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House of Commons Hansard
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Oral Answers to Questions
01 February 2018
Volume 635

Exiting the European Union

The Secretary of State was asked—

Regulatory Equivalence

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1. If he will make an assessment of the potential merits of seeking regulatory equivalence with the EU. [903661]

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18. What comparative assessment he has made of the potential merits of regulatory (a) alignment with and (b) divergence from the EU. [903684]

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We are fully focused on making the UK’s exit from the EU and our new trading relationship with the world a success. We have set out proposals for an ambitious future relationship with the EU that minimises regulatory barriers for goods and services. Our partnership should be underpinned by high standards, a practical approach to regulation, trust in one another’s institutions and a shared spirit of co-operation.

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Does my hon. Friend agree that regulatory equivalence, as opposed to regulatory alignment, should be a red line in our negotiations with the EU if we want to do trade deals with other countries around the world?

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Regulatory equivalence is about pursuing the same objectives, and as the Prime Minister outlined in her Florence speech, that could mean achieving the same goals by the same means or achieving the same goals by different means. It does not mean that we have to harmonise our rules with those of the EU. It is not a binary choice; we are proposing a bespoke, bold and ambitious free trade agreement between the UK and the EU, and we want to secure trade with Europe and with the wider world.

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By more than 2:1, members of the Institute of Directors would prefer the UK to maintain regulatory alignment with the single market rules for goods and services, rather than actively seeking to diverge after Brexit. Is that the Government’s aim as well?

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The Government have been talking to a wide range of industry groups and representative bodies of business, and we recognise that there are benefits in some areas of maintaining regulatory alignment and ensuring that we have the most frictionless access to European markets. Of course we are entering the negotiations on the future partnership, and we want to take the best opportunities to trade with Europe and the wider world.

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Is it true that Michel Barnier has basically offered us the Canada model, agreement on which could be reached this year, thus negating the need for any transition period?

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The Government’s policy is that we are pursuing a bespoke trade agreement, not an off-the-shelf model. We believe that it will be in the interests of both sides in this negotiation to secure an implementation period.

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The European Union has clearly and firmly set out its views on the options for these negotiations. Ministers so far have signally failed to provide any coherent response because they cannot agree among one another, and the Minister’s answers today underline that—whether the answer is regulatory equivalence or something different, we just do not know. How long will it be before the British Government have a coherent position to set out in these negotiations?

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The Prime Minister has repeatedly set out a coherent position with regard to the future partnership we seek with the European Union. There was the Florence speech. My Secretary of State has been making speeches and the Chancellor has been making speeches, clearly setting out the UK’s objectives for these negotiations, and we look forward to achieving those objectives in the months to come.

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The Minister will know that legal text has now been looked at in terms of the progress report in December and that the issue of regulatory alignment came up with that document. Can we be assured that nothing will be put into legal text that prejudices our interpretation—the Government’s interpretation—in relation to regulatory alignment?

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Absolutely; I can give that assurance. It is very important that we do secure the agreement based on the joint report and that that secures the position on the territorial integrity of the United Kingdom.

Customs Union

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2. What recent assessment he has made of the effect of the UK leaving the EU customs union on the economy. [903662]

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The Government conduct an extremely broad range of work on EU exit issues and will continue to do so, which means that all decisions, including those on the EU customs union, are supported by many analyses. Leaving the customs union liberates the UK to establish new and fruitful trade deals with the rest of the world, as well as pursuing a new trading relationship with the EU that retains as frictionless a trade as possible in goods.

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From that answer, it is clear that no assessment has been made. We have had it confirmed again this week that the north-east retail and manufacturing sector will be hardest hit in all scenarios. It is clear—is it not?—that nearly 200,000 workers in my region who work in these sectors are facing grim futures because of this Government’s inability to get their act together.

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One advantage—although there are many—of leaving the customs union is that Britain can be a champion for global free trade again for the first time in 40 years. Free trade through mutually beneficial partnerships has historically ushered in productivity, innovation, consumer choice, growth and prosperity—something I hope that the hon. Lady will encourage.

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I very warmly welcome my hon. Friend to her place. It is great to see a ray of sunshine, optimism and positivity from the Front Bench. What a shame that we do not see the same from the Opposition Benches. Is she surprised, as I am, that we are still discussing the customs union? The EU has ruled it out. The Prime Minister has ruled it out. The Leader of the Opposition—if not quite the shadow Secretary of State—has ruled it out. Why are we still talking about it?

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My hon. Friend raises a very prescient point. The British people voted to leave the EU in their historic decision in 2016. In doing so, they instructed this Parliament to take us out of the EU customs union. That is exactly what the Prime Minister and this Government are doing.

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Blaenau Gwent has just been boosted by the arrival of the car company, TVR. Does the Minister agree that we need a customs union with the European Union for such ventures to survive and thrive?

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The UK is the second largest market for cars in Europe, so it is clearly in both our interests to continue this partnership between our industries. Is it not encouraging that companies such as Jaguar Land Rover, Nissan, Toyota and McLaren have made significant investment decisions in the UK since the referendum? I am committed, with this Government, to ensuring as frictionless trade as possible, so that we can continue this fruitful arrangement and support this vital sector of our economy.

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It may be that the Minister is not aware that, in fact, car production went down for the first time since 2009 and that investment in the industry has also gone down by £500 million. When will the Government confirm exactly what their plans are in relation to the customs union, so that companies that manufacture here know that their components can get safely into the United Kingdom and not get stuck in a traffic jam at Calais?

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We are seeing a rise in manufacturing and in exports, and UK foreign direct investment is at a record high. The economy is doing very well, and there have been encouraging signs and votes of confidence in the UK economy since Brexit. As we enter the next phase of the negotiations, we want to ensure that the automotive sector benefits from any arrangement. That will be a priority for the Government.

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We now know—no thanks to the Government—that all the analysis that the Government have done to date shows that Brexit is bad news. We know that the Prime Minister was shown that analysis a few days ago, and we know that the first thing she did was to jump on a plane to China. Will the Minister confirm the accuracy of the reports yesterday that the Government’s analysis also shows that their obsession with cutting EU migration will be seriously bad for the British economy?

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We are in the middle of the negotiations, but when it comes to migration, it is clear that the UK will be committed to designing its own immigration policy, which is determined by skills, talent and brains. That is what will drive our economy forward, and that is what will create jobs and growth.

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My question was whether yesterday’s report was correct. I take it from the Minister’s attempt to dodge the question that that report, like the previous ones, was entirely accurate. Given that the Government’s own analysis shows that leaving the European Union is bad news, leaving the customs union is bad news and leaving the single market is bad news—and now that we know that cutting immigration from the European Union is bad news—do the Government have any plans, at any time before Brexit day, to adopt a strategy that is based on facts and evidence, rather than on blind ideology?

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The document to which the hon. Gentleman refers is not Government policy. It comes with significant caveats and is limited in nature. It is clear that there are significant benefits from our departure from the EU and the customs union. First, we have the chance to pursue our independent global trade policy and foster growing economic ties with fast-growing economies for the first time in 40 years. Secondly, we will be free from the common external tariff, which could lead to a drop in consumer prices for British citizens. Lastly, we have the golden opportunity to build a new customs arrangement with the EU that is world-leading and enables prosperity, jobs and growth.

Negotiation Outcomes

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3. What steps his Department is taking to plan for different outcomes in the negotiations on the UK leaving the EU. [903663]

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Across the Government, we are planning for all outcomes, including the unlikely scenario in which no mutually satisfactory agreement can be reached. Given the success that we have had in securing an agreement in the first phase of negotiations, we are confident that we will go on to reach a swift agreement on an implementation period and a mutually beneficial future partnership with the EU. We approach the negotiations anticipating success and a good deal for both the UK and the EU.

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Given DExEU’s propensity to rubbish the Government’s own research, will the Minister commission the independent Office for Budget Responsibility to model the budgetary and economic impacts of the four departure options—World Trade Organisation rules, a Canada-style deal, the Government’s free trade agreement proposal and joining the European Free Trade Association—and then release this modelling to Parliament?

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As my hon. Friend knows, the OBR’s responsibilities are set out in legislation, and we do not have any plans to change them. I am glad that she mentions EFTA. A number of colleagues have raised EFTA with me. It would be important to have a further debate on EFTA if she would like to table one, because I would like to hear from colleagues what problems they believe that EFTA would solve in relation to our relations with the European Union, given that Swiss bilaterals have been ruled out and we are looking for our own bilateral relationships. We do not propose to join the European Economic Area, which would be a bad deal for the UK.

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I know that the Secretary of State is an early riser, but did any of the other Ministers listen to the former Chancellor, George Osborne, on Radio 4 this morning? What are they going to say about what he says about the fact that this country, especially the manufacturing sector, is doomed outside the European Union?

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I do not accept the premise of the hon. Gentleman’s question. Unfortunately, I did not have the opportunity to listen to the former Chancellor on Radio 4 this morning. [Interruption.] The Secretary of State says that he did. I am grateful to the hon. Gentleman for reminding me fondly of the time that I did listen to the former Chancellor on Radio 4, before I went on after him at the height of the campaign.

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Does the Minister agree that it is important that we keep our skies as open as possible post Brexit? Can he provide any reassurance that he is engaging with the aviation sector to make sure that this industry can continue to thrive under any and all post-Brexit scenarios?

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I can give my hon. Friend that assurance. It is in all our mutual interests to ensure that aviation continues to be open and liberal. The Secretary of State for Transport is well apprised of the issues and is pursuing them.

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The Buzzfeed papers tell us that the regions most damaged by a no-deal Brexit would be the west midlands, Northern Ireland, and the north-east. The people of these regions deserve better. Will the Minister take the opportunity to make it clear to certain colleagues sitting behind him that they are wrong and irresponsible to be talking up or wishing for a no-deal outcome?

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To answer the hon. Lady very directly on her last point, as I said earlier, it is our policy to seek a mutually beneficial, deep and special partnership with the European Union, embracing an economic partnership, among other things, and we are optimistic about achieving that outcome.

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The Minister will not say it, but I will: they are wrong and they are irresponsible to be doing so.

As well as certain regions being hit hardest, certain sectors are threatened severely by a no-deal Brexit. For example, the food and drink industry exported £9.8 billion-worth of goods to the EU last year. Once and for all, will the Minister rule out a no-deal outcome, commit to a transition on current terms and give industry the certainty it needs?

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I find the hon. Lady’s question peculiar. She seems to be suggesting that I would adopt something other than Government policy. It is the Government’s policy to secure an implementation period on current terms; it is the Government’s policy to secure an economic partnership; and of course it is the Government’s policy to be responsible and prepare to exit the European Union under whatever circumstances may prove necessary.

Non-UK EU Nationals

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4. What steps he is taking to maintain the rights of non-UK EU nationals resident in the UK after the UK leaves the EU. [903664]

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As the Prime Minister made clear in her open letter to EU citizens, we highly value the contributions they make to the UK’s economic, social and cultural fabric. Safeguarding the rights of EU citizens living the UK and UK nationals living in the EU was a first priority for negotiations. This is a commitment we have delivered on. The agreement reached in December in the joint report gives those covered certainty not only about residency but healthcare, pensions and other benefits.

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The 2011 census stated that 20% of Kensington and Chelsea’s population were EU nationals. In Kensington, we have three schools for Spanish and for French students. Families are living in fear of the uncertainty. With the discussions on EU citizens’ rights opening next week, will the Minister reassure my existing EU constituents that they will retain all their rights once we leave the European Union?

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The hon. Lady should welcome the fact that we reached in the joint report agreement on the wide range of rights that I just described, and that does provide certainty. We want to work with colleagues at the Home Office to ensure there is a streamlined process for the new settled status that will come in under UK law, to secure those rights in the long term.

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Is the Minister not concerned that the Prime Minister’s reported comments about the more limited access to rights that those arriving during transition will have may have a chilling effect on drawing the skills and talent to the UK that his colleague spoke of a minute ago, to meet the labour market gaps that we urgently need to fill in many sectors?

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We have been clear that during the implementation period, EU citizens should be able to continue to visit, live and work in the UK as they do now, and we will use that period to prepare for the future partnership. There will be a new registration scheme for EU nationals in preparation for our future immigration system. The citizens’ rights agreement reached in December, set out in the joint report, gives certainty about the rights of EU citizens already here going forward, but the agreement does not cover those arriving after we leave the EU.

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rose—

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Ah, yes, a Dorset knight.

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Can my hon. Friend confirm that during the implementation period, all foreigners, including those in the European Union, will be treated equally in having access to our country?

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We will remain an open and tolerant country that recognises the valuable contribution of those with the skills and expertise to make our society better, but we will also control the overall number of migrants who come to the UK. As we leave the EU, we are seeking to form new ambitious trade deals around the world with trading partners anew. We will have control of our borders, and free movement as it has worked during our EU membership will end when we leave the EU.

European Court of Justice

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5. Whether he plans for the UK to be subject to rulings of the European Court of Justice during the transition period. [903666]

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In Florence five months ago, the Prime Minister set out a proposal for the implementation period under current terms, utilising the existing structure of European Union rules and regulations, including the European Court, for that time-limited period. That is necessary so that there is only one set of changes for businesses and people and minimum disruption. We are also clear that our priority will be getting the right arrangements for Britain’s relationship with the EU in the long term, out of the single market, out of the customs union and without direct jurisdiction of the European Court.

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So the European Court will be deciding on issues in this country, and if British businesses want to continue doing trade with the rest of Europe, they will have to abide by all the rules of the single market, and British citizens will have fewer rights in the rest of Europe than they have now. In essence, the Government are turning us from being a proud partner with European colleagues into a vassal state. Will the Secretary of State propose that we hand them over some Danegeld as well?

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I think that is the first time I have seen the hon. Gentleman in alliance with my hon. Friend the Member for the 19th century.

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15. If the Government were regrettably to accept the EU’s negotiating guidelines, so that the United Kingdom remains subject to the jurisdiction of the European Court of Justice during any implementation period, what arrangements would be put in place to safeguard Britain’s interests, given that there will be no British judges? [903679]

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As my right hon. Friend well knows, we are going into negotiation on this matter almost as we speak. During that period, my primary concern is any new laws coming into effect over which we have had no say, and we will aim to set up arrangements to ensure that they do not harm the United Kingdom.

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After the Prime Minister’s Florence speech, the Under-Secretary of State for Exiting the European Union, the hon. Member for Fareham (Suella Fernandes), who I welcome to the Front Bench, co-ordinated a letter from the European Research Group describing the Government’s policy on the transitional period as staying in the EU “by stealth”. She has not yet replied to my letter of 14 January, offering her the opportunity to retract that view. Does the Secretary of State agree that it is these divisions at the heart of the Government that jeopardise our negotiations? Will he confirm that all his Ministers support Government policy on the transition?

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It is almost sine qua non that all my Ministers support Government policy, which is more than I can say for Opposition Front Benchers.

International Business Community

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6. What steps he is taking to ensure the Government engage with the international business community during negotiations for the UK to leave the EU. [903668]

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Ministers from across the Government have carried out extensive engagement on EU exit, in both the UK and the EU, with businesses and industry bodies from all sectors of the economy. Those include international businesses with a footprint in the UK and British businesses with interests in the EU. The Prime Minister chairs a quarterly business advisory council to hear directly from senior business leaders on the key issues across EU exit and the wider economy.

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Coming from Coventry, which is the home of the UK motor industry, I have been delighted by the industry’s resurgence in recent years. Last year, however, it did see a fall in output of 3%, which was attributed by the Society of Motor Manufacturers and Traders to the need for clarity on Brexit transition. Given the importance of car manufacturing and its supply chain to the west midlands economy, what reassurance has the Minister been able to give the industry about the future relationship with our European partners?

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I, too, am delighted about the resurgence to which my hon. Friend refers. It is precisely because of such requests and the result of such engagement with businesses that the Government’s proposals for an implementation period—promising the clarity needed to plan ahead—have been welcomed by various sectors of our economy. We and the EU want to agree the detail of the implementation by the end of March, making good as swiftly as possible on our promise of certainty. We are seeking a bold and ambitious economic partnership with the EU, with the greatest possible tariff and barrier-free trade arrangement with our European neighbours.

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Businesses that I speak to in the north-east tell me of international investments that have been put on hold while companies try to work out what kind of Brexit this Government are actually going for. They do not want to make that public, so will the Minister tell me how she is engaging with international business to assess the impact of that on our economy, and indeed—because I forget what the story is today—whether such an assessment is going on?

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I hope the hon. Lady listened to the Secretary of State’s very detailed presentation and speech on Friday in which he set out the terms of an implementation period and addressed exactly the issues that she raises now. The implementation period will provide a bridge and a platform for businesses to enable them to plan for the future, to give them the time that they need, and to enable them to plan on that basis for a prosperous future outside.

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The services sector is of course the largest part of the British economy, and while the single market in services may not be complete, it is the deepest market in services anywhere on the globe. Will the Minister confirm that it is our intention that the full services sector will be included in our deep and special partnership?

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My hon. Friend brings to the House her experience of the European Parliament, which we all value. As 80% of the UK economy is services-based, it is absolutely vital that we incorporate provisions relating to services in any new arrangement with the EU.

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I was astonished to read in yesterday’s National Audit Office report on the equipment plan that the Ministry of Defence’s inability to hedge effectively against sterling fluctuations could cost up to £5 billion. Will the Minister advise us what DExEU is doing to support other Departments that are struggling with Brexit as they engage with the international community?

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As I have said, there is considerable engagement with the international business community. The Prime Minister herself chairs a business advisory council to hear directly from senior business leaders on key issues. On cross-departmental engagement, there is considerable work and engagement across all Whitehall Departments to prepare for all outcomes from these negotiations.

Farmers

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7. What discussions he has had with the Secretary of State for Environment, Food and Rural Affairs on support for farmers after the UK leaves the EU. [903670]

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We have been working closely with the Secretary of State for Environment, Food and Rural Affairs on support for farmers. The Government will provide the same cash total in funds for farm support until the end of the Parliament. We of course continue to work closely with a range of stakeholders across the farming industry and beyond, as well as with the devolved Administrations.

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EU rules on farming have been “one size fits all”. Does my hon. Friend agree that after Brexit we will be able to create farming policy, regulations and frameworks that work better for all parts of the United Kingdom?

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Yes. Once we have left the EU, we will be able to redesign our agriculture policy so that farmers are competitive, productive and profitable, and our environment is protected for future generations. My right hon. Friend the Environment Secretary eloquently sets out the flaws in the common agricultural policy and how the UK Government can do so much better outside the EU.

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Will the Minister further outline how he intends to secure subsidies for the average UK farm of 160 acres—such farms are classified as small farms—and how does he believe that small farmers will be able to survive post Brexit?

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We believe in the importance of small farms and their contribution to the rural community, and the Secretary of State for Environment, Food and Rural Affairs will bring forward his policy in due course.

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The Minister referred to us leaving the common agricultural policy. Can he clarify when farmers will no longer be subject to it, and when our fishing industry will no longer be subject to the common fisheries policy? Will it be when we leave the EU next March, or is it more likely to be at the end of a transition period?

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My hon. Friend raises an important point. I know from meeting fishermen and women that in some cases they are very impatient indeed to leave the common fisheries policy—rightly so. It is a matter for negotiations, and we hope and expect to achieve clarity very soon.

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Securing favourable trading conditions will be just as important for the future of our farmers, including those who reflect distinct characteristics of the industry across the UK. Will the Minister confirm what role the devolved Administrations will play in formulating our position?

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They will play an important role, and we will continue to engage with the hon. Gentleman. I am very conscious of agricultural tariffs—the common external tariff and tariffs around the world. It is in all our interests to ensure tariff-free access to and from European markets as we reach our deep and special partnership.

Customs Union: Free Trade Agreements

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8. What assessment he has made of the effect of remaining in the EU customs union on the ability of the UK to seek free trade agreements with non-EU countries. [903671]

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14. What assessment he has made of the effect of remaining in the EU customs union on the ability of the UK to seek free trade agreements with non-EU countries. [903678]

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Remaining in the customs union would prevent the UK from striking new free trade deals and setting new tariffs on goods from countries outside the EU. By leaving the customs union and building a new customs arrangement with the EU, we will be able to forge new trade arrangements with our partners around the world while ensuring that trade in goods between the UK and the EU is as frictionless as possible.

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One of the most exciting opportunities that will become available when we leave the customs union is that of establishing a free port at Teesport, as the Secretary of State and the Minister saw for themselves last week. Will the Minister confirm that the Government will give serious consideration to this excellent idea, which will put rocket boosters under my local economy?

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I thank my hon. Friend and the Mayor of Tees Valley for welcoming the Secretary of State and me to Teesport last Friday. My hon. Friend has been an indefatigable voice for his constituents since his election to Parliament last year. It was a pleasure to meet some of the 100 business representatives who were present when the Secretary of State made his speech last Friday. Teesport is an opportunity for global Britain, and a gateway to the world—an example of our forward-thinking, independent trade policy. When we leave the EU customs union, we will have the opportunity to create our own trading policy to benefit Teesport and other areas. I sincerely hope that the free port proposal on the table will be one of the options explored.

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As my hon. Friend will know well, in Harrow, we have a thriving Indian diaspora, whose members are desperate to encourage trade between the UK and India. Will she ensure that, during the negotiations, they will not be held back from improving trade between India and the UK by artificial trade barriers between those countries?

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I pay tribute to my hon. Friend for his lifelong advocacy for the British Asian community, not least in the 1990s when he encouraged my mother to stand as a local councillor—you could say, Mr Speaker, that my hon. Friend is to blame for my being here today.

Leaving the EU offers us the opportunity to forge a new role for ourselves in the world. The Prime Minister’s first bilateral visit outside Europe was to India, which is very telling. It was encouraging that the Indian Finance Minister visited the UK for the year of culture launch in February last year. I am optimistic about the opportunities that leaving the customs union and the EU presents for UK-India relations.

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Her Majesty’s Revenue and Customs is launching a new customs declaration service, which is due to go live in January 2019. Has it been designed to deal with the fourfold increase in customs declarations that will be required post Brexit?

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The customs infrastructure is going through the upgrade that the hon. Gentleman mentions, and that is on track and on target. I am looking forward to the opportunity to build on our customs regimes so that we have a customs and excise framework that sets the standard for the world.

Phase 2 Negotiations

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9. Whether the Government plan to accept the EU’s guidelines for phase 2 of the negotiations for the UK leaving the EU. [903673]

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It is not for the UK to accept or reject the European Union’s directives. This is its mandate for negotiations, and we have our own set of objectives. In my speech last Friday, I set out our position on what we would like to see in the implementation period, and we look forward to continuing the discussion with our European Union counterparts. Let me be clear: that work has not stopped. Following the declaration of insufficient progress in December, officials have continued technical discussions on separation issues, Northern Ireland and governance arrangements. I will shortly meet Mr Barnier to continue to the process.

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For workers who arrive during the transition period under existing freedom of movement rules, what arrangements will the Government make to ensure that workers who are crucial to industries in Scotland, such as fisheries, social care and hospitality, and who do not meet tier 2 visa requirements, are not simply sent home at the end of the transition period?

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We will be discussing in some detail with the European Union the treatment of people after our actual departure from the Union. The hon. Gentleman must take it as read, as I have said several times, that they will be treated properly, that we will not do anything to undermine our economy, and that we will do everything possible to ensure that the industries he talked about are supported.

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The Secretary of State and his junior Ministers keep saying that they want a bespoke deal. When are they going to set out what that actually means? When are they going to tell us what the elements of that bespoke deal will be, and when will they cost the bespoke deal’s implications for the economies of these islands? When?

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There can be few policies that have been talked about more by Prime Ministers than this one. There have been two major speeches—Lancaster House and Florence—and two White Papers, and something like 15 Bills will be going through this House over the course of the Parliament, so the House will not be unaware of all aspects of the bespoke deal. We have also made very plain what we see as different in what we are seeking from other deals. For example, we are aiming for the free trade agreement to be comprehensive and tariff-free. On the customs agreement, we are aiming for the most frictionless one possible—we have a variety of proposals that we talked about in front of the Select Committee on that—and the House will be kept fully informed. On the costing, as we have said, I think on Monday, we will of course release all the information necessary once it is no longer sensitive to the negotiations, but before the House makes a decision.

“Scotland’s Place in Europe”

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10. What recent discussions he has had with Cabinet colleagues on the Scottish Government’s paper on “Scotland’s place in Europe: People, Jobs and Investment”, published on 15 January 2018. [903674]

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I have seen the report that the question refers to, and I know that the Secretary of State for Scotland discusses the Scottish Government’s priorities with them regularly at the Joint Ministerial Committee (EU Negotiations). There is considerable common ground between us on what we want to get out of the process, such as making sure that Scottish universities and business have access to the best of European talent, but it is disappointing that the report does not take the threat of a second independence referendum off the table, as doing so would be in the interests of Scotland.

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The Minister will be aware that the figures in “Scotland’s Place in Europe” very much mirror those that were leaked earlier this week. In Scotland, the difference is that the Scottish National party Government do proper analysis and publish it. The analysis says that there will be a hit to GDP of 8.5% and that £2,300 a year will be lost for each person in Scotland. How many jobs have to be lost or under threat before this Government realise that they must back membership of the single market and the customs union?

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The Government are seeking a successful deal for the whole UK, including Scotland. Four times as much of Scotland’s business is with the UK as with the rest of Europe. The worst thing for Scottish jobs and businesses would be to split up our United Kingdom.

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Last week, the Scotch Whisky Association expressed concerns at the SNP policy of keeping Scotland in the single market. What assurances can my hon. Friend give to companies and people in my constituency that we are trying to get access to the single market, but that we will also have the right to do deals elsewhere in the world so that we take forward Scotland’s economy, rather than holding it back like Opposition Members?

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My hon. Friend makes an excellent point in speaking up for his constituents and the businesses within it. I have met the Scotch Whisky Association on a number of occasions to discuss the global opportunities for Scotch whisky. We must ensure that we have the flexibility to take them.

Customs Union: Automotive Sector

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11. What recent assessment the Government have made of the effect of the UK leaving the EU customs union on the automotive sector. [903675]

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The Government have been conducting a broad overall programme of work on EU exit issues and will continue to do so. That means that all decisions, including those relating to the customs union and the automotive sector, are supported by a range of analytical work. We want our deep and special partnership with the EU to include the automotive industry. We want to ensure that trade is as free and frictionless as possible, with minimum disruption to the industry. The UK remains the second-largest market for cars in Europe, so it is in both our interests to continue the partnership between our industries. I know that the Vauxhall car plant in the hon. Gentleman’s constituency is extremely important, and I look forward to visiting it soon.

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As the Minister knows, the Vauxhall plant in my constituency is fighting for its survival. Vauxhall’s parent company, PSA, has said that it is not prepared to make any long-term investment decisions until there is clarity about the final trading arrangements, and, having heard what Ministers have said this morning, I am not sure we will get that any time soon. Can the Minister at least guarantee that the trading arrangements for the automotive sector will be no less favourable than they are now?

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The Government understand that Vauxhall’s decision was a commercial one, taken as a result of challenging European market conditions. Vauxhall has made it clear that the decision was made to safeguard the competitiveness of the plant. The Government maintain close ongoing dialogue with Vauxhall and its parent group, PSA, as they make their joint plans for the future, including potential investments. Ministers have met senior management representatives of PSA and Vauxhall regularly throughout the process, and will continue to do so.

I hope and expect that as we progress through our negotiations, agree on an implementation period and then move on to our economic partnership, the hon. Gentleman will find that an accelerating degree of certainty emerges.

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The port of Immingham in my constituency is vital to the automotive sector. Further to the answer given by the Under-Secretary of State for Exiting the European Union, the hon. Member for Fareham (Suella Fernandes), about Teesport and free ports, may I ask whether the Minister is prepared to meet me to discuss the possibility of Immingham’s becoming a free port post Brexit?

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I am grateful to my hon. Friend for that suggestion. Of course I will meet him and other colleagues to discuss it, but I should add that as this conversation has proceeded, certain misgivings have been expressed about free ports. We must ensure that any free port proposal is capable of giving the country the security that it needs.

Fundamental Rights

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12. What assessment the Government have made of the potential effect of the European Union (Withdrawal) Bill on the protection of fundamental rights. [903676]

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16. What assessment the Government have made of the potential effect of the European Union (Withdrawal) Bill on the protection of fundamental rights. [903680]

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The “Right by Right” memorandum clarifies the way in which human rights will continue to be protected in domestic law after the UK has exited the EU. Under both the European Union (Withdrawal) Bill and existing domestic law, all substantive rights reaffirmed in the charter of fundamental rights will continue to be protected after exit. The Government’s assessment is that, in itself, not incorporating the charter in UK law should not affect the substantive rights from which people in the UK already benefit.

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The paper leaked to BuzzFeed reportedly suggests that

“deregulating in areas such as the environment, product standards, and employment law”

could provide an opportunity for the UK. Is that part of the Government’s economic strategy?

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The Government have repeated again and again our commitment to ensuring that we improve the environment and leave it in a better condition for the next generation, and our commitments on workers’ rights have also been repeated time and again.

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The Brexit Secretary has labelled employment regulations as “crippling”, the Foreign Secretary has described them as “back-breaking”, and the International Trade Secretary has said that rules on maximum working hours are a “burden”. Will the Minister tell us why the Government are so readily prepared to undermine the promise to enhance workers’ rights as we leave the EU?

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The Government’s policy has been set out time and again. We will ensure not only that workers’ rights are preserved, but that they are enhanced and keep pace with the new working environment.

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During our consideration of the European Union (Withdrawal) Bill in Committee, concerns were repeatedly raised that critical environmental rights and protections could be cast aside as we exit the EU. If the Government are serious about raising, not lowering, those rights and protections after Brexit, why have they so far failed to introduce an ambitious new environment Bil, but are instead, as we now know from the leaked papers, commissioning analysis suggesting that Brexit could present an opportunity to deregulate in such areas.

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The purpose of the European Union (Withdrawal) Bill is to preserve the effect of EU law on the day after exit day, so far as that is possible. Its purpose is to provide certainty, continuity and control rather than policy changes. The Secretary of State for Environment, Food and Rural Affairs has laid out his policy clearly, and I look forward to his presenting a Bill in due course.

Transition Period

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13. What factors the Government plan to take into account in determining their position on the length of the transition period in negotiations for the UK to leave the EU. [903677]

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As I have said before, the duration of the implementation period should be in the region of two years, and the Commission’s position indicates a period of similar length: so far it has talked about 21 months. The aim on both sides is to give individuals, businesses and Governments time to plan and initiate the changes that must be made to allow a smooth and orderly transition, and to secure the best possible outcome for the United Kingdom.

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Could it be shorter?

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If I simply accept the European Commission proposal, then yes.

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Unlike the question from the right hon. Member for New Forest West (Sir Desmond Swayne), which was commendably pithy—and again I exhort him to issue his textbook for the benefit of all colleagues.

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I will do my best, Mr Speaker.

The EU has made it clear that EU citizens coming to the UK during the transition period should be eligible for settled status; the Prime Minister says they will not be eligible. Is that a red line, or are the Government willing to compromise on that? I thought nothing was agreed until everything was agreed.

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The hon. Gentleman is right that nothing is agreed until everything is agreed, but in the joint report that we concluded and got agreement on in December the EU agreed that the transition date, or end date for ongoing permanent residence rights—not possibilities, but rights—will be March 2019.

Transition Arrangements

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17. What recent discussions he has had with Commissioner Barnier on the transition arrangements for the UK after March 2019. [903683]

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At the General Affairs Council on Monday the European Council agreed its negotiating directives on the implementation period. Now that the Commission has a clear negotiating mandate we hope to move quickly to begin detailed discussions on the implementation period. Given the alignment in our positions we are confident we can reach political agreement by March. There remain a number of areas that we now need to discuss with the EU to ensure the period operates smoothly. We look forward to progressing substantive discussions.

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When it came to the divorce bill, after a lot of huffing and puffing and wasted time the Government simply signed on the dotted line. What will be different in the transition period we are negotiating compared with the EU guidelines issued this week?

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As to the right hon. Gentleman’s opening remark, as he is an intelligent and well-informed person it is amazing that he does not differentiate between a £100 billion demand and a £35 billion outcome; that seems to have been a somewhat useful exercise by the Government.

As for the next stage, there is a negotiation to be undertaken. There is a variety of important areas, but the primary area for me is the question of our right to sign trade deals during the implementation period so we can bring them into force immediately after we leave. That is a massive advantage for the United Kingdom to have.

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Businesses in my constituency tell me that continued membership of the single market and customs union during the transition period will help them safeguard jobs, yet the Prime Minister on 18 December ruled this out. What have the Prime Minister and Secretary of State got against the employment of people in Bristol West?

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With the greatest respect to the hon. Lady, the purpose of the implementation period, which was asked for by just about every business organisation, is to ensure they face stability in the couple of years in the run-up to the conclusion of the future relationship. That is what is going to happen, and that is why companies and the CBI and others welcomed it when we announced it.

Topical Questions

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T1. If he will make a statement on his departmental responsibilities. [903686]

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As we accelerate the pace of our negotiations with the European Union, I gave a speech last Friday to lay out the terms of the implementation period for our new relationship. This period, a bridge to the future, will be strictly time-limited and see a continuation of existing structures and rules. We will no longer be a member of the EU, which is a legal requirement for signing a new trade treaty, while still ensuring the continuity of our businesses and their trading relationships. We will use this period to ensure we are best placed to grasp the opportunities of Brexit, and that will mean signing new free trade deals with countries around the world.

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Given reports today of a huge gap between the UK and the EU on how financial services will be able to be traded freely in a post-Brexit environment, can the Secretary of State set out exactly how he sees this trade operating successfully in future, and exactly how he plans to protect the jobs of the 1.1 million people in the UK who work in this sector?

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First, not only have we not yet engaged in the future relationship negotiation, but the EU has not yet decided its own negotiating guidelines. They will, we expect, be laid down by the March Council on 22 March, and to that end I am talking to every member state that I can in order to ensure that we are at the same place on this issue, rather than having, as the hon. Lady terms it, “a huge gap”. Indeed, at the end of these questions I am going to Luxembourg for specifically that issue.

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T2. Can the Secretary of State confirm that we will find a way, during the implementation period, to negotiate a way to address the consequences of any EU legislation that is deemed contrary to our national interest? [903687]

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The duration of the implementation period should be around two years. Only when the UK is no longer a member state can we take advantage of our status as an independent trading nation. As such, the UK will negotiate our own free trade agreements but not bring them into effect until after the implementation period has concluded. For this period, we will agree a process for discussing laws that might be brought in, on which we have not had our say. This will give us the means to remedy any issues through dialogue as soon as possible.

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There have been lots of questions this week about the leaked EU exit analysis Whitehall briefings, but this is the first chance I have had to ask the Secretary of State about it directly, so I will choose my words carefully. Can the Secretary of State confirm when he first knew that economic modelling work on Brexit scenarios was being undertaken across Whitehall?

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Actually, the right hon. and learned Gentleman does not have to ask me; he should read the book. In addressing the Select Committee on 6 December last year, I said in terms:

“We will at some stage—and some of this has been initiated—do the best we can to quantify the effect of different negotiating outcomes as we come up to them. Bear in mind that we have not started phase 2 yet. In particular, we will try to assess, in bigger categories, the effect of various outcomes in financial services and in terms of the overarching manufacturing industry, agriculture and so on. We will do that a little closer to the negotiating timetable.”

I say that because I read with great interest in Hansard and elsewhere this morning various reports about my being traduced, so I thought that I should tell the House that actually I told the Select Committee that this work was under way last December.

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I think it follows that in December the Secretary of State knew that this modelling was going on. Can he confirm when he was first talked through the economic modelling of the Brexit scenarios by his Department—not when he told others, but when he was talked through it?

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Let me say something on that as well. One of the things that the right hon. and learned Gentleman has been trying to pretend over the course of the last few days is that somehow my colleagues have been critical of the civil servants doing this job, because the outcome is as yet a work in progress—[Interruption.] That is what it is: a work in progress. I say that because we are trying to do something that is incredibly difficult. Every institution that has tried it has failed—[Hon. Members: “Answer the question!”] I am going to answer the question. Every forecast that has been made about the period post-referendum has been wrong. As I told the Select Committee, the Bank of England—the best forecasting organisation in the business—forecast for 2017 a reduction in exports, but there was growth of 8.3%. It also forecast a reduction of 2% in business investment, but it grew by 1.7%. It forecast a reduction in housing investment, flat employment growth, and growth of 0.5% versus 1.1% being the outcome. What has been going on is an attempt to find a way of getting a better outcome. In those terms, I talked to my own Department and the cross-departmental group in early January on this matter.

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T3. The Nord Stream 2 pipeline—the undersea oil and gas pipeline that Germany intends to build directly to Russia—has been condemned by the American Secretary of State, Rex Tillerson, as a threat to the security of countries in central and eastern Europe. Does the Minister agree with that sentiment? [903688]

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This is an important issue. We need to ensure that Europe continues to protect its security and diversity of supply, and that is something on which we will continue to work with colleagues at the Foreign Office and at the Department for Business, Energy and Industrial Strategy.

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T5. The UK’s civil aerospace companies are leading the world in the development of future technologies, but everyone from the chief executive of Airbus to the Unite reps at Rolls-Royce says that a hard Brexit threatens that success. Why is the continued membership of the customs union and the single market not on the table to protect the UK’s engineering manufacturing sector? [903692]

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As a chartered aerospace engineer, this subject is close to my heart. Aviation is crucial to the UK’s economy, and we are committed to getting the best deal possible for the UK. We are focused on securing the right arrangements for the future, so that our aviation and aerospace industries can continue to thrive, that passengers can have opportunity and choice, and that businesses can be profitable. We will seek the right customs arrangements between the UK and the EU to ensure that trade is free and frictionless and that businesses can succeed.

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T4. Does my right hon. Friend agree that while the manner of our leaving the EU is rightly a matter for debate and negotiation to secure the best deal for the UK, the fact that we are leaving the EU was decided beyond doubt in June 2016 by the British people? [903689]

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I am happy to reassure my hon. Friend on that point. The British people voted to leave the EU—17.5 million of them—in the biggest mandate in our history, and we are committed to respecting the result of the referendum. The Government have undertaken a wide range of ongoing analysis to ensure that we get the best deal for the British people in our EU exit negotiations, but whichever outcome we choose to negotiate for—most of that has been chosen—it will involve leaving the EU and respecting that democratic mandate.

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T7. The independent “Preparing for Brexit” report commissioned by the Mayor of London found that a hard Brexit will lead to the loss of 56,500 more jobs in London alone than if the UK remains in the single market and customs union. Does the Minister agree that that is clear evidence that a hard Brexit will be catastrophic for jobs? [903694]

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No, I do not. As I explained earlier, one of the great difficulties with such forecasts is that they have proved to be entirely wrong at every turn so far, and that is not just the view of a politician. The smartest and most innovative economist in the country is probably the deputy Governor of the Bank of England, Andrew Haldane, who referred to the forecasts as having faced a “Michael Fish” moment—in other words, they must find out why they did not work. A forecast is not evidence to be relied upon. It may be an opinion, but it is not evidence.

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T6. Over the last 45 years, British taxpayers have had far too much of their money taken from them to go to the EU. Now that we are leaving, can the Secretary of State give an indication of the value of our share of EU assets and what will happen to the share that we have contributed? Is he negotiating to get it all back? [903693]

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My right hon. Friend picks up on an important point. It is a component of the negotiations that brought the public claim down from £100 billion to £35 billion—part of that was offset by our assets.

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T8. The chemicals industry is the largest sectoral employer in the Grangemouth area of my constituency. It exports 60% of its goods to the EU and imports 75% of them from the EU, and it is rightly concerned about frictionless and tariff-free trade coming to an end. Will Ministers tell us what the EU exit analysis projects for that sector? [903695]

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We have met representatives of the chemicals industry on several occasions. At the most recent meeting, we had constructive conversations that ended positively. We will ensure that we carry through the positions that we have set out, particularly in relation to goods on the market, and we hope to preserve continued registration of chemicals under REACH. We will of course seek to ensure that our deep and special partnership covers the chemicals industry, so that it can flourish after we leave the EU.

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Will the Minister confirm that it is possible for non-EU countries to access only three of the single market’s four freedoms, specifically the free movement of goods, capital and services, without being required to accept freedom of movement, as can be seen with the association agreement countries? Is the Department currently looking at that type of arrangement?

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My hon. Friend makes an extremely good point. Trade continues all around the world on a free and fair basis, particularly under free trade agreements. It is our expectation and intention to secure a free trade agreement of unprecedented scope and ambition, which should meet just the criteria that she sets out.

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The Under-Secretary of State for Exiting the European Union, the hon. Member for Worcester (Mr Walker), told the House yesterday that the document that I hope will shortly be handed over to the Exiting the European Union Committee

“does not yet reflect this Government’s policy approaches”—[Official Report, 31 January 2018; Vol. 635, c. 834.]

Given that the Secretary of State has just claimed from the Dispatch Box that everybody knows what the Government’s position is, will the Minister explain why lots of analysis has been done of the options that the Government do not want when apparently no analysis has yet been done of the option that the Government do want?

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As I said when I answered the urgent question on Tuesday, the Government cannot control the timing of leaks. The preliminary analysis is a work in progress that does not yet reflect the Government’s policy. Once the analysis has been carried through, I am sure that it will do.

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Poor old George Osborne, not mentioned at all.

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Order. I was about to say that the hon. Gentleman chunters from a sedentary position, but he almost yells from a sedentary position his expression of sympathy for the former Chancellor of the Exchequer. I am sure the former Chancellor of the Exchequer will bear with stoicism and fortitude not being directly referenced by the representatives of the Treasury Bench.

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Will the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Wycombe (Mr Baker), confirm that he heard from Charles Grant of the Centre for European Research that officials in the Treasury have deliberately developed a model to show that all options other than staying in the customs union are bad, and that officials intend to use the model to influence policy? If that is correct, does he share my view that it goes against the spirit of the Northcote-Trevelyan reforms that underpin our independent civil service?

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I am sorry to say that my hon. Friend’s account is essentially correct. At the time I considered it implausible because my direct experience is that civil servants are extraordinarily careful to uphold the impartiality of the civil service. We must proceed with great caution in this matter, but I have heard him raise the issue. We need to be very careful not to take this forward in an inappropriate way, but he has reminded me of something that I heard. It would be quite extraordinary if it turned out that such a thing had happened.

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You said it was correct.

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I did not say it was correct. I said that the account that it was put to me is correct. It was put to me, and I considered it an extraordinary allegation—I still consider it an extraordinary allegation. [Interruption.] To be absolutely clear, I said it was correct that the allegation was put to me. I did not in any way seek to confirm the truth of it. What I would say is that we need to proceed with great caution, because it is essential that we continue to uphold and support the impartiality of the civil service.

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Every day hundreds of trucks criss-cross the channel carrying vital components for the British car industry’s highly integrated supply chain. What assessment has the Minister made of the impact on that travel of customs delays, tariffs and extra bureaucracy if we come out of the customs union?

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We are seeking frictionless access to the European market for our automotive industry. We want to make sure that we continue to maintain the benefits of the complex supply chain, which benefits businesses both in the UK and in the EU.

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Can the Minister reassure me that upcoming negotiations with the EU on future migration arrangements will prioritise the needs of UK science and research, allowing the two-way flow of talent that is vital for our top universities, such as York University in my constituency?

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I am happy to give my hon. Friend that reassurance. We have been having some very useful meetings with the science and universities sector to talk about its needs in that respect. We want to ensure that the UK continues to be able to attract the brightest and the best from around Europe and around the world.

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Order. I just want to hear from the two colleagues who have not contributed to these exchanges since 9.34 am, or thereabouts.

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On 11 January Lord Callanan visited Bristol, and he made a promise to Hartcliffe residents in my constituency that there would be more jobs after Brexit. Had he been briefed by the Department on the true state of the modelling analysis when he made that promise to those people?

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As I told the House earlier, every forecasting model of the post-referendum performance of the British economy by every major organisation—the banks, Government organisations and, indeed, international organisations—has proven wrong. One of the ways they have been proven wrong is because employment in this country has grown, despite all the forecasts, to record levels today. We will be seeking to do the best we can to ensure that that growth record is maintained.

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rose—

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Order. If the hon. Gentleman’s second inquiry is a single sentence of fewer than 20 words, I will hear it. If it isn’t, I won’t.

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Will my right hon. Friend confirm that we will be able to implement decisions during the transition period and not wait until the end to implement everything that is agreed?

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We will be able to do some of them, for example, our proposal to put in place a registration scheme and so on. We will also be able to sign trade deals, but not bring them into force.

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How are the Government working with the UK steel industry to make sure it prospers post-Brexit?

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We have had meetings. My Department alone has had meetings with 350 companies, not all in steel, but in all the user industries. We have a regular meeting between the Chancellor, the Business Secretary, myself and leading business representative organisations, and of course we talk directly to the individual companies.