Sharon Hodgson, Member of Parliament for Washington and Sunderland West and Shadow Minister for Public Health is urging the Prime Minister to rule out a disastrous ‘No-Deal’ Brexit scenario. As uncertainty around Brexit continues from day to day, it is more important now than ever that a viable solution is found to break the current impasse.
In recent weeks, Sharon has been contacted by local businesses who are growing increasingly concerned by the lack of certainty around Brexit, some of whom have already incurred significant financial costs through preparing for any eventuality.
This comes as a number of high profile trade bodies and businesses issue stark warnings about the reality of a ‘No-Deal’ Brexit – details of which can be found at the bottom of this page.
Sharon Hodgson MP said:
‘There have been growing calls by some people in recent weeks and months for a ‘No-Deal’ or ‘Clean Break’ Brexit, in which we would leave the European Union (EU) without an agreement. This is being painted by some, as a harmless and convenient way in which to bring the current political crisis over Brexit to an end.
What these latest figures from the Confederation of British Industry (CBI), the Government’s own financial analysis and the concerns I have heard from local businesses, the North East Chamber of Commerce show, the Society of Motor Manufacturers and Traders (SMMT), and Trade Unions is that this could not be further from the truth.
When the automotive and manufacturing industries highlight the huge impacts that any disruption at the border could have, it’s important to listen. No politician should claim to know more about the intricate nature of industry, than those who actually work within it, and this is something I will never do.
It is all too easy for some to dismiss the concerns being raised as ‘Project Fear’, but the very real truth is that there is now the possibility of severe and long-term damage being done to our region due to the reckless approach to Brexit by this Tory Government. It won’t be the Boris Johnsons or the Jacob Rees-Moggs of the world who suffer, it will be working people in the North-East.
Our region has already suffered disproportionately under 9 years of punishing austerity, and as the proud Labour MP for my constituency I will never inflict more pain on those I represent.
That is why I will continue to back the Labour Party in calling on the Prime Minister to do the right thing by dropping her red lines, ruling out ‘No-deal’ and allow Parliament to decide next steps.’
Sharon Hodgson MP has taken a number of steps in recent weeks to put pressure on the Government into ruling out a ‘No-Deal’ Brexit:
- Sharon joined over 200 MPs from across the political spectrum in signing a letter to the Prime Minister urging the Government to agree a mechanism that would ensure a ‘No Deal’ Brexit could not take place.
- Sharon attended a meeting that followed on from this letter, with the Prime Minister on Tuesday 8th January 2019 where concerns from MPs representing constituencies across the country were aired about the damaging impact that a ‘No-Deal’ Brexit could have on manufacturing and jobs.
- Sharon also supported an Amendment to the Finance Bill which would limit the scope for tax changes following a ‘No-Deal’ unless authorised by MPs. Although the specific effect of this measure may be limited, it signals that there is no majority in the House of Commons for ‘No-Deal’.
- Sharon intends to support amendments that seek to take ‘No-Deal’ off the table and allow Parliament to have a say on options to break the Brexit deadlock.
The Confederation of British Industry (CBI) recently released information on the impact of a ‘No-Deal’ Brexit scenario on the North-East:
- If the UK fails to secure a deal, by 2034 real GVA – a measure of the value of goods and services produced in the region - could be 10.5% lower in the North East than under the UK’s current arrangements with the EU1. This could amount to an annual loss of output worth £7 billion by 2034 (in today’s prices), equivalent to twice the amount of public spending on schools and education in the region each year2.
- North East, and many of the region’s manufacturing businesses are particularly exposed to the risk of higher tariffs and other trade costs that would hit firms in a no deal scenario. The manufacturing sector accounts for 15% of the North East’s GVA and 10.4% of employment, making it the region’s largest sector3. With 89% of the North East’s exports being goods, and with 59% of these going to the EU4, a deal is really important for jobs and growth in the North East.
- The prospect of higher tariffs, border delays and administrative costs are a particular risk for the North East’s automotive sector – which spans small technology companies making steering systems to one of the largest car companies in the world. Transport equipment makes up the greatest share of manufacturing GVA in the North East (15.0%), and 94% of this comes from motor vehicles3. At a national level, the automotive sector is likely to be one of the most severely impacted sectors in a no deal scenario, with sectoral GVA projected to be around 23% lower by 2034 than it would be if today’s arrangements persisted1.That is because tariffs on cars could be up to 10% and every completed component in a car would have to be tested twice over before being sold, costing hundreds of thousands of pounds.
- The North East’s important chemicals, refined petroleum and coke sector, which accounts for 13.7% of the region’s manufacturing GVA3, is also highly exposed to no deal. The chemicals, pharmaceuticals, rubber & plastics sector is set to be one of the hardest hit sectors in a no deal, with sectoral GVA estimated to be around 22% lower by 2034 than if today’s arrangements with the EU continued1. That is because chemicals sold or traded to the EU are highly regulated and for safety reasons would have to be carefully tracked and traced through a complex system that UK firms would have to go through twice.
As reported in the Sunderland Echo, Assistant director of policy at North East Chamber of Commerce, Jonathan Walker recently warned that a ‘no deal’ Brexit could see “death by a thousand cuts” for Sunderland firms
- The result of a no deal or disruptive Brexit, he argued, could affect future investment, disrupt supply chains and even see some businesses relocate.
- “When we have surveyed businesses in the region, among exporting businesses, the overwhelming majority want an outcome that keeps us in the single market or customs union or both. “This is for the very simple reason that goods flow freely across borders into Sunderland. “Any disruption to that trade fall we believe really exposes us to short-term disruption and risk but in the long-term makes Sunderland and the North East a less attractive place to invest in. “We have a lot of companies based here where this is their European presence and they’re there to serve a European market.
- “The reason we’re concerned is because the manufacturing sector in Sunderland is part of the jewel in the crown of the North East, we’re a region that continues to punch above its weight when it comes to export, particularly value.
In a recent statement, Nissan said:
‘Since 1986, the UK has been a production base for Nissan in Europe. Our British-based R&D and design teams support the development of products made in Sunderland, specifically for the European market.
Frictionless trade has enabled the growth that has seen our Sunderland plant become the biggest factory in the history of the UK car industry, exporting more than half of its production to the EU.
Today we are among those companies with major investments in the UK who are still waiting for clarity on what the future trading relationship between the UK and the EU will look like.
As a sudden change from those rules to the rules of the WTO will have serious implications for British industry, we urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade.’
Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT) said in a recent statement:
‘’Leaving the EU, our biggest and most important trading partner, without a deal and without a transition period to cushion the blow would put this sector and jobs at immediate risk. ‘No deal’ must be avoided at all costs. Business needs certainty so we now need politicians to do everything to prevent irreversible damage to this vital sector.”