‘Creating the Best Environment for Business in Global Britain - Opportunities after Brexit’

Dr Laura Cohen speech to Conservative Beyond Brexit Conference, 2nd February

Check Against Delivery

Thank you Andy (Street).

And thank you Dan and Anthea for inviting me to speak. Hard working MEPs like you are appreciated as they have a track record fighting for our British businesses. I represent a thriving sector with rising exports that had been growing out of recession at 9% per year.

I’ll cover:

  • Firstly the opportunities for ceramics beyond Brexit;
  • Secondly why ‘no deal’ Brexit is so bad for many businesses – including ceramics; and
  • Thirdly why political consensus on a way forward is so important now. 

But first, a little about the British Ceramic Confederation and our members.

As a trade association, we are in the business of representing UK ceramic manufacturers. Our members are more diverse than you might think. Yes, Stoke potters are a big part of our membership, but also large, listed brick manufacturers such as Ibstock and Forterra. Our refractory and technical ceramics members are a vital part of the supply chain for many industries including oil & gas, defence, automotive and aerospace.

Three quarters of our member companies are SMEs. There’s a strong cluster in Staffordshire. And a growing UK supply chain.

As a trade association we work with all political parties.  We have a strong relationship with many MPs, including ex-BCC board member Rt Hon Gavin Williamson MP who has a brickworks in his constituency and will be joining us later today.

We are a thriving industry, employing more than 20,000 people directly with rising exports. In short, we’re a success story. But we are at a crossroads. In a matter of weeks we’ll be forced to follow one of two paths: one route leads  to a bright future, the other thwarting of our ambitions.

 

So let’s first talk about the bright future and the opportunities

When we surveyed our member companies before the referendum, Over 70% wanted to remain.

However, we’re not so entrenched that we can’t see that Brexit presents some opportunities on energy and trade. We want to make a success of Brexit.

On energy, ceramics are fired at high temperatures, we’re an energy intensive industry. We already have some of the most energy efficient ceramic factories in the world.  But the cost of implementing UK and EU policies on carbon reduction has been challenging as we still need to compete internationally. To decarbonise further we need to develop breakthrough technologies and implement them. These are large investments. Leaving the EU provides an opportunity for a different UK approach: government could provide energy intensive companies with “more carrot, less stick” (so helping us decarbonise rather than just taxing us punitively).

On trade, there are enormous opportunities from an independent UK policy if we take a pragmatic approach.

Our sector’s excited by the prospect of a Free Trade Agreement with the United States, already a large market, despite significant trade barriers. For example, there is a mature dining out culture in America which our ceramic catering-ware manufacturers would dearly love to exploit fully, but they are faced with huge 28% import tariffs.

The new UK Trade Remedies Authority also has the opportunity to build on the UK’s free trade credentials by tackling rule-breaking practices, such as Chinese dumping of tableware, tiles and steel. It could be more agile, speedy and vigorous than the EU system. But, I fear some UK policy makers wrongly perceive trade remedies as protectionism. Which they are not, as they deliver a level playing field, ensuring genuine free trade, when others don’t play by the rules.

Finally, our regulatory alignment with the European Union gives us a unique opportunity to have a quick, comprehensive trade agreement. All that is needed is political will. Our members need as close and frictionless relationship as possible. After all, 57% of our ceramic exports go there.

So that’s what it could look like. That brings me onto my second point:

 

On why we must avoid no deal

This isn’t project fear. I’m not talking as an ideologue. I’m a practical realist who’s worked in manufacturing for over 30 years. Here are just 5 of many problems that will affect ceramics:

No Deal Problem 1 – is Customs. The National Audit Office says leaving the EU without a deal will increase the number of import and export declarations from 55 million to an eye-watering 260 million per year. They’re also concerned that the unproven new Customs Declaration Service computer system won’t be fully ready on 29th March. One of my team only had his initial training yesterday. We could struggle to get critical raw materials to our factories and products to our customers.

No Deal Problem 2 – is Cash and investments. The prospect of no deal means cash is being tied up in stocks of raw materials and finished goods. This is instead of more productive investment to grow our businesses.

No Deal Problem 3 – is lack of Confidence. The reality is no deal will lead to crashing consumer confidence and market turmoil. Our members supply retail, construction and other manufacturing businesses. We’re exposed to what goes on in the wider economy. Remember, we supply to the car and aerospace sectors too. No deal uncertainty has also led, just last month, to some ceramic manufacturers losing orders from long-established, valued European customers. It will be difficult to get these back…. even more so with ‘no deal’.  Only this week one of our larger members went into administration – Brexit uncertainty has not helped.

No Deal Problem 4 – is Tariffs. Our famous Staffordshire pottery will have an extra 12% import tariff into the EU, making it more expensive and eroding margins. And some of our biggest non-EU markets like South Korea, Canada and Switzerland currently have EU Free Trade Agreements. We don’t have confidence that these preferential arrangements will continue with no deal. We’ll lose customers. And many jobs will suddenly become less viable.

No Deal Problem 5 – is Dumping. Chinese ceramics manufacturers don’t play by the rules and they dump product here. UK tile and tableware manufacturers rely on EU measures for a level playing field. Maintaining these will be much more difficult with no deal than with a transition arrangement. Moreover the new UK system isn’t yet legally established. And the rules aren’t agreed, even if, it means, unfortunately, just nodding them through parliament via statutory instrument. By contrast, as Anthea and Dan know the latest EU rules were meticulously scrutinised by elected MEPs. This is not voting leave and taking back control.

So, having shared the Brexit opportunities and why no deal is so bad ….

It’s time for consensus

Our ceramic industry needs a deal. We desperately need MPs, rather than doubling-down on their current positions, to reach out to each other, to listen actively and to work on a Parliamentary consensus. Caroline Spelman’s amendment last week makes this, in her words, morally binding. We need MPs to put the country’s interests before those of their parties.

Three practical examples of how we get consensus - from our MEPs, from Liam Fox and from ceramics.

Firstly in Brussels and Strasbourg –there’s no single party majority.  Anthea and Dan as MEPs have to form cross-party alliances and build consensus to deliver legislation. In Westminster this lesson has not been learnt at the time we need it the most with a minority UK Government.

Secondly, Liam Fox is setting up the Strategic Trade Advisory Group, working on trade policy and negotiations. He knows we need these behaviours after Brexit. This group will include people from diverse backgrounds: business, civil society and unions. And the job ad said they’re looking for people to act in the interests of the UK and not as a representative of their organisation.

And thirdly, if I could be so bold, politicians could take a leaf out of our book at the BCC. Building consensus is just part of being professional.

For example we work collaboratively with unions. Many associations just don’t bother as they think it’s difficult. It’s certainly hard work. It takes time and trust to build relationships. We’re curious and we want to understand each others’ positions. Even when we don’t agree, we carry on listening, respectfully. It’s worth it,  because both sides care, passionately, about ensuring we have growing businesses with great jobs, and ongoing investment. It’s worth it, because this approach achieves results:

Accident rates are now just a fraction of what they were. And that’s thanks to our initiative sharing good practice with unions, employers and the HSE over the last 17 years.

On trade remedies, I chair an alliance of eight manufacturing trade associations, three unions and the TUC. We bridged political divides and succeeded, with Government improving the Taxation Act. For ceramics this helps improve the viability of literally thousands of British jobs.

So returning to Brexit, we need a different approach, achieving consensus. Don’t let the perfect be the enemy of the good.

I was really pleased to see the Prime Minister invite and engage with other party leaders, senior parliamentarians and unions.

I was equally disappointed by the Leader of Opposition’s initial refusal to participate.

I’d be saying the same thing if I were speaking to a group of Labour party members. In fact, a BCC colleague is speaking to John McDonnell today in a similar vein.

 

Conclusion

So I want to leave you with an urgent plea.

Brexit presents some opportunities for our Ceramics sector to thrive, grow and export more. We want to make Brexit a success.

However, ‘no deal’ creates real and significant problems. It would halt our progress and push us backwards. It must be avoided. 

We need your help as politicians and activists. After Brexit we’re going to need more, not less collaboration and consensus -and the wisdom from different perspectives in more not fewer issues.

Now is the time for Government and Parliament to come together. Politicians must work across parties to avoid the disaster of a ‘no deal’ Brexit.

Our sector is thriving but businesses are now starting to lose orders from the EU. Members are pre-occupied with preparing for all Brexit eventualities. Their money is being tied up in extra stocks of raw materials and finished goods, rather than investing and focussing their staff to grow.

This is the reality outside the Westminster bubble, and it is damaging our thriving ceramic sector.

We need much more active listening and consensus for the good of the country. We welcome moves towards a deal, and genuinely hope the cross-party and EU talks gather pace because the clock is ticking.

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