a more realistic figure and use numbers that can, at least in some sense, be justified before the electorate before we get into the short campaign period? Adjust and reduce the £350 million a week figure. Adjust and reduce the £600 million a week figure for regulation.
Matthew Elliott
I think we are nuanced in how we use the figure. I referred to the speech made by Michael Gove—
Chair
That’s all you’ve got. It is a speech made after we flagged up these issues in this Committee. Crikey, that is scarcely the effort of a responsible campaigning group. Surely you should have made some effort to get these facts right beforehand. Did it not cross your mind that it might be worth while reading carefully what Open Europe had written and then asking them what they meant by their qualification? That’s what we did, and we got a clear number back from them on their website.
Matthew Elliott
When you have think tanks as eminent as Open Europe, I think it is reasonable to use their figures.
Chair
Is there anything you want to add on this, Mr Lewis?
Oliver Lewis
With the greatest respect, I think the £600 million claim is defensible, and I would say that actually I would stand by it. You referred to the Open Europe clarification, which actually provided two figures: the feasible annual saving of £12.8 billion and a maximum annual saving of £24.4 billion. It is a little more nuanced, I suggest. I would point out that various studies have been done of the cost of regulation. When we set up this campaign, we had to try to find a good source to quantify the cost of regulation to the British economy. One study, for example, is a Treasury report from a few years ago that put the cost of regulation at somewhere akin to 7% of EU GDP, which would have been considerably higher than £33.3 billion. What we decided to do was find a report that was as clear and transparent as possible. The Open Europe report, admittedly, provided only 100 regulations, but it provided details of the impact assessment used in each case. We believe that it was transparent and accessible. On using the gross figure as opposed to the net figure, you are of course right that Open Europe has provided an explanation and some clarity since then. However, if I may, I will quote. Open Europe say that the benefits that they describe are often vastly overstated, and they give three examples. In a previous life, when I was at Business for Britain, we did a similar study, and I engaged directly with the impact assessments. I think that they were right to say that the benefits produced were often grossly overestimated, and not particularly reliable claims were used to justify the supposed benefit. I would say this as well. Our campaign is about taking back control and allowing parliamentarians like yourselves to engage far more directly with regulation and how it should be amended or even appealed—far greater control than you have now. It is not about providing a prescriptive solution for how you may amend regulation, which is what I believe Open Europe is referring to here; it is about control, and I think that the figure is much more defensible as a result.
Chair
That is a long and involved reply with a number of interesting points, but the bottom line on the whole issue is that Open Europe themselves—you are wrapping yourself in their credibility even more by saying you prefer their work to that done by others in the field—say that the maximum feasible annual saving is £12.8 billion. That is what they say.
Oliver Lewis
We may be looking at slightly different reports. I am looking at the blog that gives a maximum annual saving of £24.4 billion, but I do see the £12.8 billion figure. The point is that I would suggest, with the greatest respect, that there is a slight difference in nuance which it is important to appreciate.
Chair
Right. Subtract the saving from the cost, and you arrive at £22 billion.
Oliver Lewis
Open Europe is basically putting forward—
Chair
They are the same figure.
Oliver Lewis
I would say that as regarding potential savings and how you may engage regulation Open Europe is putting forward a more prescriptive approach than we are. We are simply talking about control. They say very clearly that the total cost of these 100 regulations is £33.3 billion. That is what we are highlighting, and we are saying that British parliamentarians would have control over these regulations and other areas that are currently the preserve of the EU.
Chair
But the think-tank that you yourself are citing—I will have one more go—is making it clear that the maximum feasible annual saving is much less than that, so why on earth don’t you use the figure that the think-tank you yourself are endorsing think is the appropriate number?
Oliver Lewis
I believe that Open Europe’s approach to this and our approach are slightly different. We are looking at control, and at the fact that that they have said that these regulations have been introduced—these are EU regulations—and that they account for £33.3 billion of costs. Open Europe have gone slightly further and said if you were to engage in this after leaving—
Chair
Does it not cross your mind that there are so many MPs and other people in this debate who are aching for a serious debate about how to reduce regulation, but when they watch a debate being sucked into levels of absurdity such as you are now putting forward they despair of getting a meaningful discussion of this at all? £33 billion is not a meaningful number in this field and Open Europe have made that abundantly clear. I will give you one more opportunity to respond and then there is one more point I want to make.
Oliver Lewis
Of course. I completely respect the position that Open Europe has put forward and that you have articulated. I would simply stick to the point I am trying to make, which is that as a campaign we are trying to highlight the costs of these regulations. I believe—
Chair
Well, we have had a good exchange on that point. Let’s just clarify one other point. Mr Cummings said that Open Europe had concluded that 95% of the benefits of EU regulation do not materialise. Do you now accept that the 95% figure that he referred to refers only to the package of EU regulation for energy and climate change?
Oliver Lewis
I do.
Chair
Okay. And that therefore Mr Cummings was wrong?
Oliver Lewis
If I may, very quickly, clarify what happened: Open Europe released a blog shortly after—
Chair
We can move on much more quickly if you just accept that it was a mistake to come forward with that figure.
Oliver Lewis
Yes, basically there was a clarification from Open Europe that the way they had written up the 95% figure wasn’t particularly clear, and as a result we had approached it in a way that we wouldn’t do now with that clarification.
Chair
Okay. So you agree that Mr Cummings was mistaken in that piece of evidence he gave us and you are now sorting this out?
Oliver Lewis
Now that we have the clarification, we would not make the same statement.
Chair
Okay. And Mr Cummings, therefore, was mistaken on this.
Oliver Lewis
I can’t speak for Mr Cummings.
Chair
Well, I am asking you to speak for whether what he said was correct or not.
Oliver Lewis
It was not correct to say that 95% of all benefits do not materialise, as Open Europe has said.
Chair
Okay. And this is the same figure that was used by Boris Johnson before this Committee, too, wasn’t it? And it was the same attempted justification that he used, wasn’t it?
Oliver Lewis
Correct. It was—
Chair
So he also got it wrong, didn’t he?
Oliver Lewis
There was a genuine miscon—
Chair
Misconstruction—would you like that word? I should not be helping the witness, but I feel sorry for you having to defend such an indefensible position.
Stephen Hammond
I am not sure that “misconstruction” would be the right word—
Oliver Lewis
I would simply say that Open Europe did write a blog recently. When they said that the way that they had written it up originally was not particularly clear, they have offered a clarity on it and I am very happy to accept their new form of words.
Chair
Okay. So we have got a £350 million figure, which you are agreed is—to put it mildly—wobbly, and we have got a £600 million figure that doesn’t seem to bear sustained scrutiny, and we have got a claim that 95% of the benefits of EU regulation do not materialise, which you are now withdrawing. Is there anything I’ve got wrong there?
Oliver Lewis
I would defend the £350 million claim in the way that Mr Elliot and Mr Cummings have done. We have discussed the £600 million claim, which I would continue to defend. As far as the 95% figure is concerned, we would not make that claim now following Open Europe’s statement. However, I would note that they have said that a lot of the benefits that they looked at when they did the study did not appear to materialise, and that is something that I have found rings true in my own experience.
Mark Garnier
I will turn to trade. Before I do—forgive me if I am beginning to sound like a broken record on this subject—but on your absenteeism: you have now had a couple of cracks at apologising and showing contrition for not attending on three occasions in the past. Do you feel any more contrite than you did earlier?
Matthew Elliott
I think I have already apologised for not being here before.
Mark Garnier
In a fairly robust way, none the less. You may hear this from other members of the Committee, but where I think most of us struggle with this is that the Vote Leave campaign is going to an enormous amount of effort in order to try to demonstrate that we have sovereignty of Parliament, and that Parliament can take control of our laws, and yet you demonstrated an extraordinary contempt of Parliament—with a small c—by choosing to go and see some Swiss parliamentarians rather than coming to see the parliamentarians here.
Matthew Elliott
The trip involved much more than seeing Swiss parliamentarians. I am not quite sure where that came from.
Chair
That’s what you told our staff.
Matthew Elliott
I never talked about parliamentarians to your staff.
Chair
You talked about politicians.
Mark Garnier
So they were junior politicians, not even parliamentarians? District or county or town councillors? Not that there is anything wrong with that.
Matthew Elliott
It was a full trip that I felt I had to go on. Like I say, I received the notification of the—
Mark Garnier
There is a reason. We completely understand that on the first occasion you couldn’t come, but there have been two subsequent occasions when you have cancelled meeting us here. There are 11 members of this Committee. This is a Committee that represents one of the most forensic investigatory powers of Parliament, but at a much more simple level, the 11 members of the Committee represent somewhere between 700,000 and 800,000 voters—over 1 million individuals—who require their Members of Parliament to be effective and on call for them. We have all had to rearrange our diaries not once, not twice, but three times to accommodate you. You are going to these voters and saying to them that you want to stand up for their right to have self-determination of their laws through Parliament, and yet you are denying their Members of Parliament the ability to be able to manage their diaries properly to look after their interests. I am going back to my constituency, as many other people on the Committee are going to do, in order to stand up and make a case for staying in Europe. Your representatives are going to be making the case, and yet, when I go back to Wyre Forest and talk to my constituents, I have to apologise to them for having to rearrange my diary, which could have affected them on three occasions, to accommodate you. Do you not understand that that sends a simply dismal and appalling message of the amount of contempt that you hold for the electorate of this country?
Matthew Elliott
I should be extremely surprised if any of your constituents have heard about the diary trouble in getting this date fixed up.
Chair
They have now.
Mark Garnier
They have now. So you do hold them in contempt? Even if they have not heard about it, what does it say to Parliament that you hold Parliament in such contempt that you think it is better to go swanning off to Switzerland, no matter how important the people were that you were seeing, instead of coming to this Parliament to present the case for leaving the EU?
Matthew Elliott
I can simply say again that it is an extremely busy period. I regret that I could not turn up on the first occasion. I have never, on a subsequent occasion, failed to turn up. I always made it clear that I was not going to be turning up on those occasions.
Mark Garnier
I do not think anybody is saying that you just did not turn up, but none the less you cancelled those two occasions at short notice.
Matthew Elliott
You were suggesting that I did not turn up on subsequent occasions. I always made it clear that I couldn’t turn up. Why you would be here rather than seeing your constituents, I am not quite sure.
Mark Garnier
From our point of view—the 11 members of the Committee, all of the staff, all of the Clerks—we had to block off diary time in order to be here and available for you to come in. At short notice that was cancelled, thereby making us have to rearrange diaries for constituents, for constituents’ interest groups, for other stuff we do here, in order to be available for you. You were not available when we had expected you to come, because you found something better to do.
Matthew Elliott
I didn’t find something better to do. I had something in the diary already, and I got the invitation for the other time—
Mark Garnier
Why did you say you could come? If you had something in your diary, why did you say you would come?
Chair
Why didn’t you just say that you were too busy? I think we have been around this circuit, but I still really wonder whether the penny has dropped as to how much you have annoyed a number of people, on this Committee and in Parliament, by playing ducks and drakes like this.
Matthew Elliott
I never said I was too busy; I always made it clear—
Chair
That’s exactly what you said in response to our third invitation.
Matthew Elliott
That week, I made it very clear that I wasn’t able to attend because I had a previously planned trip, which we had planned for a long time.
Mark Garnier
All right. Well, we’re all pretty grumpy. I think you have probably got the message. Back to trade. Do you think that we in Britain, upon leaving the EU, should seek to secure continued access to the EU services market?
Matthew Elliott
As part of the free trade deal that we get with the EU, yes, of course services will be part of it.
Mark Garnier
But do you think it is important? Should we be fighting to make sure that that is part of it? Actually, I think you are pretty clear about that.
Matthew Elliott
Yes.
Mark Garnier
That puts you pretty much at odds with Dominic Cummings, who basically told us that the completion of the single market in services would be “deeply destructive” for the UK and that it would be a bad idea for the UK to seek to be part of it after Brexit. Discuss.
Matthew Elliott
Sorry, I thought you were asking whether we should have access to the single market for services.
Mark Garnier
Should we be part of it? So you don’t think we should be part of it.
Matthew Elliott
Sorry, I misunderstood you. Perhaps we should row back and talk about the sort of relationship with should have with the EU post-Brexit.
Mark Garnier
I am asking you whether we should secure continued access to EU services markets after a British exit from the European Union.
Matthew Elliott
We should secure continued access to all areas of the market for goods, services and so on, but through a free trade deal.
Mark Garnier
Okay, but Dominic Cummings seems to feel very strongly that the single market in services is a very bad thing. Would you like to expand on what the difference is between access to the single market and the completion of the single market?
Matthew Elliott
I don’t think Dominic Cummings would disagree with me that he would still like to be able to trade in services with the European Union afterwards. It is about the nature of the trade deal, and both Dominic and I would agree that it shouldn’t be, for example—
Mark Garnier
But why does he say that the completion of the single market in services would be “deeply destructive” for the UK?
Matthew Elliott
Could you refer to the precise question and the page number? Is that okay, because it is obviously of concern to you?
Mark Garnier
It is. I have it but I don’t have the question number. We will come back to that, if you’re happy to do so. While we are getting that detail, I will ask about something else. Your Vote Leave website states that after leaving the EU, we will “spend our money on our priorities”, “take back control of migration policy” and “end the supremacy of EU law”. Do you therefore envisage that, on leaving the EU, the UK will no longer have to sign up to free movement, that we will regain control over regulation in all areas and that we will no longer pay into the EU budget? Essentially, we would be getting a Norwegian model without the free movement of people. Do you think we will get that?
Matthew Elliott
I think we should put Norway to one side, because I would not want us to have the Norwegian model. Going back to what you said before you mentioned Norway, yes, I believe that we will continue to have access to the single and that we will be able to trade with the single market on free trade terms, without paying into the system or accepting freedom of movement.
Mark Garnier
What do you envisage free trade terms being?
Matthew Elliott
We are in a uniquely good position to be able to get an extremely good trade deal.
Mark Garnier
Define extremely good.
Matthew Elliott
Because we are moving from a situation where we are part of the single market already, we will continue to have full levels of access to the single market, but outside the EU.
Mark Garnier
Anybody can have access to the single market; what’s important is how much they are going to pay for that access. Do you envisage tariff-free access to the single market?
Matthew Elliott
Correct.
Mark Garnier
Okay. So why would they give us tariff-free access to the single market?
Matthew Elliott
There is a free trade area that runs from Iceland right through to the Russian border. It seems inconceivable to me that the UK would not be part of that free trade area.
Mark Garnier
Okay. That’s really important. I know you don’t like talking about the Norwegian model, but Norway and Iceland face EU tariffs on agricultural output averaging 13.2%, so there are tariffs. It is not a tariff-free zone.
Matthew Elliott
I think we are in a better position than Norway is.
Mark Garnier
There is a serious point here. I completely understand that there will be a golden model of being out. I don’t mean to use the Norwegian model as an example, but it is a very simple way of doing it: you have tariff-free access to the single market and don’t have to worry about anything else. So, we don’t have to pay any money in, we don’t have to abide by EU laws apart from, presumably, when it reflects our access to the single market and we don’t have to accept the free movement of people. I don’t see how anybody would possibly give us that trade deal.
Matthew Elliott
Perhaps I could refer to three authorities on this—
Mark Garnier
Can you give me an example of any other country that has a deal like that?
Matthew Elliott
Let me refer to three authorities on this debate. Perhaps we could start with Stuart Rose—I know you took evidence from him. On page 15 of his evidence he said, “My argument, simplistically as a businessman, would be: would you alienate your biggest customer when you went off and chased a new customer? No, you would not; you would put your arm round the customer who is your biggest customer”. I think the EU would very much want to put their arm around the UK, as their biggest customer, and ensure that we continue to have tariff-free access. I will refer to two other people as well—
Mark Garnier
I think he may well have been using that quote in the context of this country putting our arm around Europe as our biggest customers.
Matthew Elliott
He said it quite clearly in his evidence. I will refer to two other people; first, to the Prime Minister—
Mark Garnier
I think you are distorting the intention of that comment.
Matthew Elliott
To the Prime Minister I would say—David Cameron said, “Would we be able to trade freely? Yes of course we will.” Lord Kerr, perhaps the most eminent UK civil servant, said, “Of course we will be able to do a free trade deal.” All of these people, who are not on the leave side, are very clear that there will be a free trade deal.
Mark Garnier
You are conflating two things. Of course we can trade. We can trade with anybody—
Matthew Elliott
No, they are talking about a free trade deal.
Mark Garnier
They are not talking about tariff-free free trade deals.
Matthew Elliott
They are.
Mark Garnier
No, they are not. They are talking about free trade arrangements—
Matthew Elliott
Would we be able to trade freely? Yes, of course we will.
Mark Garnier
The free trade arrangement does not necessarily mean that it is tariff-free in all goods, does it?
Matthew Elliott
What has happened here is that—
Mark Garnier
It is an important point, because—
Matthew Elliott
It is an important point.
Mark Garnier
The problem is that you talk about a free trade arrangement and you talk about trading freely, but actually we know that we can trade freely with anybody in the world. We may have to pay tariffs, but we can still trade freely with them, assuming we are confident, for example, that they are going to pay, and confident of the contract law that surrounds this. If you are a small business in Kidderminster and you are trying to set up a transaction with somebody in Mexico, it is pretty complicated. It is really very difficult, because you don’t know what your contract law is; the banking system is international; you have got to work out how you are going to deliver it—that’s a small part of it—and you have got to make sure you are going to get paid. Then if you don’t get paid when you deliver the stuff, do you get a trade guarantee to go with that? It is a very difficult thing to be able to do. One of the great advantages of the EU is that you can trade with everybody in the EU on the same basis as trading with the person in the next-door village or town, and that is why there is such a good advantage. This whole debate conflating free trade, trading freely, free trade arrangements, single markets and access to the single market is, to my mind, deliberately obfuscating the whole debate. Is it not the reality that of course we can trade with anybody, but if we are going to come out of Europe, in the first instance we are probably going to be on WTO arrangements?
Matthew Elliott
I don’t think so.
Mark Garnier
You talk about a European free trade zone as if it were a non-tariff zone. It is not a non-tariff zone. I have just said that Norway and Iceland face 13.2% tariffs on agricultural output.
Matthew Elliott
Countries are able to trade freely, and when I say that the UK would have—
Mark Garnier
They can trade freely—
Chair
I think you deserve a decent time to respond now. That was not a short question; there were quite a number of points in there. The floor is yours for a moment or two, Mr Elliott.
Matthew Elliott
Thank you very much. Our position is that the UK, as the fifth largest economy in the world, the second largest economy in the EU and the biggest export market for the rest of the European Union, would have tariff-free access to the EU when we vote to leave. I believe that will happen. We are their biggest customer. To quote what Stuart Rose said, you put your arm around your biggest customer and make sure that you keep them close to you so, and I believe they would do that. To talk more widely on this issue, and to talk less politically for one moment, I mentioned the Prime Minister, Lord Kerr and what have you. I think that before we got into the heat of the referendum battle some very eminent people acknowledged that we would be able to get a free trade deal with the EU. Now we are in the heat of the referendum battle, all of a sudden they are talking about how huge tariffs would rise up and how the EU would retaliate very badly against us. This isn’t the real position that they hold, and I am very confident that, were we to vote leave, we would get the tariff-free access that you talk about.
Mark Garnier
I broadly agree with you. I think there is a lot of scaremongering that comes into this, and people are saying, “Of course they will turn around and punish us.” There are a number of issues here, but one issue that your side of the argument doesn’t necessarily get across is how it would be seen by politicians in the EU who are negotiating it. You are right that a significant amount of exports come from the EU to the UK, and we are a significant customer, but that is not true for every country. There are a number of countries in the EU that are running trade deficits with Britain—we are exporting more to them than they are exporting to us. You could look at the EU as a whole, but as you know, you have to have the agreement of all the member states in order to get a free trade arrangement. I am trying to find the figures, but I haven’t got them to hand. Of the 27 remaining member states, more will be running a trade deficit with Britain than are running a trade surplus, so the interests of those countries are very different when you are trying to negotiate a free trade arrangement. That is why, if you are going to come down upon some solution that is probably going to work, some people suggest that you come up with a WTO tariff base of 2.4%. That is probably as good as we are going to get. A tariff base of 2.4% is low, but the interesting point is that in 2015 our exported goods totalled £148 billion and our imports were £226 billion. We had a £78 billion a year trade deficit with Europe. That deficit is key to the whole thing, and it is why Europe would want to suck up to us. That is mitigated slightly by our services surplus, but of course services are not subject to tariffs at all, so there could be non-tariff barriers to our services. At the moment, we are running a £61 billion a year trade deficit, including services. If you apply a 2.4% trade tariff to that, which is the WTO model, it equates to £9 billion-worth of trade tariffs.
Matthew Elliott
There are lots of points there. Could I respond quite soon?
Mark Garnier
Yes. Why don’t you pick up on that point? I haven’t quite finished yet, but if you want to respond, I will finish after you.
Chair
We had better get to the question.
Mark Garnier
The point I am trying to make is that that £9 billion of tariffs will be chargeable either to British consumers or to British businesses, potentially. If you look at the cost of membership, we have this £350 million a week. Let us step back a little and look at the headline figures. In 2015, we paid in £17.8 billion, and we had back £4.9 billion. I take your point about it being negotiated, but that is about where it is going to be. We then have £4.4 billion of CAP payments and regional subsidies, and then we have £1.4 billion of direct grants coming into universities, companies and that type of stuff. Take all that back and you can effectively say that the direct fee payable by Britain, after we have had rebates and all the rest of it, is £7.1 billion, which is a fee that essentially buys us access to the single market—if you like, that is the cost. But if we were to come out, we would have a £9 billion balance of trade tariffs, even at the very lowest level we could probably get with WTO arrangements. That is assuming that we get the best possible deal. At the moment, that £7.1 billion is a cost to the Government; coming out, that £9 billion would be a cost to the consumer, or a potential cost to the consumer. That is where it would start affecting the economy. Please respond to that.
Matthew Elliott
Wow, there is a lot to respond to. Perhaps I can start with the negotiation and why I am so confident that we would actually have tariff-free access to the single market. If you look at the countries with which we have trade deficits—you are right to look at those—and the countries with which we have trade surpluses, the ones with which we have surpluses at the moment are, basically, Ireland, Luxembourg, Malta, Denmark, Bulgaria, Estonia and Croatia. The biggest one is Ireland at £10 billion. If you look at the ones with which we have huge trade deficits, Germany is the biggest one, France the fourth biggest and Italy the fifth biggest. I would say that the bigger and more serious countries have huge trade surpluses with us. I cannot imagine, the day after Britain votes to leave, Angela Merkel allowing a situation where the British markets were cut off for BMW or any of the other companies. Ditto the French farmers, the Italian fashion companies and what have you. We have a huge trade deficit with all those key very big countries, so they would want to continue to have access to the UK market. They would have a huge incentive—[Interruption.] May I just finish my point? They would have a huge incentive to have that free trade deal and tariff-free deal that I talked about. If you look at the other countries, which may not be so keen to have that tariff-free access to the UK, the biggest one of them is Ireland, and frankly Ireland would desperately want the EU to do a free trade deal with the UK.
Mark Garnier
Can I ask quite an important question—
Chair
If it is very brief, you can, but we are going to have to move on.
Mark Garnier
You make a very good point: why would those countries with a trade surplus with the UK want to negotiate anything other than the best deal for them to export? However, why would the UK, with a trade deficit with Europe, want to negotiate a free trade deal? Let me put it to you that we can defend our economy by having tariffs on imports in order to reduce the amount of imports that we have from Europe.
Matthew Elliott
With so many parliamentarians during this debate making it very clear that they want to have tariff-free access on both sides, I would find it extraordinary if on 24 June there all of a sudden was a majority in Parliament for protectionism between the UK and the EU.
Mark Garnier
You are probably right, but you never know.
Helen Goodman
There is a connection between the questions Mr Garnier has been asking and the questions I was asking. If we made a trade deal having left the EU, surely you can see that we would have to abide by the standards imposed through the single market to have access. To give a very simple example, imagine you are manufacturing kettles. You have to meet the German standards on kettles or the EU standards on kettles if you want to sell into the EU. If you are going to maintain this trade, you are not going to get the gains on regulation that you were suggesting half an hour ago.
Matthew Elliott
In the same way that you have to maintain the regulations to trade into the US market or any other market around the world. Of course companies who export have to go along with the regulations of the country that they are exporting their goods to. That goes without saying. Let’s not forget the 95%—
Helen Goodman
So we can’t get rid of all these regulations then, can we?
Matthew Elliott
Let’s not forget the 95% of companies in the UK who do not export to the EU, who have all the costs of regulation without the benefits of trade with the EU.
Helen Goodman
That is a separate question.
Matthew Elliott
It is an important one, though.
Helen Goodman
It is important, but do you think it is easier for British companies to have two different sets of regulations that they need to meet—a European set and a British set? That is the world that you would be creating.
Matthew Elliott
They already have to deal with multiple sets of regulation. If you look at a company such as JCB, for example, they have to deal with regulations for outside of the EU, where they export to the US. They deal with the regulations for the EU as well, so they are used to dealing with multiple sets of regulations.
Chair
But to be fair, they have complained about that a lot, and there is a business cost attached to it.
Matthew Elliott
Companies are used to dealing with multiple sets of regulations. There is another key point that goes beyond this.
Chair
No one is suggesting that it is not possible to do these things. The question is, what does it cost? There is a business cost to multiple sets of regulations and regulatory standards.
Matthew Elliott
If you look at the example I gave, I believe that JCB have concluded that the overall cost of Britain being part of the EU is greater than the benefit to them as a company.
Helen Goodman
Well, they may have done, but don’t you think it’s interesting that we’ve heard from so many other companies, whose views you’ve been dismissing as complete rubbish, totally wrong and operating on false premises? You’re happy to listen to JCB, but somehow you don’t want to listen to Boeing or Glaxo or Hitachi.
Matthew Elliott
Or Nissan.
Helen Goodman
Or Nissan, or all these other people putting the contrary view. You do seem to me to be picking and choosing somewhat.
Matthew Elliott
We do listen to these companies very closely. We listened to the chief—
Helen Goodman
You told me an hour ago that you hadn’t even spoken to them.
Matthew Elliott
We listened to the chief executive of Nissan when he told The Guardian, on 21 January 2016, “Whatever is the decision of the UK we will adapt to it. I don’t think there is a reason to worry.” We listened to the chairman of Hitachi when he told The Daily Telegraph on 31 January 2016, “We cannot say Brexit is the wrong way”. We have listened to these people. These people—
Helen Goodman
I’m afraid what Hitachi have said is that belonging to Europe is central to their model, and they are advising people—
Matthew Elliott
“We cannot say Brexit is the wrong way”.
Helen Goodman
I am sorry; that statement has been overtaken. They have written to all the people who work in their factory, telling them that it is in the interests of the firm to vote to remain. I know that because the factory is in my constituency.
Matthew Elliott
The only thing that has changed between January and—
Chair
Order. We have been going for an hour and twenty minutes, and I think a number of other colleagues want to get in. I am going to give you the opportunity of the last word on this point, Mr Elliott, and then I am going to bring in Stephen Hammond.
Matthew Elliott
The only thing that has changed between January and the statement you refer to is the start of the campaign. I might suggest that they are putting out a statement like that for political reasons, but their real position is that nothing will change.
Stephen Hammond
Mr Elliott, good afternoon. If the UK votes to exit on 23 June, do you think it should retain the financial services passport?
Matthew Elliott
I think it would.
Stephen Hammond
Why do you think that?
Matthew Elliott
Because I think the UK is in a strong position to negotiate a very good deal with the EU. I explained before how I think we would get tariff-free access for goods. I also think there is a very strong reason why we would continue to have passporting rights into the EU, in just the same way that German and French banks want passporting rights into this country.
Stephen Hammond
But you would accept, of course, that if we do retain the passport, we would have to accept the EU financial regulation without having any control over how it developed.
Matthew Elliott
I think that would be a result of discussions—some might say lobbying—between people in the City, banks in particular, and—
Stephen Hammond
Why do you take that view? If you look at the completely contrasting views we have had previously, from European commissioners who have taken a very different view from the one the current European Financial Services Commissioner has taken, it is highly unlikely that we would have that sort of influence. I am not sure, and I think the Committee would be keen to understand, why you have that optimism.
Matthew Elliott
I will pass over to Oliver in a moment, but I think you get more political statements like this during the course of a campaign. Can I give one example? This won’t take a moment to explain. Think back to the Scottish referendum, which Mr Kerevan will remember very well. During the course of that referendum, different statements were made, for example that Scotland would not be able to use the pound—Mark Carney was wheeled out to say that. I actually think that, had Scotland voted for independence, Scotland probably would have used the pound; I know Oliver Letwin was going round telling people that they would be able to use the pound. Similarly, with this debate, you might sometimes have statements, where different people are wheeled out to say, “No, you won’t get this”, but in reality you would.
Stephen Hammond
But if you look at the proposals by the previous commissioner, Monsieur Barnier, even with the position as it is now, inside the European Union, we were forced to fight our position. I think it is clear that financial regulation would be more difficult to achieve favourably for the City of London and the financial services industry in the UK outside the EU.
Matthew Elliott
As I say, I think Britain would get a very good deal were we to leave, and I think that would include a very good deal for the City.
Stephen Hammond
In a similar way to your response to Mr Garnier’s question about tariffs, you are hoping for this great deal, but you haven’t yet said why. The opposite to that, of course, is that, “pour encourager les autres”, they would actually make the deals as difficult as possible.