Skip to main content

UK Economy

Volume 612: debated on Wednesday 29 June 2016

We now come to the Opposition day motion in the name of the Leader of the Opposition. I call John McDonnell to move the motion.

I—[Interruption.] Scottish National party Members should calm down.

I beg to move,

That this House recognises the risks posed to the UK economy following the decision to leave the European Union; notes with concern the loss of the UK’s triple A credit rating, the potential output cut, potential job losses, risks to investment and the volatility in the equity and currency markets; and calls on the Government to bring forward measures to protect jobs and support businesses in the nations and regions in relation to the short, medium and long-term potential consequences of the referendum decision, and to address the current threats to community cohesion.

Let me welcome the Chancellor’s presence in the Chamber. I have been critical of his non-attendance of recent debates. I have to say that this was one day on which I thought he might be too busy elsewhere, but I welcome him to the debate. I also commend his Financial Secretary who, in excruciating pain from a bad back, has dealt competently and courteously with the Finance Bill over the last few days. In our roles, sometimes we all have to watch our backs.

Although this is an Opposition day debate, this is, frankly, no time for partisanship and party political game playing when the country faces such serious challenges. I suggest that the tone of this debate should be one of honest critique, but constructive engagement. Yes, we have to be honest about our assessment of the economy, but we also have to be constructive in our questioning and our proposals for the future. The country will expect us all to work together—not uncritically but co-operatively in times of unprecedented political and economic turmoil.

The hon. Gentleman talks about doing things critically and uncritically. One criticism I have—it seems to me to be a fact—is that before the referendum, the Chancellor promised an emergency Budget, but he seems to have been bluffing on that, because there is not going to be an emergency Budget. He had already bluffed once, because I think he bluffed about the pound in Scotland. How would the hon. Gentleman respond to that?

To be frank, we need to move on now. I expressed my concerns about some of the over-exaggerated claims at the beginning of the campaign that turned people off. We now know, however, that many of the claims made on both sides are unfortunately coming true.

The leave vote in last week’s referendum has left us all with an immense series of tasks, and the economic situation is a major challenge for us all. Let me run through some of the headline items that we know about over these last few days: the UK’s triple A credit rating has been lost; the pound fell to a 31-year low; sterling markets have been in turmoil, as have stock markets here and abroad; the FTSE 100 index registered the biggest single-day fall since the bankruptcy of Lehman Brothers in 2008; employers, most notably in the financial services, are already looking to relocate jobs, with a quarter of all those employers saying that they have introduced a hiring freeze; and shares in UK banks have fallen dramatically. These are not comments, but realities, and this is just an outline of the situation that now obtains.

Will the hon. Gentleman welcome the fact that the bond markets did the opposite of what the ratings agencies suggested? They said that the price of bonds should go down and the cost of state borrowing should go up, but I am very pleased to tell him that the opposite happened: bonds are at a new all-time high and, according to the market, we have record lows of borrowing costs. Does this not prove that the markets actually had a huge vote of confidence in respect of state debt and state creditworthiness?

It proves the chaotic nature of the market at the moment.

Let me look ahead. Most major forecasters have revised their expectations of future growth sharply downwards. There is a major loss of capacity and the potential for permanent damage to the UK’s growth prospects cannot be ruled out. We await an official assessment from the Office for Budget Responsibility, as the Chancellor announced in his statement on Monday morning. I think that an initial assessment should be given sooner rather than later, but ongoing close monitoring would be welcome, with regular reports to Parliament to ensure that that is happening. There is a prospect that the OBR will report at least a serious worsening in the public finances.

What assessment has my hon. Friend made of the Chancellor’s statement a couple of days ago that taxes might have to go up and be followed by further cuts? Is not this a further infliction of austerity on the British people?

I shall come on to that later in my speech. I want to deal with the implications of the Chancellor’s statement on Monday for future Budgets, if I may. In a situation like this, it is essential to introduce some clarity. There is great uncertainty, both for those fearing for their jobs and those worried about the volatility of the financial markets over the last few days. It is up to us—I mean the whole House—to secure some clarity and a clear sense of direction in our debate.

Let me clarify why the referendum result has led to this situation. There were warnings that a vote to leave would produce this shock. Economic forecasting is, as we know, not an exact science, even at best, but every forecaster with any credibility pointed towards a significant negative shock from a leave vote. The main disagreements were about the size of that shock, and I have to say that the warnings should have been heeded. It was irresponsible of those campaigning for leave not just to gloss over them, but to make the claim that a leave vote would lead only to warm sunny uplands. The truth is that the shock is already significant and could rapidly worsen if action is not taken.

We welcome the Governor of the Bank of England’s commitment to take steps to extend liquidity provision to banks if necessary, and to stand ready with further measures. We welcome the fact that the Chancellor has been in urgent consultation during the weekend with those in the financial services industry and our international partners. We will support measures to stabilise the markets and dampen volatility, but with the firm caveat that these measures—this was the point made by my hon. Friend the Member for Coventry South (Mr Cunningham)—should not impose costs on households or small businesses. Despite his earlier statements, the Chancellor has ruled out his previous contractionary emergency Budget until the fiscal position is made clear, and this is to be strongly welcomed.

To move forward, we have to be honest in our assessment of the current situation if we are to ensure that the correct remedies are agreed for the future. We do not share the Chancellor’s assessment, as he knows, of the broader economic picture. His claim that the roof was fixed while the sun was shining belies the reality. The leave vote is having a greater impact because the roof has not been fixed, as we saw in the Office for Budget Responsibility’s assessment of the UK’s fiscal position that was published alongside this year’s Budget.

I agree with the hon. Gentleman’s approach to the debate. Employment rates in our country are now at a record high—in my constituency it is up 60% since 2010. Capital requirements for the banks are some 10 times what they were in the past six years and the budget deficit is down from 11% to 3% this year. I think that that was what the Chancellor was talking about when he referred to fixing the roof. What position does the hon. Gentleman think the UK economy would have been in now, after last week’s vote, if we had not taken those measures?

I remember the Chancellor promising that the deficit would have been eradicated last year. Although we welcome the jobs that the hon. Gentleman mentions, many of them are, unfortunately, insecure and poorly paid. However, we welcomed and supported the capital requirements relating to banks. I hope that the Conservatives can accept that balanced assessment.

At the centre of the OBR’s pessimistic assessment was the stagnation of UK productivity. According to the latest available data, between 2007 and 2014—Members on both sides of the House have raised this point—productivity did not grow. That is the worst performance by any G7 economy, and it means that today, on average, every hour worked in the UK is a third less productive than in the United States, Germany or France. This productivity stagnation has happened on the present Chancellor’s watch. It is clear that his long-term economic strategy has failed, as he has not secured the basis for long-term growth. Can we at least agree that from now on that we need a comprehensive strategy to deal with the productivity crisis?

Over the past few years, growth has relied too much on two things. First, although the economy has produced a large number of jobs, they have been poorly paid and insecure. Secondly, growth is unfortunately becoming more and more dependent on a return to household borrowing. We have not yet hit the level of 2008, but the OBR forecasts an unprecedented five years of continual household deficits.

Alongside our deficit with the rest of the world, our current account deficit has widened to its highest level since the 18th century. At 7% of gross domestic product, it is the largest current account deficit in any major developed economy. To finance the gap, borrowing from the rest of the world and the sale of UK assets have reached record levels, alongside assets sales to the rest of the world involving a range of facilities, to some of which there have been significant objections in the House. Relative to GDP, the UK now has a larger overseas debt than any other major developed country. We have been able to finance the current account deficit, despite weak productivity growth, because of what Mark Carney described, in a recent lecture, as “the kindness of strangers”.

Does the shadow Chancellor agree that the current account deficit is essentially being funded by foreign direct investment, which includes the purchase of assets in this country by Chinese organisations? How does that relate to Britain taking back control?

Labour has consistently presented arguments in the House about the asset sales that have taken place. In the past, they have been described as selling the family silver, but in recent years we have been selling the floorboards and the fabric of the building itself.

Investors in the rest of the world have been willing to overlook some of the fundamentals of our economy in the belief that the country is politically stable, and has secure banks and a booming property market. Overseas investors have been willing to buy assets and lend money on a grand scale as a result. Owing to the leave vote, however, that “kindness of strangers” is now in short supply. Given the uncertainty over the UK’s relationship with the rest of the world, the confidence of international investors in its position has been undermined.

I welcome the hon. Gentleman’s focus on this point. My biggest worry is that we are dependent on inward investment which, according to Fitch, may fall by 5% this year. Does he agree that whatever happens in the negotiation, the single most important message that must come out of it is that we are still an open economy, and will not resort to protectionism?

I fully agree. I echo the Chancellor’s statement on Monday that this country is open for business, and Members of all political parties must repeat it time and again to ensure that we retain the confidence of overseas investors as best we can.

We have to recognise that the confidence of international investors has been undermined by uncertainty over the UK’s relationship with the rest of the world. It is regrettable that the current account deficit has not been addressed so far. To address it would have required a restructuring of our economy. We would have needed an industrial strategy to develop and support our key industries. The Government must now produce a comprehensive industrial strategy to support those industries and lay a path to future growth.

Given that uncertainty, does the hon. Gentleman welcome the fact that the Speaker of the House of Representatives has today called for immediate talks between the United States and the UK about setting up a trade deal that will be in place for the US when we leave the EU? Does he also welcome the statements from the Indian Government, who want a trade deal between the UK and India to be arranged immediately so that we can ensure that there is no interruption to the UK economy?

It must be recognised that the trading relationship with India, although growing, is still relatively small. I welcome the negotiations that are taking place, but we know from our experience of the timescale in which trade agreements have been secured over much of the past decade that the process is lengthy, and that when individual states negotiate on their own, they do not necessarily achieve the benefits that they would have secured within a trading bloc.

The simplest explanation for these decisive economic weaknesses is the poor state of investment in the UK. Admittedly, business investment was already in decline before the referendum, but it is undoubtedly falling still further, and, as the press has reported, the ongoing uncertainty alone is enough to deter investment. That fall in business investment is being worsened by the Government’s plans to cut their own investment which, according to current projections, is set to fall by the end of the decade. Without sustained investment—private and Government investment—we shall not be able to address the economic decline that has blighted too much of our country.

The hon. Gentleman talks about the need for an industrial strategy. The Government have set out important strategies for key industries such as life sciences, and, of course, for a northern powerhouse to help to rebalance the economy. Given the challenges that we face and the continuing need to rebalance the economy, will the Opposition now get behind the Government’s plans and, in particular, support the northern powerhouse, about which they have been equivocal?

We have welcomed initiatives to try to rebalance the economy; the problem has been the success rate. The investment pipeline that the Chancellor announced several years ago has been less than 20% successful. Five years on, we have seen only £1 billion of the £20 billion that was meant to come from pension funds. The Government announce well, but they do not implement very well. There is too much government by press release rather than by implementation.

I will come back to the hon. Gentleman, but I must press on for a while.

It is important to recognise that economic decline and regional inequality, and the deep-rooted alienation and despair that they have produced, contributed to the fact that so many people voted to leave the EU. Some fear that a shock to business investment spending would help to push the entire economy into another recession. Again, I call for a fresh programme of Government investment to produce shovel-ready projects, especially in the areas that have been hardest hit by long-term economic decline.

May I point out to the hon. Gentleman, in the spirit of the conversation that is taking place this afternoon, that there has been considerable investment in some northern cities, such as my city of Leeds? In the last month, Kirkstall Forge railway station opened in the constituency of his hon. Friend the Member for Leeds West (Rachel Reeves), and half a billion has been spent on other projects in the city. It is not all talk—I understand the politics of it—but I want the hon. Gentleman to understand that some of our great northern cities have benefited from real investment.

We must not talk down some of the success that has been achieved so far, but, although it has dealt with regional economic problems, it has not been on a sufficient scale to rebalance the economy in the way that was promised. As a result, a disillusioned section of the electorate were willing to blame anyone, including migrants and including the EU, and accordingly voted to leave. People felt that communities had been left behind, and I believe that that is a consequence of the lack of investment in recent years.

Does my hon. Friend agree that it would be a huge boost to the British economy if the £16 billion initiative for the expansion of Heathrow went ahead, and will he support my call for a free vote on the issue before the recess?

I have to give my hon. Friend his due; he chances his arm. I am sure that there is a need for investment—selective investment—in aviation.

We are short of time and a lot of Members wish to speak.

Whenever aviation expansion takes place, it will be judged on the criteria that the Labour party has set, which include the environmental impact and the impact on the wider economy. We await the proposals from the Government and we will then take our decision.

The referendum vote has forced a debate on the best course for our economy and for economic policy. It is unlikely that a simple return to business as usual will be possible or even desirable, but there are immediate steps that can be taken to calm market volatility and to limit the shock to demand. It is incumbent on the Government to take those necessary measures and Labour, in the national interest, will support measures intended to stabilise the economy when they protect households and businesses.

On monetary policy, of course authority rests with the Bank of England to intervene to preserve the stability of banks and the wider economy. Governor Mark Carney’s Friday morning statement was important in helping to stabilise the immediate situation. However, some interventions by the Bank will require authorisation from the Government. To ensure the success of those interventions, it will be helpful if the House is kept as fully informed as practicable of those authorisations, with regular updates.

On fiscal policy, with the expected slump in demand, the Government’s present fiscal charter is, to say the least, increasingly anachronistic. With the Chancellor having missed two of his three targets—on debt and on the welfare cap—he will now have to suspend the deficit target. The charter’s restriction on investment spending in particular is impossible to defend. For the regions, a squeeze on Government investment could be especially damaging.

Last year—this was raised earlier at Question Time— over £10 billion was provided in regional development funding by the EU. That was concentrated on our most deprived regions and places that needed it the most. What steps are the Government taking to ensure that that essential funding will now be made good? What structures are being put in place to liaise with elected mayors, local government leaders and regional bodies to address the loss of EU funds?

The UK currently holds a 16% stake in the European Investment Bank, which last year disbursed a record £6 billion in investment for the UK. That includes £l billion for social housing. What steps are the Government taking to maintain current programme funding? What plans do the Government have for the UK’s stake in the European Investment Bank?

May I press on? I have taken a significant number of interventions and I am worried about time.

Significant uncertainties have been created for those trading with Europe, including manufacturers that are reliant on extended supply chains across the EU. What measures are the Government putting in place to support supply chains that are threatened by the severance of those ties and the falling value of the pound?

Exit from the EU threatens the UK’s continued status as a global financial centre. A number of major banks have already put in place plans to move jobs from the UK. They are fearful of the loss of their European Union passport that allows them to win business across the EU. We need to know soon from the Government how they will ensure that those passport rights are retained. I hear that one French negotiating position is to offer EEA status with some controls on freedom of movement, but the loss of bank passporting rights. Clearly that is a move to encourage bank migration from London and it is unacceptable. The resignation of Lord Hill as Finance Commissioner means that the UK currently has no voice at Commission level to argue the case for UK finance. What steps will the Government take to ensure that the voice of UK finance continues to be heard in Europe? May we propose to Government that, as a matter of urgency, they establish a working group to monitor the ongoing threat to the UK’s financial stability, working with representatives from across the financial services industry?

It would be wrong not to mention the threats that have been made to community cohesion following the vote to leave. I was very concerned to hear about the attacks on the Polish community. Any such attacks must be condemned outright by the whole House. I have a Polish community in my constituency. The Polish War Memorial nearby at Northolt stands testimony to the sacrifices of Polish pilots during the second world war. I have attended many meetings at the Polish centre in Hammersmith, which was disgracefully attacked. I send my message of solidarity to that community and to anyone else suffering from the rise in racism. What mechanisms will the Government put in place with local government leaders and city mayors to protect these communities, to help to overcome these divisive actions and to resource the programmes that will be brought forward?

We will get through this period of uncertainty, as Britain has done many times in the past. There are real strengths in our economy, not least our talented and dedicated workforce. None the less, volatility continues and grave uncertainties remain about the UK’s future relationship with our European partners and the wider world. The future direction of Government strategy is not yet determined, but Labour is prepared, in the national interest, to work with the Government and our parliamentary colleagues on both sides of the House to ensure that the best interests of the British people are secured. I commend the motion to the House.

I very much welcome this opportunity to update Parliament and the country on some of the economic challenges that we now face. I welcome the hon. Member for Salford and Eccles (Rebecca Long Bailey) to her new position as shadow Chief Secretary. I will not welcome all the new members of the Labour Front Bench because it would be a bit like the presentation of the Bills that we just saw, but it is very good that the shadow Chancellor is still in place, and he has 80% of the support of the Conservative parliamentary party to remain there.

May I respond to this sober debate with a message of reassurance and realism? I say at the outset that because this is a challenging time and this is a good opportunity for the House to discuss these issues, we are not going to seek to divide the House on the motion today.

That message begins with the reality that I have never shied away from telling the country the truth, as I have seen it, about our economic challenges, and we do now face very significant economic challenges as a result of the referendum decision last week. I do not resile from any of the concerns that I pointed to before the referendum, but I want to provide reassurance that we are about as well placed as we could possibly be to meet the challenges that lie ahead. The shadow Chancellor was correct to raise problems such as low productivity growth, which bedevil many western economies, but the British economy has been the strongest advanced economy in the world in recent years. We have the highest employment rate in our history. The capital requirements for our banks are 10 times higher than they were before the financial crisis. Inflation is low and stable, and real wages and household disposable incomes have been growing. These things did not happen by accident—they happened because over the last six years we took difficult, sometimes painful decisions in order to rebuild our economy, to strengthen our banks and to put our public finances in better order. We said we would fix the roof—and thank goodness we made the progress that we did.

While I personally gave everything to campaigning for a different outcome, we saw a clear result in the referendum. I accept that result and the Government accept that result. Now we need to implement that decision and deliver for the British people on the instructions they have given us.

As the 10-year cost of borrowing has fallen from 1.4% to under 1% and the rate for 30-year money is now under 2%—record lows—does that not mean that there will a windfall element from lower interest charges? Will the Government consider funding the debt longer at this advantageous time for borrowing?

My right hon. Friend is right to point to the fall in UK gilt yields, but there has been something of a flight to safety. In the last six years, we have made UK Government debt a safe haven in stormy waters, and on this side collectively we can take enormous pride in the fact that we have done that. It is very different of course from the situation six years ago when yields were increasing in the face of economic difficulties, whereas here they have come in.

In terms of the financing of the debt, I have already on a number of occasions over the last six years changed the skew of the Debt Management Office’s debt plan and made sure we have more longer-dated debt than we would otherwise have had. One of the reasons why international investors and others have confidence in the UK gilt market is that we do not chop and change all the time every week, so while my right hon. Friend makes a very good point, I do not think we should immediately respond to the events of the last week by changing our financing remit. Indeed, the message we need to be sending very clearly is one of stability and reassurance. That brings me to the plan I believe we should now follow.

First, it involves ensuring financial stability, and that is precisely what we have been doing in the past few days. In the run-up to the referendum, the Treasury worked closely with the Bank of England and the Financial Conduct Authority to put in place robust contingency plans for the immediate impact of a leave vote. I met the Governor of the Bank of England to discuss it on a number of occasions, and the Financial Policy Committee and the Monetary Policy Committee both had special meetings to discuss those contingency plans. The Prudential Regulation Authority—essentially, our bank regulator—worked systematically with each major financial institution to make sure they were financially sound and prepared for whatever the outcome of the referendum was going to be. The Bank of England pre-announced additional liquidity auctions to support the banking sector. People will have seen this week from the result of those auctions that that liquidity has been provided. Over the last few days, we have been working closely alongside Finance Ministers and central bank governors across the G7 nations and the nations of the European Union to make sure that we are monitoring developments closely and are ready to respond. The president of the European Central Bank updated the European Council yesterday—the Prime Minister reported on that to the House earlier—but it has to be said that the update was not particularly rosy. Let us be clear: these contingency plans were designed to prevent disorder in markets; they were not designed to stop markets adjusting to the new economic reality.

I can reassure the House today that our major banks are resilient. Capital and liquidity remain strong, and this morning we have seen greater stability in the major banks’ share prices, and the currency markets are continuing to function effectively. But there have been significant adjustments, and we have to be realistic about the impact of the referendum on the financial markets.

The resilience and stability of our banks is to be welcomed, but it is clearly at the price of pumping so much central bank money into the system that bank share prices are falling, and the future commercial prospects for our banking system have been undermined. The system is not as stable as the Chancellor is telling us.

The stability of our financial institutions is there for people to see. It has been assured by our regulators. If the hon. Gentleman is saying that the market is making new assessments about the future earnings of banks, yes, that is so, and it is quite striking that it is banks that face the UK economy that have seen the sharp falls in their share prices, not banks that face the European and international economy. We have to be realistic: markets—free markets—are going to make those kinds of adjustments. We have seen those—the shadow Chancellor noted them—but it is striking that there has been the largest one-day fall against the dollar on record for our pound sterling. Equity markets, particularly the FTSE 250—which largely comprises companies that, again, face the UK domestic market—fell by 14%, and they are now 9% below their level. The particular sectors that have been affected are British retail banking, house building and short-haul airlines, some of which have seen their share price fall by more than 40%.

Notwithstanding what the Chancellor of the Exchequer has said, will he acknowledge the benefits of a weaker exchange rate? For a country that is running a large trade deficit, having a significantly weaker exchange rate will make a large difference, particularly to exporters, and it means that we are more likely now to avoid deflation in the economy, which not a few months ago people were forecasting was likely to hit us.

I agree with my hon. Friend that a free-floating currency is a shock-absorber that we have the benefit of. We do not have a fixed exchange rate, and of course we are not part of a single currency, so the currency can take some of the strain, and that is reflected in the currency market.

The only thing I would caution my hon. Friend on is this: in 2008 we saw a sharp fall in sterling, and that was sustained, but it did not lead to the boost in exports that people expected at that point. That was partly because other markets, including European markets, were depressed, but, as we came to discover, it was also the case that integrated supply chains these days are more international. For example, car exporters might benefit from the fall in the currency in terms of the price they sell their cars for, but they will have imported parts and will have seen import prices go up. Unfortunately retailers are also warning us that prices in supermarkets, for example, may well now rise because of the fall in the currency, but we will wait and see.

Of course the other challenge we face is from the credit rating agencies—not that everything they say is gospel. Unfortunately, we lost our triple-A rating with Standard & Poor’s and were downgraded two notches a few days ago.

The shadow Chancellor raised questions about monetary policy. Obviously the Bank of England is independent. The MPC set out the challenging trade- off it might face between a fall in output and a rise in inflation. We will have to wait and see how MPC responds to the judgment it has to make.

The central bank has not been undertaking quantitative easing, but the arrangements put in place by my predecessor Alistair Darling—essentially, the authorisation arrangements —remain in place. In other words, the MPC will be able to use any of the monetary policy instruments in its toolkit, but that is entirely a judgment for it. We will wait to see how it responds to the challenges it faces.

This June, sadly, the sun is not shining, and like many MPs I have been contacted by constituents who may wish to delve into a second referendum. Democracy gives us a say, not necessarily our way. Does the Chancellor believe that even looking at a second referendum would do massive damage to our improved finances and delay and disrupt further infrastructure projects which are so vital to our communities?

I fought passionately to remain in the European Union, not because I was a massive fan of the EU with all its problems but because I thought it was better for Britain to be in the EU than outside it, but I absolutely accept the result of the referendum. I do not think it is credible, in the days after the result, to say, “The people got it wrong. We need to elect a new people.” In our democracy, we need to respect the result that the British people have given us and, as representatives of the population in this Parliament, our obligation is now to get on and deliver what they have asked us to deliver, to the best of our ability.

The Chancellor is being very candid in his remarks this afternoon. He has referred to the situation with the banks, and I have noticed that Goldman Sachs has downgraded its profit forecast for the UK banking sector by €10 billion over the next two years. Will he reflect on what that means for the UK economy and for tax receipts? Will he also reflect on the importance that is placed on getting out of our banking holdings over time? Does he not think that this is a self-induced problem that has been created by the Conservative Government’s manifesto commitments? Does he not regret the fact that it is the Conservative party, through its internal dispute, that has got us into this terrible mess in the first place?

The short answer to that is: no I do not. I do not think that it is wrong, in a democracy, to ask the people about very big constitutional issues. In all the years that I have been a Member of Parliament—and, indeed, before that—the question of our relationship with the EU has hung over our political system and our body politic. I am surprised to hear a Scottish nationalist raise doubts about the effectiveness of referendums, but there we are.

We have well thought-through contingency plans and they remain in place in case financial conditions should deteriorate. The market should not doubt our resolve. We are absolutely determined that, unlike eight years ago, Britain’s financial system will help our country to deal with any shocks and dampen them, rather than contributing to those shocks or making them worse. As the shadow Chancellor requested earlier, I shall of course keep the House informed. However, we have to accept that some investment and hiring decisions will continue to be paused as firms adjust to the uncertainty caused by the referendum. There is already survey evidence and anecdotal evidence of this. So the second part of our plan—the first part involves financial stability—has to be to resolve that uncertainty as quickly as is practical in a democratic system.

European Union funds have helped economic development in my constituency. What measures is the Chancellor going to take to ensure that areas such as south Wales continue to receive support for infrastructure and to help to boost jobs in our valleys?

We are going to face some big questions about providing support to the institutions, regions and sectors that have been receiving European Union assistance, most notably the regional support that has been provided to areas such as south Wales, the ongoing support that the EU provides for research in our universities and the support for our farming community. We in the House of Commons are going to have to address all those issues in the coming months and possibly beyond. However, at the moment we remain a member of the European Union—I shall talk about the procedure for our departure in a moment—and the European funding and grants will continue to be made. We are looking specifically at areas where questions have been asked about long-term uncertainty in relation to particular projects, and I will keep the House updated. This is a challenging question, which we have to answer, and we are looking at it very intensively now. But at the moment nothing has changed and we remain a member of the European Union.

That brings me back to the question of trying to resolve as quickly as is practical the uncertainty about the new relationship we are seeking with the European Union and our European neighbours. We need a bit of realism and we need to offer reassurance. It is apparent that the uncertainty will be fully resolved only when we as a country have negotiated an agreement with our European partners on the relationship we now want to have with them. We know what the broad options are. The Government spelled them out and set out the different relationship models over the past few months in the Treasury and Cabinet Office papers that were produced in advance of the referendum. We could join the European economic area, like Norway; we could forge a new negotiated bilateral agreement with the EU, like Canada; we could adopt the Swiss model; or we could rely on World Trade Organisation rules.

As the Prime Minister set out at this Dispatch Box, the Government have established a new unit at the heart of Government made up of some of the best civil servants, reporting to the Cabinet, that will help us as we make that decision. I stress, however, that Members of Parliament and other organisations can feed in to the work that is taking place, so that we have the fullest possible information on the decision that we will have to take collectively as a Parliament on our new relationship with Europe.

My view is clear that we should move towards an arrangement that provides us with the closest possible economic ties with our European neighbours. Close to half of our exports go to the EU and millions of jobs are supported by our trade with the EU. Leading industries, such as car manufacturing, farming and our services industry, are reliant on that relationship, and we should be moving towards an arrangement under which—if we reach it and can negotiate it—the trade of both goods and services, including financial services, is as free as possible. In the meantime, returning to a point I made earlier, UK firms continue to have exactly the same status as any other EU firm. Business continues in the City and elsewhere, including for euro-denominated trading in our financial markets.

However, I am a realist—we have to be realistic about this—and we must acknowledge that we cannot have all the benefits of the EU without accepting any of the costs and obligations. It will be for this Parliament to decide what the accommodations and compromises should be.

So much of the leave argument was predicated on shifting our focus to the world beyond Europe. If the Chancellor agrees with that assumption, we need to ensure that we can get there. Given that Heathrow expansion would deliver a £16 billion privately financed shot in the arm, up to £211 billion of economic growth—predominantly outside the south-east—180,000 jobs and 10,000 apprenticeships, I urge the Chancellor to commit to giving Government Members a free vote safe in the knowledge that there will be sufficient votes on the Opposition Benches, irrespective of whipping arrangements, to deliver that result.

We await the work that is being done on air quality around the airport. When we discussed the matter some months ago, people were a bit dismissive, but to be fair to the new Mayor of London, he raised air quality issues during the London mayoral contest that resonated with voters’ concerns—the hon. Gentleman would know that as a London MP. Before Parliament makes a decision, it is important that we have addressed the issues, concerns and questions about air quality. It will be nothing new if I tell the House that the decision will be controversial when we come to take it, so it is important that no one cries foul over the process. We can then make a decision on the merits of the case. People know my view, which is that we need additional runway capacity in the south-east of England, but where that capacity should come from must be a matter first for the Government and then for Parliament.

As with so many issues, Northern Ireland has a direct interest in runway capacity in the south-east, and we want a decision on the issue raised by the hon. Member for Ilford North (Wes Streeting) as quickly as possible as well. Can the Chancellor assure me that the Treasury is talking to the Department of Finance in Northern Ireland and the Northern Ireland Executive so that Northern Ireland’s interests and concerns are very much in the thinking of Her Majesty’s Government?

That dialogue is taking place and I assure the right hon. Gentleman that it will continue to take place. We were on different sides of the argument when it came to the referendum, but he shares my view that Britain needs to be open to the world and trading with the world. That means having sufficient airport capacity to fly to the world and to allow the world to fly to us. I am sure that that view is universally accepted across the House, but we will find out.

The key challenge, to which I think we can rise, is working out through collective discussion and decision making the new relationship that we should seek with the European Union. Until we have agreed on an approach, we should not trigger article 50 and begin the process of exiting the European Union. As the Prime Minister said, “triggering article 50” is rightly a decision for the new Prime Minister and the new Government, and it is a decision that we will take at the right time, when we are ready and not before.

The economic uncertainty will have an impact on our public finances that is likely to be both cyclical and structural. The Office for Budget Responsibility will make its assessment of the economy this autumn—let me tell the shadow Chancellor that, to get the best possible forecast from the OBR, we have to wait a little for the dust to settle—and it will be for the new Government under a new Prime Minister to take the decisions about the adjustments that will be required to meet the new fiscal realities, but we should never forget that fiscal stability is the absolute bedrock of economic security. We must be realistic, but I want to reassure the House that our economy remains competitive and open for business—we have the lowest corporate taxes in the G20, more people in work than ever before thanks to our welfare reforms, and our science and our universities are world class.

Let me pick up on a point that has been made throughout the debate in the country and in Parliament. We need to go on forging our links with key partners beyond Europe, such as with China and India. I never thought that we had to choose between Europe and forging new links with the rest of the world. Germany exports three times as much as we do to China, so it is clearly possible to do that within the European Union, but outside the European Union those links are more important than ever before.

I will travel to China next month as part of the G20 Finance Ministers meeting there. To pick up on a point that my hon. Friend the Member for Harrow East (Bob Blackman) made in an intervention, I have spoken to the US Treasury Secretary and the Speaker of Congress in the past couple of days about strengthening our ties with our great ally, America.

Does the Chancellor agree that it is about not just new trade deals but the supply chains that he mentioned earlier and building those customer relationships over many decades, as we have with the European Union? We simply cannot take our trade from Europe one day and move it to the US or China the next.

My hon. Friend is completely right, but we should not have to choose between the two. It is perfectly possible to do a lot more business with India, America and China while also doing a lot of business with Europe. That would be a key part of Britain’s economic strength in the future. As I have said, in respecting the decision of the British people to leave the EU, we should now be seeking the closest possible terms of trade with the EU not just in goods but in services, including financial services.

The third and final part of the plan that we need to pursue was touched on by the shadow Chancellor—we think of it as a social issue, but it has economic ramifications as well—and that is that we must unite across the political spectrum and offer a very loud and clear message to this country that we have no tolerance of intolerance, hatred and bigotry. We need to send a message of reassurance to all the communities in our very successful, multi-faith, multi-race democracy that we will not tolerate those who want to divide us.

The reports of the graffiti on the Polish community centre in Hammersmith, of the people who have lived in this country for decades being told, “We voted you out”; and of the figures that have shown a big increase in the report of hate crimes all point to incidences that are appalling and unacceptable. It is not the British way. We should unite in condemning it. The Prime Minister and the Under-Secretary of State for the Home Department, my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley), set out some of the additional steps that we are taking to combat this intolerance, but in this economic debate I say to business leaders that they should also play their part and make it clear that intimidating bullying of any kind in the workplace based on nationality or race should be identified and punished. Britain is an open, tolerant and diverse society where people of all faiths and none and of all nationalities and ways of life are welcome, as they have helped to build this successful country.

Therefore, there are three key things that we need to do now: go on ensuring financial stability; ensure that we resolve the economic uncertainty by working together to determine the model for our new relationship with the EU; and send out a strong message that we will not tolerate intolerance. If we deliver on those three parts of the plan, we will be doing the best we can to make this decision work for Britain and to fulfil the instructions of the British people. I must be straight with people in this country: the weeks and months ahead will not be easy, but, as has always been the case in our history, it is during the moments of greatest challenge that our country must demonstrate its greatest resolve, and it often does.

I thank the shadow Chancellor and the Chancellor for their tone so far. We will support any necessary and constructive measures to bring back confidence and stability, particularly to the markets. The shadow Chancellor was right to say that we cannot hide and that we must have a robust critique of what the referendum outcome may mean. Unusually, the vast majority of the criticism that I do make today will be directed not at the Chancellor, but at those who led the Brexit campaign, who once again since that referendum are absent from this Chamber.

We will support the motion before us, although that is rather superfluous, given that there will now be no vote. We agree with much of it, particularly in respect of the decision to rip Scotland and the UK out of the EU and the huge and real risks that that poses to the economy, to jobs and to prosperity. Those risks were brought about in part by the decision to hold the referendum, but much more importantly by the failure of those advocating Brexit to have any plan if they won. It is worth noting that when we had our first independence referendum, it was based on a 650-page White Paper, a detailed plan and a clear prospectus for what would happen. What the Brexit campaign leaders—the Lord Chancellor and the hon. Member for Uxbridge and South Ruislip (Boris Johnson)—had prepared was a few scribbled notes on the back of Nigel Farage’s fag packet. It really was not good enough.

The hon. Gentleman refers to the first referendum. He will recall that the big issue there was the currency that would be used by an independent Scotland. In the Bill being drafted, is it the assumption that Scotland would no longer use the pound and would have an alternative currency?

We had better fix the problems caused by the Brexit decision and then, if we find ourselves unable to secure our place in the EU by any other means, the hon. Gentleman will be more than welcome to scrutinise whatever plans are brought forward.

The hon. Gentleman makes an eloquent point, but he is totally wrong. I have to set fire to his straw man. A general election, where a policy programme is presented and a party is ready to take over with a fixed platform of policy, is different, as he knows, from a referendum. The referendum result is an instruction to the Government to deliver, and they should have been ready to take that instruction.

We are now seeing the consequence of the lack of plan. The expectation that those who campaigned to stay in should be preparing the work for those who wanted to leave is preposterous in the extreme.

We back the motion also because the people of Scotland voted overwhelmingly to remain in the EU. We have shown ourselves to be a modern, outward-looking and inclusive country, and I share the view of others. We look on in horror as community cohesion is under threat as the racists and the bigots think the result of the referendum is a green light to abuse anyone from any other background. It is not, and we unreservedly condemn that racism and that bigotry.

Let us understand what happened in Scotland on the day of the referendum. The people there made it clear that they see their future as part of the EU: 62% of the Scottish people—a nation—voted to stay in the EU, compared with 48.1% across the UK, and 51.9% across the UK voted to leave; only 38% in Scotland chose to do that. Over 1.5 million people voted remain. Each and every one of the 32 council areas voted to remain—the only nation in the UK with a clean sweep of local authorities voting to stay in. At a little more than 67%, the turnout was the second highest of any referendum held in Scotland, even higher than the 1997 referendum on devolution. So while I understand what the Chancellor said about respecting the will of the UK people, I hope that the same will apply to respecting the will of the Scottish nation, who have clearly said that they intend to stay in.

Given the clear decision that Scotland made, if it came to a vote on the Floor of the House on whether to implement article 50, would the SNP say no?

The Government have made it clear that it will be for the next Government to bring forward such a vote. I think we have got until September or October at the earliest before we need to decide whether to do that.

We are disappointed that the UK voted to leave. That is not what we wanted. The priority must be, as others have said, to stabilise markets and to protect the economy. That is why our First Minister is in Brussels today, and it is why she has said that our Government are exploring each and every potential avenue to maintain Scotland’s EU status, because that is where the instability is coming from.

Let me say one more thing about the previous referendum, and then I will move on to the economic consequences. It is democratically unacceptable for Scotland to be removed from the EU against its will. The irony is that we were told time after time before our independence referendum that the threat to our position in the EU came from independence. Alistair Darling told us that in November 2012. Ruth Davidson told us that on 2 September 2014:

“It is disingenuous…to say that no means out and yes means in, when actually the opposite is true. No means we stay in,”

she said. Even the Better Together campaign tweeted the same day:

“What is process for removing our EU citizenship? Voting yes.”

How wrong, and how misleading that all was. Our place in the EU was never under threat from independence; it was, and it is now, very much in jeopardy only because of the UK decision to leave.

I will move on from that. Now is the time for calm, measured reflection, with our First Minister and Government doing everything they can, including talking directly to Brussels today, to secure our European status and to provide as much reassurance and certainty as we can over the next days and weeks. It is the time for being reassuring, as we all should and must, to individuals from the EU and further afield, because we believe—as most in this House believe—that they remain welcome and appreciated here.

We must also do all we can to help to restore financial stability, to reassure the business community and to emphasise that, of now, we remain members of the EU and we are firmly in the EU; that trade and business should continue; and that we should all do everything we can to say to those planning inward investment, “This remains a place where one should invest one’s capital with confidence.”

Why is this important? Because the FTSE 100 dropped by 8.4% on the morning of 24 June. On 27 June the downward trend continued; by late afternoon, the FTSE was down another 150 points, or 2.5%. Friday morning’s sudden drop meant that £137 billion was wiped off UK blue chip stocks within minutes of the markets opening. As the Chancellor said earlier, banks, house builders and others were the biggest fallers. Taylor Wimpey was down 42%, Persimmon 40% and RBS 34%. During Monday morning, trading in the shares of Barclays and RBS was briefly halted as the sharp losses exceeded 10% of their stock value. After trading was restarted, the share price of both companies continued to fall and move wildly because of the uncertainty. The FTSE 250 index, which has more businesses in it that are exposed to the domestic market, fell even further—by 7.2%, or 1,200 points. Those were extraordinary falls and changes in both markets. PageGroup led the fall; there was a 58% slump in the value of its stock.

While I recognise the figures the hon. Gentleman quotes, does he accept that the FTSE 100 is currently trading at around 6,300, which is higher than it has been for most of the last six months?

Indeed, and I will come to the recovery in certain areas in just a moment. The hon. Gentleman is right when it comes to the FTSE 100, but let me come to all the other indices, and we will see the real damage and how it is being played out.

It was not simply stock prices that were affected. Sterling was trading at $1.45 before the referendum. The value of the pound against the dollar fell by almost 8% on Friday the 24th—almost twice the fall in 1992, when the UK was forced out of the exchange rate mechanism on Black Wednesday.

Of course the FTSE 100 is going to rebound a bit, because the vast majority of the business of FTSE 100 stocks is outside the United Kingdom. If we look at indices such as the FTSE 250, which is much more domestically exposed, we see that the fall has been catastrophic.

That is absolutely correct. The FTSE 250 is far more exposed to the domestic market. Whether the index moves up or down slightly at any given time, the key point is that the exposure to the UK market and the lack of confidence at the moment are precisely what is driving that uncertainty.

No, I will not give way at the moment.

I was pointing out that the fall in the pound was twice that in 1992. By Monday the 27th, it fell another 2%, to $1.32—a three-decade low. [Interruption.] There are mutterings from people who want everything to be fine. We have had a near three decade low in the pound because of the actions taken by the Brexit campaign, which failed to have a plan to deal with this eventuality—that is the crux of the matter. The value of the pound against the euro fell almost 6% on Friday the 24th, and it fell again on Monday the 27th.

Most alarming, given the stock placed on it, was that the UK lost its triple A credit rating from Standard & Poor’s following the Brexit vote. Standard & Poor’s said the referendum result could lead to a

“deterioration of the UK’s economic performance, including its large financial services sector”.

It was the first time that Standard & Poor’s had downgraded a triple A-rated sovereign by two notches in one go. On Friday the 24th, Moody’s cut the credit outlook from stable to negative, saying the result could lead to a prolonged period of uncertainty. By changing its outlook to negative, it has warned that the UK’s Aa1 rating is also at risk of being lowered, and with that, obviously, comes the risk of higher borrowing costs.

And that is before we get to the real world and job security. The Institute of Directors surveyed 1,000 of its members. It found that a quarter plan to freeze recruitment. Two thirds said the vote was negative for their business. The BBC has reported that HSBC plans to move up to 1,000 staff who process payments in euros from London to Paris. Others are deeply concerned about the loss of passporting arrangements, which mean that firms do not have to have different authorisations for individuals in individual countries. These are very real concerns, but they are being whitewashed and brushed over by those who are desperate to leave, because of the absence of a plan to deal with issues that should have been considered in advance.

The leaders of the Brexit campaign are conspicuous by their absence from this Chamber, which is perhaps not a surprise, given the embarrassment they face. One of those leading voices—the Minister of State for Energy—said the volatility we are seeing is not unusual. Does it not just underline the complete economic illiteracy of their case that they think these unprecedented changes are not unusual?

If the pound falls by twice as much as its record fall ever, I suppose that no one sensible should describe that as minor, normal or run of the mill. My hon. Friend is absolutely right.

With regard to the indices, it is true, as I said, that the FTSE 100 has pretty much bounced back to its pre-referendum level, as of earlier today. The FTSE 250 is not yet back to the position it was in on Monday 27 June. The pound versus dollar is unchanged since its collapse and is bouncing along the bottom. The pound versus the euro is unchanged since the fall and is bouncing along the bottom. The real concern—

No, no.

The real concern is that this uncertainty will last for a very long time, not least because of the preposterous decision by those advocating Brexit not even to try to invoke the article 50 negotiations immediately—not so much a man without a plan as a campaign without a clue.

No, I am not going to give way.

We do know, though, that many of the underlying problems are deep rooted and long term. One of the arguments posited by the out campaign was that money currently going to the EU could be spent here at home. We do not need to leave the EU to reverse the decision to convert innovation funding from grants to loans in order to support new product development. We do not need to leave the EU to reverse the cuts to export support in order to help businesses sell more overseas. We do not need to leave the EU to abandon an economic plan to cut £40 billion more than is necessary to run a balanced current account. We do not need to end our membership of the EU to do these things; we do need an end to austerity.

The other argument that the Brexit campaigners posited was that we need to “take back control”, in their words, in order to achieve improvements in all the economic metrics. The problem with that is that countries within the EU are doing better on every single measure. Malta and the Czech Republic have lower unemployment. Denmark, Sweden and the Netherlands have higher employment. Ireland has higher GDP growth. Estonia and Bulgaria have lower debt-to-GDP ratios. In terms of the key issue of productivity—

No, I am coming to an end.

Productivity, as against the UK, is higher in the entire euro area. It is higher in Austria, Sweden, Denmark, Germany, France, the Netherlands, and Ireland. All the things that we want to see done can be done within the EU: that is self-evidently the case.

This is a Brexit campaign without a plan, leading to the chaos we are seeing now and potential difficulties in the economy for many, many years to come. Of course we need to get on, one way or another, to resolve this, fix it, and work with the hand we have been dealt. However, if we are expected to respect the decision taken across the whole of the UK, we would expect the same respect for the decision taken by the people of Scotland to stay in the EU.

Order. If we stick to about 10 minutes each, I will not have to impose a speech limit. If we can go with that, then I think we can get everybody in.

It is a great privilege to speak in this debate, which I very much welcome, because it is what we should be doing. There is a lot of excitement out in the rest of the estate at the moment, but following this enormous decision, with all its consequences, we should be sitting here as a packed Parliament discussing the huge impact. I very much welcome the shadow Chancellor’s point about the need for a cross-party approach, because this is potentially bigger than any party or any leader, no matter how charismatic or experienced they may be.

Perhaps the hon. Gentleman could explain why this is an Opposition day debate and the Government did not call a debate on the economy after Brexit.

I am not an expert on “Erskine May”, but I understand that this slot was allocated for an Opposition day debate—[Interruption]—and there was a statement on the European summit.

I campaigned passionately for a remain vote, and I argued positively. I always set out what I thought was the positive case, but I have to say that in my view the negative case was made too often. We created a “cry wolf” situation: if we warn about some things too often, people eventually ignore us even when we are right. We must be honest and say that some of those predictions are coming true.

I believe that the country can come through this, come together and be stronger eventually, but if we are to do so, we initially have to recognise what we have lost and the strength that we have given up. The best way to look at this is to think of a very good Gwyneth Paltrow film—I do not know whether you have seen it, Madam Deputy Speaker—called “Sliding Doors”. We know what has happened: we have had the resignation of a great one nation Conservative Prime Minister; we once again, having reopened Pandora’s box, have the issue of Scotland; we undoubtedly, whatever the indices are showing, have turbulence in the financial markets; and we have profound uncertainty. The very best we can say is that we have a crisis of uncertainty. We hope that that will not be manifested as real pain in the economy, but it is quite obvious that there is a genuine risk of that and we must deal with it. As I said when I intervened on the shadow Chancellor, Fitch has issued a very serious warning of a 5% reduction in investment this year. The biggest threat is what might happen to inward investment. We must remember the current account deficit issue and the fact that the country is completely dependent on inward investment. If the big foreign firms look at this country less positively, we will pay a high price.

I mention “Sliding Doors” because if we had boarded the other tube train going to “Remainia” in the referendum —oh, how I wish that had been the case—

The hon. Gentleman has a fantastic sense of humour himself, as does his party.

If we had boarded that tube train and gone down that route, our Prime Minister would have been in post for years to come, and our stock market, our economic confidence and our currency would have strengthened. We would not have put permanently to bed but would have very strongly put to one side the two big constitutional issues of Europe and Scotland that have bedevilled our politics for so long. Instead, we have instability again.

We have to recognise that if we had remained, we would have had a very strong position, rather than all this uncertainty and weakness. For me, whatever arrangements are negotiated for the future, they must compensate for that and restore the strengths and assets that we had, not least the fact that British has historically been seen as a beacon of trust. It has been seen as a country into which people would put their life savings, and there is a profound sense around the world that we have respect for the rule of law, and that we are stable, sound and all the rest of it. At the moment, one could forgive the world for thinking that that was not the case, as certainly seems to be true in other European countries.

How do we restore those strengths? First and foremost, when we enter into negotiations, we have to decide on the principles—just as with a Bill, we have a Second Reading debate about its principles—and we need to decide on the principles of the negotiations we will have with our European partners and on the fundamentals about how we go forwards. I want to focus on three key points.

The first point is openness, to which I referred earlier. To me, one of the most extraordinary comments during the referendum was when, after concerns were raised about steel, a key figure in the leave campaign said that if we left the EU, we could unilaterally impose tariffs on Chinese steel. There may be a strong case for doing so, but that betrayed the fact that when the argument becomes nationalistic, particularly economically nationalistic, there is inevitably a threat of protectionism. We have heard many times about how Britain would negotiate good trade arrangements, and about how, since we have deficits with the EU, its members will want to trade with us—after all, look at how many cars we buy from them. Implicitly, the point was therefore that if they did not want to trade with us, we would consider protectionism.

I realise that my hon. Friend and I were on different sides of the argument, but does he recognise that the EU is a protectionist bloc? The EU is a common tariff area whose members collectively impose significant tariffs on other parts of the world, some of which are impoverished third world nations.

I accept my hon. Friend’s point, but the EU as a whole is a tariff-free market of half a billion people, and it is a massive asset for our economy to be part of that. In my opinion we need to remain in the single market at all costs. The principle of openness is important, but this is also about the message we send. We have all agreed that there is a threat to inward investment—this is an existential threat to our economy—and it is important to send to the world the message not just that we are open for business, but that we will be open with the principles of our economy and not resort to protectionism.

Secondly, any negotiation on our new arrangements must take place in a tone and manner of goodwill. We must seek an arrangement that is not just in our interest but in those of a strong European Union, and that is fundamental. Whoever undertakes those negotiations with our European partners must be someone who is trusted to want something that works for both parties—I worry about people going to negotiate with a body that they have spent many months heavily criticising.

My third point is about fiscal policy. Whatever we do, if we want to maintain a sense that we are sound, and win back the sense that we are a stable country in the world, we must continue with a fiscally prudent regime. We must continue to take tough decisions, and commit to balancing the books and reaching a surplus. The message that that would send will inspire confidence in our investors and help to restore the stability we all seek.

Does my hon. Friend agree that an important start has been made on building up that mutual trust by the candour and openness with which the Prime Minister and Chancellor accepted the verdict of the people, even though it went against their own strongly held beliefs? We must carry that forward by ensuring that we observe the spirit, as well as the letter, of the people’s decision.

I agree with my right hon. Friend, and I was coming on to speak about why this decision came about. While we must accept the decision of the people, we must also understand and be honest about the prospectus on which we believe they voted. A few days ago my hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), the former Mayor of London, of whom I am—of course—a huge fan, wrote:

“It is said that those who voted Leave were mainly driven by anxieties about immigration. I do not believe that is so.”

However, the huge turnout that we saw in working-class areas of this country, council estates and so on, was not due to people saying, “We didn’t get a say on the Lisbon treaty”; it was because of immigration, which was pushed in an inflammatory way throughout the debate. If anyone wants proof of that, I can bring the tweets and emails that I have received, some of which were shocking and horrific—indeed, some were too shocking to read out in the House in the way that some of my hon. Friends have done.

We must accept that the campaign was driven by concerns about immigration. That makes things difficult for us, because when we negotiate we must find a way of preserving all the economic strengths to which I referred while controlling immigration from the European Union. If we boil down the explicit underlying nature of the prospectus from vote leave, it was the end of unskilled immigration from the EU. We heard that there will be skilled migration, but at the moment tier 3 is closed and unskilled workers cannot come to this country from outside the EU. Finding that balance will be incredibly difficult, but it is possible if we have good faith and show goodwill towards those with whom we negotiate.

I welcome today’s debate and the tone that we have heard this afternoon. After what has been all too often a foul-mouthed debate over the past couple of months, the tone of constructive engagement and working together is very important. It is down to the leaders in this House to put the decency back into our democracy and, like many others, I was shocked to hear the statements, tweets, messages and incidents that hon. Members read out during our proceedings on the statement earlier today. We just cannot have that in this country; we are not going to have that in this country. It is a responsibility on all our shoulders to ensure that in the communities we serve we stamp it out, and we stamp it out fast.

Part of a decent democracy is that people honour their promises. Let us be honest that we have already seen promises that were made in the campaign being broken into shreds, tatters and little pieces. It is a job for all of us to hold to account the leaders of the leave campaign who made promises that now appear not to be honoured. We need to hang those promises around their necks in the months ahead because, frankly, our democracy cannot withstand too many more broken promises. The guilty men and women who made those promises must be held to account in this House.

I wanted to speak in the debate because I want to say that we need to honour the people’s decision. They have given us a stark lesson. We know how to globalise, but we do not know how to make globalisation work for the majority of voters. What I think most voters told us in the referendum is that we have become a world of very rich elites and very remote elites. People have had enough of it; they want a different settlement.

We need to move with speed in this House to set out the principles for a new special relationship with our closest neighbours. The sooner we agree those principles across the House, the better. I am glad the Chancellor set out a couple of principles, but I hope that he agrees, and that when the Chief Secretary to the Treasury winds up the debate he will agree, that we ought to have been better prepared. We were told yesterday by the Prime Minister that there is a new EU unit, yet somehow the Government have forgotten to include the Home Office in it, as if somehow immigration was not an important feature of this debate. Quite frankly, that beggars belief.

We are blessed in this House with the European Scrutiny Committee, which does a good job. It is charged with scrutinising individual instruments of EU legislation that come before us. It is, of course, chaired by that neutral and commanding figure the hon. Member for Stone (Sir William Cash). However, it is not equipped to look at the big picture nor to look at the principles that we need to agree. I therefore hope the Prime Minister will take seriously the call from Opposition Members for a new Joint Committee of both Houses to try to get to the bottom of the 6,500 instruments we might need to incorporate into UK domestic law, give or take those aspects we do not like.

Parliamentary sovereignty has just been voted on, but Parliament cannot be sovereign if Parliament is blind. We need to ensure that we are equipped in this House with a method of coming to agreement and making sure that the right plan for a new relationship is on the table.

On the question of democracy and sovereignty, does the right hon. Gentleman agree that the Government, in terms of setting out their timetable for Brexit, should also set out a timetable for scrapping the House of Lords so that we do not have any more unelected bureaucrats deciding day-to-day business?

I am grateful to the hon. Gentleman for that intervention. I am on his side when it comes to the House of Lords. This Government’s idea of democracy is to bring forward proposals to cut the number of people in this House while increasing the number in the other place, I think by more than 200 at the last count. It makes one wonder what they are scared of when it comes to democratic decisions.

I want to touch very briefly on some of the principles that have to define the new special relationship with Europe, and we have to start with national security. Since we put in place co-operation on justice and home affairs, we have made important progress. We have good ideas, such as the European arrest warrant, and we have concerted action on sharing information relating to crime, terrorism and watch lists. Terrorists do not respect international borders and nor must the fight against terrorism. It is therefore essential that we agree to collaborate and co-operate to the maximum possible extent with our neighbours when it comes to the fight against crime and the fight against terror.

Secondly, it is clear from this vote—the hon. Member for South Suffolk (James Cartlidge) made this point well—that we will have to update the principle of free movement and replace it with a new principle of fair movement. I was the Minister for Borders and Immigration who introduced the points system for non-EU immigration into this country. During the French presidency, it became clear to me that there was an appetite across Europe for reforming the free movement directive. I said at the time that it would be a long struggle to get such reform, but the sooner we started, the sooner we would finish. Surely we now have to take that lesson and begin putting on the table serious proposals for the reform of free movement.

There are a million and one choices to make. We have to start by honouring the rights of those who are already here. We cannot retrospectively tamper with the rights of people who have already made the life-changing decision to move home. There are then questions about restrictions on low skill or high skill, how long visas should last, whether visa rights should lead to rights of settlement and citizenship, and what access to benefits should be enjoyed for taxes paid in. Of course, there is the huge question of how, as part of a new agreement on fair movement, this country steps up to its international obligations to help refugees struggling due to war in the middle east. We should be doing far more to help Europe with the burden of giving safe haven to refugees fleeing war zones and make that part and parcel of our proposals for fair movement.

Within all that, we have to be careful that we do not damage the free movement of ideas, which is why I always argue that students and scientists should be exempt. Alongside that, we must ensure that co-operation on ideas, intellectual capital and intellectual property protection are part of the new arrangements.

Thirdly, we must ensure that there is no race to the bottom on workers’ rights and human rights. It was this country, and one of our greatest Prime Ministers, that helped to found the Council of Europe. Over the decades that followed, we were among the most important authors of the European convention on human rights, and we are the proud co-authors of the European Court of Human Rights. We must ensure that there is no race to the bottom on workers’ rights, and that we do not enjoy second-class human rights in this country.

Fourthly, we obviously have to try to maximise free trade, free movement of goods and free movement of capital throughout the single market. We will need to be honest that we will pay a price for introducing restrictions on migration. We need to think carefully about what price we are prepared to pay. That is why I believe we need to introduce the minimal possible restrictions on free movement and the fewest fetters possible.

When it comes to the free movement of trade and of capital, we must ensure that our rights to tax revenue are protected. We have made progress over the past few years in ensuring that multinationals pay their fair share of tax, but heaven knows we have an awful long way to go. We know that hundreds of billions are sheltered by European companies in tax havens. We have to deepen collaboration and co-operation with Europe to ensure that people pay their fair share.

Finally, we need a big debate about sharing the burdens of our neighbourhood. Good neighbours do not shirk their duties, whether on climate change or common border protection. There will be countless other burdens regarding which Britain has to step up and say, “Yes. We are going to take on the obligations that come with sharing this part of the world.” The Prime Minister was right to say that we will not turn our back on Europe. We have to send a very clear signal that we will be not just good neighbours, but the best of neighbours.

In the debates that come, there will be an iron relationship between reform of free movement, access to the single market and the integrity of the United Kingdom. If we are to maximise the integrity of the UK and to keep our trade balance good, we have to keep changes to free movement to an absolute minimum. It would be an error to slam the door to this country closed and lose our place in the world as a great trading nation, which would inevitably lead to the unravelling of the United Kingdom.

We need great British moderation now more than ever. We must have no more pie in the sky from politicians with no intention of honouring their promises, which is why I hope this place continues to lead such debates.

It is a pleasure to follow the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), who made some fine points. I particularly liked the phrase he coined about moving from free movement to fair movement.

There is a time and a place to take a risk. I started my business in 1992. Many in the House will remember that year and, in particular, 16 September 1992. Unemployment was at 3 million; repossessions were running at 72,000—three times the normal average; and, on that single day, interest rates went from 10% to 12% to 15%. As the House will remember, the day after, we pulled out of something called the exchange rate mechanism, and that was the right thing to do. Many economists said it was the wrong thing to do—they said it was a big risk—but things could hardly have got worse, so it was absolutely the right thing to do.

Look at where we are today: we have one of the fastest-growing economies in the developed world and virtually full employment, meaning that all our young people and our older people can get a job. We had a saying in our business: hope is not a strategy. There was so little strategy from the Vote Leave campaign going beyond our exit from the EU, which was why most business organisations—the Institute of Directors, the CBI, the manufacturers’ federations, TheCityUK—said it was the wrong thing to do. Every leading economist—and even some not-very-leading economists—said it was the wrong thing to do. But of course this was seen as some kind of conspiracy.

It was not just business talking like that but the music industry, the science industry, our research organisations, our technology industry and so on. A report by the House of Lords called leaving the EU a huge risk because of the complexity of withdrawal. It will take at least two years from our giving notice under article 50, but it will take many more years to unwind all the connected legislation. A report in The Times last week said it would take 10 Queen’s Speeches to unwind the legislation. That breeds the uncertainty that businesses do not like.

This is also about trade deals, and not just about trading today with Europe but about opening new trade markets around the world. As the Chancellor said, that is a great opportunity, but businesses cannot simply move their supply and customer bases from one location to another overnight—yet that is what they are being asked to do.

Is not much of our trade with the rest of the world done through large international companies that locate in the UK because we are in the single market?

My hon. Friend is absolutely right. A good example are the Swiss banks. Despite Switzerland’s being part of the European economic area, it cannot trade directly with the EU, so it has to base subsidiaries within the EU. Happily, firms such as Credit Suisse and UBS put them in London, as do US banks such as Goldman Sachs, J.P. Morgan and the like. That is why the head of TheCityUK said that the move could cost up to 100,000 jobs in the City of London. Yet this was never dealt with or answered by the Vote Leave campaign. [Interruption.] My hon. Friend the Member for North West Hampshire (Kit Malthouse) shakes his head. The risks are huge, yet the issue has not been properly dealt with.

The impact on car manufacturers has not been properly dealt with either. This is not simply about our opening new trade markets around the world; it is about a supply chain that is deeply embedded throughout Europe. A typical drive shaft for a family saloon car is manufactured in six different countries across Europe. What are car manufacturers to do if tariffs are applied between us and the EU? Just last evening, I was talking to a multinational retailer who had 3,000 members of staff but was moving to new premises with 5,000 members of staff. These people move from London to Frankfurt to Paris just as we would move from north Yorkshire to London, but they face the prospect of not being able to do that. How have we made this decision without talking about these issues and answering these questions?

There is an even bigger issue. Looking at the European Union in such a sensitive stage, I view it as a house of cards, and if the UK pulls our card from the bottom, there is a significant risk that the whole house will implode. A domestic economic risk then moves towards becoming an international and global economic risk, along with a political risk and a security risk. This country’s economy and our prospects for national security could be hugely affected.

We should recall that only a few years ago many European member states were totalitarian states behind the iron curtain, yet they are today free and fair democracies with the rule of law and freedom of the press. The European Union has presided over those member states, making sure that they are focused on prosperity and trade, rather than looking backwards or, even worse, eastwards towards Russia.

All these issues are in play, and there are many positive reasons for remaining part of the European Union. It is about the opportunity to live, work and study right across the continent; it is about peace and prosperity; and it is about tackling some of our huge challenges and economic risks—issues such as climate change, air pollution, drug resistance and tax evasion.

Of course, free movement of people and immigration are the biggest issues that need to be dealt with. I quite understand the public concern about those issues, and I believe that this was not a referendum on the European Union, but on immigration. I understand that we need to deal with it and now we have an opportunity to do so. As the right hon. Member for Birmingham, Hodge Hill and my hon. Friend the Member for South Suffolk (James Cartlidge) said, we need to deal with it in a proportionate way, and to look at the many different solutions to the problem, working together with our European neighbours.

Above all, we must have free and unfettered access to the single market, because the economic consequences of not having it are impossible—too severe—to contemplate. All the way through the referendum campaign, I wanted to remain and reform, but that option is no longer available. What we must now do is to work together with our European counterparts to make sure that we get reform. We must work collaboratively with our European partners to make sure that we have a fair economic settlement that works for both the European Union and for the United Kingdom.

I was going to say that it is a pleasure to speak in this afternoon’s debate, but that is not really how it feels. I am not the baby of the House, but I am among its younger Members, and for the 33 years in which I have been alive I have grown up in a country that is part of the European Union. Part of its character is a confident, open, outward-looking nation that looks to the world with optimism, confidence and strength.

Although I respect the result and the verdict of the voters last week, I cannot disguise my bitter disappointment with the result. It has put this country on a fundamentally different course for this century from the one we were previously on. We have already seen the economic impact of that decision, and we have seen some of the political repercussions of it, too. Probably more worrying than anything else about last week’s result is the sense that our political leaders have yet to find adequate answers to the questions that have been thrown up by the leave vote.

I represent an outer London constituency on the Essex border, and many of the people I represent travel in on the Central line to work in the City of London, and many of them will be worried about the future of their jobs. We have already seen the announcement of thousands of jobs potentially moving abroad into the eurozone, and we hear rumblings about other jobs set to go elsewhere. Communities, including those that voted overwhelmingly to leave, are seeing the consequences of their decisions, with a loss of the inward investment that delivers jobs—whether it be investment in car manufacturing in the north-east or investment to bail out the steel industry in Neath Port Talbot.

Without feeling too bitter about the result or finger-wagging at people who have reached different conclusions, I cannot but say—and am deeply sorry to say—to those who attacked Stronger In and its advocates for prosecuting “Project Fear”, especially those in the House and in the officially designated Leave campaign, that it looks increasingly likely that it was “Project Fact”, whether we are talking about instability in the currency or the markets, or about decisions that have already been made in the space of a few days that will relocate jobs, change people’s lives, and affect communities for the worse.

As far as I am concerned, the Conservative leadership contest cannot come soon enough. I relish the prospect of seeing the hon. Member for Uxbridge and South Ruislip (Boris Johnson) at the Dispatch Box, because I want him—along with his right hon. Friend the Member for Surrey Heath (Michael Gove) and other Conservative Members who prosecuted those arguments—to live up to the promises that were made. I want them to live up to the promise of £350 million for the national health service, the promises about immigration, and every other promise that they made to the British people, which, in good faith, those people believed when they voted leave. This place must deliver accountability if we are to place any trust or any faith in politics.

When those Members assume the reins of power—and some of them are already in that position—they should expect Labour and, I suspect, Conservative Members to hold them to account for the promises that they made. If I had been a leave voter and I found that my job was at risk, or that immigration had not changed substantially in the way I had been promised, or that there was not £350 million for the NHS or anything remotely like it, I would feel very betrayed and let down—and so many of those who are members of my generation or younger do feel let down, because they will bear the consequences of this decision for longer than anyone else.

I cannot recall any other issue on which there has been such an overwhelming economic consensus, among this country’s leading economists and economists around the world, that in the longer term this country will not be as well off as it might have been: not poorer than it is today, perhaps, but certainly not as well off as it might have been. Why should we be concerned about that? If our country is not as well off as it might have been, in communities like the one in which I grew up—in communities like my council estate in the London borough of Tower Hamlets, and other working-class communities throughout the country—it will not be the wealthiest who feel the impact in their pockets, but the poorest.

When businesses do not have as much custom, as much trade or as much inward investment from around the world, it will not be the mighty global players that are affected; they will simply take their business elsewhere. It will be the small and medium-sized enterprises. It will be the hard-working people who take the risk, who take the plunge and set up a business, who work their fingers to the bone, day in day out, to turn a profit and provide a home and an income for their families. Those are the people who will pay the price of this decision. So forgive me, Madam Deputy Speaker, if I feel somewhat angry about that.

I congratulate the hon. Gentleman on his powerful and effective contribution to the debate. I also congratulate him on what he said about airport expansion during the Chancellor’s speech. Whatever our future constitutional position, we shall need to make whatever decisions we can to get the country moving, to show that we have momentum, and to encourage inward investors back into the UK.

I am grateful for that intervention. In the short time during which I have been in the House, I have been appalled by the extent to which party-political self-interest has slammed the brakes on vital infrastructure decisions to secure the future economic wellbeing of our nation, or even our national security. The Government should allow votes on airport expansion, on our continuous at-sea nuclear deterrent, and on other major, vital infrastructure projects to keep our country safe and prosperous. We cannot continue to allow such crucial decisions to be sacrificed on the altar of party-political management, not least when the attempts that are made appear to be futile.

We are not just seeing a fundamental change in the role of Britain in the EU; I think that we may be looking at the break-up of the United Kingdom. I am thinking not just about Scotland, but about the huge achievement that was made in Northern Ireland, from the Downing Street declaration under John Major to the Good Friday agreement under Tony Blair. The Northern Irish peace process itself could be put at risk because of the way in which this debate has been handled. It is troubling that, days after the referendum, there are still no answers to some of the critical questions that have been asked about how we are to move forward as a country.

The hon. Gentleman is making a fantastic speech and I agree with the sentiments that he has expressed. Is it not the case that, in the best case scenario, it is inevitable that a huge amount of Government energy and time will be diverted to legal wrangling and other issues? We should be focusing on the huge issues that the country faces.

I wholeheartedly agree. I came to this House not to spend hours and hours scrutinising changes to the law to protect the rights we already have as members and citizens of the EU, but to advance new ones and to fight for my schools, my hospitals and my public services and to improve the life chances of people in my constituency. I did not come to this House to take part in a grand constitutional convention tinkering at the edges to maintain the status quo, rather than advancing the interests of our nation.

I am almost reluctant to interrupt my hon. Friend’s flow, which is magnificent, but he mentioned the Northern Irish peace process. May I ask him to comment on the fact that the EU was one of the key components of the Good Friday agreement, just as we worked with Washington and with Dublin? The EU and peace 1, peace 2 and peace 3 are essential components of the architecture of the peace process. The possibility of customs posts from Derry to Dundalk is not some fanciful nonsense; it is a reality. Is he aware of the negative impact that this is having on the people of Northern Ireland?

My hon. Friend has a great deal of expertise in this area and we take seriously his warnings. I would feel less aggrieved by what he says if it were not for the fact that in the run-up to the referendum these very questions were put to the Secretary of State for Northern Ireland. We were told, “Don’t worry”—which seemed to be the blank cheque; it was said with every promise of the leave campaign—and now we find that we should very much worry.

We should also worry about the reason people voted to leave the EU. Much of it was not about the Lisbon treaty or where decisions are taken. Many people, even with this British Parliament as sovereign as it is today—and as sovereign as it was last week by the way—still do not feel that they have control over their lives and their destiny. I would hazard a guess that when the analysis is done we will be able to map community by community those places that voted leave and those places that have had the hardest time because of the unequal nature of our economy. That should worry us more than anything else. Many people voted leave out of desperation, in the vague hope, in the belief that their circumstances could not be worse than they are today and that our immigration system and the flow of people into this country make them and our economy less well off, rather than better off. That concerns me deeply.

I represent one of the areas that overwhelmingly voted out. Thirty-six per cent. of my constituents earn the living wage and believe that this decision will increase their salaries, yet 7,000 of my constituents are employed in an industry that is already looking to see what happens next, is unstable and is stopping investment. Does my hon. Friend agree that we have to get strong answers from the Government to protect future investment?

We do need those strong answers. We also need to accept that it is not just about our economy as it is today; it is about our economy as it will be defined in the future. This country now faces choices about the structure of our economy and about how to compete in a globalised world. With respect to Members on the Government Benches, it is my belief that there is a risk, under not just the current Government but the next Prime Minister, that the future will be about a race to the bottom, further casualisation of labour—a race to the bottom in terms of wages and terms and conditions —because outside the protection of the single market that is the only way for this country to profit in the way those at the top of society want. That makes me even more worried for our country’s future. That is why we desperately need a change in Government.

More than 100 years ago, working people, socialist societies, friendly societies and trade unions came together to form the Labour party because they knew that the way to improve the lives of working people and their conditions was not by marching through the streets demanding change but by marching through the corridors of power and delivering that. The Labour party has a great history, whether it is the creation of the national health service, homes fit for heroes, the white heat of technology, the creation of the Open University, the introduction of the national minimum wage, or the improvements in education standards that let this council estate boy from Tower Hamlets make it to university and to this place. Successive Labour Governments are the only vehicle for delivering progressive change in this country.

I urge Members of my party to think very carefully about whether we prefer the futility of opposition to the ability to change people’s lives through power. The pursuit of power is not about our careers; it is about the life chances and opportunities of the people the Labour party came into being to represent—and if they do not have confidence in the Labour party and its leadership to be that change, we consign this country to decades of Conservative Government, just as we did before when I was growing up in the 1980s. That should hang heavily on the consciences of the skeleton Front Bench of this party, because until we start providing effective opposition now, that lot will get away with it. That is why we should remember above all else that the Labour party is a cause, not a personality cult, and it is time some people put the interests of the people the Labour party was founded to represent at the forefront of their judgments about their futures and do the right thing so we can get on with taking that lot apart and delivering a Labour Government.

It is a pleasure to follow the powerful and eloquent speech of the hon. Member for Ilford North (Wes Streeting); I feel somewhat like a dull bank manager following on from his act.

Perhaps unusually, may I welcome not just the subject of the motion, but also the wording of it? I congratulate those on the Opposition Front Bench on bringing this motion forward today.

I must confess that the decision made by the voters of the UK to leave the European Union came as both a surprise and a shock to me. I spent my time holding debates across my Bexhill and Battle constituency so that constituents could hear both sides of the argument and then come to their own conclusion. I never sought to influence their votes one way or the other. This position of balance also permitted me to speak to 25 schools—both secondary and primary—over the last week of the referendum campaign. It troubled me greatly that young children whose parents were originally from the EU were asking if their parents would have to leave the UK or whether Britain would go to war if we left. At least it gave me the opportunity, with balance, to do my best to reassure them.

I would contend that the campaign themes and sometimes extreme scenarios that were being asserted were causing these concerns to be raised and it is little wonder to me that some votes appear to have been irrationally cast. Had the remain side recognised, perhaps in more balanced tones, that there were positive reasons for the UK to leave the EU but even more positive reasons to remain, I wonder whether the UK population would have so readily lined up to give the establishment opinion-makers the thumbs-down.

All this is for historians to deal with in due course. We are where we are and it is my belief that we in this place have to lead from the front and get the best deal for the UK in order to preserve the rights that our population has enjoyed from the EU while delivering the semblance of democratic control which the public have demanded of us through this result.

While I have concerns about the economic implications in the short term, I believe that, with the right civil service negotiation team in place, we can get a good deal from our European partners. I do, however, believe that this will take determination, good grace, hard work, focus and an ability to work with our European counterparts. Thumbing our noses, as Nigel Farage did so disgracefully in the European Parliament this week, not only demonstrates that he should not be let anywhere near this process, but also demonstrates that vitriol and triumphalism rarely bring out the best in negotiation counterparts.

My rationale for this is borne of my experience working at Lehman Brothers over a 15-year period, for seven years with the small team that was unwinding what became the world’s largest bankruptcy. I was running a legal department the day Lehman Brothers went bankrupt. During the speech of the hon. Member for Ilford North, there was a time when I wanted to come over and give him a cuddle, because there was great fear in 2008 just like the fear for his generation that he was describing. There is great fear right now, but I remember that fear back in 2008, from a personal perspective because I had my mortgage on that institution, and my friends and colleagues for many years worked for it. Despite what people say about investment banks, they include not only bankers, but cleaners, secretaries, and people who do not earn a great wage, and they lost not only their job, but their sense of pride and security in that institution.

The hon. Gentleman is right to mention the support staff and cleaners who make those businesses function, but it is also worth mentioning the fact that, although the people who work in financial services have been guilty of all sorts over the years, including bringing our economy almost to its knees, the financial services sector still generates enormous investment in this country and creates jobs. It would be foolish to allow that great industry to go by the wayside, given all the benefits that it brings and the tax receipts that we invest in public services. We should not let those people off the hook, but we should never pretend that financial services are not an asset to this country.

I absolutely agree with the hon. Gentleman. There were some who really needed more punishment than they got, while others took a huge amount of punishment, but those services are still a great exporter for UK plc.

The events on that day in 2008 were an enormous shock, and I remember them well. I worked with a guy from another bank—the largest international and commercial bank—who was in control of its legal department. He said he had spent that weekend dealing with Lehman Brothers as it fell over. He then spent the following week dealing with one of the other largest banks as it fell over. The week after that, his own bank fell over as well. Back then, those of us who were there remember feeling that money was just not safe in any financial institution at all. People might be fearful right now, but I ask Members to cast their minds back to 2008 when things felt even more uncertain.

I also ask the House to recognise that, in the past six years, the economy in this country has got better. We have recovered. Who would have thought we would reach a position in which 2 million new jobs could be created? Perhaps the decision on the European Union has been such a great shock because we have once again got used to a form of stability.

I am not—not least because the point has just been made for me—but I am well aware of that fact, and it is one of the reasons that I am feeling positive. My point is that, at the time, people feel terrible but history judges that things might not have been quite as bad as they feared. I certainly take my hon. Friend’s point.

The bankruptcy of Lehman Brothers certainly brought out the worst emotions in people, as well as some of the better ones. I can recall three stages of behaviour. There were those who lost their heads, those who wielded the knife and those who put their heads down and tried to work through the chaos.

I did indeed. I worked in Her Majesty’s Treasury for the then Government, who are now the Opposition.

I can assure the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) that I arrived here to help after the events in question. My hon. Friend the Member for Beckenham (Bob Stewart) mentioned the fact that the markets have bounced back, and it is good that they have done so, but we should all be aware that they will be volatile and they will fluctuate. They will go up and down, but what matters is the long-term momentum in our economy and particularly our ability to attract ongoing inward investment. Our minds must soon turn to how we can ensure that that tap has not been turned off, either through infrastructure investment or through fiscal measures to encourage investment into our country.

My hon. Friend has great experience in these matters and I agree with everything he has just said. I shall now press on because I am conscious of the time.

I was talking about the three emotional states that I came across during the events of 2008, and the best of those was demonstrated by those who put their heads down and tried to work through the chaos. Being a believer in such action, I stayed on with the Lehman Brothers estate for seven years to manage the team of lawyers that was dealing with the claims, worth tens of billions, that were made against the estate as well as those that the estate made against other trading entities. For 18 months, I led a team dealing with a multibillion-pound case against a large international bank that had locked up our custodial assets to use against its own claim. Rather than litigate across the globe, we negotiated with the bank and ended up settling to both parties’ satisfaction, drawing up a new trading agreement to continue future business. I hope that that is a metaphor for what can be achieved with our European partners. As a result of that success, Lehman Brothers claimants, who originally feared getting only 10p in the £1, will end up with nearer £1.50. It became such a sound and safe investment that we struggled to get claimants to take their money out because they wanted interest to continue to accrue.

I use that example because, at the time, the situation looked hopeless to staff and financial stakeholders alike, and I recognise that that is how much of our population sees the UK’s plight following the referendum. I hope that, over time and with the right team in place, a better outcome can be delivered for the UK. Only time will tell whether our economy will be stronger outside the European Union than inside, but what is in our hands is putting in place an experienced civil service team with the qualities to deliver for the UK and then giving them the time and space to come up with a strategy and allowing them to implement it. While we have discussed many of the trading principles that we would like to see in place, I urge the House to think more soberly about the type of people that we have to fight for them. From experience, I would say that that is as important as the cause itself.

That approach, with sufficient transparency in the process, is what will give the population the reassurance that they so badly need at this uncertain time. I look forward to calls from across the House saying that the House should work together and add all its experience and support to the process, so that we can support all the people in this country.

I wish that we did not need to have this debate, because I wish that the majority had voted to stay within the European Union, but we are where we are. In the spirit of openness and transparency, it may be useful to set out that I well understand that the way in which I and my hon. Friends understand the problem and how we frame it is different from the way that people in other parts of the Chamber see it. In my view, the sovereign people whom I respect and on whose behalf I must act are the people of Scotland. I believe in a great continental principle of popular sovereignty. I do not believe in the principle of parliamentary sovereignty. That is why I am particularly concerned that my colleagues and I reflect on what is in the interests of Scotland at this time.

The hon. Member for Thirsk and Malton (Kevin Hollinrake) who is leaving—[Interruption.] He was leaving until I mentioned him. He made some of the best points in this debate thus far about the lack of a plan. Even Baldrick had a plan.

A cunning plan at that. However, it would seem that the leave side had no plan and that the Government were unfortunately unprepared for this eventuality. The Prime Minister indicated at Prime Minister’s questions that we are having to spend the next few months modelling the alternatives without specifying what different scenarios were being planned for. Whatever the scenario, we must get some clarity about what we are going to say about Scotland’s place within the European Union. The Government cannot assume that we will meekly follow and be dragged out of the European Union against the will of the Scottish people. It is not our job to be dragged along; it is our job to represent the interests of Scotland and the Scottish people, and that we will do to the best of our ability.

At Prime Minister’s questions before the vote, I raised the case of Thomas and Elke Westen, originally from Germany, who lived in my constituency. Thomas runs a small business in the service sector. Elke is a distinguished artist in glass. They came to Scotland some years ago, bought an old home and refurbished it beautifully, created jobs in the community, and contributed to the community in lots of voluntary ways. Days before the vote, they decided that they could not stand the way in which they were being portrayed as immigrants and that they would leave the country for the period of the vote. They said that if the vote was to leave, they would want to leave Scotland permanently. They are in France at the moment. I am still in contact with them, and I am trying to persuade them to come back. I am aware that they are not the only people who feel that they have been hurt tremendously by the nature of the debate and let down by the Government. It is all very well for the Government now to say that they are welcome here when they denied them the vote in this referendum. Part of the problem we have in reassuring people is the way they have been treated up to now both by the Government and by those advocating a leave vote.

Elke and Thomas were small business people. There has been lots of discussion today about large businesses.

My hon. Friend makes an excellent point about the impact on EU nationals. May I remind him that it was not just vote leave campaigners who denied the vote to EU nationals and 16 and 17 year olds, but the Government who were backing remain?

I was there in Committee when we debated votes at 16 and foreign nationals. I made the point on foreign nationals, and it is a fact that if they had been allowed the vote, which is not the case in general elections, they could have swung the result. Even though I regret the result, we cannot underestimate how inflammatory that would have been, especially as we were not using the franchise from a general election.

That is a rather sad argument to make. We allowed EU nationals a vote in the Scottish referendum. Thomas and Elke Westen are as much Scots as I am and they have as much right to express their feelings about the country in which they have chosen to live. It is similar to the case of my older brother and sister who had to emigrate because they could not get the opportunities to work in their own land, which has been a big problem for Scotland. The countries in which they have gone to live have welcomed them and allowed them the vote. Excluding these people helped to introduce an element of xenophobia into the way in which the referendum has been conducted. I have great regard for the hon. Gentleman, but on that particular point, I am afraid that I completely disagree with him.

There are problems for our small and medium-sized enterprises. In my own constituency—I would be interested to hear whether this is shared elsewhere—two types of SMEs have been talking to me. The first group includes those SMEs that export, and their concerns are primarily about access to markets. Earlier, the argument was made that it was good that a falling pound would allow exports to be a little more competitive. In all honesty, I have not heard a single business person making that claim. What I have heard is that the problem will be in assuring exporters that they have access to markets. Without access to markets, the exchange rate is rather immaterial.

The second type of SMEs has included not exporters but importers. They are particularly concerned about what is happening with the currency level, and what the cost will be of bringing in the types of continental products that we have been so used to benefiting from over the past 20 or 30 years. There are different perspectives on the problem in SMEs that reflect real concerns that we will have to manage in this new situation. The Government will not be able to wait two years until an exit takes place to deal with this matter. They will have to think urgently about the kind of initiative that can be brought in to assist those SMEs that are living in a period of great uncertainty. When they have a period of great uncertainty, what effect will it have on their decision-making? They will not be going to the banks and borrowing for investment at a time when they are uncertain about how they are going to construct their future. My fear is that over time that uncertainty will lead to less and less investment, not merely by the large corporations, but by many of the small businesses at the heart of our communities.

Another issue of concern is research funding and academia in society. Many people have said, “Don’t worry. The contracts that have already been struck will not be ended,” so our great universities are safe in that regard. However, the universities’ fundamental concern is for the future of European collaboration in research. How will that happen if we have exited the EU? Will British academics have the same access to other academics and to future research projects? That is highly unlikely unless we regain our place in the European Union. What of those students in Scotland and elsewhere who have benefited from travel to continental Europe and those who benefit from the great universities of France, Germany, Italy and elsewhere? What are their prospects? Future generations will be denied the opportunities that others have had over the past 30 years. That can only be a tragedy for our society.

It is a pleasure to follow my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin). It is always a fantastic honour to listen to the eloquence of one of my oldest friends in politics.

We have a responsibility to act in a way that does not talk down the economy, and collectively to support measures to create financial stability leading to sustainable economic growth. I commend the Bank of England for seeking to reassure the financial markets that it will, among other things, take the necessary measures to sustain liquidity. However, when the Prime Minister says in this House, as he did on Monday, that there has been an “adjustment” in the financial markets, his comments fly in the face of reality.

Over the past week, the pound has fallen by more than 10% against the US dollar. The FTSE 250, which is more representative of the UK economy than the FTSE 100, is down by 12% in a week. When we look behind these indices, we see the severity of the declines in a number of economically sensitive sectors. Look at the banks: RBS is down by 28%; Barclays is down by 27%; and Lloyds is down by 22% over the past week. The house builder Barratt Developments is down by 32% over the past week.

Those astonishing falls clearly represent a crisis of investor confidence in our economy and indicate that investors anticipate a significant shift on growth in the UK economy. Indeed, I note this afternoon that consensus expectations for GDP growth in the UK next year have fallen from 2.1% to 0.4%. This is no “adjustment”, as the Prime Minister called it; it is a significant shift in investor perception of UK plc, and it is driven by a failure of leadership by the Prime Minister and his Government.

Let us make no mistake: this is a crisis made in Westminster by Westminster, and it needs our full attention if we are to respond appropriately to the challenges we face. The challenge is brought home to us when we see that Moody’s has today changed its outlook on 12 UK banks and building societies, and downgraded its outlook on 52 UK sub-sovereigns from stable to negative.

The Chancellor talked of an emergency budget and additional austerity measures as a result of Brexit. It is the Government’s responsibility to deliver financial stability, not to kick the legs from under that stability and threaten the jobs and livelihoods of our citizens, but that is precisely what this Government have done. These are no abstract matters—[Interruption.] It might be better if the Front-Bench team paid some attention rather than talking to each other, because we are discussing the livelihoods of people in this country and it would be respectful to the House if Front Benchers listened to the debate.

The fall in the financial markets affects the pension funds of everyone investing in this country. The stock market adjusts to future expectations of profits and dividend growth, and that is what should concern us. Goldman Sachs has downgraded UK banks and cut its profit forecast for the sector by a whopping €10 billion. Just think about that—a Tory row over Europe leads to banking profits in the UK being decimated. Have the Prime Minister and his Government no shame about what they have caused? It is, as someone might say, another fine mess they have got us into.

When the Government come to this House and call for support to change the future payout to pensioners of the British Steel pension scheme, it is, in part, through a consideration of future prospects for asset growth in that pension scheme. Thousands of British Steel workers and pensioners face a very real threat to the value of their pensions, and the events of the last few days can only exacerbate it. The threat to the British Steel pension scheme is newsworthy and current.

As the consultation response from the Institute and Faculty of Actuaries suggests, there is a much wider threat to pension schemes, but this self-induced run on the markets has made that threat greater. We need to put it in the context of the economic circumstances that we face. The fallout from the financial crisis of 2007-08 is still with us. We are burdened with eye-watering levels of debt. Wages have barely risen in real terms since the financial crisis. Productivity has flatlined and prospects for economic growth had already been cut before we ran into the backwash of the referendum. What was required was a focus on driving investment into our economy through innovation and by driving up productivity growth, as a result delivering higher living standards.

The UK Government have engineered, at the very least, an economic setback of their own making. Why? A fallout over Europe within the Tory party has caused domestic and foreign investors to take fright, and not just at prospects for growth and stability in the UK because this will have a knock-on effect on our neighbours in Europe and elsewhere. The Chancellor has talked about further austerity, so yet again the poorest and weakest in our society will be asked to pay the price for a lack of leadership from the UK Tory Government.

When we look back over the last few years, we see rising inequality, which has been driven by the Government’s fiscal and monetary policy decisions. There has been a lack of appropriate measures to deliver sustainable economic growth, with too narrow a focus on quantitative easing, rather than considering measures that could have led to better outcomes. Where is the Government analysis of the quantitative easing programme? As of today, £375 billion has been invested in an asset purchase scheme. Where are the additional measures to stimulate growth and investment?

We know that the Government and those on the Brexit side had no plan for a leave vote. The Chancellor went into hiding. Well, let us hear it now. The financial markets have given their judgment on the referendum decision. Where is the Government’s response, beyond the Prime Minister calling the market declines an “adjustment”? We need to build confidence and stability, so where is the Government plan to do that? Let the country hear it. I will happily give way to any of the Government Front-Bench team if they want to intervene. So far, we have heard absolutely nothing that would deliver confidence to the financial markets.

We know that there is no plan. The Prime Minister and the Chancellor are like a pair of rabbits caught in the headlights, transfixed and clueless. The Prime Minister was sent packing from the meeting of the Council of Ministers—he is yesterday’s man in Europe and yesterday’s man at home. The Prime Minister has got us into this mess, but he has no plan to get us out. Someone else is going to have to pick up the pieces and deal with the economic uncertainty. Thank goodness that we in Scotland have Nicola Sturgeon and the Scottish Government, who are showing effective leadership. We are optimistic for our country. At the 2015 general election campaign, and in every Budget since, the SNP has set out a credible alternative to austerity that would see us invest in public services and kick-start growth throughout the UK.

People in this country and elsewhere have reflected on the leadership that Nicola Sturgeon has shown over the last few days. We need the European Union to recognise the voice of Scotland and the fact that Scotland voted to remain in the European Union. Scotland is an internationalist country that is open for business. The vote in the Scottish Parliament yesterday showed a unity of purpose, giving the Scottish Government a mandate to negotiate with the European Union to protect the interests of the Scottish people and to make sure we retain access to the single market, which is so important to the security of jobs, investment and growth.

Let me say to the people of Scotland and to those in this Chamber that Scotland in Europe will be a beacon of hope, bringing jobs and investment to this country. People in London who are concerned about operating in financial services can come to Scotland—to a country that sees itself as part of a European destiny, that will be very much focused on jobs and growth, and that will deliver for the people of Scotland.

Given all the hon. Gentleman’s passion for staying in Europe, and for all of us in the Union working with each other and with Ireland, does he agree that we need to find a way of establishing how Scotland fits into the Union and how all the parts of the United Kingdom can work together so that we can move forward?

Of course, those of us on the Opposition Benches will work to ensure that we can rescue something out of the carnage of the vote that took place throughout the UK.

The people of Scotland and Northern Ireland voted to remain in the European Union. Of course we want to do our best for all the people of the UK, but our primary responsibility is to protect the people of Scotland. That is why we need to extend the hand of friendship to the people of the European Union and to say to them, “Please stand by us. We have stood by you.” Let us make sure that Scotland remains in the European Union so that we can deliver hope, prosperity and jobs for our people.

May I, too, thank the Labour party for giving us the opportunity to debate this matter? The European referendum result has been debated by the European Parliament, the Welsh Assembly and the Scottish Parliament, so it was high time we had the opportunity to do so, notwithstanding the time the Prime Minister has given us in his statement. As always, it is a privilege to follow my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford), as well as my hon. Friend—and neighbour—the Member for Kirkcaldy and Cowdenbeath (Roger Mullin).

The decision that has been made will have a huge impact on Scotland. My hon. Friend the Member for Kirkcaldy and Cowdenbeath mentioned research. In my constituency, I have the University of St Andrews, which has argued that for every £1 of Scottish Funding Council grant it receives, it returns £12 pounds to our economy. To turn that on its head, for every £1 that St Andrews loses, Scotland will lose £12. That has a significant impact on the economy locally.

I speak from personal experience, as somebody who benefited from the right to live and work in the European Union, and as somebody who benefited from Erasmus. I know the opportunities that that gave me and the opportunities that young people are now missing out on, and I wonder whether the Government will reflect on the training and educational opportunities that will be lost to not only individuals but the broader economy.

It is worth remembering, on a question of democracy, that Scotland voted overwhelmingly to remain part of the European Union. If we take the electoral regions throughout the United Kingdom, we find that the highest proportion for any side—remain or leave—was the 62% gained in Scotland, with every single local authority area voting remain, including the two that voted not to join back in 1975. That was a phenomenal mark of support for European Union membership, and one that it would be ill-advised to ignore.

On the point about democracy—I made this point to the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) earlier, but it is important—this place will gain powers and responsibilities, and it will have more say over the day-to-day lives of our citizens. So why—I would be delighted if anybody can tell me this—do we maintain the unelected affront to democracy that is the House of Lords when Vote Leave argues on a point of democracy? It is a disgrace.

Given the issue of stability, which is so important for the economy, and the huge uncertainty around Scotland remaining part of the United Kingdom, I am delighted that over the past few days the Scottish Government have shown a huge amount of leadership. I pay tribute to the Scottish Government, who, it would appear, represent the only functioning party of Government left in the United Kingdom. The vacuum that has been left by the Conservative party and the Labour party, which is reflected in this Chamber right now, is doing no credit to this place whatsoever. What is more, just as the people of Scotland are being well served by the Scottish Government, the people of England are being ill served by their two biggest parties. The people of England—who have made their decision, and we respect that—deserve much more than they are receiving at the moment.

Let me say more broadly—my hon. Friend the Member for Kirkcaldy and Cowdenbeath has worked very hard on this—that we have a rich heritage of European citizens who have made their lives and their homes in the United Kingdom. European citizens have made, and continue to make, a huge contribution in my constituency. They enrich our economy, and they enrich our society more broadly as well. I wish that more leading politicians had said what the First Minister of Scotland said:

“I want to take the opportunity this morning”—

the morning after the referendum—

“to speak directly to citizens of other European countries living in Scotland—you remain welcome here, Scotland is your home and your contribution is valued.”

We all need to repeat that over the coming weeks and months.

As other hon. Members have said, there is no impediment against this Government—indeed, this House—making a positive statement about the rights of those EU citizens, whom we value and who make an unbelievable contribution to our communities. That can and should be done. We need to press all those seeking the Tory leadership on this. If they all unite on it before going through the rigmarole of electing a new leader, we can end this uncertainty, which must be unbearable for these people.

My hon. Friend, as usual, makes an excellent point. We should have some commonality of purpose, and a few more people should repeat that, because of the richness that these people bring to our society—the Scots Germans, the Scots Irish, who would include my family many, many years ago—[Interruption.] And the Scots Australians as well. We are a richer country for it. If the leadership contenders, in no matter which part of the House, could make that commitment, it would be valuable to these people, and to us.

Things have changed, and changed utterly. Over the past few days in Scotland, a number of people who voted no in the independence referendum are coming round to the idea of independence—or certainly coming round to the idea of working together to maintain Scotland’s place in the European Union. I give credit to members of the Labour party, the Liberal Democrats and the Green party who are working with the SNP in the Scottish Parliament to maintain Scotland’s place in the European Union. It is interesting that the Scottish Liberal Democrats have now been reported as urging their party to support independence and drop their opposition to it. Henry McLeish, the former Labour First Minister, has said that he is “very, very attracted” to independence and it is a “game changer”.

Outwith domestic politics, internationally and from a European perspective, we are seeing welcome support from people such as Guy Verhofstadt, the former Belgian Prime Minister, who has said:

“it’s wrong that Scotland might be taken out of the EU”

against its will. Manfred Weber, the leader of the European People’s party, has said:

“Europe is open to new member states…Those who want to stay”—

and we are staying—

“are welcome”.

I pay credit to Micheál Martin, who thinks that, as an issue of fairness,

“Ireland ought to be”


“friend and demand fair play”.

I welcome all those comments from our European friends and allies.

Historically, and as a matter of fact, Scotland may be on the geographical periphery of Europe, but we sit at Europe’s heart politically, and that is where we want to stay and will stay.

It is a pleasure to be debating with the Chief Secretary to the Treasury in the first of what I hope will be many such debates. I thank the Chancellor, who is no longer in the Chamber, for his kind words.

There have been some fantastic speeches in this debate, and I want to run through some of the main issues that have been raised. The hon. Member for Dundee East (Stewart Hosie) highlighted concerns about the leave campaign’s lack of a plan. The hon. Member for South Suffolk (James Cartlidge) stated that, sadly, some of the remain campaign’s predictions were coming true. I welcome the fact that he echoed the sentiments about a cross-party approach. He said that this is bigger than any leader, and it certainly is.

My right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), whose comments I welcome, stated that he wanted to put decency back into democracy. The hon. Member for Thirsk and Malton (Kevin Hollinrake) feared for the international house of cards that Britain’s exit could cause to collapse. My hon. Friend the Member for Ilford North (Wes Streeting), who made a fantastic speech, echoed the risks that jobs would be moved, that communities in deprived areas would struggle to obtain investment, and that “Project Fear” would prove to be “Project Fact”. The hon. Member for Bexhill and Battle (Huw Merriman) said:

“We are where we are and…we…have to lead from the front”.

I could not agree more.

The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) told us the terrible and harrowing story of his constituents who have left to go to France following the result of the European referendum—we hope that we can coax them back again—and he highlighted the problems faced by SMEs in trade. The hon. Member for Ross, Skye and Lochaber (Ian Blackford) made a very passionate speech. He stated that we should not kick the legs from under stability and highlighted the fact that falling markets affect the pensions of everyone. Finally, the hon. Member for North East Fife (Stephen Gethins) echoed the comments about how people from the EU have enriched his local economy. He wanted to state that their contribution was valued, a sentiment that is certainly shared by Members on both sides of the House.

As my hon. Friend the shadow Chancellor outlined in opening the debate, the decision to leave the EU poses considerable risks to the UK economy. The financial markets are in turmoil, sterling remains volatile, the UK’s triple A credit rating has been lost, and employers in some sectors have already started to discuss moving jobs out of Britain. This is very worrying, but we can turn it around. To do so, we need political and economic stability. We now need all parties to put their political interests aside and work together in the interest of their nation’s economy. I have enjoyed the tone of today’s debate, which has been broadly in agreement with that sentiment.

I thank the hon. Lady for her comments. Will she join me in welcoming the fact that the Labour party, the Liberal Democrats and the Green party in Scotland have given the Scottish Government a mandate to negotiate with the European Union about Scotland’s continued membership of the EU, given the overwhelming vote?

I think that is really an issue for the Scottish Government. I am sure it will be the subject of many debates in the coming weeks, and I hope we will debate it further in this House.

On where we are now, I do not share the Chancellor’s assurances that our economy is now shockproof. He did not fix the roof while the sun was shining—quite the opposite: he sold it off. The growth we have heard about is largely built on a swelling bubble of household borrowing and an increase in poorly paid, insecure jobs. I was pleased to hear that his emergency Budget has been shelved for the time being. However, there remains a high probability that austerity measures will be introduced later in the year, imposed by a new Conservative Prime Minister who could be even more ideologically to the right than his or her predecessor. Such an approach, based on cuts and under-investment, has taken hold despite the fact that economists the world over agree that it is economic nonsense to cut Government spending when the economy may be heading towards recession. The most vulnerable will suffer, and our communities will snap under the strain of further public sector cuts. Quite frankly, people cannot take any more.

It is not hard to understand some of the reasons why vast swathes of people in this country voted so passionately in last week’s referendum—it is no wonder that people were angry with the political elite when their financial situations have worsened rather than improved. On doorsteps in my constituency, which has suffered from decades of industrial decline, I could feel the anger from those who have been left behind. They were right to be angry—angry that our hospitals and schools are in a state of crisis and starved of funding; angry that many people cannot get a home; and angry that our public services are being cut so that the safety net on which they rely is eroded. People rightly wanted something or someone to blame for that, but sadly that was confused in the rhetoric of some of the referendum campaigns. A hornets nest was stirred up with scaremongering about migration, rather than a debate on the core issue of why our economy was not working and how the EU affected that.

We must ensure that migrants living in Britain know that they are welcome, especially in the light of the racist attacks and abuse that have been reported since the referendum. I wholeheartedly echo the Chancellor’s comments that such behaviour is not British—that is not what makes Britain the great nation it is. Such disillusionment with the political establishment took root long before the EU referendum, and 1979—the year I was born—heralded the biggest change in economic thought that the country has ever seen. British manufacturing, and the secure well-paid jobs that came with it, was the envy of the world, but it had its heart and soul ripped out. In many cases manufacturing was moved overseas to cheaper labour markets, and the jobs lost were never really replaced. Communities around the country were destroyed, leaving future generations to pick up the pieces.

Following such decline there has been a failure to restructure our economy, to develop an industrial strategy to support key industries, and to make our country great. However, we are where we are, and whether people voted leave or remain, it falls on us in this House to build a country of which the British people can be proud and in which they feel safe. We need a plan to rebalance our economy and support our key industries—a proper industrial strategy to provide the secure jobs that we so desperately need, and Government investment in our economy so we can become the innovators of the world, with priority investment in those communities that have been economically neglected for years.

All Members of the House must fight for and support our economy and the people in it. The economic outlook for the UK is uncertain, and we are facing turbulent political times. As my hon. Friend the shadow Chancellor emphasised earlier, there are strengths in our economy, but we must nurture and support them at this vital time. If we do not, the future looks bleak. Labour is willing to work across the House to ensure that the people of this country are protected from whatever is to come, and we are committed to delivering an economic agenda that promotes Britain and British industry. Let us be the envy of the world once again.

I thank the Opposition for tabling this motion and giving the House the opportunity to reflect on the momentous events of the past week. I also congratulate the hon. Member for Salford and Eccles (Rebecca Long Bailey) on her meteoric promotion to the shadow Cabinet. My right hon. Friend the Chancellor has already congratulated her, but I thought it worth repeating in case there have been any further changes in the past three hours. In all seriousness, I welcome her to her role, and I wish her good fortune in what could be a difficult time in the Labour party.

It is two weeks to the day since we last gathered in the Chamber to debate whether it was in our best interest to stay in the EU, or whether to plot our own course ahead—indeed, I had the last word for the Government in that debate, but we have seen what can happen in two weeks. I said that although I believed the EU needed reform we were better off in. Many hon. Members on both sides of the House spoke in support of that view, just as others—again, on both sides of the House—put the case to leave. That is the mark of a good democracy. With such a big decision about our future, it was right that the ultimate choice was for the people who make this country what it is. In the past few months and years, this has not been a question confined to the halls of Westminster. It is one that has been debated in homes and streets, on the way to school and on the way to work.

Last Thursday, we braved a typical British summer in large numbers to each have our own say on the question. That is the mark of a healthy democracy. Now we have made the collective choice to leave the European Union, countries around the world will see at least that Britain has a Government who listen to the direction its people set and plot their course accordingly. I am sure my hon. Friends will agree that that is the mark of a true democracy.

On the mark of a true democracy—I made this point earlier—does the Minister agree that we should have a timetable to scrap the House of Lords, given the vote about democracy?

This may come as news to the hon. Gentleman—he was not here in the previous Parliament, although some of his SNP colleagues were—but we had a very extensive set of debates, including a number of votes, on the future of the House of Lords. I do not think that, at this time of great interest in the nation’s constitutional affairs, another debate about the future of the House of Lords would be sensible.

We heard some very good speeches, including from my hon. Friend the Member for South Suffolk (James Cartlidge). I agree with him that it is no use going back to what might have happened. We need to move forward in reasserting our strengths as a nation and as an economy. I could not agree with him more that we need to continue with a fiscally prudent regime and build a surplus before the end of this Parliament.

Is the Minister therefore saying that the Treasury is still committed to running a budget surplus in 2019, come what may?

The fiscal rules provide for action in the event of particular eventualities. I do not see a need to revise the rules at the moment. We move forward from here. The most important thing is for all of us to unite in moving forward and to make the best possible case for our renegotiation in the European Union.

We heard from the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), who is a predecessor of mine in this role. I totally agree with him about being loud and clear on the rights of existing EU nationals in this country. I can tell him that my own wife, Frau Hands, would very much agree with him as well.

I am going to talk a little more about the debate.

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) made a very powerful speech, referring to his very strong business background. Like me, he strongly supported the remain campaign. He made strong points about business and the importance of making sure we secure business and trade in our new arrangements.

The hon. Member for Ilford North (Wes Streeting) said he is one of the youngest Members of this House and that he had not been alive when the country had been outside the European Union, which is food for thought. All the years he has been alive, the country has been in the European Union. He was right to say that if an economy goes wrong, it is very likely to be the poor who suffer most. That would also apply in London, which we both represent. He issued a warning to the skeleton Front Bench of his own party. It is not appropriate for me to reflect too much on that, but I am sure his points landed with those he wished to make them to.

My hon. Friend the Member for Bexhill and Battle (Huw Merriman) made a strong contribution. He made an interesting observation at the beginning of it, when he said he hosted debates with high-quality speakers in his constituency and came away thinking that they did not seem to sway voters either way. He also said that the economy will bounce back if we act with resolve, which was an important point.

We then heard three speeches from Scottish National party Members—the hon. Members for Kirkcaldy and Cowdenbeath (Roger Mullin), for Ross, Skye and Lochaber (Ian Blackford) and for North East Fife (Stephen Gethins)—and I have taken a couple of interventions from them. They made impassioned speeches and some pretty familiar points.

No, I will carry on.

The result may not have been what some of us wanted, hoped for or even expected, but that does not mean that the Government were unprepared for it. In the past six years, we have been working hard to bring our economy back from the brink and get our public finances back under control. We said we needed to fix the roof for any economic storms ahead, and that is what we have done. We have brought down the deficit, and we have steady growth, record employment and a resilient financial system, which we spent the past six years strengthening.

We have done the analysis on what leaving the EU might mean, and considered the potential impacts on our economy in both the short and the long term. There was general consensus in the House a fortnight ago on the risks we might face, so hon. Members recognise that it will not be plain sailing and that there are challenges ahead, but thanks to the measures we have taken over the past six years our economy is as well prepared as it could be to face whatever comes our way.

We anticipated that there would be an immediate impact on the value of our currency and the stability of the financial markets. The Treasury, the Bank of England and the Financial Conduct Authority have extensive contingency plans in place and we are watching the markets closely. Although we have seen volatility, the markets nevertheless continue to function effectively.

The Prudential Regulation Authority has worked closely with major financial institutions to prepare extensively for the consequences of a vote to leave. The Bank of England stress tests show that UK banks have enough capital and liquidity reserves to withstand a scenario more severe than the country currently faces. Thanks to our work to strengthen our financial stability, banks in the UK have raised more than £130 billion of additional capital in the past six years, and have more than £600 billion in liquid assets to ensure that they can keep lending to UK businesses and households during challenging times. The Bank of England can provide more than £250 billion of additional funds to support the banks and the smooth functioning of the markets. It can also provide liquidity in foreign currency if required. The authorities have all the necessary tools in place to protect financial stability. They are monitoring developments closely and will not hesitate to take further measures as required.

As we embark upon the renegotiation of our relationship with the EU, I reiterate the reassurances of the Prime Minister that the result does not mean that everything changes overnight. For British subjects living in the EU and EU citizens living in this country, there will be no immediate changes. People can still travel across the EU, businesses can trade as they did and our services can be sold as before.

The Prime Minister has been clear that there will be no immediate triggering of article 50, the procedure by which a member state can leave the EU. That gives us time to plan the new arrangements we are seeking with our European friends and neighbours. It also gives the Prime Minister’s successor the opportunity to make any adjustments to economic policy and our public spending, informed by an assessment of our economic situation from the independent Office for Budget Responsibility this autumn. In the meantime, we will continue to work hard to maintain the fiscal stability we have always worked so hard to deliver. A new unit will be set up in Whitehall bringing together experts from across the civil service, and in answer to the right hon. Member for Birmingham, Hodge Hill I can say that it will extend right across Whitehall, including all Departments likely to be affected, and that it will be given the resources it needs.

Yes, it will include the Home Office, and it will advise on the many options we face as we determine our future relationship with the EU. As Chief Secretary to the Treasury, I expect to play my own part in that task over the coming months.

Does the Minister agree that the unit needs to consider how we hold the Union together and build the relationships between Scotland, England, Wales and Northern Ireland, given the direction in which Scotland seems to want to move and the need to maintain our relationship and trade with Ireland?

I thank the hon. Gentleman for his intervention. Of course, we have to keep on board all the devolved Administrations and make sure we get the right deal for all the nations of this country and, indeed, for Gibraltar. I know that different parts of the UK voted different ways—my constituency voted 70% to remain—but we must come together and ask for, and get, the best possible deal for the UK as a whole in the negotiations. That is absolutely the key point. This is not a time for division between our nations and communities.

Now is also the time to heal divisions in the country and in our communities. I was one of the first to condemn the disgraceful attack this weekend on the Polski Osrodek Spoleczno-Kulturalny—POSK—which is in what used to be my constituency in Hammersmith. I was delighted that—people have commented on this—perhaps for the first time in 20 years the hon. Member for Hammersmith (Andy Slaughter) and I have found something to agree on. We were retweeting each other in condemnation of the attack. It was an absolutely disgraceful attack on the Polish community in particular and on EU nationals and foreigners in general.

There was some irony there. I am not sure that the people responsible had any sense of what POSK did. POSK was set up in the 1960s. It had nothing to do with EU freedom of movement and labour or our joining the EU in 1973—even if it did, of course, the attack would still not have been correct. POSK was founded back in the 1960s, as a focal centre for the local Polish community, many of whom fought shoulder to shoulder with British servicemen in the second world war, fighting for our values and protecting our way of life. Never has the word “solidarity” felt more appropriate in how we reach out to the Polish community and other EU communities in this country. Sadly, that attack was not the only incident of xenophobia across the country, but every right-thinking person, on both sides of the House and the referendum debate will see them for what they are: ignorant and unwelcome displays of hatred, which have no part to play in the future of this country.

Both professionally, as the representative of a constituency where about 17% of local people are EU nationals and which benefits from their contribution, and personally, as the husband of a German wife and father of half-German children—they were in tears on Friday morning after hearing the referendum result—I want to send the message loud and clear from this Chamber that our fellow Europeans are still welcome in the UK, as are those from beyond the continent.

I had an Italian constituent in tears on Saturday—she had been here for 30 years and had raised her family here—asking whether we were going to deport her and her children. We need to get a grip and the Government need to get a plan.

The Government have been loud and clear in condemning these events, and a statement was made earlier on what the Government are doing in response. A vote to leave the EU is not a vote for hatred and intolerance; it is not a vote to turn our backs on our European friends; and it is not a vote to pull up the drawbridge and turn away from the world. At the same time as we find the best way forward for this country, we must uphold the very best values.

This debate has moved on from a fortnight ago. It is no longer a question of whether we should leave the EU, but how. We have got our decision; now is the time for all of us to roll up our sleeves, get on with the job and keep building the best future for this country. I have every confidence that this is precisely what our hard-working people will do; it is precisely what our businesses will do; and it is precisely what this Government will do. Investors across the world will see that our economy is fundamentally strong and that we are still very much open for business. In government, we will continue to build on those foundations to seek the best opportunities for people across the UK. That has always been our aim, and it will remain our aim as we plan the way ahead.

Question put and agreed to.


That this House recognises the risks posed to the UK economy following the decision to leave the European Union; notes with concern the loss of the UK’s triple A credit rating, the potential output cut, potential job losses, risks to investment and the volatility in the equity and currency markets; and calls on the Government to bring forward measures to protect jobs and support businesses in the nations and regions in relation to the short, medium and long-term potential consequences of the referendum decision, and to address the current threats to community cohesion.