There have been 2 exchanges between Mr Philip Hammond and Department for International Trade
|Mon 14th January 2019||European Union (Withdrawal) Act||28 interactions (3,342 words)|
|Thu 6th December 2018||European Union (Withdrawal) Act||82 interactions (4,842 words)|
The hon. Gentleman is extremely courteous and always punctilious about the truth of what is said in this Chamber. I simply stated the fact that the Prime Minister had said it was impossible to renegotiate but that, when she faced defeat, she tried to do what she herself had said was impossible.
The Government could have used some of this time to respond to the Treasury Committee by providing proper economic assessments containing an analysis of the Northern Ireland backstop and setting out the short-term economic impact of the Prime Minister’s proposed deal. On 11 December, the Committee published its report on the withdrawal agreement and the political declaration. It concluded:
“The White Paper scenario, which is akin to the Chequers proposal, represents the most optimistic and generous reading of the Political Declaration, insofar as it is consistent with it at all. It does not represent the central or most likely outcome under the Political Declaration. Therefore, it cannot be used to inform Parliament’s meaningful vote on the Withdrawal Agreement. The information provided includes no analysis of the Backstop, and there is no short-term analysis of any of the scenarios, including on public finances and on regional and sectoral job losses and gains. The Government has only provided long-term analysis, which does not show how the economy will transition to a new trading relationship, or the path taken by inflation and unemployment”.
The Chair of the Committee, the right hon. Member for Loughborough (Nicky Morgan), commented:
“The aim of this report is not to recommend how MPs should vote, but to ensure that MPs are as informed as possible when it comes to choosing a division lobby. Yet the Government has made this difficult to achieve. The Committee is disappointed that the Government has modelled its White Paper, which represents the most optimistic reading of the Political Declaration, rather than a more realistic scenario. The Committee is also disappointed that the Treasury has not analysed the backstop and fails to include short-term analysis of any of the scenarios, including impacts on public finances and on regional and sectoral job losses or gains.”
In the Chancellor’s letter responding to the Committee, he revealed that
“there is not yet sufficient specificity on detailed arrangements for modelling purposes, and therefore the provisions of the backstop have not been included in the analysis.”
Indeed! Members are being asked to take one of the most important decisions for our country on the basis of inadequate financial information, and it is precisely this lack of specificity that has left Members across the House unable to have confidence in the Prime Minister’s deal.
Of course it was right to look at the 15-year long-term assessment. Nobody is disputing that. Indeed, I will quote later from precisely that analysis. The problem is—and this is not just my criticism but the all-party Treasury Select Committee’s criticism—that these crucial elements of how we will transition to the future relationship have not been analysed or presented to the House.
Break in Debate
The hon. Gentleman clearly has not been listening. My hon. Friend the Member for Brent North (Barry Gardiner) explained how we would, as a third country, be able to negotiate a deal that would give us that say. [Interruption.] If Government Members doubt that, they should give us the opportunity to start the negotiations.
Tomorrow this deal will go down, and it is now time to put the mistakes of the past two years behind us and clear away the debris of this deal and the Government’s failed negotiations. It is clear that, to break the deadlock and deliver a clear mandate for a new approach, we need a general election. It is time to let the people have their say.
If that is not achievable, this House will need to work together to secure the best compromise to protect our country, and the Executive need to recognise that Parliament must rule on this matter, not the Executive. At that stage, Members may want to confirm that new deal with the people in a public vote. People will be looking to us to judge whether we have the maturity, good sense and commitment to our country and the national interest to secure a deal that protects jobs and the economy. I believe we can live up to that, and we must.
The Chancellor is praising other people for compromise, but if the deal is defeated tomorrow, will he stick to that principle and will he compromise further with other people who are expressing other views, particularly those of us who think that the public should be brought back into this discussion?
Has the Chancellor by any chance read the powerful letter in today’s Financial Times from the former EU Financial Services Commissioner, Jonathan Hill? He said that he had yet to meet anybody who felt that the Norway model would work for the UK’s financial services industry. In fact, he felt that EEA members had so little influence on the EU’s rule making for financial services that they were grateful if anybody even replied to any of their correspondence.
Will the Chancellor explain to us, then, how this deal gives our country more say in how Europe defines its financial services, which we will want to continue to trade with, compared with what we currently have as members?
I am grateful to the Chancellor for giving way. Throughout this process he has been far and away the coolest head around the Cabinet table, constantly advocating for the economic interests of the deal over some of the hotheads, many of whom left the Government. So why on earth, at this late stage, is he still countenancing the prospect of no deal? How can he justify spending billions of pounds on preparing for a no deal that he does not want, that the Prime Minister does not want, that this House does not want, that the country does not want and that businesses do not want? It is fuelling uncertainty, it is adding to anxiety and it is costing the taxpayer. It is reckless and irresponsible. Why on earth is a serious person such as the Chancellor still persisting with this absolute fantasy? It is a disgrace. Rule it out!
I thank the Chancellor for giving way. He has just said that it is right for this country to do Brexit in a way that would bring prosperity. Will he say which of the Brexit scenarios, which his Department has done the figures for, show this country being better off?
Will my right hon. Friend confirm that all the statistics, which are being thrown around somewhat inaccurately by some in this Chamber, show that under every and any scenario Britain will be better off? It is simply a case of how much better off—that is what we are arguing about.
I thank the Chancellor for his generous comments earlier about my contribution. To be clear—I say this to offer an olive branch to the Government—the EEA, Norway-plus, common market 2.0 option would involve us voting for the withdrawal agreement, but with a different political declaration that would more closely align us with the single market and the customs union. He might want to think about that before dismissing it.
We have heard once again that the backstop is undesirable and no one wants it. We have heard that it is temporary and an insurance policy. Every insurance policy is time-limited. If neither side wants it and everyone acknowledges that it is temporary, why can we not put a date on it and end it at a particular time? Surely that is not unreasonable.
Despite what the Chancellor has just set out, the reality is that nothing he has described tonight will be as good as the situation we have now as an EU member state.
Just before I call the Chancellor of the Exchequer to resume the previously adjourned debate, I want to make two points for the benefit of the House. First, I said yesterday, and I think it is worthy of repetition today, that although this is in one respect a seamless debate running over a period of five sitting days, colleagues should know—and if they have forgotten, be reminded—that there are wind-up speakers each day from the Front Benches. The implication of that for colleagues should be unmistakeable. If right hon. and hon. Members wish to speak in the debate, they should be sure to be present for the winding-up speeches, and they should have a pretty good—if not precise—idea of when those speeches will be delivered. I will keep a record, but this is an important convention, and it really is unacceptable for a Member to speak and then take the attitude that he or she has many commitments and a very full diary and must be elsewhere and cannot possibly be present for the winding-up speeches. That really is unacceptable in parliamentary terms, so I am sure that Members will want to comply with the convention.
Secondly, perhaps I can be forgiven for saying, as I happen to know, that the last time I looked no fewer than 75 right hon. and hon. Members had indicated to me that they wish to catch my eye today. From the Chair’s point of view, and in terms of the efficiency of chairing and of the proceedings, it would be much appreciated if colleagues did not beetle up to the Chair to inquire where they are on the list, how long it will be before they are called, etc. The usual channels are on the case. I politely say to colleagues that the Chair will, as always, do his level best to get everybody in, but the merits of patience can scarcely be overstated. With that, I invite the Chancellor of the Exchequer to resume the debate.
The Chancellor said recently that backing the Prime Minister’s deal would be better for the country than remaining in the EU. However, during the referendum campaign in February 2016, he said that a yes vote would lead to “very significant uncertainty” and would have a “chilling effect” on the economy. What information can the Chancellor share with the House that has caused him to have such a fundamental change of opinion?
Did my right hon. Friend subscribe to the statement in the 2017 Conservative general election manifesto that no deal would be better than a bad deal?
The Chancellor mentioned no deal, so I wonder whether he can explain what no deal means. My understanding is that the rest of the world trades under World Trade Organisation rules with independent free trade agreements, so there is actually no such thing as no deal, is there? If we do leave—I do not buy the term “crash out”—we will trade on WTO rules, so that does not mean “no deal”, does it?
I agree with the Chancellor that there will inevitably be an economic penalty from leaving the EU. Does he agree that having to comply with lots of rules set by the EU, over which we will no longer have any say—that will be the position under the withdrawal agreement—is part of the economic penalty that we will suffer?
Does my right hon. Friend agree it is important that we have a deal that is not only good for the economy but that brings our country together? The deal on the table is one that offers that, and it is one with which we should move forward.
Does my right hon. Friend agree that uncertainty is bad for our economy and very bad for businesses?
The Chancellor is being generous with his time. Can he clarify whether the Government’s analysis confirms that the half-baked Brexit deal that they are pursuing will actually leave our country permanently poorer?
On Tuesday, the House of Commons Library wrote to me to say:
“The backstop comes into force automatically, if the Withdrawal Agreement is signed, at the end of the transition period.”
This morning, the Prime Minister said:
“If we get to the point where it might be needed, we have a choice as to what we do, so we don’t even have to go into the backstop at that point.”
Can the Chancellor help to explain that because there seems to be a variance between those two statements?
The Chancellor is making a very good case about what would happen if there were a no-deal Brexit. Indeed, in his opening remarks he described it as an act of “uncertainty and economic self-harm”. Given that the companies he has talked about, which depend so much on just-in-time deliveries in the motor industry and elsewhere, are most worried and concerned about the prospect of a no-deal Brexit, and as there is clearly not a majority in this House for a no-deal Brexit, although we may disagree about other things, why do we not unite and rule out that option?
I totally concur with what my right hon. Friend said about divided nations, but may I urge him to be cautious about relying too heavily on economic forecasts? We all remember the Treasury, the Bank of England and the International Monetary Fund predicting economic woe by Christmas 2016 if we voted to leave, with talk of 500,000 extra unemployed, a do-it-yourself economic disaster and so on. It got so bad that in the end the Bank of England had to publicly apologise for getting it so wrong. Can we just make sure we keep things in perspective with regard to these economic forecasts?
The one thing that I would suggest to the Chancellor is that the problem with these forecasts is that they do not anticipate a response from the Government to a given set of scenarios. That is one reason why the forecasts in 2016 were so wrong.
While the Chancellor is explaining the deal, will he explain to the House which trade unions he has sat down and briefed on the deal, and what their response was? The feedback that I have had from ordinary trade union members in my constituency is that, although this deal is preferable to no deal, it is still a long way away from the certainty that they would have hoped to have had in the proper arrangement that they were expecting.
Does the Chancellor agree with the Governor of the Bank of England that stress tests have shown that under every scenario the financial system is robust? That should give the Government confidence to be equally robust with the EU in future negotiations.
With regard to the deal versus no-deal scenario, does the Chancellor agree that the problem with the WTO option is that it is silent on swathes of modern British industry, so it does not cover our economy completely? Aviation is one of the most obvious sectors that is not covered by the WTO option. It is very dangerous for us to go into a situation in which those sectors are not adequately covered.
The Chancellor is being very candid. According to his recently published long-term economic analysis, the Government’s two scenarios would result in a hit to GDP, or a lowering of the growth rate, of between 3.4% and 6.4%, if there is a deal, and of between 6.3% and 9% if there is no deal. Will he confirm that this is indeed the choice the UK are putting before Parliament?
Will the Chancellor put on the record what he thinks the hits will be? He said in response to a Labour Member that there would be a lower growth rate. What are the percentage differences in the two scenarios—deal and no deal—versus staying in the EU?
Is it not the truth that there has not been time to consult with the organised trade unions because the Government have been consulting with the hard-line Brexiteers in the European Research Group instead of putting the national interest first?
My question is this: why did the Chancellor not support his Prime Minister in her pledge to end austerity in the Budget, which would have addressed many of the reasons for the divide in the nation he refers to?
The Chancellor just referred to British citizens living in EU countries. Can he confirm that, under this deal, EU citizens living in the UK will be in a better position than British citizens living in EU countries, because they will not have the ability they currently have to move freely between EU countries?
Let us hope not. I have tried this with the Prime Minister: can the Chancellor look the young people of this country in the eye and tell them that all the restrictions we will impose on EU nationals the EU will impose on our young people? The rights that he and I have to live, work and love across a continent of 27 will be lost to our young people. Will he now be straight with them and tell them that there will now be restrictions on their freedom of movement?
I would like to move the Chancellor away from the party political point scoring and to ask him a serious question about what reassurances he can give to companies in Grimsby such as Young’s, which relies on fresh fish products from Iceland and south Norway. Both are non-EU countries with EFTA and EEA agreements with the EU. How does this Tory withdrawal agreement impact on the certainty of future supply to an industry that employs 5,000 people in my area?
According to the Department for Transport, if we crash out without this agreement, the hauliers of this country will have access to only 1,000 permits—and that to cover a range of areas from health products to food and furniture deliveries. This would be catastrophic for my constituency, which relies on haulage. Does my right hon. Friend agree?
Before the Chancellor started giving way, he made the point that just being in the customs union was not replicating what we have at the moment, but does he accept that, were we to join Norway, Iceland and Liechtenstein in the European Free Trade Association and, on top of that, agree a customs union that we would need to keep the Irish border open, we could keep a very high proportion of the economic benefits of membership, even if the House insists on proceeding to give up political membership and other aspects of the EU?
I am listening carefully to the Chancellor. He mentioned frictionless trade, but where in the political declaration does it say “Guaranteed frictionless trade”? It said so in the Chequers agreement, but it seems to have been omitted in what we are voting on on Tuesday.
I thank the Chancellor for giving way. Does he agree that, under the withdrawal agreement, the UK will continue to trade on the same basis not just with the EU, but with the EEA and other countries, which means that companies such as Young’s of Grimsby would not face a cliff edge, but that if we vote against this agreement, then all is uncertain?
I am very grateful to my right hon. Friend for giving way. He mentioned financial services and the impact of any Norway-style arrangement on the sector. Does he not also acknowledge that the proposed deal that the Government are putting forward is not great for financial services by any means? The sector obviously employs many of my constituents in Orpington who come into London every day to work in the City in all manner of roles. I have read the Government’s economic analysis and it shows that, over the relevant forecasting period, the financial services sector will be hit by around 6% to the effect that our trade will be 6% smaller than it would otherwise be. That is a meaningful hit to one of our most competitive industries, and we do not have many globally competitive sectors, so it baffles me why we would willingly do that.
I wish to make one further point if I may and ask another question. The agreement that the Government are putting forward will mean that we will no longer have any direct influence on the EU’s rule making with respect to financial services. It is therefore all the more important that we maintain our ability to play a full part in representing the UK’s interests in global bodies such as the Basel Committee and the International Organisation of Securities Commissions. Article 219 says that we will have to follow the EU’s position on all those bodies. [Interruption.]
I think the House has captured what Jack Straw used to call the gra-vah-men of the hon. Gentleman’s point. I prefer the pronunciation gra-va-men, but there you go.
I am very grateful to my right hon. Friend for giving way and I very much appreciate the realistic point that he makes about what is on offer to my constituents in the financial services sector. Does he agree that it is precisely because this is the best deal that we are likely to get and that it gets us into transition where these important technical matters can be resolved that it has been welcomed by all the representative bodies of the financial services sector across the country?
I have been listening carefully to the Chancellor’s speech. At the very beginning, he said that divided nations are not successful nations. I am inclined to agree with him, but how does he square that comment with a potentially differentiated deal for Northern Ireland that will leave Scotland at a competitive disadvantage?
The Chancellor talks about record numbers of people in employment and says that unemployment is lower, but that is not the case in relation to disabled people. Does he agree that this Government’s record on disabled people is one of more disabled people out of work and more on lower wages?
I agree with what the Chancellor says about the dire problems caused by no deal. However, he described the transition period as a time in which business could prepare for the new world. The truth is that the Government will be negotiating in parallel with those businesses trying to make changes, so they will not know the destination and will not be able to use that time because the fact is that it is uncertain.
Did not the Bank of England, the Treasury and the IMF all incorrectly forecast economic woe if the people of the United Kingdom voted to leave in 2016? Indeed, they predicted 500,000 job losses before we even Brexit. As the Chancellor has outlined very well today, our economy is growing and, importantly, employment is increasing. There have been fantastic results since we voted to leave. If he was standing at the Dispatch Box today and arguing for a WTO agreement, the City of London and everyone else would still support him because they would have the leadership that the Government would be providing. The fact of the matter is that this country requires leadership to leave on WTO terms, not criticism about leaving.
Will the Chancellor give way?
The Chancellor is as kind as he is funny.
If the Chancellor sincerely believes the situation that he has just described to us and if he cannot convince this House of that situation on Tuesday, will he resign because he has clearly lost the confidence of this House?
I am very reassured to hear what the Chancellor has just said, because he said in his opening statement that he felt that Brexit itself might be at risk, which of course is very much at odds with what the Prime Minister has promised us. Will he go on reassuring people like me that the will of the people will be followed by this Government?
One of the things that really concerns businesses is the availability of skills with this deal. At the moment, they know that there is a plan for growth, which the Government have in the light of their abysmal record on productivity, but that plan cannot be delivered if skills are migrating back to the EU. How will the Chancellor address that?
Key sectors in the north-west, such as the chemicals, aerospace, pharmaceutical, nuclear, and food and drink industries, involve high-paying, high-skilled jobs. Will my right hon. Friend comment on the impact on those jobs if this deal is not agreed?
Next week we will make one of the most significant decisions that most hon. Members will ever make in this House, and it will impact on current and future generations. So far, hon. Members have ensured that we approach the debate leading to that decision with the seriousness of tone that it warrants—indeed, I think we have seen some of the best of the House over the past few days—and we have to find a way through.
On Wednesday, my right hon. Friend the Member for Leeds Central (Hilary Benn) said:
“My final plea to the House is as follows. Now is the moment to tell each other the truth… No one is going to get everything they thought they would get. No one is going to receive all the things they were told they would receive. All of us are going to have to compromise, and we are going to have to find a way forward that a majority can agree upon.”—[Official Report, 4 December 2018; Vol. 650, c. 802.]
I fully concur with those sentiments, and that is what we are about in this coming period.
I wish to focus on four points—I recognise that a large number of Members wish to speak, so I will be as succinct as possible. My first point, on which I hope we can find widespread majority and common ground across the House, is that we must seek to prevent a no-deal situation occurring by either imposition or default. Secondly—and I say this in as straight a way as possible—it is increasingly obvious that the Prime Minister’s deal is neither politically nor economically acceptable, and neither is it capable of bringing the House or country together.
Thirdly, as the House looks for an alternative, Labour has proposed a plan that we believe could unite the country, by addressing the concerns raised in the referendum campaign while securing the benefits of a close and collaborative relationship with our European partners. That is what we are about. My fourth point is an expression of a worrying concern, given the current state of our economy, about the impact of a bad deal on our communities.