Mr Philip Hammond debates with Department for International Trade

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)

European Union (Withdrawal) Act

Mr Philip Hammond Excerpts
Monday 14th January 2019

(1 year, 8 months ago)

Commons Chamber
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Department for International Trade
Barry Gardiner Portrait Barry Gardiner - Parliament Live - Hansard
14 Jan 2019, 7:23 p.m.

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.

The Chancellor of the Exchequer (Mr Philip Hammond) Parliament Live - Hansard
14 Jan 2019, 7:26 p.m.

Will the hon. Gentleman acknowledge that the cross-Government modelling to which he refers looked at the situation 15 years out? Of course it does not reflect the inclusion of the backstop. The backstop, if it were used, would be a temporary arrangement, so it is completely irrelevant to the stable state 15 years out.

Barry Gardiner Portrait Barry Gardiner - Parliament Live - Hansard
14 Jan 2019, 7:27 p.m.

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

John McDonnell - Hansard
15 Jan 2019, 1:16 a.m.

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 of the Exchequer (Mr Philip Hammond) Parliament Live - Hansard
15 Jan 2019, 1:18 a.m.

This has been a wide-ranging and interesting debate that has exposed clearly the different and passionately held views on all sides of the wider argument about Brexit. In my contribution to this debate on 6 December, I set out the economic case for a deal, the damage that would be likely to result from disruption of cross-border supply chains in a no-deal scenario, and how a deal would deliver a dividend for the UK economy in terms of both economic growth and the public finances. Those arguments remain valid, and you will be relieved to hear, Mr Speaker, that I do not intend to repeat or elaborate on them.

We have heard arguments in favour of the full range of options for both exit mechanics and the future relationship between the UK and the EU. Indeed, I think I heard pretty much the full range within the speech of the hon. Member for Brent North (Barry Gardiner). At one moment, I thought he might be on the brink of applying for associate membership of the European Research Group.

A large group of my hon. Friends recognised in their contributions the logic of the Prime Minister’s deal and the need for a compromise so that we can move on as a country. My hon. Friends the Members for Stafford (Jeremy Lefroy), for Thirsk and Malton (Kevin Hollinrake), for Harborough (Neil O’Brien), for Chichester (Gillian Keegan), for Waveney (Peter Aldous), for Gloucester (Richard Graham), for Hitchin and Harpenden (Bim Afolami), for Taunton Deane (Rebecca Pow), for Elmet and Rothwell (Alec Shelbrooke), for North West Norfolk (Sir Henry Bellingham), for Maidstone and The Weald (Mrs Grant) and for Halesowen and Rowley Regis (James Morris), and my right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald), all made that point. I think my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) was in that category as well.

My hon. Friend the Member for North West Norfolk probably summed it up best when he said that he himself would like “a 100% Brexit” but recognised that only 52% voted for it, so that to unite the country we all have to compromise. This is a time for individual sacrifice in the greater good.

Two of my hon. Friends were a little more blunt in their contributions: my hon. Friend the Member for Monmouth (David T. C. Davies) and my right hon. Friend the Member for Chesham and Amersham (Dame Cheryl Gillan) recognised explicitly that their motive for voting for the Prime Minister’s deal was a fear that the alternative might be no Brexit at all.

Peter Kyle Portrait Peter Kyle - Hansard
15 Jan 2019, 1:21 a.m.

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?

Mr Hammond Hansard
15 Jan 2019, 1:21 a.m.

The deal that the Prime Minister has presented to Parliament very clearly is a compromise between the views of people on both sides of this argument. It will not deliver 100% of what anybody wants, and the Prime Minister herself has recognised that only this afternoon.

I want to mention my right hon. Friend the Member for New Forest West (Sir Desmond Swayne), because I think he summed up what is still a dilemma for many—that the middle is being squeezed from both sides—and I wish him well in his consideration of these important issues over the next 24 hours.

Opposition Members made many points. A group of them—the hon. Members for Rotherham (Sarah Champion), for Gedling (Vernon Coaker) I think, for Blackpool South (Gordon Marsden), for Scunthorpe (Nic Dakin) and for Merthyr Tydfil and Rhymney (Gerald Jones)—while clearly rejecting the Prime Minister’s deal, which I acknowledge, were all I think signalling that they would wish to be able to support a deal and to find a way forward, explicitly recognising that no one is going to get everything that they want.

I listened carefully to the contributions and the concerns that were expressed, and I believe that the architecture of the Prime Minister’s deal is capable of accommodating such concerns if that is what we as a nation want to do. It is in that spirit that the Government have accepted the amendment proposed by the hon. Members for Bassetlaw (John Mann) and for Don Valley (Caroline Flint). However, we must distinguish between adjustments to the negotiated future relationship and seeking to renegotiate the withdrawal agreement—something that is simply not deliverable. I shall return to that theme later.

A number of hon. Members on the Opposition Benches—the hon. Members for Bath (Wera Hobhouse), for Aberdeen North (Kirsty Blackman), for Midlothian (Danielle Rowley), for Edinburgh West (Christine Jardine) and for Huddersfield (Mr Sheerman)—simply wished to turn back the clock and pretend that this whole thing had never happened. I urge hon. Members expressing that view to consider carefully the wider consequences for our political system if that were to happen. I would say to Scottish colleagues who expressed that view that their arguments would be more powerful if they could show an ability to consider the consequences for the UK as a whole, as well as the consequences for Scotland.

I thought the hon. Member for Manchester Central (Lucy Powell) made a crucially important point, which is that the House needs to find a way to show what it is for, not just what it is against. She went on to make, I think, the sole pitch of the evening for the Norway model.

Joseph Johnson Parliament Live - Hansard
15 Jan 2019, 1:24 a.m.

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.

Mr Hammond Hansard
15 Jan 2019, 1:25 a.m.

I have been making effectively the same point myself for about the last year. We concluded that the EEA model would not work for Britain’s most important sector, financial services. The deal that the Prime Minister has negotiated has within it good and strong provisions for financial services and will be a much better result for the financial services industry than the EEA model would be.

Lloyd Russell-Moyle Portrait Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op) - Hansard
15 Jan 2019, 1:25 a.m.

rose—

Mr Hammond Hansard
15 Jan 2019, 1:25 a.m.

I will give way briefly to the hon. Gentleman and then I must make some progress.

Lloyd Russell-Moyle Portrait Lloyd Russell-Moyle - Hansard
15 Jan 2019, 1:25 a.m.

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?

Mr Hammond Hansard
15 Jan 2019, 1:26 a.m.

Without wishing to digress too far, the simple point is this. Under an EEA model, the whole of the UK financial services sector and all its sub-sectors would be subject to European Union regulation in perpetuity, without any ability to opt out. Under the model that we have agreed with the European Union under this deal, we will be able to seek equivalence where it is right for us to do so and not to seek equivalence where it is clearly not in our interest to do so, for example in the insurance sector.

A group of my hon. Friends—my hon. Friends the Members for North West Leicestershire (Andrew Bridgen), for Bournemouth West (Conor Burns), for North East Somerset (Mr Rees-Mogg) and for Fareham (Suella Braverman)—made the case for what I will call an ideological Brexit: leaving with no deal and without any fear of the consequences. I profoundly disagree with them, but I respect their arguments. They are sincerely made and genuinely held.

A further group of my hon. and right hon. Friends—my right hon. Friends the Members for Chingford and Woodford Green (Mr Duncan Smith) and for Uxbridge and South Ruislip (Boris Johnson) and my hon. Friends the Members for York Outer (Julian Sturdy), for South Dorset (Richard Drax) and for Amber Valley (Nigel Mills)—made the case for getting a better deal and, implicitly, if that was not achievable, leaving without a deal. I have to say that getting a better deal is not a realistic outcome at this stage in the process. I will return to that theme in just a moment.

Finally, the argument was made by my hon. Friends the Members for Orpington (Joseph Johnson), for Bracknell (Dr Lee) and for Totnes (Dr Wollaston) and by the hon. Members for Ilford North (Wes Streeting), for Walthamstow (Stella Creasy), for Hammersmith (Andy Slaughter), for Stroud (Dr Drew) and for Westminster North (Ms Buck) for a second referendum. Most of those Members were clear that, in arguing for a second referendum, what they are hoping to achieve is a reversal of the Brexit decision.

With just 73 days left before we leave the European Union, we have to recognise the basic architecture of the process we are engaged in, the constraints within which we are operating and the nature of the decision we are faced with. We in this Parliament have essentially three routes open to us over the next few weeks: a negotiated deal where both the divorce arrangements and the future relationship, as well as how we manage the process in an orderly way, are agreed with the EU, with an implementation period guaranteeing a smooth transition; an exit with no deal and no transition, where key elements of the divorce such as the financial settlement will ultimately be determined by the courts, where protections for citizens will be unilateral, with an abrupt end to single market access and other privileges of membership for both businesses and citizens, and where there will be no agreed framework for managing the process of resolving disputes, with all the attendant risks of disruption that that will bring; or the third option, a revocation of the article 50 notice and no Brexit at all.

Wes Streeting Portrait Wes Streeting - Hansard
15 Jan 2019, 1:30 a.m.

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!

Mr Hammond Hansard
15 Jan 2019, 1:30 a.m.

Mr Speaker, we are engaged in a debate here and, whether the hon. Member likes it or not, a number of my colleagues have advocated the merit of a no deal exit. I have made it very clear that I do not agree with them, but I respect their position because it is a sincerely held position, consistently expressed. While I do not agree with them, I will vigorously defend their right to express their point of view.

Those are the three possible outcomes from where we are now.

Stella Creasy Portrait Stella Creasy - Hansard
15 Jan 2019, 1:30 a.m.

Will the Chancellor give way?

Mr Hammond Hansard
15 Jan 2019, 1:30 a.m.

I will not give way; I need to make some progress.

It is clear to me that the majority of this House is opposed to no deal, for very good reason in my view. When the British people voted narrowly to leave the EU, they did so at the end of a campaign that had emphatically promised them a better life outside the EU. Like the vast majority of us in this House, I won my seat at the general election on a manifesto pledge to deliver on that referendum decision. So although I did not make those promises, I feel bound to ensure that we not only deliver Brexit but do so in a way that makes good on the promise of greater prosperity. A no-deal Brexit would not do that and would therefore, in my view, be seen as every bit as much a betrayal as no Brexit at all.

Stella Creasy Portrait Stella Creasy - Hansard
15 Jan 2019, 1:30 a.m.

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?

Mr Hammond Hansard
15 Jan 2019, 1:30 a.m.

It is very clear, and I have had the discussion in the Chamber many times, that the closer our relationship with the European Union, the closer the trading partnership we are able to maintain and the less friction there is in our trading relationships, the greater our prosperity and our economic growth will be. A no-deal Brexit would not do that.

I believe we have an obligation to deliver Brexit, and to do it through a negotiated deal that protects Britain’s jobs and Britain’s businesses. At the other extreme, a revocation of article 50 would indeed be seen as a betrayal. It would reinforce disillusion with the political system and it would seriously risk fuelling populism at a time when we in this country can least afford it.

David T C Davies Portrait David T. C. Davies - Hansard
15 Jan 2019, 1:30 a.m.

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.

Mr Hammond Hansard
15 Jan 2019, 1:33 a.m.

My hon. Friend is of course right. A number of hon. Members have appeared to suggest in their remarks that we might be absolutely worse off in certain circumstances. The analysis the Government have published shows that that is clearly not the case. The country will be better off. The economy will grow in every modelled outcome. The question is merely by how much.

I believe the great majority of right hon. and hon. Members have either come or will come to the same conclusion as me: that the only Brexit that will protect our economy for the long run while honouring the referendum decision is a negotiated, orderly agreed Brexit, with an implementation period to allow a smooth process from our membership of the EU to a future close partnership with the EU that protects the vital trade, economic security and cultural links between the UK and our neighbours—in short, a deal.

Lucy Powell Portrait Lucy Powell - Hansard
15 Jan 2019, 1:34 a.m.

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.

Mr Hammond Hansard
15 Jan 2019, 1:39 a.m.

The hon. Lady acknowledges something that the Chancellor of the Duchy of Lancaster said in his contribution a couple of days ago. It is important for us to remember that any form of negotiated solution requires a withdrawal agreement, and that has to include provisions around the financial settlement, citizens’ rights and the Irish border. The EU has made it clear that it is not prepared to renegotiate the withdrawal agreement that has already been negotiated.

I am not suggesting that all those who recognise the need for a deal support the Prime Minister’s deal. I know that that is not true, but I want to make the case that this deal can provide a way forward for all those who support a deal. I want to explain why those who call for a deal, but not this deal, as a number of Members from all parts of the House have done—people who dream of a negotiated arrangement without the Irish backstop or of single market access without the entry fee and without free movement of people—are simply dreaming, because the deal that is on the table represents the high water mark. A withdrawal agreement is a necessary precondition to any negotiated deal with the EU and to any form of transition or implementation period. Without a withdrawal agreement, the EU will not negotiate any form of future relationship.

On citizens and money, we have reached good outcomes in the withdrawal agreement. On the Irish protocol, clearly none of us is comfortable with the temporary backstop arrangement, which is why all of us—the UK Government, the Irish Government and the EU—will be seeking to avoid its use under any circumstances and have committed to using our best endeavours to ensure that it will never be used and that in the unlikely event that it is, it is replaced by new arrangements as rapidly as possible. It is not a trivial point that the backstop fundamentally challenges the EU’s core principles.

We should be in no doubt, either, that the EU means what it says about the withdrawal agreement not being open for renegotiation. If we want a negotiated future relationship of any kind—I say this to the hon. Member for Manchester Central—it will be based on the withdrawal agreement that is before the House tonight.

Sir John Hayes Portrait Sir John Hayes - Hansard
15 Jan 2019, 1:38 a.m.

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.

Mr Hammond Hansard
15 Jan 2019, 1:40 a.m.

I do not know how much engagement my right hon. Friend has with the insurance industry, but it would baulk at the notion that an insurance policy is time-limited. If someone is covered by an insurance policy against the acquisition of some terrible disease, such as asbestosis, it may be 10 or 20 years later that they discover they are a sufferer. They would expect the insurance put in place to cover them. The European Union and the Irish Government are very clear that the withdrawal agreement is negotiated on the basis that the backstop provides an absolute reassurance that in every circumstance, the Irish border will remain open.

The Prime Minister said earlier this evening that her deal is a compromise, and she was clear in her Lancaster House speech at the outset of the process that achieving an agreement would require compromise. The political declaration that has been achieved has exceeded our expectations in the commitments that the EU has made: an agreement to construct the closest economic relationship between the EU and any advanced economy in the world; a free trade area for goods with no tariffs, no fees, no charges and no quantitative restrictions; a commitment to an ambitious relationship on services and investment, including financial services, building on the most ambitious achievements of EU trade deals; and agreement to further co-operation across a wide range of sectors, from transport to energy and data. It provides a strong basis on which to negotiate the legal text of our future partnership agreement, and the Prime Minister has made it clear that we expect Parliament to play a prominent role as we shape the political declaration into a legally binding text.

Alison Thewliss Portrait Alison Thewliss - Hansard
15 Jan 2019, 1:40 a.m.

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.

Mr Hammond Hansard
15 Jan 2019, 1:41 a.m.

It is a balance, and I have personally come to the conclusion that the damage that would be done to our political system, the resulting instability and the economic consequences mean that the economic cost of going back would outweigh the economic cost of going forward. I am sorry if the hon. Lady does not agree, but I can assure her that I have thought very long and hard about this.

Those who believe, as his tests suggest the Leader of the Opposition does, that it is possible to have the exact same benefits of being in the EU while being out of it—[Interruption.] I know that the shadow International Trade Secretary agrees with me, because he wrote so in The Guardian this morning. Those people are simply wrong. I recognise that there are people on the Conservative Benches who have a principled objection to the Prime Minister’s deal. I respectfully disagree with them, but I recognise that their motives are honourable.

I wish that I could be as charitable about the Leader of the Opposition and the shadow Chancellor. They say they reject the Prime Minister’s deal because they want a strong and collaborative future relationship, but the Prime Minister’s deal delivers that. They say they want fair management of migration in the interests of the economy and communities, but the Prime Minister’s deal delivers that too. They insist on measures to defend rights and protections and to protect national security and on the capacity to tackle cross-border crime and to deliver for all regions and nations of the UK, but the Prime Minister’s deal does all those things already. The only one of the Labour leader’s tests that the Prime Minister’s deal does not meet is the demand that Britain should receive, as a non-member, the exact same benefits of membership—[Interruption.] I did not say the same thing. Even the Leader of the Opposition must be able to work out that such a demand could never be delivered, and of course that is why he made it. I say to him that it is time to put the national interest first, to stop chasing unicorns and to start engaging in the real debate.

The deal before the House honours our pledge to implement Brexit, delivering control of our borders, laws and money, while also fulfilling our vision for a future partnership with the EU that will support Britain’s prosperity and security in the years ahead. In short, it delivers the Brexit promised in the referendum. That makes it a remarkable achievement—a compromise that everyone in the UK can get behind, however they voted in the referendum. The ability to compromise and find a way through is, after all, one of our great strengths as a nation—it is what gives our society its resilience. It is a characteristic that has been less in evidence in the Brexit debate over the last couple of years, but one that we need to rediscover as a matter of urgency.

No one is going to get exactly the Brexit they want, but in this deal we have a way forward that everyone can live with. Time is not on our side. We as a House now need to move swiftly and decisively to get behind the deal, to make the tough choices needed to simultaneously deliver the Brexit people voted for, protect our economy and our national security and give people the brighter future they were promised. Neither no deal nor no Brexit will allow us to come together as a nation and move on. Both would leave a sizeable proportion of the population feeling cheated and betrayed. The deal is the compromise that can bring the whole nation together, and I commend it to the House.

European Union (Withdrawal) Act

Mr Philip Hammond Excerpts
Thursday 6th December 2018

(1 year, 9 months ago)

Commons Chamber
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Department for International Trade
Mr Speaker Hansard
6 Dec 2018, 11:51 a.m.

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 of the Exchequer (Mr Philip Hammond) Hansard
6 Dec 2018, 11:52 a.m.

Thank you, Mr Speaker. I welcome the opportunity to take part in this debate today and to make the case to the House for backing the Prime Minister’s Brexit deal, ensuring a smooth and orderly departure from the European Union, delivering on the referendum decision of the British people and, at the same time, securing a close economic and security partnership with our nearest neighbours and most important trading partners. I will also make the case for rejecting the calls from those who would prefer to plunge the country into the uncertainty and economic self-harm of no deal, and from those who would seek to undo the referendum decision and, in doing so, fuel a narrative of betrayal that would undermine the broad consent on which our democratic politics is based.

Mr Clive Betts Portrait Mr Clive Betts (Sheffield South East) (Lab) - Parliament Live - Hansard
6 Dec 2018, 11:52 a.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 11:53 a.m.

I have always recognised that leaving the EU will have an economic cost, but the deal that the Prime Minister has negotiated minimises that cost. Our nation is divided on the issue, and I fundamentally believe that we have to bring the country back together in order to succeed in the future. This deal offers a sensible compromise that protects our economy but delivers on the decision of the British people in the referendum. My judgment is that, if we want to maximise the chances of our nation being successful in the future, this is the right way to go.

Sir Christopher Chope Portrait Sir Christopher Chope (Christchurch) (Con) - Parliament Live - Hansard

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?

Mr Hammond Parliament Live - Hansard

Yes. As I have said in this House many times, at the beginning of the process, there were people inside the European Union who were contemplating a punishment deal for the United Kingdom—a deal designed to punish us for having the audacity to decide to leave the EU. Clearly, we could not have accepted such terms for our departure.

Mr Hammond Hansard
6 Dec 2018, 11:53 a.m.

I will give way one more time and then make a little progress.

Ms Nadine Dorries Portrait Ms Nadine Dorries (Mid Bedfordshire) (Con) - Parliament Live - Hansard

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 11:54 a.m.

Yes, it is no deal. As I will say later in my speech, if we did leave the European Union without a deal, we would actually be the only advanced economy in the world trading with the European Union on pure WTO terms, with no facilitation agreements whatsoever. In my view, that would be a very bad outcome for the United Kingdom.

Stephen Timms Portrait Stephen Timms (East Ham) (Lab) - Parliament Live - Hansard
6 Dec 2018, 11:55 a.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 11:57 a.m.

It depends very much on what those rules are. Rules on the goods acquis, the part of EU regulation that deals with goods, are very stable and have been for many years. We know that our manufacturers in this country will continue to follow EU rules on goods, whether we choose to adopt those rules or not, so I think that the economic price of having such rules would be very small. In other areas, such as financial services, where rules are changing rapidly and where there is a great dynamism in the system, there could be much greater dangers for us in being locked into following rules over which we have no influence. That is why the deal we are putting before the House proposes a very different way forward for goods than for services, and particularly financial services.

I have observed this process at close quarters for two and a half years, and I am absolutely clear about one thing: this deal is the best deal to exit the EU that is available or that is going to be available. The idea that there is an option of renegotiating at the eleventh hour is simply a delusion. We need to be honest with ourselves that the alternatives to this deal are no deal or no Brexit. Either would leave us a fractured society and a divided nation.

Only the compromise of this negotiated deal—delivering on the referendum result by leaving the EU, ending the free movement of people and reasserting our sovereign control over our laws, while at the same time maintaining the closest possible trade, security and cultural links with the European Union to protect our jobs, our living standards and our values—can allow our country to move on. Only that compromise can bring us back together after Brexit is delivered, and we should remember the lesson of history that divided nations are not successful nations.

Maggie Throup Portrait Maggie Throup (Erewash) (Con) - Parliament Live - Hansard
6 Dec 2018, 11:57 a.m.

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.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 11:57 a.m.

I completely agree with my hon. Friend. That is the central theme of what I will say to the House today. Yes, leaving the European Union has a cost, but going back on the decision of the British people would also have an enormous cost for our country.

Sir David Evennett (Bexleyheath and Crayford) (Con) - Parliament Live - Hansard
6 Dec 2018, 11:58 a.m.

Does my right hon. Friend agree that uncertainty is bad for our economy and very bad for businesses?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 11:58 a.m.

Yes, and we are already paying a price, and have paid a price, for the uncertainty on our future trading relationship with the European Union. The sooner we can restore certainty, the sooner we can get back on to a path of solid economic growth.

Mr Tanmanjeet Singh Dhesi Portrait Mr Tanmanjeet Singh Dhesi (Slough) (Lab) - Parliament Live - Hansard
6 Dec 2018, 11:58 a.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:01 p.m.

No. In all scenarios, we expect that economic growth will continue and the economy will carry on growing. What we were looking at in the analysis we published last week is a ranking of five different scenarios based on their impact on the overall size of the economy over a 15-year horizon.

The theme of today’s debate, as Mr Speaker has reminded the House, is the economy, and the economy has always been at the heart of the UK’s relationship with Europe. It was definitely not the lure of political union but the prospect of jobs, wage growth, trade and prosperity that brought Britain into the European Economic Community, as it then was, in 1973—I was there, and I remember. For most of us who campaigned 43 years later to remain in the EU in 2016, it was certainly not the political institutions and the paraphernalia of the Union that provided the motivation to do so, but a hard-nosed appraisal of our economic interests.

The fact is that our economic and trading relationship with the EU has been built over 45 years, during which time our economies have shaped themselves around each other and become inextricably intertwined: supply chains criss-cross borders; workforces draw on talent from across the continent; and a firm in Birmingham can deal with a customer in Berlin as easily as one in Bradford—so much so that almost 65% of all UK trade is now with the EU or through EU trade agreements. These trading relationships and commercial partnerships were not built overnight, but in a no-deal exit many of them would be destroyed overnight, as the market access and free-flowing borders on which they are based were lost. Although new trade partnerships with countries outside the EU undoubtedly offer new and exciting opportunities for UK companies, the analysis the Government published last week is clear that the benefits flowing from new free trade agreements would not compensate for the loss of EU trade from a no-deal exit.

Andrew Selous Portrait Andrew Selous (South West Bedfordshire) (Con) - Parliament Live - Hansard
6 Dec 2018, 12:01 p.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:02 p.m.

The backstop remains as the ultimate default, but the agreement we have negotiated with the EU very importantly gives us the choice, if we are not ready to move to our new future partnership on 1 January 2021, to seek an extension of the implementation period for one or two further years. That is a very important part of the architecture of what we have negotiated. I make no bones about this—I have said it before. In my view, it would be much better for the UK to seek an extension of the implementation period if we need a further period of time before we are ready for the new long-term arrangements, rather than go into the backstop.

Richard Burden (Birmingham, Northfield) (Lab) Parliament Live - Hansard
6 Dec 2018, 12:02 p.m.

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?

Mr Hammond Parliament Live - Hansard

The way to do that is to support the proposal that the Prime Minister has presented to the House, which represents a compromise, ensuring that we leave the EU and respect the referendum decision of the British people, but do so in a way designed to minimise any negative impact on our economy and maximise the opportunities for this country in the future.

Mr John Baron Portrait Mr John Baron (Basildon and Billericay) (Con) - Parliament Live - Hansard
6 Dec 2018, 12:03 p.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:04 p.m.

I am grateful to my hon. Friend, because he gives me the opportunity to clarify for the House that these are not economic forecasts; they are modelled scenarios for what might happen in different circumstances. Like all economic modelling, they depend to an enormous extent on the assumptions that are made. The assumptions in this paper are transparent and the assumptions that the Bank of England made are also clear. My hon. Friend has made his point about the modelling that was done in 2016. I can only speak for the Treasury and tell him that a huge amount of work has been done since 2016 to update and upgrade the Treasury’s long-term model. That computable general equilibrium model is the one that has been used.

Mr John Baron Portrait Mr Baron - Parliament Live - Hansard
6 Dec 2018, 12:05 p.m.

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.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:05 p.m.

My hon. Friend is right. Of course, this work seeks to do something quite different: it looks at five different potential scenarios and ranks them in terms of the impact that they would have. I readily concede that it is more important to look at the ranking than the absolute numbers or ranges of numbers attached to them.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:05 p.m.

I shall make a bit of progress, then give way again.

I was saying that the benefits flowing from new FTAs would not compensate us fully for the loss of EU trade from a no-deal exit. That is why we have fought so hard for a deal that delivers the closest possible trading relationship with the EU, while respecting the outcome of the referendum and giving ourselves the ability to form new trading arrangements with countries around the world. Today, the case for this deal is that, uniquely among the options open to us, it does deliver on our commitment to leave the EU and on our collective duty to protect the jobs and living standards of our constituents.

Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op) Hansard
6 Dec 2018, 12:06 p.m.

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.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:07 p.m.

The deal that is on the table provides the key elements that we will need to maintain our trading relationship with the European Union. It makes a commitment to maintaining our borders as openly and free-flowingly as possible. It eliminates tariffs, quotas, fees and charges. It will protect the vital supply-chain business that is at the heart of our trading relationship with the European Union.

Colin Clark (Gordon) (Con) Parliament Live - Hansard
6 Dec 2018, 12:07 p.m.

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.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:08 p.m.

The Governor is of course absolutely right. The modelling that the Bank has done has been tested against the financial policy committee’s stress tests to ensure that, even in the worst-case scenario, our financial system would be resilient. The work that we have done since 2010—including increasing banks’ capital ratios and introducing risk-reduction strategies around banks and financial institutions—has ensured that the system will be resilient, even against the most extreme circumstance that the Bank of England has modelled.

Nigel Huddleston Portrait Nigel Huddleston (Mid Worcestershire) (Con) - Parliament Live - Hansard
6 Dec 2018, 12:08 p.m.

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.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:08 p.m.

My hon. Friend is right, but I think the most telling point about this issue is the one made regularly by my right hon. Friend the Secretary of State for International Trade. If WTO terms are so fantastic and so good for a trading relationship, why do we need to negotiate free trade deals with all these other countries around the world? We already trade with them on WTO terms, but we clearly believe that we can do much more if we negotiate something better than WTO.

Angus Brendan MacNeil Portrait Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP) - Parliament Live - Hansard
6 Dec 2018, 12:09 p.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:10 p.m.

The hon. Gentleman is misinterpreting the analysis. These are not rates of GDP growth; this is an estimate of the relative size of the economy at a 15-year horizon under different scenarios. In all scenarios, we expect that GDP growth will recover and continue.

Angus Brendan MacNeil Portrait Angus Brendan MacNeil - Hansard
6 Dec 2018, 12:10 p.m.

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?

Mr Hammond Hansard
6 Dec 2018, 12:11 p.m.

I am sorry but the hon. Gentleman is wrong. I did not talk about a lower growth rate. I am talking about a smaller overall size of the economy. It is our central view that, once the economy has moved to a new equilibrium, growth will resume in all these scenarios and that our economy will go on getting larger.

Angus Brendan MacNeil Portrait Angus Brendan MacNeil - Hansard
6 Dec 2018, 12:11 p.m.

What are the numbers?

Mr Hammond Hansard
6 Dec 2018, 12:11 p.m.

This is not an economic forecast. It is a modelling of five different scenarios. Our economic growth rate in 2033 will depend on a raft of other issues, not only on the outcome of this debate.

Jim McMahon Portrait Jim McMahon (Oldham West and Royton) (Lab/Co-op) - Parliament Live - Hansard
6 Dec 2018, 12:11 p.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:12 p.m.

I am not quite sure what the hon. Gentleman is referring to. In the Budget, I set out a clear plan for Britain’s future. I set out an indicative envelope for the spending review next year, which will show public spending increasing in real terms throughout the next spending review period. In most people’s definition, that is turning a very important corner for this country.

The economic analysis published by the Government last week clearly shows that, of the spectrum of outcomes for the future UK-EU relationship, the modelled White Paper scenario would deliver significantly higher economic output than the no-deal scenario, the FTA scenario, and even the EEA scenario. The proposed future UK-EU relationship is estimated to result in economic output around 7 percentage points higher than in the modelled no-deal scenario in the long run, once the economy has reached its post-Brexit equilibrium.

This is a deal that secures the rights of more than 3 million EU citizens living in the UK and around 1 million UK nationals living in the EU; a deal that takes us out of the European Union and sets a framework for an economic partnership with our European friends and neighbours that is closer than any other they have today, while allowing us to strike free trade agreements around the world; a deal that ends freedom of movement and regains control of our borders, not so that we can shut down immigration, but so that we can manage it in our own best interests, ensuring that our businesses and health service still have access to the skills they need—skills that we will need as we build on our fundamental economic strengths to give Britain the brighter future our citizens imagined when they voted in June 2016; a deal that delivers on the referendum result, while securing the achievements of the British people in rebuilding our economy over the past eight years; and, above all, a deal that can bring our country together again.

Mike Gapes (Ilford South) (Lab/Co-op) Parliament Live - Hansard
6 Dec 2018, 12:14 p.m.

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?

Mr Hammond Parliament Live - Hansard

British citizens living in an EU country will be able to continue living in that country. They will not necessarily have the automatic right to relocate to another EU country.

Pete Wishart Portrait Pete Wishart (Perth and North Perthshire) (SNP) - Parliament Live - Hansard
6 Dec 2018, 12:19 p.m.

rose—

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:19 p.m.

At the same time, EU citizens living in the UK will have the right to continue living here.

Pete Wishart Portrait Pete Wishart - Hansard

rose—

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:15 p.m.

The hon. Gentleman is very persistent. I will probably regret giving way, but I will do it anyway.

Pete Wishart Portrait Pete Wishart - Hansard

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:16 p.m.

The deal we have negotiated will ensure the greatest possible level of freedoms and rights for UK citizens so that they can carry on living their lives and we can carry on working, collaborating and trading with our EU partners. I am completely convinced that of the options open to us this is the right way for the country to go forward.

If anyone on the Opposition Front Bench genuinely believes that there is a magic deal available that would see us retain all the benefits of EU membership but with no free movement, no payments into the EU’s budget and no state aid rules, they are sadly deluded. Labour calls for a Brexit that delivers the “exact same benefits” as we currently have. That is called remaining in the European Union and it means being in the single market as well as the customs union, and last time I checked that was not Labour policy. A customs union alone would not deliver those “exact same benefits”. It would not maintain supply chains, remove regulatory checks and non-tariff barriers, or deliver frictionless borders. So Labour’s policy fails its own test. The time for trying to have your cake and eat it has passed. It is now time for tough choices and practical solutions and for a focus on the things that really matter. It is time to deliver a “jobs first” Brexit, and that is what the Prime Minister’s deal does.

Melanie Onn (Great Grimsby) (Lab) Parliament Live - Hansard
6 Dec 2018, 12:18 p.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:18 p.m.

As I suspect the hon. Lady knows, after we leave the EU, we will be an independent coastal state, and we will be able to enter into agreements with Iceland, Norway and other countries to regulate quotas, how the fish are caught, the reciprocal rights of our fishermen to enter other countries’ waters and of their fishermen to enter our waters, and other such matters.

David Morris Portrait David Morris (Morecambe and Lunesdale) (Con) - Hansard
6 Dec 2018, 12:19 p.m.

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?

Mr Hammond Parliament Live - Hansard

My hon. Friend is right, and he takes me back to the question from my hon. Friend the Member for Mid Bedfordshire (Ms Dorries) earlier. If we were to leave the EU in a real no-deal scenario, with such issues left unresolved, we would be in a very difficult place. The small number of transit permits available to hauliers would be just one of the many issues that would cause considerable difficulty.

Lord Clarke of Nottingham Portrait Mr Kenneth Clarke (Rushcliffe) (Con) - Parliament Live - Hansard
6 Dec 2018, 12:19 p.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:21 p.m.

My right hon. and learned Friend is right that, strictly, the flow of trade in goods would be facilitated by such an arrangement, but there are two problems with the EFTA-EEA model. First, it would continue to impose on us the obligations of freedom of movement, which we believe the British people voted against in the referendum decision in 2016. Secondly, it would leave our financial services industry in particular extremely exposed to having to comply with a rapidly evolving body of EU regulation over which we would have no influence.

Albert Owen (Ynys Môn) (Lab) Parliament Live - Hansard
6 Dec 2018, 12:21 p.m.

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.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:21 p.m.

Under the political agreement, there is a commitment by the parties to working in good faith together to minimise any impediments to trade between us. We are confident that, with goodwill on both sides and the evolving technologies that are available, we will be able to design a very efficient and free-flowing border for UK goods and for imports from the European Union.

Vicky Ford Portrait Vicky Ford (Chelmsford) (Con) - Parliament Live - Hansard
6 Dec 2018, 12:22 p.m.

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?

Mr Philip Hammond Parliament Live - Hansard
6 Dec 2018, 12:22 p.m.

My hon. Friend is exactly right. One of the huge benefits of the negotiated deal that is in front of the House is the transition period, giving us another two years, to the end of 2020, of clarity and certainty for British businesses about how they will operate in the future.

Let me be clear about the economic benefits of this deal: a time-limited implementation period, as I have just said, giving people and businesses time to adjust; a deal that ensures citizens, both British and European, are properly protected; a political agreement to construct the closest economic relationship between the EU and any advanced economy in the world; a free-trade area for goods with no tariffs, no fees, no charges, and no quantitative restrictions; a commitment to an ambitious relationship on services and investment, including financial services; and for further co-operation across a wide-range of sectors from transport to energy and data.

Joseph Johnson (Orpington) (Con) Parliament Live - Hansard
6 Dec 2018, 12:24 p.m.

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.]

Mr Speaker Hansard
6 Dec 2018, 12:19 p.m.

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.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:24 p.m.

Let me say this frankly to my hon. Friend: there is no deal that is negotiable that involves leaving the EU and maintaining the financial services passport. That is a fantasy world outcome. There will not be passporting. What we have negotiated with the European Union is an enhanced equivalence approach that will allow us to maintain our vital financial services networks with the European Union in the areas where there is significant financial services trade between us and to do so in a way that will provide the reassurance that commercial companies need in London to continue operating.

A mere equivalence finding is of no use to a company operating a book of derivatives worth several trillion dollars when there could be an abrupt ending of the equivalence arrangement unilaterally by one side. There has to be a more structured basis for that co-operation in the future. We have agreed that with the European Union, and I absolutely agree with my hon. Friend’s point that, even though we will not have direct influence over new European Union rules, we can have a significant influence over the shaping both of the global rules and, indeed, the European rules.

Over many decades of membership of the European Union, the UK has had a huge influence over the EU’s financial services regulatory environment. We have done that not through voting power, but through the skill, the diligence and the commitment of our civil service and industry teams who have engaged in Brussels and who have provided their expertise to try to shape the European Union’s financial services regulation in a way that is effective and that works for us all, and we will carry on doing so in the future.

Sir Robert Neill Portrait Robert Neill (Bromley and Chislehurst) (Con) - Parliament Live - Hansard
6 Dec 2018, 12:27 p.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:27 p.m.

That is exactly right. It has been welcomed by all the major bodies. It has been welcomed by the City of London. First, this deal gives us the transition period, which is a vital respite for business in preparing for the future, and it gives us a commitment to a future deal that will protect our economy and, in particular, our financial services sector.

At the Budget in October, I made a Brexit prediction. I predicted that a deal that creates confidence in a smooth transition and a close future partnership will not only protect our jobs, businesses and prosperity in the long run, but deliver a short-term deal dividend for Britain. The Bank of England last week published its modelling of a range of scenarios to assess the potential impact as the economy makes the necessary adjustment to reflect the new trading relationship between the UK and the EU. The Bank estimated that a negotiated deal could boost British GDP by 1.75% in the short term, as businesses and consumers alike express their confidence in the future, while leaving the EU on WTO rules and without a transition period could cause a recession, with GDP reduced by up to 7.75% and unemployment rising to 7.5%. The Bank of England is clear: a no-deal exit would mean jobs lost, food prices up, house prices down and wage growth lower.

Businesses have made their views clear. The Federation of Small Businesses called this deal

“a welcome step back from the no deal cliff edge.”

The Institute of Directors warned that only 14% of its members

“would be ready to cope with a no deal outcome in March”.

The CBI has described no deal as a disaster for the economy.

This House has before it a deal that can deliver the certainty that will unlock the potential of our economy and assure Britain of the brighter future it craves. Let us not be the generation who have to explain to our children and grandchildren why we let that opportunity slip from our grasp. Let us choose now to move on to that brighter future, not to go back to square one with continuing uncertainty, division and disharmony.

As we make this decision and exercise our solemn duty in this Parliament in the interest of the nation, let us not forget the progress that we have made and what we would be putting at risk with no deal: eight straight years of growth; employment at a record high; 3.3 million more people in work; higher employment and lower unemployment in every region and every nation of the United Kingdom; wages growing at their fastest pace in nearly a decade; and the proportion of low-paid jobs at its lowest for at least 20 years. Britain is leading the world in breakthrough technologies—from biotech to fintech, and from robotics to genomics—and at the cutting edge of a technological revolution that will underpin our prosperity and success for decades to come, if we get Brexit right.

Martyn Day Portrait Martyn Day (Linlithgow and East Falkirk) (SNP) - Parliament Live - Hansard

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?

Mr Hammond Parliament Live - Hansard

We are clear that we have negotiated this deal as the United Kingdom in the best interests of the United Kingdom and every part of the United Kingdom.

Marsha De Cordova Portrait Marsha De Cordova (Battersea) (Lab) - Parliament Live - Hansard

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?

Mr Hammond Parliament Live - Hansard

The hon. Lady is simply wrong. We have record numbers of disabled people in work and that is a record of which this Government are extremely proud. She needs to go away and check her facts.

Helen Goodman (Bishop Auckland) (Lab) Parliament Live - Hansard

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.

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:33 p.m.

The hon. Lady is too absolutist. Yes, of course there is further negotiation to be done, but the shape and key elements of the deal are clearly set out in the political declaration. I have described some of them already today. Business will be able to begin to prepare. I completely accept that further clarity will arise during the ongoing negotiations in the transition period. I am sure that she has talked to businesses, so she will know that this is the way that business wants to go. The alternatives—of a no deal exit, or of trying to overturn the referendum decision and risk fracturing our country for a generation—are too awful to contemplate. We have to take this opportunity that is presented to us to protect our economy and to heal our country.

To protect the living standards of the people of the whole United Kingdom, we need to act now. We need to act now to end uncertainty, to protect jobs, businesses and prosperity and to begin to heal the divisions in our country. But what if we do not? What if we turn our backs on this opportunity of a negotiated exit and a transition to the future? I have heard that we have nothing to fear from no deal—nothing, that is, except a cliff-edge Brexit in just four months’ time; the end of frictionless trade with our biggest export market; restrictions on our citizens travelling in Europe; and being the only developed economy in the world trading with the EU on purely WTO terms with no customs facilitation agreements, no data sharing or protection agreements and no approvals regime to allow our industries to trade with their nearest customers and suppliers—just tariffs, paperwork and bureaucracy.

UK car exports would face tariffs of 10%. Many clothing exports would face tariffs of 12%. Agricultural exports would face even higher tariffs. Almost 90% of UK beef exports and 95% of lamb exports go to the EU, where they could face tariffs of over 70% and 45% respectively.

Ian Paisley Portrait Ian Paisley (North Antrim) (DUP) - Parliament Live - Hansard

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.

Mr Hammond Hansard

I am afraid that the hon. Gentleman is just wrong on the question of the financial services community and WTO. The financial services community would not support a WTO exit. That would be the worst possible scenario for financial services, with no time for preparation. Frankly, given the role of financial services in our economy—7% of our GDP—and their even larger role in our fiscal economy, accounting for over 11% of our fiscal revenues, anything that damages that industry will be extremely damaging to our economy and our public services.

Steve McCabe Portrait Steve McCabe (Birmingham, Selly Oak) (Lab) - Parliament Live - Hansard
6 Dec 2018, 12:36 p.m.

Will the Chancellor give way?

Mr Hammond Hansard
6 Dec 2018, 12:36 p.m.

In the absence of any better offers, I will give way to the hon. Gentleman.

Steve McCabe Portrait Steve McCabe - Parliament Live - Hansard
6 Dec 2018, 12:37 p.m.

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?

Mr Hammond Hansard

I regard my job as to go on making the case for a sensible middle way out of this situation. I do not believe that we can afford the economic cost of a no-deal exit, but I equally do not believe we can afford the political and societal costs of trying to undo the decision of the British people in the referendum. We have to find a negotiated way forward. The Prime Minister has presented us with the route forward, and we have to take it.

Bill Wiggin Portrait Bill Wiggin (North Herefordshire) (Con) - Parliament Live - Hansard

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?

Mr Hammond Hansard

My right hon. Friend the Prime Minister and I have said many times that the choice before this House is very simple: it is this deal, no deal or no Brexit. Those are the opportunities that we have to choose between.

Rachael Maskell Portrait Rachael Maskell (York Central) (Lab/Co-op) - Parliament Live - Hansard

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?

Mr Hammond Hansard

The Government are clear that freedom of movement will end as we leave the EU, but as I have already said, that is not the same as shutting down migration. Once we regain control of our own borders, we will run our immigration system in our own interests, taking account of the needs of British society and the British economy, ensuring that we have the skills needed for our businesses to operate and our national health service to function properly, but at the same time making sure that the incentives exist for our businesses to train and upskill our indigenous British workers. We have to make our choice as a nation.

Antoinette Sandbach (Eddisbury) (Con) Parliament Live - Hansard
6 Dec 2018, 12:40 p.m.

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?

Mr Hammond Parliament Live - Hansard
6 Dec 2018, 12:42 p.m.

My hon. Friend could have added that those industries also have a high trade penetration with the European Union, and they depend critically on maintaining open and free-flowing trade arrangements with it. The deal before the House today allows us to maintain those trading patterns with the European Union and protect our supply chains, businesses and commercial relationships, while also having the opportunity to go out and make new trading partnerships with friends, old and new, around the world. In my view, that is the best possible outcome for businesses in my hon. Friend’s constituency.

We have to make our choice as a nation, and it falls to this House to act on the nation’s behalf, setting aside narrow party interests and focusing on what is in the national interest of our United Kingdom. After two and a half years, it is time to choose and time for Britain to move on. This deal will ensure that we move forward as a nation, taking back control, protecting jobs, getting business investing again, growing, thriving, and bringing the nation back together. It sets the United Kingdom on a course for a prosperous future, with a close relationship with our biggest trading partner and the ability to strike trade deals with the rest of the world. It supports our economy and lets us get back to the priorities that the British people elected us to deliver: investing in the infrastructure and skills of the future, keeping taxes low, reducing our debt and supporting our vital public services. Let us get on with it. Let us back this deal, honour the referendum, protect our economy and work together in the national interest to build a brighter future for our country.

John McDonnell (Hayes and Harlington) (Lab) - Parliament Live - Hansard
6 Dec 2018, 12:43 p.m.

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.