Business Brexit Summit with Ruth George MP and the University of Derby

Overview

The event was held at the Devonshire Dome in Buxton, in partnership with the University of Derby.  Over 20 businesses, ranging from multinationals to SMEs were represented, employing over 1,750 staff in High Peak, along with East Midlands Chamber of Commerce.

Introductions: Professor Nick Antonopoulos, Pro Vice-Chancellor of the University of Derby welcomed delegates and Ruth George MP gave an introductory speech.

Debate: a wide-ranging debate covered:

  • Regulations
  • Relationships with EU markets
  • Employment

Group Comments: participants gave comments on the specific areas of:

  • On-going trade with the EU
  • Movement of labour and access to skilled workers
  • The possible impact of tariffs and border controls with the EU
  • Trading with the rest of the world

Closing remarks and thanks from Ruth George MP

Conclusions: The overwhelming view of those present was that the UK should remain a member of the EU single market and the EU customs union, or enter new arrangements which are as close to that as possible.

 

  1. Welcome from Professor Nick Antonopoulos, University of Derby Pro Vice-Chancellor
  • Welcome from the University of Derby.
  • Businesses are at the heart of the University of Derby.
  • As a University, we focus on creating a caring, aspirational environment for students.
  • The Buxton Campus of the University of Derby specialises in degrees in Tourism, Hospitality, Events and Spa Management.
  • The University of Derby is committed to making a positive contribution to the community, by providing great teaching and training, supporting local jobs, and caring for the environment.
  • Education is a massive export for the UK with a value of £22 billion.
  • We must continue to value this after the UK’s exit from the European Union.

 

 

 

  1. Introduction from Ruth George MP

Ruth welcomed local businesses of whom over 20 were represented, from multi-nationals to SMEs, and thanked the University of Derby for hosting.  The recent Apprenticeship Awards evening had showed how well the University is working with local businesses and attracting those from further afield to Buxton.

Jobs are especially important in rural areas such as High Peak so it is important that we value local businesses and employment.  Many businesses have raised concerns about Brexit with me and this summit is to discuss the broad issues for Ruth to take back to Parliament and to help inform Labour Party policy.

The meeting report is being sent to Sir Keir Starmer, Shadow Brexit Secretary, and to Hillary Benn MP, Chair of the Select Committee on Exiting the EU.

Over a year after the triggering of Article 50, there is still huge uncertainty around Brexit:

  • Negotiations are still ongoing. The government’s aims constantly change as backbenchers (and sometimes ministers) attempt to impose their own agendas.
  • The EU Withdrawal Bill has been significantly amended in the House of Lords. Those amendments will return to the Commons for further votes and ‘ping-pong’ negotiations between the two Houses.
  • The Trade Bill and the Taxation (Cross-Border Trade) Bill have stalled in the House of Commons as the government cannot reach agreement with their MPs on our future membership of the Customs Union and future trade deals.

This uncertainty makes things difficult for many companies who import and export.  I hope that sharing local experiences and letting me know specific issues you would like me to take up with government on your behalf will help find some answers on how to progress.

Parliament will have a ‘meaningful’ vote on the final deal and I am therefore engaging with as many constituents and local interests as possible to determine what people in High Peak want from our Brexit deal.  This involves:

  • A detailed survey of options for the Brexit deal has been delivered to households across High Peak and currently has over 1,200 responses.
  • Two public meetings in Buxton and Glossop, attended by over 300 people.
  • A Youth Summit with East Midlands MEP Rory Palmer where local young people raised concerns about education, Single Market membership and worries about rising hate crime in the local area.

This Business Summit is the next stage of engagement.  The impact of Brexit on our businesses and local jobs is key so it is important to hear your thoughts directly.

When the details of the Brexit deal are known Ruth will arrange further events to gather views on the impact of the actual proposals.

I will scrutinise the final deal very carefully against the conditions that local people have set to make sure that it will work for High Peak, but I am prepared to not support a deal which does not work for local people and businesses.

 

 

 

 

3. Questions & Comments

3.1 Regulations

  • We know there will be great upheaval. MPs who favour a hard Brexit are creating uncertainty by pretending there won’t.  For our work in health and safety, we need EU licenses.  To obtain them, we must have a trading entity in the EU, so we now have to transfer work from Buxton to Ireland.  Other businesses are doing the same, as there is a long backlog for issuing VAT numbers in Ireland.
  • We have also had trouble with uncertainty over EU regulatory divergence. We did not get advice from our trade association.
  • We export to the EU, so the flow through the ports is a major issue. If there are any delays, this will limit the supply chain, and reduce our capacity. If our capacity to deliver is reduced, our customers will go elsewhere. Customs Union and Single Market membership would have been good. We would be rule-takers, rather than rule-makers, but fortunately most EU regulations are very sensible.
  • Only about 12% of UK laws come from EU. Many of the laws which are unpopular are self-inflicted, not from the EU.
  • Do we know whether EU regulations will transfer automatically transfer into UK law?
  • How will you judge whether a deal is ‘good’ before you vote?

Ruth’s responses

Regulations

  • The Government is aiming for full regulatory alignment at the point of Britain leaving the EU, but no one can guarantee that regulations will stay the same after that. The UK could commit to mirror EU regulations going forward but no one is prepared to give that blanket commitment.
  • We are hoping that regulations will stay aligned as far as possible during the transition phase.
  • Current EU regulations will need around 19,000 amendments to transpose them into UK law, the majority of which are very minor and will be done by civil servants.
  • Roughly 800-1,000 of these amendments may be contentious. These will be framed as secondary legislation and receive scrutiny from small committees of MPs.  It will be very difficult for MPs to thoroughly scrutinise all of these regulations so we will appreciate advice from businesses on issues that will affect you.
  • Interest groups are already lobbying for certain changes to regulations. The EU Exit Impact Statements assumed £40 billion of economic advantage from reducing the UK’s ‘regulatory burdens’.

Voting on the Brexit Deal

  • I will continue to listen to local people. The 1,000+ responses from my Brexit Survey have shown some shift in local opinions, but not a large shift yet. I will continue to monitor the surveys and will hold more public meetings when the deal is finalised.
  • If there is a major shift in public opinion against the deal, then I believe it would be wrong for me to vote for that deal.

 

3.2 Relationship with EU markets

  • My company has been working for over a year to set up a notified body in Finland in the EU27. In January, we and all our customers received a letter from the European Commission stating that as of March 2019, all the certificates we issued would become invalid. We are based in Buxton, but we will now have to have staff in Finland who will issue the certificates.
  • Importing will be a major issue. If tariffs are imposed on products and materials, or delays occur at ports it will slow down the manufacturing process, and increase our costs.
  • As a service-based business, we have received substantial funding through the EU. A third of our work is in the EU.  If we are not an EU-based company, then in tendering situations, we will not get the same treatment.  Already we are experiencing this disadvantage against competitors based in the EU27. For the first time in nine years, we did not win the full tender for a contract in Ireland; and were just given half.  I feel this decision was partially due to the cooling in relations, following the Brexit vote.
  • Engineers for our aerospace engineering company must regularly carry expensive equipment through airports. Getting through customs in the EU is not an issue currently, but we do have regular problems in airports outside the EU. We need clarity over what provisions will be in place following Brexit as it will have such a major impact on our business.
  • March 2019 will be the cliff edge. There is a lack of clarity over the transition period, so competitors in the EU already have an advantage.
  • There is already a massive queue of companies registering in Ireland. The Government need to understand that this will mean losses of tax revenue and jobs.
  • Any barriers to supplying European countries is great news for German companies, who will be able to compete more successfully for these contracts. We have already stopped tendering for some contracts due to Brexit, as we know we will not be successful.

Ruth’s response

  • I hope the Government will stick to their commitment to remain in the EU Customs Union until 2020, and hopefully there will be a form of Customs Union after that.
  • But the politics are very fluid, and this has generated a great deal of uncertainty.
  • How many of you would support remaining in the EU Customs Union after the end of the transitional period in 2020? 19 out of 21 representatives showed their hands.
  • How many would support abandoning Brexit? 14 out of 21 representatives showed their hands.

 

3.3 Employment

  • The amount of paperwork to employ somebody from outside the EU, such as India, is problematic. This certainly dis-incentivises employment of non-EU workers. It is concerning there is no clarity if this will be the case when employing EU citizens following Brexit.
  • Will people want to come here after Brexit?
  • As a representative for a business in the construction industry, nationally we are reliant on employing Eastern Europeans. But now employees are finding it difficult to sign off on their commitment to future projects due to uncertainty over their right to remain in future, meaning our business is unsure whether it will have the staff levels for work scheduled in the future. Will any politicians make the case for freedom of movement?
  • In my business, we employ EU citizens because they are the best skilled. There is a skills gap in the UK, partially due to the lack of applied education opportunities.
  • Employing people from outside the EU is costly, and a lengthy process. It cost me £10,000 to employ someone from outside the EU and within 3 months, they had left my business.  There is nothing we can do about that.
  • Great opportunities arise currently within the EU. Our business takes interns from French Universities (who are sponsored by French companies), for 3 month periods. As well as being great experience for the students, it is very helpful for us. When we have approached British Universities about doing the same, they want to charge us. The loss of these opportunities are not mentioned it is a shame they will be unlikely to exist after we leave the EU.
  • The business I work for in aerospace engineering relies on getting labour in and out of the EU quickly. If we are no longer able to do this, then we will lose our competitive edge.

Ruth’s response

  • It is looking likely that a visa system will replace freedom of movement after the UK leaves the EU. Both Labour and the Conservatives have indicated that they would support work visas.
  • Whether people will still want to come to work in the UK will depend how our economy is performing, but in general, I anticipate that people will be less keen due to visas and a reduction in their rights to remain and for their families to join them.
  • The impact on the health service could be terrible if we are not properly prepared, due to the high number of nurses and doctors from EU27 countries.
  • There is already a fear factor amongst some people from the EU living in the UK, with many immigrants already receiving threatening letters from the Home Office.
  • During both public meetings in January, EU citizens who lived in High Peak and were working said they no longer felt welcome in the UK, and were planning on leaving.
  • If local businesses are saying to me that freedom of movement is vital for them, then this is a case I will consider making.
  • Although High Peak has been reasonably unaffected by immigration, in some cases it has had an impact in low-paid employment. Alongside negative stories in the press, this has fostered some negative perceptions of immigration.
  • How many of you would support the continuation of free movement of labour after leaving the European Union? 18 out of 21 representatives showed their hands.

 

 

 

4. Comments from Round Table Discussions

4.1 On-going trade with the EU

  • I am concerned that my business will be disadvantaged in tendering for work funded either directly or indirectly by the EU.
  • If we lose the alignment for data protection law, and regulations, this will make competing on a level playing field with EU27 countries impossible.
  • The possibility of not being able to use the Single Euro Payments Area (SEPA) – the EU-wide direct debit payment system – would be terribly detrimental to our business. The consequence will be costs via conversion rates, commission charges, and the loss of transaction automation.
  • It is uncertain whether UK businesses will be able to use the VAT Information Exchange System (VIES), which allows shortcuts in relation to VAT administration, following Brexit. Not being able to do so would have negative connotations for our business.
  • I am worried about the negative consequences of a no deal, and not being in the customs union. Being in the customs union, even without a “seat at the table”, is vital as regulations are developed.
  • I am concerned about the additional workload and bureaucracy in relation to Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulations if we leave the customs union and single market.
  • For my business, it is vital that everything possible is done to avoid the economic consequences of a no-deal exit. This would be awful.
  • The UK needs efficient movement of supply chains to avoid the negative impact of Brexit, and I am not convinced that the UK has this.

4.2 Movement of labour and access to skilled workers

  • I am worried about the costs and timeliness of processing procedures for work visas in the EU27 after Brexit.
  • As an exporting business which designs, manufactures, and installs capital goods, not being able to offer customers a complete service if movement of labour is restricted will be a real issue.
  • It is vital that students are exempted from the immigration statistics so that the number of student nurses coming to the country does not drop after Brexit.
  • It is important that there is a successor to the Erasmus programme after Brexit to enable the exchange of ideas and resources, and allow continued co-operation across Europe for researchers and students.
  • Skilled workers from the EU cover the skills gaps in the UK for engineers. It is critical for the survival of our business that access to this market remains open.
  • My business has experienced difficulties getting work visas in areas of the rest of the world. It took me nine weeks to get a work permit in Australia, and after being offered more work near the end of my stay, my request for a visa extension was rejected. I would be fearful if this kind of relationship were replicated with the EU27.

4.3 The possible impact of tariffs and border controls with the EU

  • I am concerned about the cost of importing goods from the EU post-Brexit, as this will eat into our margins and impact on jobs and prices.
  • Not all materials can be bought within the UK, and some must be imported from the EU and other countries. If those materials are then subject to taxes and tariffs, the manufacturing costs increase – and these costs will fluctuate.  This will make effective planning for the future much more difficult.
  • More barriers with the EU will hinder our product development, as it will restrict access to some materials. For example, the UK already cannot meet the demand for the supply of recycled plastic which is used in packaging, and I anticipate there would be more cases like this if there are barriers to trading with the EU.

4.4 Trading with the rest of the world

  • I am concerned that if smooth movement of goods through ports ceases, and there are delays due to additional customs checks, business will be affected with non-EU companies as well as EU companies as so much trade goes through Europe, even if it ends up in other countries. I am uncertain whether the UK has the resources and infrastructure to cope with this challenge.
  • It will be more difficult to trade with the rest of the world as soon as we leave the EU in March 2019 as we will cease to qualify for the EU’s preferential tariff rates. This will continue for a long time until the UK can negotiate new trade deals, but many businesses will cease trading with those countries in the meantime as we won’t be able to compete with EU27 companies who will still enjoy the preferential tariffs.
  • I feel that there will not be a fundamental rebalancing of trade towards the rest of the world after Brexit, but rather that companies such as my own will seek to retain current relationships with EU companies, even if at a slightly detrimental level.
  • I am worried about Britain’s standing as an outward-looking nation, and how this will affect perceptions of my business.
  • I am uncertain about growing relationships with companies in countries like India and China. They are more likely to want to foster closer ties in other EU27 nations, due to the allure of access to the EU markets.