The Brexit Effect

Hello and welcome to The Brexit Effect with me Christian Fraser.

Is the UK economy standing at the cliff edge -

or is there a soft landing the other side of Brexit?

We will hear from business leaders in Bristol on what type

of relationship they want with the EU.

There is no clear visibility on what's going to happen to those

guys post hard Brexit, soft Brexit, whatever Brexit.

They have been lean years for the pig farmers of Yorkshire -

I think it will be all right for pig men,

Migration from Europe is at a record level.

But what will ending freedom of movement mean to the UK economy

We have an expert panel with us this evening to debate the big issues.

Michael Gove is here - the former Tory Cabinet

minister one of the chief architects of the Vote Leave campaign.

Sir Vince Cable of the Liberal Democrats -

former Business Secretary and a strong Remain supporter.

Professor Anand Menon of King's College London -

who leads the independent research body, UK in a Changing Europe.

And Dia Chakravarty, Political Director of

the TaxPayers' Alliance - a think tank for for lower taxes

And we'll have the view from Strasbourg.

Article 50 still to be triggered, but for those British MEPs elected

to represent us in Europe, life is already changing.

Hello and welcome to the Brexit Effect -

this is our special programme looking more in-depth at what lies

We're now almost six months on from the Brexit vote,

still we have only a partial picture of where we are heading,

and a great deal of uncertainty over who has the power to formally

Yet for all these obstacles there's no question we are slowly moving

Last week, while the Supreme Court sat to consider the issue,

MPs voted overwhelmingly to support Theresa May's plan to begin

But even if there's clear support for that,

there is no such agreement in Parliament on what kind

The overwhelming evidence is that they do not want hard Brexit.

There is not a consensus out there for hard Brexit.

And if we're going to reach a consensus it has to be a genuine

Our amendment also lays out an important challenge to those

on the benches opposite, who say they respect the result

of the referendum but whose actions suggest they are looking for every

On the question of a vote on the final deal, now,

I heard him say today, I expect there will be a vote.

Well, I expect that the district line will turn up

He said, as I understood it, it is inconceivable

Well some people would have said that it was inconceivable that

Donald Trump would be elected as president of the United States.

It does not fill me with a great deal of confidence.

It was perfectly clear, made clear not just

It was perfectly clear, made clear not just by the vote leave campaign,

a role in, but it was made perfectly clear by the then Prime Minister,

It was made perfectly clear by my right honourable

friend the then Chancellor of the Exchequer,

It was made clear by every single one of the leading representatives

of the Remain campaign that voting to leave the European Union meant

The government has to be able to carry through the effect

And the plain choice we face is whether to constrain

the government or not to constrain the government.

My argument is that if we constrain the government we will end up

with a worse result from the point of view of people like me

So, the views from Parliament last week during the debate. I could go

of, your fellow leave campaigner Iain Duncan Smith said this vote had

given the government a blank cheque. Do you think it was so significant?

I think it has certainly given the government clear instruction. Not

just the overwhelming majority of conservatives but the entire House

of Commons saying now is the time to leave, let's trigger article 50 B

for the end of March, that gives the government the clear instruction to

get on with it. I would not say it is an entirely blank cheque. There

are two things to bear in mind. One, the nature of the mandate and

arguments made to leave. And secondly the need to address some

specific concerns. The government made it clear that they were going

to produce a plan before article 50 was formally triggered, that's the

basis on which the Parliamentary vote was secured, so there will be

more detail from the government before we formally trigger Brexit.

Is the plan comprehensive, is it enough? We don't know enough about

it. If I can shift your metaphor from blank cheques to bricks and

mortar, the country has voted and I accept that, to move house. We don't

know what the house is that we are moving to. And there needs to be

some process by which we decide whether we want to complete the

move, the house may be bigger and better, it may be full of dry rot.

There needs to be a proper process which Parliament leads, now

established by the courts, to decide whether the move should proceed. The

concern is that there are some politicians on the Remain side who

are, in the words of Michael, obfuscating, trying to delay the

process? I think there has been a serious loss of the benefit of the

doubt on both sides during the course of the referendum campaign.

And I think it does seem, to a lot of Brexit campaigners, I was

personally want even though my organisation did not take a stance,

that a lot of Remain supporting MPs are trying to stop the process in

some shape or form in the name of Parliamentary scrutiny.

Parliamentary scrutiny is a brilliant thing but it does often

seem like there is some intention on the part of some Remain supporting

MPs to stop the process somehow. The other party in this is the Supreme

Court, if they say the government needs a mandate, the timetable is

off again, isn't it was yellow one of the many things we don't know

about the Supreme Court is whether they will specify what this plan

should be. Plan could be a statement saying do the best for the country,

see you later, or the Supreme Court could say there needs to be

something more substantive, and that could be significant. Aching up on

the point Oliver Letwin made, if you have to mandate the government,

don't you tie their hands? What was it John Major said? Don't bind my

hands when I'm negotiating with Europe. Isn't there a danger of

limiting the negotiations? It seems perfectly reasonable that Parliament

should set out a set of objectives which will necessarily be brought.

And what is sometimes called the soft Brexit option, causing minimum

disruption and damage while actually leaving the European Union, if

Parliament were to give that general direction that would seem to be

perfectly reasonable. This is not a conventional negotiation. You must

remember article 50 triggers a process which will conclude with the

European Union making us an offer, conventional negotiation is not what

is going to happen. There is a danger that if you put it in

legislation it is narrow and confines what the government can do.

De negotiation will be very tightly drawn, it will be a bill in perhaps

18 or 20 words. Before that the argument will be how much is

revealed in that plan. The argument of Oliver Letwin is, and Vince is

right, it's a different sort of negotiation from other treaty

negotiations, but the more that you reveal beforehand, the greater the

potential for your case to be picked apart by others. OK.

So far the economy has out-performed many of the forecasts

But there are still longer-term concerns over what kind

of deal will be negotiated, and, crucially, what will happen

in those days after the divorce settlement takes effect.

The CBI - that represents many big businesses -

has been pushing for a gradual transition towards a new

And a couple of weeks ago, the Prime Minister hinted

that the Hovernment is working to avoid a so called "cliff edge".

Our business editor Simon Jack has been to the West of England to get

the thoughts of company bosses there.

Britain is on a journey out of the European Union.

It officially sets sail at the end of March when we'll

So far the route we're going to take has been, well,

So we've come to Bristol to find out what businesses here want to know

about the potential perils and potential opportunities

For firms like this manufacturer of aerospace components, initial

anxiety has given way to just getting on with it.

In fact the company has just spent ?400,000 on this new machine.

I was very pro-remain as a business person because I didn't want

the uncertainty that Brexit is still potentially

But people have decided on what they want to happen.

Let's roll up our sleeves and move forward.

In fact the economy has not really dimmed at all since the vote,

and here at the UK's largest independent financial adviser,

investor confidence has been looking up.

I think things are a lot more certain.

Two things in particular we've learned.

One is that we're definitely leaving the European Union.

And the other is that people have certainty that actually,

the day after the Brexit vote, the world hasn't fallen to pieces.

But hang on a moment, remember, we are still in the European Union,

and there is a gap to be bridged between where we are now

The government wants to start the exit process

That means the UK will actually leave in March 2019.

If no new deal between the UK and the EU has been

Are we heading for the edge of a cliff?

With precious little time to negotiate a new rule book,

A regulation, customs and trade no man's land?

Mike Summers is worried about potential delays

at a new border with Europe, and he's worried about the future

There is no clear visibility on what's going to happen to those

guys post hard Brexit, soft Brexit, whatever Brexit,

whatever type of Brexit we're talking about.

All this talk of cliff edges has prompted ministers to start talking

about a transitional period to give the UK a bit more breathing space

Having a longer period to manage the adjustment

between where we are now as full members of the European Union

and where we get to in the future as a result of the negotiations

that we will be conducting would be generally helpful.

Another thing that would be helpful is more assurance

One is that freed from Europe, then we will be able to tear up

When we look at it the UK was always at the top of the list in terms

of gold plating regulation that came out.

So actually it could be that freed up from Europe that's a green light

So we're not quite sure which way that's going to go.

So what has emerged from the mist and the murk

There are fears that we won't get the deal done in time,

we'll step into the unknown off this so-called cliff edge.

But some ministers are coming round to the idea of some sort

of transitional deal to smooth that process.

And others are deeply sceptical about how much that might

cost and how long that process might take.

One thing businesses want is still the one thing

Vince Cable, if there's going to be a transition, how long should it go

on for? I see this in two stages. And I think this is what Philip

Hammond was arguing for. You have a first stage where the basic

framework is agreed. You are in or out of the single market, you accept

or don't accept the customs union, the formula for the settlement of

Britain's remaining debts on the budget, whatever. There is a lot of

detail that will take years to sort out. Let me take one single example.

I did a conference with independent travel operators, now they operate

under something covering package holidays, and nobody imagines that

this kind of detail can be renegotiated, it's taken 30 years to

get there, within a small period of time. So there will have to be a

framework in which the government agrees with the European Union that

we're going to stay in the single market either overall or for many

product categories all we are going to leave it. And once that is

established you can then begin to talk about all the technical detail

which is massive. I take your point but if you have to negotiate a

transition, why not get on with the real deal? Why do we need a

transition to get to deal we to negotiate again? If you don't do

anything for two years and then you start, I can understand that's not

helpful to anybody, and I don't think that's what Philip Hammond and

others mean. You do in gauge with negotiation, you get the framework

agreed, and there is technical detail that will take a long time to

negotiate. To take another example, all the stuff around the car

industry, whether or not they will be able to remain in the customs

union so they don't have all the vast bureaucracy involved in rules

of origin, or widgets flying backwards and forwards. You can

agree a framework, the car industry remains in the customs union, maybe,

maybe not, I don't know. But when you've agreed it then you agree the

mechanics of how it plays out. Is there a cliff edge? No, I think the

phrase was actually used by one of the leaders of the CBI and I think

that it has been given a great deal of additional currency because

people want to make the prospect of leaving seems somehow perilous

instead of potentially liberating. I think it is the case, Vince is

right, that there are some issues that need to be resolved as part of

completing the article 15 negotiations. We need to divvy up

the resources of the European Union and the debts between us. And there

are issues, and Vince mentions the regulations governing transport and

travel. We can agree outside the European Union and say that we will

abide by them as we abide by other global rules and regulations that

govern how, as is done. I think some of the argument for transition runs

counter to the need for certainty. And I think there are certainly some

people who argue that the transition would provide a period of

adjustment. The danger is that the longer transition, the less certain

you are about the final destination. It was said today that it would have

to be for a fixed period, you couldn't have an open-ended

transitional period. And in that sense the question is why not move

quickly to concluding all of those things that constitute a proper

deal, both the division of response but it is in debts and comprehends a

free trade agreement between Britain and the European Union which should

work in both countries interests. If you then have a transitional

arrangement between our current situation and what might be the

eventual free trade agreement then how do we know that a transitional

arrangement is going to take less time to negotiate than the final

deal? It may well be that a transitional arrangement in all its

complexity becomes a way of disposing activity from getting to

the eventual deal we need to have. You raise the issue of cost as a

representative for the taxpayers Alliance. PO BR says it will cost as

an extra ?250 million a week probably to transition. There is no

specification over whether we would pay in for transition but that seems

to be the cost. This is the thing, without knowing what this transition

means, what it involves, how long the period lasts, how can we

possibly have any sort of cost estimate to go ahead with it? It is

definitely a point that whether this is actually going to be another

layer of added uncertainty which is Mrs can't cope with, I don't think

it is the right way to go, that is always going to be a worry. You talk

about cost and also limited resources, it could be costs but it

could be other things like civil service time etc, at a cost. Is it

not worth focusing all of those resources and focusing on getting

out, as it were, and going towards the final deal rather than dividing

focus and working on something for a little while and then something

else? That I think will be crucial and that's what we need to look at.

But if we get to the period at the end of article 50, October 2018 on

current projections, and there is no deal on the table, no transition,

what happens to all those products that we export to the European

Union? It will be March 2019 I think when it ends. So if we don't have a

deal the world's trade organisation rules will apply. And what is wrong

with that? A certain amount of tariffs are mandated. But we would

be quids in with our deficit with Europe. It would still impede trade

because people would have to pay to trade goods either way. The more

important thing is that you lose the certainty of the market and the

equivalence of regulation that allows service providers to trade in

Lisbon like they were trading in Liverpool. This isn't actually about

tariffs, this is about regulatory equivalence. This is about saying,

we accept euros, you can come and do business here, and that is true for

the city in particular. We are in the regulatory framework, we set the

gold-plated standard on regulation. So we may choose to proceed with an

option where we keep the regulation that has been negotiated.

Effectively we grandfathered single market rules. If that happens the

disruption is limited. I don't think we can be cavalier about the

imposition of tariffs. It affects a narrow part of the economy but the

car industry, aerospace industry, pharmaceuticals to some extent,

these are industries where vast amounts of stuff goes backwards and

forwards across frontiers. It would have a crippling effect if you had

to have customs control, tariff imposition or tariff relief every

time one of those transactions happen. Simply saying WTO rules,

tariffs, so what, that may not affect substantial chunks of the

economy but for supply chain industries it's crippling. There are

good reasons to think that the Chancellor will prevent, it's being

written up that he has the upper hand on his Brexit colleagues in the

Cabinet. It's always dangerous to try to read too much into a comment

here and a phrase there when you have collective Cabinet discussion

going on. Both Vince and I served in the same Cabinet, we know sometimes

certain comments are overinterpreted. Sometimes there was

division when in fact people were in the same place. I think Philip's

comments about the advantages of transition were in some cases

overinterpreted because there are different types of transition, not

too complicated this further. We could be in a situation where we

acknowledge that we have to continue paying into European Union covers

for a period after we've left in order to settle certain debts and

seal certain obligations. Ayew relaxed about transition? At this

stage I would want to know more before I could feel confident that a

transitional period is the right thing. I am open-minded. I think it

may well be the case that the period between the end of the article 15

negotiations, March 2019, and the period where we are fully outside

may involve certain changes or alterations in the nature of

Britain's relationship with the European Union. But until you've

seen what proposed, it's difficult to know. At the thing I always say

is, if we are going to have a transition, and during that period,

unless it's perfectly clear what the terms and length, that can generate

uncertainty. The Chancellor spoke recently that there would need to be

significant physical infrastructure changes at ports, we would need to

train large numbers of people, and you can't do that inside 18 months.

I think the time element is crucial and the attraction of the

transition. A complete trade deal will be impossible in 18 months. It

will be easier to do than a trade deal and it gives us a bit of

breathing space to deal with practicalities. Frankly negotiating

across the breadth of our economy a deal with our biggest trading

partner within two years when you are also doing article 50, and it's

not really two years because these elections are coming up in Europe

and they will stop negotiating for the duration, it makes a lot of

sense. But more cost involved? In our experience, with the greatest

respect to both politicians here who have run departments, government

departments and the consultants who work with them are very good at

producing a huge price tag and saying, this is what it will cost

taxpayers. We don't often see that it is justified. This is why details

are really important. How long a period we talking about? How will

they just avoid implying a number of new civil servants? Why aren't we

looking at what resources we have within departments at the moment and

seeing whether we can make more efficient use of those resources

which are already in place? These are all questions that have to be

asked. I just wanted to pick up something that Vince said about WTO

rules. No one is saying that's where we want to end up but I think that

could be a good starting point. And that's where our negotiators come in

and we had to that. But it does add a little bit of certainty which

businesses are crying out. Quite we are all sitting here presuming there

could be a transition. One of the chief negotiators said there would

be useful is in transition but there were some important caveats, it

depends what Britain wants. Vince made the point powerfully earlier,

of course there is the gauche nation, there is a lot to talk

about. Ultimately we cannot force the EU 27 to come to a conclusion

that they consider isn't in their own interests. We've got to accept

the fact that while we can seek to reason and weigh up certain

advantages that we have against some of the advantages that the European

Union has in this negotiation, if the 27th side that they want to opt

for a particular cause that we think might be damaging for them, then

they can take that decision. I think the notion of building up from a WTO

situation will be very costly. Firms in the supply chains that Vince

talked about will have made discussions a song you costs, might

be thinking about different investment decisions in member

states as a result. Don't they have those processes in place if they are

dealing with WTO countries? Absolutely, but what Vince was

talking about with supply chains, if you take a manufacturer of cars for

instance, parts of cars cross borders several times while they are

being manufactured. So within the manufacturing process, arguing

caring costs and certainly administrative delays at borders, it

is these things have to be checked, it will slow the whole process up.

Jury out on transition for the moment.

We are going to talk food and farming next.

It's a big sector worth more than ?108 billion to the UK economy.

75% of our agricultural exports go to the EU, and last year,

our payments from Brussels under the Common Agricultural Policy

Those subsidies will, of course, stop when we leave the EU.

But not all farmers received that support, and there is one sector

in particular that has done pretty well since the vote and now

I have been north, to a place I know very well, to find out more.

The dales of West Yorkshire, known to the locals as God's own country.

In Otley they've gathered for the year-end auction of pigs.

There are big orders for Christmas hams.

Though this day will begin with bacon.

After years without subsidy, pig farmers say they can

A falling pound and a world shortage of pork, notably in China,

has led this year to a 30% jump in exports.

And even at home these smallholders are seeing a Brexit dividend.

The prices are really good at the minute.

In fact ?1.90 for a normal pig is really good, isn't it?

Pig prices have been good here recently.

Today this prize pig brought the top price in the country, ?3.10 a kilo.

On average two years ago they were getting just 80p.

But it's not been so good for us to British consumer.

The UK is not self-sufficient in pigs.

We import a lot of our bacon and ham.

So the increased demand has been good for exporters but the cost

of your average bacon butty has gone up.

In fact wholesalers say since the referendum smokey bacon

The uncertainty in prices and in supply and demand will persist.

And the problem is familiar to the farming industry as any other.

Not that that uncertainty is undermining the wider UK economy.

Since the vote consumer confidence has soared.

Retail sales in October were up 7% on the same month last year.

The economy grew 0.5% in the third quarter,

better than expected, which means the UK will be

the fastest-growing of the G7 economies this year.

For 2017 growth has been downgraded and government finances

are projected to be ?122 billion worse up to 2021 than was

Such a hole in public finances might limit future farm payments.

But since these farmers are not losing hand-outs their biggest

concern is the size of the market and where they might export.

I think it will be hard until we know what they are actually

The exchange rate and all the exports will be quite difficult,

nobody really knows how it will pan out.

The general public ought to concentrate on supporting

And there's plenty of farmers in Britain that produce

I think it will be all right for pig men, yeah.

Pig farmers, like the rest of us, have plenty of questions.

Maybe a bumper Christmas, but they don't yet know enough to be

sure that politicians won't make a right pigs ear of it.

I'm sure they won't make the pigs ear. I wanted to remind you of a

quote before Brexit, you said we would have a bloodbath in the

financial markets, would you accept, looking at those figures, it's not

been anything of the sort? We certainly haven't had Armageddon,

but equally there has been an impact. An 18% devaluation which I

think is the largest since the war, is a very substantial factor. It has

some positive consequences and it will help exporters and people

competing with imports. But equally, squeeze living standards,

particularly next year when petrol prices and food prices feed through,

that's the basis of a somewhat more pessimistic growth forecast the

office budget responsibility have come up with. I think the optimists

and extreme pessimists have been confounded. We've had a modest

impact so far. I think the thing coming over the horizon is the big

business investment decisions as opposed to fairly routine business

operations, they are not being made, the evidence suggests that. And that

will take a toll until we get greater clarity about the outcome.

One of the things apparent to me in this fantastic market where I was

yesterday is, with the greatest respect to the people I spoke to,

how many of them were in their dotage. There weren't many young

farmers, and they would say that's because the European Union hasn't

supported young farmers particularly in livestock. I think there are all

sorts of reasons why UK farming has faced tough times inside the

European Union, in particular UK fisheries. If we redesign how we

choose to subsidise our farmers then one of the things that we can do is

that we can encourage a more environmentally sensitive approach

towards land use and we can shift subsidy away from some of the barley

barons who receive an enormous amount towards smaller farmers, and

hill farmers who make a contribution not to just high quality produce,

but also make sure the countryside continues to look beautiful and to

be an asset. What about that farmer who said people need to buy British?

I think a lot of people try to support their British farmers when

they go into supermarkets but is there anything you can do in

government to encourage people to buy British?

Heavy devaluation helps people. Better labelling? Better label. As

Vince said, if you make imports unaffordable, people will buy

domestic products. We saw the black hole in the figures there that the

OBR says will be there, it is only a forecast that. Will make it

difficult to commit to farm payments, isn't it? At the moment,

we have a complete lack of clarity over what will happen to those

sectors that receive money from the European Union. I'm not going to

defend the common agricultural policy because I wouldn't know how

to begin to do that. It is a fact that many farmers got money out of

the policy, I'm sure they are worried about their future. It would

be nice to have clarity now about what the Government intends to do in

the short-term for those people. For all the good numbers, wages are

pretty limp and my bacon sandwich is getting more expensive. Quite. We

heard about the petrol price. Often the easiest answer is to cut taxes.

We pay, I think 60% of what we pay at the pump goes straight to the

treasurery. We could cut taxes there. Absolutely right what was

just said, it's important these farmers find out what is actually

going to happen to them. The beauty of Brexit should have been that we

now decide what happens with our money. That really should be the

case. We should be lobbying politicians to get the best deal for

what works for our farmers as well. Maybe carve out a bit of common

ground here actually. I think Michael's comments on how you might

reorganise is very sensible. Shifting the subsidies in that kind

of way seems to be absolutely right. The big picture is how much money

the Government will have. If the OBR forecasts are correct that the

effect of Brexit negotiation and the uncertainty of the next few years is

to slow the economy down, then of course there's less Government

money. If we have the additional proposal to cut tax on petrol,

there's a bigger hole in the budget. The big picture relates to

Government revenue, which is not great. I can see the scope within

the farming sector, for example, for having a more rational way of

allocating subsidy. This is public sector broadcasting. We're bringing

Remain and Brexit closer together. Let's turn to one of the key issues

with Brexit you could say THE issue -

and that is migration. People in the UK voted

Leave for many reasons, but controlling immigration was one

of the big messages on the doorstep. So if we end freedom of movement,

how much impact could that have Chris Morris has

been taking a look. Free movement is linked to

membership of the EU's single market. Here it is, the 28 EU

countries plus Iceland, Norway, Switzerland and the invisible dot in

the middle, Liechtenstein. The free market is more than a Free Trade

Agreement. A basic deal moves taxes, tariffs and quotas on goods and

services from one country to another. The sing the market takes

that from a starting point but it has a common set of regulations on

everything from chemicals to working hours, a mutual recognition of

standards on things like safety and packaging. It guarantees the EU's

Cherished four freedoms, the free movement of goods, services, capital

and people and on that, says the EU, there can be no compromise. The

single market and its four freedoms, four freedoms, are indivisible.

Cherry-picking is not an option. In other words if you want free

movement of goods, you've got to accept free movement of people. Now

you can make an economic argument for saying that full free movement

of people isn't strictly necessary for the functioning of a single

market. But this is about politics too. If the UK won unilateral

restrictions on the free movement of people, who knows what other

countries mite begin to demand. The EU seems pretty determined not to

give the UK anything which looks like a better deal than the rest. So

it's tricky and there will be a price to pay. But if there's one

lesson the Government has to take from the referendum, it's that

immigration numbers from the EU have to be seen to be coming down. That

would seem to mean that free movement has to go. What are the

numbers we're talking about? Well, in the year to June 2016, according

to the Office for National Statistics, an estimated 285,000

citizens from other EU countries immigrated to the UK. While about

95,000 emigrated abroad. So a net migration figure of about 190,000,

that's record levels. But look at how that breaks down. For 41% of new

arrivals, the main reason for coming was a definite job. But for another

31%, well, they were looking for work, with no guarantee of a job and

that may be one area where the Government could decide to tighten

the rules quite considerably. I think the Government's likely to

adopt a work permit system. We have no wish to stop tourists and

students and people coming in to invest their own money or people who

can take care of their own livelihoods, but what we do want to

do is to have a numerical control on the number of people who come in to

take low paid jobs in our economy and there are still unemployed

British people. There would need to be some kind of control. The easiest

way to do that would be a work permit system. We have a work permit

system for the rest of the world, it would be creating justice between

Europe and the rest of the world. To compare with immigration from

outside the EU. New arrivals last year, nearly half of them came to

study. They were students. That is obviously a different thing and

they're not from the single market. But if the UK does impose

restrictions on people coming from the EU, how might the EU respond to

Brits hoping to go in the opposite direction? And what other

restrictions mite be imposed? There are a host of other questions. Do

you make a distinction between high-skilled and low-skilled job

seekers? What about sectors of the economy like agricultural and

construction, that depend heavily on labour from elsewhere in the EU? How

do you regulate any system in the first place? The Home Secretary

Amber Rudd told Parliament last week there would be a feed to have some

sort of documentation for EU nationals in the UK post Brexit, so

not just work permits. It would be complex. One estimate to leave you

with, simply registering EU nationals already here for permanent

residence would take, at the current rate it's being done, 140 years. An

awful lot for the Government to chew on. It needs to come up with some

answers fairly quickly. If we pick up on one point in his

report there, 31% come here looking for work. If you wipe out those who

don't have a fixed job, you deal with the number quite drastically. I

suppose one does, though wipe out sounds drastic. If it was up to me,

as soon as it was possible after the referendum result became understood

and known, I would have said that anybody who has, who was in this

country on the 23 June should be allowed to be here. That should have

been the case, I think. The Government didn't make that

announcement. Now it's a bit late to deal with those questions because a

lot of other questions are coming in the horizon as well. It's a terrible

idea for politicians to decide on a number when it comes to immigration.

Politicians are not good at working out how many people we need from

anywhere in the world. It should be left to the businesses. The idea

that you might have to have a job lined up if you come into the

country, could be a good idea, students also. So when you have a

real purpose to come into the country, that could work out. We

should look into it. People like us, who have family or grew up outside

the EU, that's how a lot of the world actually move around. I think

that's something to look into. How do you determine who was here in

June? There is a massive administrative problem there. The

reason why the Government couldn't do that, even if it was minded to,

is they don't know who's in the country at any given time. Unless

migrants have registered to vote or are claiming benefits, we don't know

who they are. Couldn't we use the national card system? Jo It's not a

re-- It's not a reliable guide as to who is in the country. When it comes

to the numbers, this is as much as politics as the economy now. One of

the clear things about the Brexit vote was dissatisfaction about

perceived levels of migration. I think our politicians know that. Do

you accept that? Yes. You accept that migration has to come down? I

accept that this is inevitable. You weren't very clear on that before

the vote. I always argued that the fact that you have totally

uncontrolled migration for the European Union is difficult to

justify. It's leading - I don't understand the Liberal Democrat

position. You are saying we can somehow remain in the single market

while at the same time bringing down migration. You made a very sensible

point, when we talk about free movement of labour, there are

different categories of people. I rather agree that it would be

sensible to restrict people coming on a purely opportunistic basis

looking for jobs. It's not clear that breaches the single market. If

people are offered jobs here and are free to come when they've got bona

fide employment, that is observing the spirit of free movement. This

whole argument has been polarised between ridiculous extremes. I spent

five years negotiating with the Germans about free movement of

professionals as part of the single market. They restrict movements of

professionals. We don't apply the rules as we should? We've got a

pretty liberal approach to it. Given that the Government is now in a very

awkward position, that I think genuinely, they want to preserve

freedom of trade and keep the sing the market as far as trade's

concerned, but restrict movement. We should be looking for that kind of

way forward. I don't understand what the problem is. There are two

specific political problems about migration. We have a

non-contributory welfare system. Secondly, we pay benefits to people

in work, working tax credits. Which meant these people could come over

here and claim from the state, even if they hadn't contributed

beforehand. There was a perception that this isn't fair. But that was

something that came from the peculiarity of our welfare system.

That made us slightly different to other member states. David Cameron

negotiated improvements in that. Which we rejected. What happened to

the Australian points system? Well, it was dismissed, that's the wrong

word, rejected by Theresa May. I argued that we should have an

Australian style points system. You still believe that? It doesn't

matter whether it's Australian, what I think we need to have is a system

similar to that, whereby we say that we're willing to accept people if

they've got skills and if they've got the capacity to contribute to

economic growth. We're also willing to accept a number of people who are

fleeing persecution and to whom we should provide refuge. As it

happens, I would go further than the Government is willing to at the

moment and I would do things the Government has ruled out. One, I

would guarantee every EU citizen here the right to stay. Who, because

you don't know who's here? If we provide that guarantee, then we'll

find that actually - So we have an amnesty, everybody gets a passport?

If you're an EU I Zen, you're allowed. They will rush to the door.

If it's the case we are about to go over the cliff edge, I don't think

they will. It will be an interesting question as to whether or not

European citizens think we're a good bet or not. The second thing, is I

would, to be fair to Vince, I think he has argued for that, I would

exempt students from net migration figures. I would also be more

flexible - That's 40-odd % of the number. It's making a complete

nonsense, producing complete self-harm. We've heard this week

they're going to halve the numbers. It's got nothing to do with

immigration. They're not immigrants. For technical reasons they're

included in the numbers. That's about enforcement as well. If you

are here on a student visa, it shouldn't be that difficult if the

UK border agency worked properly to work out once the visa, once that

course is over, if they don't have a job to stay back with they don't

stay back. That shouldn't be such a difficult thing to do. Joo the

public, of course, people were concerned about migration, it was an

issue during the debate. I think the public are savvier than often given

credit for. If people have a proper job and they're not undercutting

wages, they're welcome. People come to study, they're welcome. If people

come to either gain the benefits system or come here with the

explicit aim of taking advantage a demand for low-cost labour which

undercuts the wages of people here, that's not acceptable. Many people

would ask what's the problem with the work visa system? You said your

family came from outside Europe. They're still over. There it's just

me. Anybody from outside Europe needs a visa. That's why you don't

need to go to Australia! I guess, if we made some restrictions on people

who were - We get rid of the 31% looking for work and say if you've

got a work visa you can come. Well, I guess that's the way the system

could work. Yes, I think one of the points John Redwood made, which is

fair, if there's seen to be equivalence between the European

Union and other countries that would be an entirely non-discriminatory

policy when it comes to nationhood. That would be a good thing. Now, it

may well be that we end up having a deal whereby we give preferential

treatment to certain types of people from the European Union, that's a

request that the EU makes. But as a starting point, I would far rather

than we had a totally non-discriminatory system. A tighter

border at Calais and Dover? Yes. What about Northern Ireland and the

Republic? We've had a common travel area since the 1920s. I think it's

perfectly possible for us to have - You can't put a border upon it, can

you? One of the things, the Republic of Ireland is, like the UK outside

Schengen, so of course, it's going to be the case that you will have

the capacity for individuals who are trying to get into Ireland to be

checked bit Irish. And you have the capacity, if we wish to, to have

certain checks at the border, random checks, if we think it's

appropriate. On the whole we've been able to work successfully between

Britain and Ireland since the 1920s. I don't see it's an insuperrabble

obstacle. If you're attracting professionals, that's all good. What

happens to south Lincolnshire, that dramatic need for migrant labour.

Will those people fill out the forms for a three-four month stay or look

elsewhere. What about a seasonal - If it's three months, they're not

covered by restrictions. They're not in the immigration numbers unless

they're a year over a year. We don't understand why. Would that have

worked? Could that have worked to have a seasonal veesament I believe

Australia has that and when they need an influx of people - The The

former Home Secretary ruled that out. She's now the prm. We have had

seasonal worker schemes in the past. It depends on what the industry

might demand. Part of the challenge is that in some of those areas like

Lincolnshire where you have migrant labour working in agriculture, you

had a strong vote to leave. In America, when you had restrictions

on low cost labour in agriculture, what you had was wages creeping up a

bit and increased mechanisation and increase prod ductivity as well. If

you put a work visa system in place, is there a danger you dissuade the

people you want, the high skilled workers who say I can't be bothered

with Britain, it's too difficult? You reduce the flexibility of the

labour market, the ability to respond quickly to a demand for

labour goes down slightly because of an administrative hurdle. Anyone

who's filled in an immigration form to go to the United States knows you

have to steel yourself for the process. A lot will depend on what

the bureaucracy looks like. It will have an impact. It will have an

impact of people would want to go to Europe from Britain to study or

work. Yes, again, let's keep study separate, because that should never

be part of the immigration regime any way. If you want to do a

six-month attachment in Paris, you might need a work visa in future. We

would hope common sense prevails. Short-term assignments, shouldn't be

covered by immigration. These net immigration figures which the

Government uses and again I don't want to get into the whole history

of the net immigration target, which was a very bad thing to have done in

the first place. They cover people who were moving for over a year. So

with a bit of common sense and sensible statistics you can allow a

lot of flexibility of short-term labour. Very quickly before we

finish on this, a sector by sector skills based system, would that

work? I don't know necessarily that each sector can come to a consensus

itself about how many workers it might need. I'm open to a debate

about how to manage a work permit system better, yes.

On Thursday, European leaders are getting together

They will discuss Brexit, but over a dinner to

Her spokeswoman says that's reasonable, as they need to prepare

Perhaps it's also a sign that the UK is already on its way out.

Article 50 is yet to be triggered, but as Kevin Connolly

has been finding out, in Strasbourg, life

for those we elected to the European Parliament isn't

It is the season of Advent in the Christmas market in Strasbourg and

of course, the season of Brexit too. The difference being that everyone

knows what to expect once Advent is over. No-one these days is watching

the clock and the calendar more cautiously than Britain's block of

MEPs. They are on the frontline of Brexit. So what are they picking up

about the way the rest of the EU now views the UK's imminent departure?

It was very nice actually the first time I came back after the Brexit

referendum and I was feeling a bit nervous about how I might get

received. A French assistant called, even before I got into the

Parliament, called across and said, "Welcome home." That was very

touching and very nice. That is the attitude we've had. You're right,

sympathy. They know we did our best in the referendum to campaign for

Britain to stay and that we're continuing to support the European

Union the best way we can. The new year will bring a new test of the

UK's standing, when the European Parliament chooses the chairs of its

20 committees. The UK currently holds three and may yet hang onto

all of them. Richard Corbet, Labour's Deputy Leader here, says

that's because his fellow MEPs don't blame him and his colleagues for

Brexit. In the meantime, we are there, we are appreciated by our

colleagues, at least some of us are, probably not those like Nigel

Farage, who would happily blow the whole place up. But those of us who

legitimately take part in fighting our corner within the system, they

pressure that we're -- appreciate that we're not representing the Tory

Government. There can be a surprising sense of the wheels

continuing to turn, for now at least. And one of the Brexiteers,

rejected any analogy with Turk yes, sir voting for Christmas. -- turkeys

voting for Christmas. I like Turkies and I like Christmas. I voted myself

out of a job. I'm happy that the country voted to leave. I think it

will be the right decision. Wre making sure that we're going to

deliver the best Brexit that we possibly can for the UK. It means

that we use every ounce of influence we have here whilst we're still

inside the bubble. So in the shadow of Brexit, it's business as usual

for Britain's MEPs, for now. What will happen when the tough talking

begins next year though? That's another matter.

Advent and Christmas will soon be over, of course, but for British

MEPs the period of counting down will go on. They'll be among the

first to know whether British influence in the EU is going to last

right up till the moment of Brexit or quietly fizzle out somewhere

along the way. Next year will tell. Yes it's interesting that last

point. If you are a British MEP, it must be like changing jobs. If

you're on the way out, you're not privy to the same conversations.

You're locked out of important meetings. Is that a problem for the

UK that we're not in some of these meetings? I think while we're still

in, we're bound to follow the rules. The European Union is still

legislating and it's hard to avoid the impression that the Government

is so preoccupied with leaving that it's slightly taking it's eye off

the ball when it comes to influencing legislation at the

moment. It must be a very weird situation to be an MEP at the moment

because you know you're going to be out of the door. I would be surprise

today we got those three committee chairs when they come to select them

next week. A lot of the work in Europe goes on in the back rooms and

before the ministers turn up. Is it important that these MEPs are in

there? I think that quite a lot of the work is done not just by MEPs

but by the people who are our diplomats and civil servants wokking

in our team in Brussels. But one of the things that leaving the European

Union will compel us to do is to concentrate on making sure that the

laws and regulations that we ideally take back control of are shaped in

the right way. So there are talented people in the European Parliament

and I'd like to see those talents deployed to make sure Britain

becomes more competitive because of changing rules and regulation that's

we can determine back here now. You've been testing the temperature

around Europe. Do you feel that they are going to stick together as this

coherent block in this negotiation or can we divide and conquer? I

should say first and foremost, I'm about 25 years too old for that. I

think politics will prevail. What I found quite striking in talking to

politicians across Europe at the moment is the political imperative

is not to give us a deal when it comes to breaking up the four

freedoms we heard about earlier. They're prepared to self-harm to get

the deal they want? They're prepared to put politics above economics. If

you're a mainstream centrist French politician, what you want to do

least is make Brexit look appealing for those who are tempted to vote

for the National Front. Same in the Netherlands. In the Netherlands they

reckon the Brexit will cost 10 billion euros over five to ten

years. They say they have to take the hit, otherwise they will say,

you've given them a good deal, we can do the same thing. There are

political considerations. Do you think there's a strand of thought in

Europe, if we make this as hard as possible and give them the worst

deal maybe they'll balk at the last minute. Ireland voted twice, the

Netherlands voted twice. They all vote twice and then they get the

decision they finally want. That's why it's important to make sure

everybody knows Brexit is going to happen. Taking from what you just

said, political decisions will be impacted by economic decisions as

well. If the citizens in those countries think that by giving us a

bad deal, the rest of the EU countries are going to get a bad

deal from us. Don't forget a lot of those people sell products to us,

they need a good deal as much as we do. If that affects the economy of

those countries, I think that would also impact on the policy, the

political side of those countries as well. I think that's why we really

should get a good deal if our negotiating play -- negotiators play

our cards right. We can, over the next 18 months, change some minds in

Europe. I absolutely take the point that Anan makes, people are worried

about what they regard as the forces that have been unleashed by the

Brexit vote. I think as the clock ticks, there will be rational

judgments being made and indeed pressure brought to bear on European

governments by their corporate sector and business sector. I think

that over the course of the next 18 months opinions can change. While at

the moment there are some people who are hoping that Britain might begin

to regret the vote, what I suspect may happen is that in Europe, not

that they will give us the softest and easiest deal available, but that

opinion may change. This is our last programme of the year for the Brexit

Effect, when you're sitting over your Christmas dinner, Vince, with

your Turkey wish bone thinking of Brexit in the months ahead, what

will you be wishing for? I accept that we're in a different place from

a year ago. We've got to try and make a success of this. I go along

with that broad view. I hope that we prodouse what is loosely called a

soft Brexit. It is possible that we could finish up in a very, very bad

place. Go back to my metaphor about moving house, you've decided to

leave, furniture is in the removal van and you discover the place

you're going to is full of dry rot and it's collapsing. We might have

to re-open this issue. I'm not saying that because I want to

destabilise, but I think we've got to keep at the back of our minds

that - trying and get as good a negotiation as possible, but we

might have to, Parliament might have to rethink. Keep your wishes secret,

we are out of time. No doubt plenty more

twists and turns to come, but that is where we must leave

it for now. Thanks to all my guests

this evening: Sir Vince We will be back in the new year

keeping track of The Brexit Effect. For now, from us all,

thanks for watching. Hello. Good evening, it's another

mild night out there. We've got southerly winds, bringing that mild

air in from quite a long way south. Frost free across the board. And a

lot of cloud overnight as well. Some rain drifting north across