[3rd Allotted Day]
Debate resumed (Order, 4 December).
Question again proposed,
That this House approves for the purposes of section 13(1)(b) of the European Union (Withdrawal) Act 2018, the negotiated withdrawal agreement laid before the House on Monday 26 November 2018 with the title ‘Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community’ and the framework for the future relationship laid before the House on Monday 26 November 2018 with the title ‘Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom’.
Just before I call the Chancellor of the Exchequer to resume the previously adjourned debate, I want to make two points for the benefit of the House. First, I said yesterday, and I think it is worthy of repetition today, that although this is in one respect a seamless debate running over a period of five sitting days, colleagues should know—and if they have forgotten, be reminded—that there are wind-up speakers each day from the Front Benches. The implication of that for colleagues should be unmistakeable. If right hon. and hon. Members wish to speak in the debate, they should be sure to be present for the winding-up speeches, and they should have a pretty good—if not precise—idea of when those speeches will be delivered. I will keep a record, but this is an important convention, and it really is unacceptable for a Member to speak and then take the attitude that he or she has many commitments and a very full diary and must be elsewhere and cannot possibly be present for the winding-up speeches. That really is unacceptable in parliamentary terms, so I am sure that Members will want to comply with the convention.
Secondly, perhaps I can be forgiven for saying, as I happen to know, that the last time I looked no fewer than 75 right hon. and hon. Members had indicated to me that they wish to catch my eye today. From the Chair’s point of view, and in terms of the efficiency of chairing and of the proceedings, it would be much appreciated if colleagues did not beetle up to the Chair to inquire where they are on the list, how long it will be before they are called, etc. The usual channels are on the case. I politely say to colleagues that the Chair will, as always, do his level best to get everybody in, but the merits of patience can scarcely be overstated. With that, I invite the Chancellor of the Exchequer to resume the debate.
Thank you, Mr Speaker. I welcome the opportunity to take part in this debate today and to make the case to the House for backing the Prime Minister’s Brexit deal, ensuring a smooth and orderly departure from the European Union, delivering on the referendum decision of the British people and, at the same time, securing a close economic and security partnership with our nearest neighbours and most important trading partners. I will also make the case for rejecting the calls from those who would prefer to plunge the country into the uncertainty and economic self-harm of no deal and from those who would seek to undo the referendum decision and, in doing so, fuel a narrative of betrayal that would undermine the broad consent on which our democratic politics is based.
The Chancellor said recently that backing the Prime Minister’s deal would be better for the country than remaining in the EU. However, during the referendum campaign in February 2016, he said that a yes vote would lead to “very significant uncertainty” and would have a “chilling effect” on the economy. What information can the Chancellor share with the House that has caused him to have such a fundamental change of opinion?
I have always recognised that leaving the EU will have an economic cost, but the deal that the Prime Minister has negotiated minimises that cost. Our nation is divided on the issue, and I fundamentally believe that we have to bring the country back together in order to succeed in the future. This deal offers a sensible compromise that protects our economy but delivers on the decision of the British people in the referendum. My judgment is that, if we want to maximise the chances of our nation being successful in the future, this is the right way to go.
Yes. As I have said in this House many times, at the beginning of the process, there were people inside the European Union who were contemplating a punishment deal for the United Kingdom—a deal designed to punish us for having the audacity to decide to leave the EU. Clearly, we could not have accepted such terms for our departure.
The Chancellor mentioned no deal, so I wonder whether he can explain what no deal means. My understanding is that the rest of the world trades under World Trade Organisation rules with independent free trade agreements, so there is actually no such thing as no deal, is there? If we do leave—I do not buy the term “crash out”—we will trade on WTO rules, so that does not mean “no deal”, does it?
Yes, it is no deal. As I will say later in my speech, if we did leave the European Union without a deal, we would actually be the only advanced economy in the world trading with the European Union on pure WTO terms, with no facilitation agreements whatsoever. In my view, that would be a very bad outcome for the United Kingdom.
I agree with the Chancellor that there will inevitably be an economic penalty from leaving the EU. Does he agree that having to comply with lots of rules set by the EU, over which we will no longer have any say—that will be the position under the withdrawal agreement—is part of the economic penalty that we will suffer?
It depends very much on what those rules are. Rules on the goods acquis, the part of EU regulation that deals with goods, are very stable and have been for many years. We know that our manufacturers in this country will continue to follow EU rules on goods, whether we choose to adopt those rules or not, so I think that the economic price of having such rules would be very small. In other areas, such as financial services, where rules are changing rapidly and where there is a great dynamism in the system, there could be much greater dangers for us in being locked into following rules over which we have no influence. That is why the deal we are putting before the House proposes a very different way forward for goods than for services, and particularly financial services.
I have observed this process at close quarters for two and a half years, and I am absolutely clear about one thing: this deal is the best deal to exit the EU that is available or that is going to be available. The idea that there is an option of renegotiating at the eleventh hour is simply a delusion. We need to be honest with ourselves that the alternatives to this deal are no deal or no Brexit. Either would leave us a fractured society and a divided nation.
Only the compromise of this negotiated deal—delivering on the referendum result by leaving the EU, ending the free movement of people and reasserting our sovereign control over our laws, while at the same time maintaining the closest possible trade, security and cultural links with the European Union to protect our jobs, our living standards and our values—can allow our country to move on. Only that compromise can bring us back together after Brexit is delivered, and we should remember the lesson of history that divided nations are not successful nations.
Does my right hon. Friend agree that uncertainty is bad for our economy and very bad for businesses?
No. In all scenarios, we expect that economic growth will continue and the economy will carry on growing. What we were looking at in the analysis we published last week is a ranking of five different scenarios based on their impact on the overall size of the economy over a 15-year horizon.
The theme of today’s debate, as Mr Speaker has reminded the House, is the economy, and the economy has always been at the heart of the UK’s relationship with Europe. It was definitely not the lure of political union but the prospect of jobs, wage growth, trade and prosperity that brought Britain into the European Economic Community, as it then was, in 1973—I was there, and I remember. For most of us who campaigned 43 years later to remain in the EU in 2016, it was certainly not the political institutions and the paraphernalia of the Union that provided the motivation to do so, but a hard-nosed appraisal of our economic interests.
The fact is that our economic and trading relationship with the EU has been built over 45 years, during which time our economies have shaped themselves around each other and become inextricably intertwined: supply chains criss-cross borders; workforces draw on talent from across the continent; and a firm in Birmingham can deal with a customer in Berlin as easily as one in Bradford—so much so that almost 65% of all UK trade is now with the EU or through EU trade agreements. These trading relationships and commercial partnerships were not built overnight, but in a no-deal exit many of them would be destroyed overnight, as the market access and free-flowing borders on which they are based were lost. Although new trade partnerships with countries outside the EU undoubtedly offer new and exciting opportunities for UK companies, the analysis the Government published last week is clear that the benefits flowing from new free trade agreements would not compensate for the loss of EU trade from a no-deal exit.
On Tuesday, the House of Commons Library wrote to me to say:
“The backstop comes into force automatically, if the Withdrawal Agreement is signed, at the end of the transition period.”
This morning, the Prime Minister said:
“If we get to the point where it might be needed, we have a choice as to what we do, so we don’t even have to go into the backstop at that point.”
Can the Chancellor help to explain that because there seems to be a variance between those two statements?
The backstop remains as the ultimate default, but the agreement we have negotiated with the EU very importantly gives us the choice, if we are not ready to move to our new future partnership on 1 January 2021, to seek an extension of the implementation period for one or two further years. That is a very important part of the architecture of what we have negotiated. I make no bones about this—I have said it before. In my view, it would be much better for the UK to seek an extension of the implementation period if we need a further period of time before we are ready for the new long-term arrangements, rather than go into the backstop.
The Chancellor is making a very good case about what would happen if there were a no-deal Brexit. Indeed, in his opening remarks he described it as an act of “uncertainty and economic self-harm”. Given that the companies he has talked about, which depend so much on just-in-time deliveries in the motor industry and elsewhere, are most worried and concerned about the prospect of a no-deal Brexit, and as there is clearly not a majority in this House for a no-deal Brexit, although we may disagree about other things, why do we not unite and rule out that option?
The way to do that is to support the proposal that the Prime Minister has presented to the House, which represents a compromise, ensuring that we leave the EU and respect the referendum decision of the British people, but do so in a way designed to minimise any negative impact on our economy and maximise the opportunities for this country in the future.
I totally concur with what my right hon. Friend said about divided nations, but may I urge him to be cautious about relying too heavily on economic forecasts? We all remember the Treasury, the Bank of England and the International Monetary Fund predicting economic woe by Christmas 2016 if we voted to leave, with talk of 500,000 extra unemployed, a do-it-yourself economic disaster and so on. It got so bad that in the end the Bank of England had to publicly apologise for getting it so wrong. Can we just make sure we keep things in perspective with regard to these economic forecasts?
I am grateful to my hon. Friend, because he gives me the opportunity to clarify for the House that these are not economic forecasts; they are modelled scenarios for what might happen in different circumstances. Like all economic modelling, they depend to an enormous extent on the assumptions that are made. The assumptions in this paper are transparent and the assumptions that the Bank of England made are also clear. My hon. Friend has made his point about the modelling that was done in 2016. I can only speak for the Treasury and tell him that a huge amount of work has been done since 2016 to update and upgrade the Treasury’s long-term model. That computable general equilibrium model is the one that has been used.
My hon. Friend is right. Of course, this work seeks to do something quite different: it looks at five different potential scenarios and ranks them in terms of the impact that they would have. I readily concede that it is more important to look at the ranking than the absolute numbers or ranges of numbers attached to them.
I shall make a bit of progress, then give way again.
I was saying that the benefits flowing from new FTAs would not compensate us fully for the loss of EU trade from a no-deal exit. That is why we have fought so hard for a deal that delivers the closest possible trading relationship with the EU, while respecting the outcome of the referendum and giving ourselves the ability to form new trading arrangements with countries around the world. Today, the case for this deal is that, uniquely among the options open to us, it does deliver on our commitment to leave the EU and on our collective duty to protect the jobs and living standards of our constituents.
While the Chancellor is explaining the deal, will he explain to the House which trade unions he has sat down and briefed on the deal, and what their response was? The feedback that I have had from ordinary trade union members in my constituency is that, although this deal is preferable to no deal, it is still a long way away from the certainty that they would have hoped to have had in the proper arrangement that they were expecting.
The deal that is on the table provides the key elements that we will need to maintain our trading relationship with the European Union. It makes a commitment to maintaining our borders as openly and free-flowingly as possible. It eliminates tariffs, quotas, fees and charges. It will protect the vital supply-chain business that is at the heart of our trading relationship with the European Union.
Does the Chancellor agree with the Governor of the Bank of England that stress tests have shown that under every scenario the financial system is robust? That should give the Government confidence to be equally robust with the EU in future negotiations.
The Governor is of course absolutely right. The modelling that the Bank has done has been tested against the financial policy committee’s stress tests to ensure that, even in the worst-case scenario, our financial system would be resilient. The work that we have done since 2010—including increasing banks’ capital ratios and introducing risk-reduction strategies around banks and financial institutions—has ensured that the system will be resilient, even against the most extreme circumstance that the Bank of England has modelled.
With regard to the deal versus no-deal scenario, does the Chancellor agree that the problem with the WTO option is that it is silent on swathes of modern British industry, so it does not cover our economy completely? Aviation is one of the most obvious sectors that is not covered by the WTO option. It is very dangerous for us to go into a situation in which those sectors are not adequately covered.
My hon. Friend is right, but I think the most telling point about this issue is the one made regularly by my right hon. Friend the Secretary of State for International Trade. If WTO terms are so fantastic and so good for a trading relationship, why do we need to negotiate free trade deals with all these other countries around the world? We already trade with them on WTO terms, but we clearly believe that we can do much more if we negotiate something better than WTO.
The Chancellor is being very candid. According to his recently published long-term economic analysis, the Government’s two scenarios would result in a hit to GDP, or a lowering of the growth rate, of between 3.4% and 6.4% if there is a deal, and of between 6.3% and 9% if there is no deal. Will he confirm that this is indeed the choice the UK are putting before Parliament?
The hon. Gentleman is misinterpreting the analysis. These are not rates of GDP growth; this is an estimate of the relative size of the economy at a 15-year horizon under different scenarios. In all scenarios, we expect that GDP growth will recover and continue.
Will the Chancellor put on the record what he thinks the hits will be? He said in response to a Labour Member that there would be a lower growth rate. What are the percentage differences in the two scenarios—deal and no deal—versus staying in the EU?
I am sorry but the hon. Gentleman is wrong. I did not talk about a lower growth rate. I am talking about a smaller overall size of the economy. It is our central view that, once the economy has moved to a new equilibrium, growth will resume in all these scenarios and that our economy will go on getting larger.
Is it not the truth that there has not been time to consult with the organised trade unions because the Government have been consulting with the hard-line Brexiteers in the European Research Group instead of putting the national interest first?
My question is this: why did the Chancellor not support his Prime Minister in her pledge to end austerity in the Budget, which would have addressed many of the reasons for the divide in the nation he refers to?
I am not quite sure what the hon. Gentleman is referring to. In the Budget, I set out a clear plan for Britain’s future. I set out an indicative envelope for the spending review next year, which will show public spending increasing in real terms throughout the next spending review period. In most people’s definition, that is turning a very important corner for this country.
The economic analysis published by the Government last week clearly shows that, of the spectrum of outcomes for the future UK-EU relationship, the modelled White Paper scenario would deliver significantly higher economic output than the no-deal scenario, the FTA scenario, and even the EEA scenario. The proposed future UK-EU relationship is estimated to result in economic output around 7 percentage points higher than in the modelled no-deal scenario in the long run, once the economy has reached its post-Brexit equilibrium.
This is a deal that secures the rights of more than 3 million EU citizens living in the UK and around 1 million UK nationals living in the EU; a deal that takes us out of the European Union and sets a framework for an economic partnership with our European friends and neighbours that is closer than any other they have today, while allowing us to strike free trade agreements around the world; a deal that ends freedom of movement and regains control of our borders, not so that we can shut down immigration, but so that we can manage it in our own best interests, ensuring that our businesses and health service still have access to the skills they need—skills that we will need as we build on our fundamental economic strengths to give Britain the brighter future our citizens imagined when they voted in June 2016; a deal that delivers on the referendum result, while securing the achievements of the British people in rebuilding our economy over the past eight years; and, above all, a deal that can bring our country together again.
The Chancellor just referred to British citizens living in EU countries. Can he confirm that, under this deal, EU citizens living in the UK will be in a better position than British citizens living in EU countries, because they will not have the ability they currently have to move freely between EU countries?
Let us hope not. I have tried this with the Prime Minister: can the Chancellor look the young people of this country in the eye and tell them that all the restrictions we will impose on EU nationals the EU will impose on our young people? The rights that he and I have to live, work and love across a continent of 27 will be lost to our young people. Will he now be straight with them and tell them that there will now be restrictions on their freedom of movement?
The deal we have negotiated will ensure the greatest possible level of freedoms and rights for UK citizens so that they can carry on living their lives and we can carry on working, collaborating and trading with our EU partners. I am completely convinced that of the options open to us this is the right way for the country to go forward.
If anyone on the Opposition Front Bench genuinely believes that there is a magic deal available that would see us retain all the benefits of EU membership but with no free movement, no payments into the EU’s budget and no state aid rules, they are sadly deluded. Labour calls for a Brexit that delivers the “exact same benefits” as we currently have. That is called remaining in the European Union and it means being in the single market as well as the customs union, and last time I checked that was not Labour policy. A customs union alone would not deliver those “exact same benefits”. It would not maintain supply chains, remove regulatory checks and non-tariff barriers, or deliver frictionless borders. So Labour’s policy fails its own test. The time for trying to have your cake and eat it has passed. It is now time for tough choices and practical solutions and for a focus on the things that really matter. It is time to deliver a “jobs first” Brexit, and that is what the Prime Minister’s deal does.
I would like to move the Chancellor away from the party political point scoring and to ask him a serious question about what reassurances he can give to companies in Grimsby such as Young’s, which relies on fresh fish products from Iceland and south Norway. Both are non-EU countries with EFTA and EEA agreements with the EU. How does this Tory withdrawal agreement impact on the certainty of future supply to an industry that employs 5,000 people in my area?
As I suspect the hon. Lady knows, after we leave the EU, we will be an independent coastal state, and we will be able to enter into agreements with Iceland, Norway and other countries to regulate quotas, how the fish are caught, the reciprocal rights of our fishermen to enter other countries’ waters and of their fishermen to enter our waters, and other such matters.
According to the Department for Transport, if we crash out without this agreement, the hauliers of this country will have access to only 1,000 permits—and that to cover a range of areas from health products to food and furniture deliveries. This would be catastrophic for my constituency, which relies on haulage. Does my right hon. Friend agree?
My hon. Friend is right, and he takes me back to the question from my hon. Friend the Member for Mid Bedfordshire (Ms Dorries) earlier. If we were to leave the EU in a real no-deal scenario, with such issues left unresolved, we would be in a very difficult place. The small number of transit permits available to hauliers would be just one of the many issues that would cause considerable difficulty.
Before the Chancellor started giving way, he made the point that just being in the customs union was not replicating what we have at the moment, but does he accept that, were we to join Norway, Iceland and Liechtenstein in the European Free Trade Association and, on top of that, agree a customs union that we would need to keep the Irish border open, we could keep a very high proportion of the economic benefits of membership, even if the House insists on proceeding to give up political membership and other aspects of the EU?
My right hon. and learned Friend is right that, strictly, the flow of trade in goods would be facilitated by such an arrangement, but there are two problems with the EFTA-EEA model. First, it would continue to impose on us the obligations of freedom of movement, which we believe the British people voted against in the referendum decision in 2016. Secondly, it would leave our financial services industry in particular extremely exposed to having to comply with a rapidly evolving body of EU regulation over which we would have no influence.
I am listening carefully to the Chancellor. He mentioned frictionless trade, but where in the political declaration does it say “Guaranteed frictionless trade”? It said so in the Chequers agreement, but it seems to have been omitted in what we are voting on on Tuesday.
Under the political agreement, there is a commitment by the parties to working in good faith together to minimise any impediments to trade between us. We are confident that, with goodwill on both sides and the evolving technologies that are available, we will be able to design a very efficient and free-flowing border for UK goods and for imports from the European Union.
I thank the Chancellor for giving way. Does he agree that, under the withdrawal agreement, the UK will continue to trade on the same basis not just with the EU, but with the EEA and other countries, which means that companies such as Young’s of Grimsby would not face a cliff edge, but that if we vote against this agreement, then all is uncertain?
My hon. Friend is exactly right. One of the huge benefits of the negotiated deal that is in front of the House is the transition period, giving us another two years, to the end of 2020, of clarity and certainty for British businesses about how they will operate in the future.
Let me be clear about the economic benefits of this deal: a time-limited implementation period, as I have just said, giving people and businesses time to adjust; a deal that ensures citizens, both British and European, are properly protected; a political agreement to construct the closest economic relationship between the EU and any advanced economy in the world; a free-trade area for goods with no tariffs, no fees, no charges, and no quantitative restrictions; a commitment to an ambitious relationship on services and investment, including financial services; and for further co-operation across a wide-range of sectors from transport to energy and data.
I am very grateful to my right hon. Friend for giving way. He mentioned financial services and the impact of any Norway-style arrangement on the sector. Does he not also acknowledge that the proposed deal that the Government are putting forward is not great for financial services by any means? The sector obviously employs many of my constituents in Orpington who come into London every day to work in the City in all manner of roles. I have read the Government’s economic analysis and it shows that, over the relevant forecasting period, the financial services sector will be hit by around 6% to the effect that our trade will be 6% smaller than it would otherwise be. That is a meaningful hit to one of our most competitive industries, and we do not have many globally competitive sectors, so it baffles me why we would willingly do that.
I wish to make one further point if I may and ask another question. The agreement that the Government are putting forward will mean that we will no longer have any direct influence on the EU’s rule making with respect to financial services. It is therefore all the more important that we maintain our ability to play a full part in representing the UK’s interests in global bodies such as the Basel Committee and the International Organisation of Securities Commissions. Article 219 says that we will have to follow the EU’s position on all those bodies. [Interruption.]
Let me say this frankly to my hon. Friend: there is no deal that is negotiable that involves leaving the EU and maintaining the financial services passport. That is a fantasy world outcome. There will not be passporting. What we have negotiated with the European Union is an enhanced equivalence approach that will allow us to maintain our vital financial services networks with the European Union in the areas where there is significant financial services trade between us and to do so in a way that will provide the reassurance that commercial companies need in London to continue operating.
A mere equivalence finding is of no use to a company operating a book of derivatives worth several trillion dollars when there could be an abrupt ending of the equivalence arrangement unilaterally by one side. There has to be a more structured basis for that co-operation in the future. We have agreed that with the European Union, and I absolutely agree with my hon. Friend’s point that, even though we will not have direct influence over new European Union rules, we can have a significant influence over the shaping both of the global rules and, indeed, the European rules.
Over many decades of membership of the European Union, the UK has had a huge influence over the EU’s financial services regulatory environment. We have done that not through voting power, but through the skill, the diligence and the commitment of our civil service and industry teams who have engaged in Brussels and who have provided their expertise to try to shape the European Union’s financial services regulation in a way that is effective and that works for us all, and we will carry on doing so in the future.
I am very grateful to my right hon. Friend for giving way and I very much appreciate the realistic point that he makes about what is on offer to my constituents in the financial services sector. Does he agree that it is precisely because this is the best deal that we are likely to get and that it gets us into transition where these important technical matters can be resolved that it has been welcomed by all the representative bodies of the financial services sector across the country?
That is exactly right. It has been welcomed by all the major bodies. It has been welcomed by the City of London. First, this deal gives us the transition period, which is a vital respite for business in preparing for the future, and it gives us a commitment to a future deal that will protect our economy and, in particular, our financial services sector.
At the Budget in October, I made a Brexit prediction. I predicted that a deal that creates confidence in a smooth transition and a close future partnership will not only protect our jobs, businesses and prosperity in the long run, but deliver a short-term deal dividend for Britain. The Bank of England last week published its modelling of a range of scenarios to assess the potential impact as the economy makes the necessary adjustment to reflect the new trading relationship between the UK and the EU. The Bank estimated that a negotiated deal could boost British GDP by 1.75% in the short term, as businesses and consumers alike express their confidence in the future, while leaving the EU on WTO rules and without a transition period could cause a recession, with GDP reduced by up to 7.75% and unemployment rising to 7.5%. The Bank of England is clear: a no-deal exit would mean jobs lost, food prices up, house prices down and wage growth lower.
Businesses have made their views clear. The Federation of Small Businesses called this deal
“a welcome step back from the no deal cliff edge.”
The Institute of Directors warned that only 14% of its members
“would be ready to cope with a no deal outcome in March”.
The CBI has described no deal as a disaster for the economy.
This House has before it a deal that can deliver the certainty that will unlock the potential of our economy and assure Britain of the brighter future it craves. Let us not be the generation who have to explain to our children and grandchildren why we let that opportunity slip from our grasp. Let us choose now to move on to that brighter future, not to go back to square one with continuing uncertainty, division and disharmony.
As we make this decision and exercise our solemn duty in this Parliament in the interest of the nation, let us not forget the progress that we have made and what we would be putting at risk with no deal: eight straight years of growth; employment at a record high; 3.3 million more people in work; higher employment and lower unemployment in every region and every nation of the United Kingdom; wages growing at their fastest pace in nearly a decade; and the proportion of low-paid jobs at its lowest for at least 20 years. Britain is leading the world in breakthrough technologies—from biotech to fintech, and from robotics to genomics—and at the cutting edge of a technological revolution that will underpin our prosperity and success for decades to come, if we get Brexit right.
I have been listening carefully to the Chancellor’s speech. At the very beginning, he said that divided nations are not successful nations. I am inclined to agree with him, but how does he square that comment with a potentially differentiated deal for Northern Ireland that will leave Scotland at a competitive disadvantage?
The Chancellor talks about record numbers of people in employment and says that unemployment is lower, but that is not the case in relation to disabled people. Does he agree that this Government’s record on disabled people is one of more disabled people out of work and more on lower wages?
I agree with what the Chancellor says about the dire problems caused by no deal. However, he described the transition period as a time in which business could prepare for the new world. The truth is that the Government will be negotiating in parallel with those businesses trying to make changes, so they will not know the destination and will not be able to use that time because the fact is that it is uncertain.
The hon. Lady is too absolutist. Yes, of course there is further negotiation to be done, but the shape and key elements of the deal are clearly set out in the political declaration. I have described some of them already today. Business will be able to begin to prepare. I completely accept that further clarity will arise during the ongoing negotiations in the transition period. I am sure that she has talked to businesses, so she will know that this is the way that business wants to go. The alternatives—of a no deal exit, or of trying to overturn the referendum decision and risk fracturing our country for a generation—are too awful to contemplate. We have to take this opportunity that is presented to us to protect our economy and to heal our country.
To protect the living standards of the people of the whole United Kingdom, we need to act now. We need to act now to end uncertainty, to protect jobs, businesses and prosperity and to begin to heal the divisions in our country. But what if we do not? What if we turn our backs on this opportunity of a negotiated exit and a transition to the future? I have heard that we have nothing to fear from no deal—nothing, that is, except a cliff-edge Brexit in just four months’ time; the end of frictionless trade with our biggest export market; restrictions on our citizens travelling in Europe; and being the only developed economy in the world trading with the EU on purely WTO terms with no customs facilitation agreements, no data sharing or protection agreements and no approvals regime to allow our industries to trade with their nearest customers and suppliers—just tariffs, paperwork and bureaucracy.
UK car exports would face tariffs of 10%. Many clothing exports would face tariffs of 12%. Agricultural exports would face even higher tariffs. Almost 90% of UK beef exports and 95% of lamb exports go to the EU, where they could face tariffs of over 70% and 45% respectively.
Did not the Bank of England, the Treasury and the IMF all incorrectly forecast economic woe if the people of the United Kingdom voted to leave in 2016? Indeed, they predicted 500,000 job losses before we even Brexit. As the Chancellor has outlined very well today, our economy is growing and, importantly, employment is increasing. There have been fantastic results since we voted to leave. If he was standing at the Dispatch Box today and arguing for a WTO agreement, the City of London and everyone else would still support him because they would have the leadership that the Government would be providing. The fact of the matter is that this country requires leadership to leave on WTO terms, not criticism about leaving.
I am afraid that the hon. Gentleman is just wrong on the question of the financial services community and WTO. The financial services community would not support a WTO exit. That would be the worst possible scenario for financial services, with no time for preparation. Frankly, given the role of financial services in our economy—7% of our GDP—and their even larger role in our fiscal economy, accounting for over 11% of our fiscal revenues, anything that damages that industry will be extremely damaging to our economy and our public services.
The Chancellor is as kind as he is funny.
If the Chancellor sincerely believes the situation that he has just described to us and if he cannot convince this House of that situation on Tuesday, will he resign because he has clearly lost the confidence of this House?
I regard my job as to go on making the case for a sensible middle way out of this situation. I do not believe that we can afford the economic cost of a no-deal exit, but I equally do not believe we can afford the political and societal costs of trying to undo the decision of the British people in the referendum. We have to find a negotiated way forward. The Prime Minister has presented us with the route forward, and we have to take it.
I am very reassured to hear what the Chancellor has just said, because he said in his opening statement that he felt that Brexit itself might be at risk, which of course is very much at odds with what the Prime Minister has promised us. Will he go on reassuring people like me that the will of the people will be followed by this Government?
One of the things that really concerns businesses is the availability of skills with this deal. At the moment, they know that there is a plan for growth, which the Government have in the light of their abysmal record on productivity, but that plan cannot be delivered if skills are migrating back to the EU. How will the Chancellor address that?
The Government are clear that freedom of movement will end as we leave the EU, but as I have already said, that is not the same as shutting down migration. Once we regain control of our own borders, we will run our immigration system in our own interests, taking account of the needs of British society and the British economy, ensuring that we have the skills needed for our businesses to operate and our national health service to function properly, but at the same time making sure that the incentives exist for our businesses to train and upskill our indigenous British workers. We have to make our choice as a nation.
Key sectors in the north-west, such as the chemicals, aerospace, pharmaceutical, nuclear, and food and drink industries, involve high-paying, high-skilled jobs. Will my right hon. Friend comment on the impact on those jobs if this deal is not agreed?
My hon. Friend could have added that those industries also have a high trade penetration with the European Union, and they depend critically on maintaining open and free-flowing trade arrangements with it. The deal before the House today allows us to maintain those trading patterns with the European Union and protect our supply chains, businesses and commercial relationships, while also having the opportunity to go out and make new trading partnerships with friends, old and new, around the world. In my view, that is the best possible outcome for businesses in my hon. Friend’s constituency.
We have to make our choice as a nation, and it falls to this House to act on the nation’s behalf, setting aside narrow party interests and focusing on what is in the national interest of our United Kingdom. After two and a half years, it is time to choose and time for Britain to move on. This deal will ensure that we move forward as a nation, taking back control, protecting jobs, getting business investing again, growing, thriving, and bringing the nation back together. It sets the United Kingdom on a course for a prosperous future, with a close relationship with our biggest trading partner and the ability to strike trade deals with the rest of the world. It supports our economy and lets us get back to the priorities that the British people elected us to deliver: investing in the infrastructure and skills of the future, keeping taxes low, reducing our debt and supporting our vital public services. Let us get on with it. Let us back this deal, honour the referendum, protect our economy and work together in the national interest to build a brighter future for our country.
Next week, we will make one of the most significant decisions that most hon. Members will ever make in this House, and it will impact on current and future generations. So far, hon. Members have ensured that we approach the debate leading to that decision with the seriousness of tone that it warrants—indeed, I think we have seen some of the best of the House over the past few days—and we have to find a way through.
On Wednesday, my right hon. Friend the Member for Leeds Central (Hilary Benn) said:
“My final plea to the House is as follows. Now is the moment to tell each other the truth… No one is going to get everything they thought they would get. No one is going to receive all the things they were told they would receive. All of us are going to have to compromise, and we are going to have to find a way forward that a majority can agree upon.”—[Official Report, 4 December 2018; Vol. 650, c. 802.]
I fully concur with those sentiments, and that is what we are about in this coming period.
I wish to focus on four points—I recognise that a large number of Members wish to speak, so I will be as succinct as possible. My first point, on which I hope we can find widespread majority and common ground across the House, is that we must seek to prevent a no-deal situation occurring by either imposition or default. Secondly—and I say this in as straight a way as possible—it is increasingly obvious that the Prime Minister’s deal is neither politically nor economically acceptable, and neither is it capable of bringing the House or country together.
Thirdly, as the House looks for an alternative, Labour has proposed a plan that we believe could unite the country, by addressing the concerns raised in the referendum campaign while securing the benefits of a close and collaborative relationship with our European partners. That is what we are about. My fourth point is an expression of a worrying concern, given the current state of our economy, about the impact of a bad deal on our communities.
As we know, next week the Government’s deal will go down in flames, whatever putative deal is in the mind of the right hon. Gentleman will get nowhere, and the UK will look down the barrel of no deal or no Brexit. When looking down the barrel of no deal or no Brexit, will he also pick up a microphone, look at the camera and tell the people what he would choose: no deal, or no Brexit?
I would choose what the House is seeking—in good will, I believe—which is a compromise that secures the will of the people while at the same time protecting jobs and the economy. [Interruption.] Government Members shout that that is the current deal, but at some stage in the next few days reality will dawn on people that it is highly unlikely that that deal will secure a majority position in the House. We have to be honest with each other and take this opportunity for an honest expression of views. Not only will the deal not secure a majority in this House, but it is certainly not bringing the country together.
I, too, welcome the right hon. Gentleman’s approach and the tone and tenor of his opening remarks. I hope that during his speech—perhaps not immediately—he will lay out his criteria for acceptance of whatever the outcome should be, not in terms of his rather artificial six tests, but real criteria in the national interest.
I think we are all of a common purpose, which is to protect the economy and jobs. The six tests simply seek to hold the Government to their own statements, but I do not want to be dragged into a knockabout about that. We are beyond that now; we are now in a situation where the country expects us to work together to secure a majority.
The right hon. Gentleman’s third point is no different from the approach that the Government have taken, so there is clearly a unanimity there. He started his speech in a serious and sober tone, which is to be welcomed. However, my constituents fear—as do I, and many Government Members—that warm words butter no parsnips and that in his pursuit of political instability through a general election, he is prepared to sacrifice the jobs and economic opportunity that he and I hold dear, on the altar of party politicking.
Let me deal with that. I have with me copies of Labour’s composite motion on Brexit for conference—some of them have Labour party application forms on the back, which might interest the hon. Gentleman. That was a joke—[Interruption.] Not a very good one. At conference, we gave priority, which we have upheld, to securing a deal that will protect jobs and the economy. Only if we cannot achieve that do we have the fall-back position of a general election, but we are striving as best we can to secure the best deal.
I appreciate the opportunity that the shadow Chancellor has today to outline some of his views on this important matter. During his comments, will he also address the backstop issue and indicate to the House whether the Labour party would drop the backstop and the Northern Ireland protocol altogether? How will he ensure that Northern Ireland is treated fully as an integral part of the United Kingdom going forward?
I will come on to that, but the point we have consistently made is that we would not need the backstop; we want a permanent customs union and a relationship with the single market.
Let me press on. Some, I know, long for a no-deal Brexit. I want to mildly chide the Chancellor because he was among the earliest to set that hare running. In an interview in January 2017, he unwisely promoted the idea of changing our economic model to make our country what was described as a low tax haven off the coast of continental Europe. Some seized on that to provide a vestige of credibility for their campaign to crash out of the EU.
The Government have put the cost of no deal at potentially a staggering 9.3% of GDP. The Bank of England said that a disorderly no-deal Brexit could cause more economic damage than the global financial crash of 10 years ago, with house prices crashing by 14% and unemployment reaching nearly 6%. I appeal to all hon. Members to recognise that we have a duty to our constituents not to allow that to pass. I give this assurance: Labour will not countenance no deal and will work assiduously to avoid it.
Let me also say this. The Government’s threatening Members with the prospect of a no-deal Brexit to engender support for their own deal serves only to reveal their desperation. It is proving to be completely counterproductive.
Would the shadow Chancellor abandon his commitment to remain in the customs union if the backstop were not there and there was an absolute legal requirement for the 27 member states to reach a free trade agreement within the initial transition period?
We believe that a permanent customs union is an essential part of the architecture for the future relationship that will secure our prosperity, and it would benefit the overall economy.
Far from influencing Members to back the Prime Minister’s deal, I believe that the threat of no deal, used in this way, is actually strengthening the momentum to secure an alternative approach.
I move on to the Prime Minister’s deal. It is clear that it is bad for Britain. It does not protect jobs or living standards and would leave this country worse off; it does not even respect the Prime Minister’s own red lines. It risks indefinitely tying the UK to agreements over which we will have no say whatever. It does not include a permanent customs union; it does not protect employment or environmental rights; and it does not deliver a strong relationship with the single market to protect businesses or, crucially, to allow them to plan with any certainty.
My hon. Friend’s position is the same as mine: I campaigned for remain, but my constituency voted leave. People are looking for a compromise that will work; the problem with the Government’s proposal is that it will not work—and they know that.
I want to get something absolutely clear with the Chancellor. For the millions who work in the financial services, the deal and framework give no clarity on what any equivalence regime might look like. It damages the country politically and, most importantly, economically. We were initially told, and the Chancellor has repeated this today, that we would secure enhanced equivalence. Paragraph 38 of the framework starts:
“Noting that both Parties will have equivalence frameworks”.
Will the Chancellor confirm that an enhanced equivalence deal has been signed already? Enhanced agreement is what we were offered and promised by the Chancellor. There is no reference to enhanced equivalence, only to equivalence. That means greater insecurity for the finance sector, one of the key sectors of our economy.
In this House and across our families and communities, we would love this country to come together and unify. However, does the right hon. Gentleman agree that the vagueness of the declaration on the future relationship is making that entirely impossible? Rather than healing the divisions, it will keep them rumbling on for years and years.
I watched the hon. Lady’s contribution to the previous debate; it was interesting how her words coincided with those of Government Members. The use of the words “best endeavours”, “ambitions” and “sought for” gave such uncertainty that it was impossible for the general public and others to understand the direction in which the Government are going in the long term. I concur with the hon. Lady’s view.
I must press on. It is not just Labour Members who are pointing out issues with the finance sector; Members from all parties are doing so, including some on the Government Benches. That view is backed up by economists of many viewpoints in their assessment of the Prime Minister’s deal—including, it seems, the Government’s own. The official analysis produced last week was far short of what was promised, as we said at the time. It took as its starting point the Chequers proposals, which have long been discarded. In doing so, it failed to live up to the standards of transparency that we should expect when engaging in critical decisions such as this.
Even in what they did publish, the Government admitted last week—as the Chancellor has again today, I believe—that their deal would make Britain worse off. In the closest scenario to the possible deal, we could see GDP nearly 4% lower as a result of the Government’s approach to Brexit. To put that in context, this year that would be around £83 billion. In the long term, the damage is likely to be even greater. Worryingly, the Chancellor described £83 billion being wiped off our economy as a “very small economic impact”. Maybe there will be many “little extras” to follow in future.
What has happened is clear: the deal has not convinced the Government side and certainly has not convinced the people. It has not convinced a majority in the House so far.
The Government analysis estimated that the impact of trade barriers alone could mean an average drop in wages of 3%—£800 a year, in today’s terms. The regional growth impact is worst in our exporting regions such as the north-east and the west midlands. Other organisations have come to similar conclusions. The Bank of England said that GDP would be almost 4% lower by the end of 2023. The National Institute of Economic and Social Research put the damage at £100 billion in real terms.
Does my right hon. Friend agree that the uncertainty about EU free trade agreements, which currently cover our trade relations with more than 70 countries, is set to be hugely damaging to businesses up and down the country? They are currently worth more than £150 billion.
Others have said that the knock-on consequences of the uncertainties are catastrophic, and I do not disagree.
Economists from UK in a Changing Europe, working with the Institute for Fiscal Studies, estimated that the public finances could be worse off to the tune of nearly 2% of GDP, which would mean £40 billion if it happened today. There is no way of dressing this up: if the House approves the Government’s deal, every region of the UK—every sector, every household and business—will suffer.
Let me deal with the backstop that was arranged. Remarkably, the Government have published no specific analysis of the consequences and cost of their proposed backstop. We now know from the Attorney General’s advice, which was prised from the Government and they were forced to publish, that there will be new barriers to trade between Northern Ireland and Great Britain, that there will be new barriers to trade between the UK and the EU, and that the backstop could be permanent. I quote directly from the Attorney General’s advice, which says that
“the Protocol would endure indefinitely until a superseding agreement took its place, in whole or in part, as set out therein. Further, the Withdrawal Agreement cannot provide a legal means of compelling the EU to conclude such an agreement.”
Does my right hon. Friend agree that that kind of arrangement really puts this country over a barrel in the subsequent trade arrangements, because such a time limit weakens our position and makes it far less likely that we will be able to come to a good conclusion?
Yes, as my right hon. Friend the leader of the Labour party pointed out the other day, the timing does put us over a barrel. What is the incentive for the EU in this situation where we have given all the cards to the other negotiators?
So we are now faced with a prospect of new trade barriers and the potential for an indefinite backstop, but we have no assessment from the Government of what this will mean for the economy. Astoundingly, according to the Attorney General’s legal advice,
“for regulatory purposes GB is essentially treated as a third country by NI for goods passing from GB into NI.”
Others have had their say on the constitutional implications of the backstop—a rod that the Government have created for their own back. But the Government’s refusal to include prolonged membership of the backstop in last week’s economic analysis leads us to conclude that either the Government do not know what the effect of remaining in it would be, or if they do, they do not want us to know the cost and economic consequences of an indefinite backstop.
If we leave under this agreement, we would have free trade. We have two economies running in Ireland at the moment, one with the euro and one with the pound. Does the right hon. Gentleman agree that that would carry on under this agreement because, as we would be leaving the EU, the backstop is an insurance policy or a legal ramification to this agreement?
The backstop could remain permanent. We have had confusion this morning on the advice from the House of Commons Library and the Chancellor about how it could be ended or a transition deal extended in some form. There is absolute confusion at the moment, and we are now undermining the relationship with one of our biggest trading partners as a result.
One organisation, the National Institute of Economic and Social Research, has estimated that by 2030 we could see a £70 billion reduction in national GDP, in 2016 prices, as a result. Once the Prime Minister accepted our argument for a transition period, she argued that it was right because it would mean only one change for British businesses. Now we face shifting from a transition period to a backstop arrangement, and then to a free trade deal. This is not what was promised. We do know, however, what the Chancellor thinks of the backstop arrangement because he has said so:
“I’ve been clear from the outset that I do not like the backstop. I don’t think the backstop is a good arrangement for our economy, I don’t think it’s a good arrangement for our union.”
I fully agree.
In fairness, the right hon. Gentleman is absolutely right, and it is perfectly legitimate to shine a light on the issue of the backstop, which causes a lot of us concern, but can he help me to understand something? Under his proposal, if the United Kingdom were to remain in a customs union, would there not still need to be a backstop in any event, because we would be outside the single market? Is there not a concern that it does not really solve the issue? I ask that respectfully and in a spirit of inquiry.
I believe that under a comprehensive customs union agreement, it is so much more unlikely that there would be any need for that fall-back position, and we would be able to offer permanency in an agreement rather than something that is a defective insurance policy.
Others may agree with the Chancellor on his initial assessment, and, in that case, I cannot see why this arrangement—
Let me press on.
A variety of commentators have criticised the Prime Minister’s proposals, none more scathing than Mervyn King, the former Governor of the Bank of England. Leaving aside his description of the Government’s handling of this issue as
“incompetence of a high order”,
overall he says:
“It simply beggars belief that a government could be hell-bent on a deal that hands over £39 billion, while giving the EU both the right to impose laws on the U.K. indefinitely and a veto on ending this state of fiefdom.”
Many will share the view expressed by Nicole Sykes, the CBI’s head of EU negotiations, which were revealed in an email where she said that there is
“no need to give credit to negotiators I think, because it’s not a good deal.”
Let me move on to my third point, which is Labour’s alternative. I believe that the majority of hon. Members in this House agree that the Prime Minister’s deal is not a good deal. So over the next few days, and possibly—as was hinted at this morning—for even longer, Members will be searching for a way forward. I believe that Labour’s proposals for a new approach to our European relationship offer that way forward. Our European partners will have seen that the Prime Minister’s deal that they reluctantly endorsed has not proved to secure the support it requires in this House or in the country. I believe that they will see the need, now, for a constructive renegotiation if both their and our own economic interests are to be protected in the long term. Indeed, that is what has happened in the past.
Labour’s new deal will secure the economic interests both of ourselves and our European partners. It rests on three posts. Labour would prioritise a permanent and comprehensive customs union—yes, with a British say in future trade deals. We would deliver a strong, collaborative relationship with the single market—and yes, we would guarantee that the UK does not fall behind in rights for workers, consumers and the environment. Labour has always been clear: we respect the referendum result, but we have always said that we want a Brexit that puts jobs and the economy first—and that is exactly what Labour’s approach will do.
The right hon. Gentleman said that Labour is looking for a comprehensive customs union agreement in which Britain will have a say in future trade agreements, but if we were in a customs union with the European Union, we would not have a say on future trade agreements. Can he clarify that?
Let me press on now.
My fourth and final point is the vulnerability of our economy to a bad Brexit, and, indeed, the vulnerability of so many of our people—the people we represent. The Prime Minister’s deal does not give the certainty our country needs. Even the trickle of muted support from businesses when the deal was first done has now been replaced by a deafening silence. That is because businesses and trade unions alike now understand that under the Prime Minister’s deal we are facing, in 2020, more uncertainty as this Government then decide whether to extend the transition or fall into an unlimited backstop.
If a bad Brexit is forced upon our country, and the economy and jobs are not protected, many of our people who have suffered from eight years of austerity will suffer even more. Indeed, many of us believe that it has been the economic failures of the past and the present that helped to deliver the Brexit vote. I take no pleasure in saying that it was a vote from which the Government seem almost determined to learn nothing. We have an economy that has seen wages grow more slowly than in any other advanced country in the G20.
The right hon. Gentleman started in a welcome tone of offering cross-party collaboration. I was waiting to see what he proposed as the starting point for the Labour party. He spent about 30 seconds on that, in a couple of sentences, and he is now back to attacking the Government and the withdrawal agreement. Am I right in understanding that he essentially agrees with me that we should stay in a customs union and collaborate with our European partners on international trade deals? He talked about us collaborating with the single market, which I do not quite understand. Nowhere in the world is there an open border between two countries unless they have a customs union and regulatory convergence. Is he advocating that? That not only solves the Irish border problem, but eases the economic consequences of leaving the European Union to a considerable extent.
I thank the Father of the House for his intervention. Let me make this clear. First, we want a permanent customs union, and we want to ensure we have a future say in future trade deals that reflects the strength and size of our economy. Secondly, we want a close collaborative relationship with the single market, which we believe we can achieve, but we also want the ongoing protection of regulations on employment, the environment and consumer rights. Those are the negotiations that we wish to undertake—if not in government, as a Parliament.
I think the hon. Gentleman has already intervened twice. That is absolute generosity. I will press on, because I know that many other Members wish to speak.
The Government need to recognise what motivated the Brexit vote. Over time, industries that sustained whole communities around the country have been destroyed or allowed to wither, tearing the heart out of our towns, from fishing ports to mining and manufacturing communities. This week’s report from the Joseph Rowntree Foundation should be a wake-up call to us all. It confirmed that 1.5 million people are living not just in poverty, but in destitution, including 365,000 children. If we are to learn anything from the referendum vote, it is that so many of our people want change, and the decision on Brexit is fundamentally a choice about the kind of country we want to live in.
Does my right hon. Friend agree that, whatever deal we come up with and wherever we move to on Brexit, we need to recognise those left-behind communities and what drove many people to vote leave, and we therefore need a major package of economic and social reconstruction in those areas, to support them?
We need a major package, but one of the key criteria of that package is that it has to go beyond London and the south-east. It has to ensure that we invest in our regions, coastal towns and small towns—not just the cities. It has to bring everyone with us, as the result of a prosperous economy where prosperity is shared by everybody.
Labour has set out our stall. We stand for change, for an economy that works collaboratively and closely alongside our European partners, for an economy that invests in all the regions and nations of the UK, and for higher wages, driven by investment in skills and greater trade union rights. That is what our proposal embodies. I firmly hope that Members will agree to reject the prospect of no deal. Let us accept that the Prime Minister’s deal will not protect our economy and has to be rejected. Let us work together to secure the long-term interests and future prosperity of our country and our constituents.
May I start by congratulating my right hon. Friend the Chancellor on his speech, on his prudent and sensible stewardship of our economy at this difficult time and on the extraordinarily clear way in which he expressed his intent?
I should remind the House that I was a staunch remainer. I campaigned vigorously to remain, and I would certainly do so again. I am proud that my constituency voted to remain by 53%. I am personally deeply saddened by the result of the referendum, and I believe that our wonderful country made an historically bad decision that we will long regret. However, the country voted to leave the European Union in the referendum of 2016—the biggest democratic exercise in our history. I am first and foremost a democrat, and I believe strongly that that vote must be honoured.
At the time of the referendum, the then Prime Minister, my friend David Cameron, assured the country that the result would be respected. I echoed that assurance at the last election and confirmed that, however much I regretted it, I must support the democratically expressed wish of my country. I wish to make it clear that, while there are serious disagreements on both sides of the House, I believe we all have the best interests as we see them of our country at heart, and that we fight the good fight with confidence but also proper respect for those who hold long-standing views that are very different.
I was very taken with the speech by my right hon. Friend the Prime Minister at the beginning of the debate, and I wish to pay the warmest tribute to her for her tremendous courage, doggedness, diligence and determination to arrive at a deal in the national interest. I believe that she has achieved in this withdrawal agreement an essentially pragmatic compromise, which she rightly justifies as being a realistic conclusion of that which is possible. I hope the House realises that there will not be a better deal on offer and that, if this arrangement is voted down, no different deal will miraculously appear and there will be a profound period of uncertainty and risk that we might crash out with no deal, which would, by common consent, be a disaster for our country.
At the end of the day, this withdrawal agreement will leave almost nobody satisfied, but it gives all sides of the argument something. It is not a perfect deal, and it was never going to be, for that is the nature of a complex negotiation. It is indeed a compromise, and it would be a fatal mistake, as the Prime Minister said, to let the search for the perfect Brexit prevent a good Brexit.
It is also important for the House to acknowledge that the Prime Minister, by ignoring the strident noises off, under immense pressure from all sides of our own party and the House, has managed to temper these negotiations in such a way as to ensure that we will be able, in time, to retain the closest partnership with our European friends and allies. However, I remain deeply anxious that a no-deal Brexit or a second referendum, which would likely be inconclusive after a vicious and harsh campaign, might push Britain into the kind of loathsome and hateful partisan bitterness that now so disfigures American public life and is so damaging to its democratic settlement and political discourse. We do not want that in this country.
What will be achieved by support for the withdrawal agreement is one thing, but as the House knows, there are years of hard and difficult negotiations ahead. After the most careful thought, I have concluded that what is proposed in the withdrawal agreement substantially delivers on the referendum result and must thus be honoured. It is clear that, under these arrangements, the United Kingdom will be leaving the political union, ending free movement, leaving the customs union, leaving the common fisheries policy and the common agricultural policy, ending the jurisdiction of the European Court of Justice and regaining the chimera of our sovereignty. The agreement is thus entirely deserving of the House’s support.
The right hon. Gentleman said at the beginning of his speech that he believes the country made a mistake in the referendum that it will regret. How can he, in his conscience, not continue with that argument and persuade people that the best place for us is within the European Union?
I tried at length in my own inept way to explain why that was the case. I believe that the Government must honour the result of the referendum, democratically expressed in the biggest electoral exercise that this country has ever had, and not to do so would be a disgrace. In my view, this plan has very carefully and very cleverly managed to separate Britain from the European Union—46 years of combined earnest endeavour and legislation—with, frankly, miraculously minimum damage to each side. We need to keep it that way for this is a golden prize, given the circumstances. It would be extremely ill-judged to throw it away, which, above all, would be contrary to our national interest.
I am confident that we can then move on to building a stable future framework, as clearly set out by the Chancellor, which will formalise the great importance of our future relationship with our European friends, allies and partners. There is only one agreed proposal on the table. We owe it to our country to lay aside our differences, to accept that our great national traditions of pragmatism, common sense and compromise have never been more vital than now and then to come together, as the Prime Minister said, as “one Union of four nations”, to reassert the confidence that we should most definitely have in the opportunities that lie ahead for our nation’s future, if only we can grasp this nettle and move on. It will be the experience of many right hon. and hon. Members on all sides of the House of Commons that most of our fellow citizens devoutly wish us to get this done and to focus on the things that they really care and worry about daily—schools, policing, the national health service, transport, the environment and just getting from A to B—and all the other issues that, inevitably, have not had the attention they should have had as the Government have had to focus so much of their necessary effort on coming to this moment.
I am approaching the end of my parliamentary life. I am truly sad beyond words that our wonderful country has reached this pass, but I feel very strongly that we really must not reject this agreement and thus go back to square one, which would mean perhaps another deeply divisive and very unhappy referendum. In turn, that would mean the most damaging uncertainty economically and continuing division that will inevitably threaten the jobs and lives of our constituents and investment in our economy. I am afraid above all that the House would earn the undying contempt of the British people if it does not have the courage and vision to grasp this deal, however we may feel about it, in the interests of the greater good.
I am sure that many right hon. and hon. Members on both sides of the House remember Lewis Carroll’s wonderful poem, “The Hunting of the Snark”. It includes these lines, which I believe are appropriate:
“But the principal failing occurred in the sailing,
And the Bellman, perplexed and distressed,
Said he had hoped, at least, when the wind blew due East,
That the ship would not travel due West!”
To coin a phrase from a greater, kinder and more resolute period in our national life, “Come, let us go forward together and settle this now”.
May I say that I probably would not agree with the conclusion reached by the right hon. Member for Mid Sussex (Sir Nicholas Soames), but it was a pleasure to hear that speech?
I know that the Chancellor has had to go to a Cabinet committee meeting—I suspect there may be a number of those between now and next Tuesday—so I understand why he is not in his place. However, I would like to say that I agree with him in one particular regard—that to have no deal and to revert to WTO rules would be the worst possible outcome we could reach.
I would also say that I thought the Chancellor was incredibly sincere when he said that not to agree with the Prime Minister’s arrangements in this withdrawal deal would fracture society. I have absolutely no doubt of the sincerity with which he said that, but as a democrat, I say no less sincerely that, when the circumstances change and the actual consequences of what we may embark on become clear, we have a right to change our minds, whatever that means to any individual.
I wish to restrict my remarks mainly to issues of trade, investment and migration, as a reduction in trade and investment and a reduction in migration due to an ending of the free movement of people will be the main drivers of a reduction in GDP growth, productivity and living standards for citizens. Unless one views this as some kind of nationalistic project, surely to goodness our primary concern should be the economy, the changes to it, the impact on it and the impact on citizens.
On the decision to end free movement, as the Prime Minister says, “once and for all”, all of the Brexit scenarios modelled by the Treasury show GDP in 15 years’ time to be lower, and lower still when the impact of ending free movement is modelled. So it is time to stop pretending that ending free movement is a good thing. It is not: it is self-evidently economically damaging.
Intent on mitigating some of that, I read the withdrawal agreement in detail. The section in the political declaration on mobility states:
“The mobility arrangements will be based on non-discrimination”—
that is good, but
“free movement…will no longer apply”.
The parties will wish to negotiate short-term visits and visits for study, training and youth exchanges. They will consider social security issues. They will explore the possibility of facilitating the crossing of respective borders for legitimate travel; that means it will not exist on day one. They will allow travel under international family law, or for judicial co-operation in matrimonial matters, in matters of parental responsibility and the like. Paragraph 59 of the document states:
“These arrangements would be in addition to commitments on temporary entry and stay…referred to in Section III”.
Those are limited areas. I will come back to that in relation to agriculture, but I do not want anyone to think that this agreement will in effect allow travel as it currently exists; it simply will not.
All the serious pre-referendum assessments of the likely impact—every one—were negative. They were almost all in the minus 2% to minus 9% GDP range over the forecast periods they looked at. Even the OECD central estimate was a 5% loss of GDP over the forecast period. The subsequent analysis, the “Cross Whitehall Briefing”, suggested that GDP would be 1.5% lower in 15 years under an EEA-type scenario, 4.8% lower under a free trade agreement scenario and 7.7% lower under a mitigated WTO-type scenario. It is worth noting that even that final scenario was based on a smooth, orderly no-deal exit, not a disruptive, cliff-edge Brexit. It is, therefore, no surprise that the Bank of England Brexit analysis shows GDP growth lower, unemployment higher and inflation steeply upward the more disorderly the Brexit. Pre-referendum, the figures for Scotland on a WTO rules outcome suggested GDP down 5%, real wages down 7% and employment down by 80,000 jobs, or about 3%.
Since the withdrawal agreement has been published, there have been further assessments, which have been referenced today. The NIESR has suggested GDP growth will be reduced by £100 billion a year. The LSE has suggested that GDP will be lower—again, in the minus 2% to minus 9% range. The Scottish Government have demonstrated that, under an FTA agreement, Scottish GDP will be down by about £9 billion, which is the equivalent of £1,600 per person.
This is actually the problem with this debate. There has been a series of almost universally identical assessments from dozens of different organisations, yet some people—I want to be careful about the tenor of this—have ignored all expert opinion. There has been the gut instinct reaction, “That’s what we’re going to deliver and”—by sheer force of will—“things will be better.”
Hold on a moment.
I think it is important—this is why I have laid it out in this way today—to demonstrate that, from the start of the exercise, pre-referendum, between the referendum and the withdrawal agreement and since the withdrawal agreement, expert opinion tells us one thing. The hon. Lady is perfectly at liberty to disagree with that. She might come back in five, 10, 15 or 20 years and say, “I told you so. It wasn’t that bad.” But if we go in blindly to something as substantive and perhaps irrevocable as this and get it wrong, the public will never forgive us.
The hon. Gentleman, quite rightly, makes the point that a number of expert economic opinions all say much the same thing, but of course that is exactly the same as was the case before the referendum. [Interruption.] Members may not like the facts, but I will repeat the facts to them. Exactly the same was true before the referendum. The Government’s forecast was in the middle of those expert opinions and the outcome was approximately £100 billion out in the first two years after the referendum. So there is a reason to say that the experts may be all talking within a hall of mirrors.
I do not doubt that some of the assessments given for what might have happened to date, before we leave, were wrong. I was very clear from the outset of the referendum that nothing would happen. My personal view was that nothing would happen in the first couple of years. Indeed, even after we leave I do not think the impact will be immediate. But when we look at big foreign direct investment decisions on £1 billion investments to access a market of 500 million or access a market of 70 million, I suspect at that point we will begin to see some very substantial and negative consequences for the UK economy.
Does all this not prove that it stands to reason that the best possible relationship with the European Union must be membership? If the deal was going to be so beneficial for the UK economy, everybody else would want the same deal and the whole European Union project would implode. That is simply not possible and demonstrates that, no matter what people were voting for, they were not voting to become poorer.
My hon. Friend is absolutely right. I am not going to do it today, but certainly in previous debates we have gone through quote after quote after quote from Brexiteers who said that we would not be leaving the customs union, we would not be leaving the single market and we would still have the right to travel freely throughout Europe. Not everybody voted for a Brexit that was based on any single assessment damaging the economy, living standards and opportunities for their children and grandchildren.
The last of the assessments is the most recent, the Government’s assessment, which again shows a central forecast in all circumstances broadly in the minus 2% to minus 9% range. I find it extraordinary that the Government in essence have ignored every single serious assessment of the economic damage Brexit will do. What we see now with this proposal on the withdrawal agreement are rabbits caught in headlights, walking the economy towards danger, rather than pausing, thinking and changing course.
I want to pick up on an earlier comment. The hon. Gentleman said that bringing to an end free movement would be very damaging. What would he say to my constituent, a young Gloucester girl, eight months’ pregnant and badly beaten up by her European boyfriend, who is terrified that when he comes out of prison he will return to haunt her and her family, because this country cannot deport European nationals unless they have served a sentence of longer than two years? Does he agree that there are some elements where actually it would be protective, not damaging?
I am reluctant to get into an individual case. Suffice it to say we all have constituents. The same young lady may have been assaulted by a man from the same town who lives two streets away. Nationality and the ability to travel in that circumstance, however difficult, is actually irrelevant.
Before my hon. Friend’s intervention, the hon. Gentleman was making a point about looking at economic futures and the Government facing facts where growth could be less than expected. Does he not see the irony of SNP Members making that point, when reports clearly state that Scotland, were it to be separated, would face 25 years of austerity? Keeping to his more consensual tone in the Chamber, I would just say that when he quotes GDP figures and minus or plus, addition or subtraction, could he be clear to the House, because I think it is very important for all those watching, that we are talking about growth being less than forecast? Growth will still happen, but it will be less rather than none at all.
I have been absolutely clear that these figures are against the baseline. That is absolutely correct. These are figures where GDP is lower than would otherwise have been the case.
The language of the political declaration is about negotiating a future relationship. If we set aside the way in which that has been dressed up as some kind of exceptionalism that we are going to have the best deal ever, we are in essence talking about no more or no less than the vague intention to start to negotiate what the Government hope will be a preferential free trade agreement. However, the vulnerability of our economy to Brexit cannot be adequately mitigated through a UK-EU free trade agreement. That is, in essence, all we are talking about. For example, the EU FTA with Canada does include some limited provision for some degree of third country validation that is aligned with EU regulations, to facilitate the trade in goods, but it falls substantially short of securing access to the European single market that the UK or any European Economic Area member country currently enjoys. We argue that continued membership of the European single market and the customs union is vital to ensure that the UK economy continues to benefit from those current fundamental trading arrangements.
If memory serves, there was a previous assessment by NIESR that demonstrated that retaining single market membership could avoid a 60%—yes, 60%—decline in goods and services exports to the EEA by comparison with an arrangement based on WTO rules. I would also add at this point that the current arrangements do not simply facilitate trade with the EU directly. Membership of the EU has, for example, enabled Scotland to benefit from EU FTAs with more than 50 trading partners, so that by 2015 Scotland exported £3.6 billion to countries with which the EU has a free trade agreement. That trade accounted for 13% of Scotland’s international exports. In addition, although this is harder to quantify, many of the products exported from Scotland to the rest of the UK—this goes the other way as well—will form finished goods destined for the rest of the single market or countries with which the EU has an FTA. I will come back to that point, because it is important.
Of course, the rather non-exhaustive list of reasons why trade is likely to fall and drive down GDP growth, includes the increased cost of bureaucracy; uncertainty about the nature of customs arrangements; additional regulatory burdens; non-tariff barriers, which in some cases are the most significant; uncertainty about the legal basis upon which certain transactions may be carried out; and so on. Now, it is likely that some of those issue will be resolved—I have no doubt about that—but not all, not quickly and not without a cost to businesses and the economy.
If we look briefly at one or two of the ways in which the political agreement intends to take us forward, we can demonstrate how uncertain that is. On customs—this is in paragraph 27 of the political agreement—the UK has suggested a facilitated customs arrangement, or “facilitative” as it is described. But that is broadly similar to the maximum facilitation already described as fundamentally unworkable by the EU. On tariffs—this is in paragraph 23—what is said is fine in principle, but if we do not achieve that or if there is no deal, we are left with a situation where some people who support a harder Brexit are suggesting we set all our tariffs to zero and thus increase trade. However, were that to happen—this was confirmed yesterday in terms of the backstop—there is no guarantee that it would be reciprocated and it may well lead to the dumping of goods here from countries with massively lower labour costs, undermining business, jobs and prosperity here. Absolutely nothing is certain. In a sense, we are not taking a decision on an agreement; we are taking a decision on a wish list in a political statement, some or all of which may come to naught.
I have already gone through what is said in the political agreement about labour, and we are already seeing staff shortages, particularly in the rural economy. UK farms take in about 60,000 workers a year on a seasonal basis. The UK Government’s present proposal is for an evaluation scheme of 2,500 people. That does not cut the mustard. It may be that this matter is resolved in two or three years and that this issue is resolved quite successfully, but the damage will be done by then; the crops will have rotted in the fields.
I think that somebody said earlier, “This is all terribly bad news; it is all Project Fear—is there any reason for optimism?” Frankly, I do not think that there is. I do not believe that an FTA could adequately mitigate the damage that Brexit will cause. The Government’s own assessment says that an end to free movement plus an FTA would result in a decline of around 6.7% of GDP.
It was argued in the UK Government’s Global Britain strategy that we would offset a decline in trade with the EU from being outside the single market by exporting to more countries. However, fully replacing the value of EU trade will be challenging, as illustrated by the trade flows from the emerging BRICS economies—Brazil, Russia, India, China and South Africa. I will use the Scottish figures to demonstrate that briefly. Those nations account for £2.1 billion, or 7%, of Scotland’s exports. By comparison, the EU accounts for £12.3 billion, or 43%, so even a small proportionate loss in trade, or lost growth in trade with the EU would require a dramatic increase in trade—over 30%—with those countries. We would all love to see that happen across the whole UK, but I suggest that that is highly unlikely.
If the UK signed agreements with the 10 biggest non-EEA countries, including the USA, China, and Canada—a process that could take many years—that would cover only 37% of Scotland’s current exports, compared with the 43% that goes to the EU. Some of the trade simply could not be substituted. If one is selling low-margin or perishable goods to the EU that are refrigerated in a wagon overnight, it simply cannot be substituted by shipping the same stuff to Australia, Japan or China. It simply does not work like that.
Finally on trade, it is also worth pointing out that despite the Government’s optimistic assumptions, even signing a substantial number of trade deals would result in an increase in trade of less than one quarter of 1% of GDP compared with the situation today—that was confirmed yesterday—if we successfully negotiate trade deals with the US, Australia, New Zealand, Malaysia, Brunei, China, India, Brazil, Argentina, Paraguay and Uruguay, the UAE, Saudi Arabia, Oman, Kuwait and Bahrain. That is an awful lot of risk for very little potential gain.
I want to talk about two other areas briefly. The first is foreign direct investment, now a key feature of the contemporary global economy and one from which the UK and Scotland derive considerable benefits. We have seen a substantial number of jobs in Scotland owned by EU companies that have invested here over the decades precisely to have access to the European market. There is no certainty that that would stay, and in the future much of it would go.
The second point that I wish to raise is productivity. The Bank of England assessment in the past week cites academic evidence that shows how tariffs may force the reallocation of
“production toward less efficient domestic producers, lowering aggregate productivity”—
So, even if there is substitution, as many argue, it is likely to lower aggregate productivity.
I appreciate the hon. Gentleman’s generosity. All the evidence shows that inward investment is about relative advantage. It is about lower corporation tax rates and flexible labour markets. It is about a skilled workforce and our universities. Tariffs of 3% to 5% are not as important as other factors, and I suggest that he look at the record inward investment that we have seen in this country since the referendum result, to prove that point.
The hon. Gentleman is right in one regard: tariffs are important—in some areas, very important—but the non-tariff barriers, as I said earlier, may be more significant. We are already seeing skilled labour leave and not come back. We are already hearing that our universities, which he mentioned, are now worried because their academic working together with Europe is no longer there. The relative advantage of an English-speaking country with access to the EU market was there for all to see. Some people now wish to rip that up.
Every single Brexit model is bad. Investment is likely to fall, trade will most certainly be reduced, barriers will be erected, people will be poorer and productivity will be stifled. On that basis, we need to think, and think again—and quickly. As I see it today, and I will paraphrase the Prime Minister’s words from another constitutional debate: there is no positive case for Brexit, now is not the time for Brexit, and frankly, Brexit must be taken off the table.
Before I attempt to pick up on the shadow Chancellor’s final views on where we are going, rather than on where we are, I draw the House’s attention to a wider issue, which I think goes to a quite important set of facts that the hon. Member for Dundee East (Stewart Hosie) was talking about in terms of Scotland’s export arrangements. When economic historians look back on this time in 100 years’ time, I suspect that they will view Brexit as small by comparison with what has happened with the entire global trade. In the last third of the century, we have seen a huge transformation in the wealth of the world off the back of free trade. About a quarter of the world’s population, or well over 1 billion people, have been raised out of absolute poverty—$2 a day or thereabouts—by free trade. It has been a magnificent story over about one third of a century.
In that time, this has had an impact on us, too. We have gone from having 60% of our trade with the European Union and 40% with the rest of the world 20 years ago to nearly the other way around—in a couple of years, 60% will be with the rest of the world and 40% will be with the European Union. I am loth to quote forecasts, given the bad name that they are being given at the minute, but the projection—not a forecast—is that that will continue.
To pick up on the point made by the hon. Member for Dundee East, if we take the top three markets for British goods, or UK goods, in the rest of the world versus Europe, the top European ones of Germany, France and the Netherlands are dwarfed by our sales to America, China or Australia—our top three in the rest of the world. I take his point that we have to look very carefully, as we did when I was in government, at the regional balance of some of these exports, but the aggregate picture is very clear. Our trading future is more in the rest of the world than it is in Europe. This has huge implications—massively underestimated by Treasury and Bank of England forecasts over and again—for the need to keep our freedom to do trade deals to maximise our ability to exploit that.
I am not going to spend very long on the actual proposal that the Government have put in front of us, because it seems to me very clear that it will not survive the end of this debate. Very quickly, the Attorney General’s advice tells us that the backstop would endure indefinitely and that it would tie us to the customs union with no escape. That has massive implications for what I just said. The deal would still leave us, whatever the Chancellor says, subject to the rule of the European Court of Justice, albeit by a back-door and concealed route. It would see Northern Ireland carved out of the United Kingdom and tied to the European Union single market and the customs union, and it gives away £39 billion in exchange for the vaguest of political promises on a future deal. Because of all that and because we would be locked in at the discretion of the European Union, it puts us in a formidably bad negotiating position for the future. In my view, other than the constitutional issues, that is the most serious practical aspect of what is proposed. I do not believe that it will survive, which means that the shadow Chancellor’s question, “What are the future options?” is the central question of the debate.
I am grateful to the former Secretary of State for giving way. I note his reluctance to believe in forecasts, but he has not always been reluctant to forecast. In fact, on 25 May 2016, a month before the referendum, he said:
“The first calling point of the UK’s negotiator immediately after Brexit will not be Brussels, it will be Berlin, to strike a deal”.
If my memory serves me right, he became that “UK’s negotiator immediately after Brexit”. Can he tell us how the striking of the deal in Berlin went and when will we see it? Is that what he has in his hand now, or has he lost it?
People have to read more than one line of a speech. Perhaps the hon. Gentleman’s iPad is too small to carry more than one sentence. I also said that the critical part of the negotiation would not be the first two years, but the last three months, when France and Germany would determine the outcome. If the hon. Gentleman wants to quote me again, he should get it right next time.
May I make one small point? My right hon. Friend has focused on the backstop on the Northern Irish border, and he has quoted the Attorney General as saying that we could be in that indefinitely, but surely the “if” is if we decide to go into the backstop in the first place. The other option is to extend the transition. Does he not agree?
That is what is laid out in the proposal, but the transition will then come to an end, and at the end of that, we will still have to make a decision on where we are going, backstop or no. I am afraid that we are always in, and the point is that it is at the behest of the European Union, not at our behest. I have nothing against the European Union, but it is the negotiating partner that may gain an advantage from delay.
May I reassure my right hon. Friend on that point? It is clear from article 3 of the protocol that it is not necessarily a right for us to have that extended transition. We can only ask for it, and that is a different thing.
Yes, that is also true, but the general point is that the overall timetable is not in our control; it is in the other side’s control. As we have seen throughout this entire negotiation, the moment we gave away sequencing at the beginning, we gave an advantage to the other side. My right hon. Friend the Member for Clwyd West (Mr Jones), the former Minister of State, is nodding: he remembers it.
There are essentially three emblematic conclusions to this. The first is the World Trade Organisation, which we have talked about already—I doubt whether it will be a deliberate conclusion, but it is a possible one—the second is Norway, which a number of Members on both sides of the House have suggested might be the best outcome, and the third is Canada plus, plus, plus. There are compromises between them; there are mixtures of them; but those three essentially capture the possible outcomes.
Let me start with the issue on which I disagree with pretty much everyone who has spoken so far: the World Trade Organisation deal, the so-called no deal. The Chancellor called it a strict no deal, because he knows full well all the preparations that have been made in the Government to create a basic no deal, or basic negotiated outcome. There is a whole stratum, a whole spectrum, of possible types of no deal. Some of them deal with the issues that my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) raised earlier—aviation, data and so on. If this deal goes down, as I think it will in a few days, there will be a scramble in London and Brussels to start putting those one-on-one, unilateral negotiations together. So there is a range of possibilities.
Aviation and the WTO were mentioned earlier by my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston). The EU itself is looking for a deal on aviation, as we would be, so there is actually no difference. The EU still does not have a deal on aviation.
It was said earlier that all the regions in the United Kingdom would support the backstop. Members of the Democratic Unionist party in the House do not support the withdrawal agreement. Does the right hon. Gentleman recognise—I suspect that he does—that Unionists feel alienated by proposals that will weaken our position in the United Kingdom of Great Britain and Northern Ireland, because the EU will have the final say on what happens in relation to the single market and the customs union over Northern Ireland?
Let me reinforce the point that I made to the hon. Member for Bishop Auckland (Helen Goodman): I told the Prime Minister that last December, as everyone now knows.
I do not take a utopian or a dystopian view of the WTO option. There are Conservative Members who think that it will be the best option in the long run, because it is the freest in terms of outcomes, and there are those who fear it as a complete disaster. I think that it is neither. There has been an enormous amount of black propaganda about the outcome of the WTO proposal. A month or two ago, we heard that the supplies of insulin would dry up. No, they will not. We talked to pharmaceutical companies and to the NHS, and they did their checks. No drugs will dry up, full stop. My hon. Friend the Member for Mid Bedfordshire (Ms Dorries) mentioned aviation. We were told that planes would be grounded, but a European Commission briefing document showed in January 2018 that there would be EU-wide contingency measures ensuring no stoppage of aviation.
I should be grateful if my right hon. Friend looked at the evidence that pharmaceutical companies have given to the Business, Energy and Industrial Strategy Committee about the catastrophic results of a no-deal Brexit. I recall him saying that we would not need an implementation period, because we would have had our deal by now. I am afraid that it is not as easy or as simple as he appears to wish to outline.
Order. It is in order for Members to intervene, and it is in the nature and tradition of parliamentary debate in this place. However, I hope that I can be forgiven for making the point that if Members intervene and are not subsequently called to speak, they will not complain—brackets: what are those pigs I see flying in front of my very eyes?
What a pity, Mr Speaker. I enjoy interventions, as you well know.
My hon. Friend the Member for Eddisbury (Antoinette Sandbach) has misquoted me from somewhere. It was I who negotiated the implementation period element, precisely because it is not without hiccups. It is not without issues. There will be practical issues in the first year of a WTO outcome, but that does not overwhelm the big advantages—the massive advantages—of having the freedom to negotiate our trade deals in the future.
I am afraid not, on this occasion. I hope that the right hon. Gentleman will forgive me. I have just almost been given instructions.
Let me now say a little about delays at Calais. The first thing to say is that the French do not intend them to happen. I know that, in our chauvinist way, we expect the French to misbehave, but that is not their intention. The prefect of the Calais region, the representative of Calais and the head of French customs have all said in terms that they will do everything in their power—through lower inspection rates, light-touch phytosanitary inspections and the rest—to ensure that the trade between Calais and Dover will work. If there is a hiccup—we have had them before, with driver strikes and so on—we shall be able to divert 20% to 40% of the trade to other ports. That is a good example of the wild assertions that are simply not right.
I am very sorry that the Chancellor is not here, because I wanted him to hear what I had to say about the projections to which the hon. Member for Dundee East referred and on which I think he relied rather too much. It was not “The Rees-Mogg Times”, or some other organisation on one side of the debate, that criticised the Bank of England. It was a Nobel prizewinner, Paul Krugman—hardly a Brexiteer—who castigated the Bank, as did Andrew Sentance, a former member of the Monetary Policy Committee, who, again, is not a Brexiteer. Those were simply disgraceful polemical projections. They were not forecasts in any way, and I think that the Bank will come to regret them, if it has not done so already. So that is the practical element.
There is another issue to bear in mind. The WTO option is a walk-away; that is the problem—it is a walk-away. It is an outcome that we do not want, but we need it to have a proper negotiation; that is a hard fact that we have to face. We all think that we will suffer most from a WTO outcome, but that is simply not the case. There is an asymmetric arrangement here. We have a floating pound, to cite the German chief economist of Deutsche Bank, and the movement of the pound is what has protected us so far in the past two years, and it will protect us again. We have unilateral capability that nobody else in Europe will have: the ability to change our taxes and regulations to make sure we get the FDI—foreign direct investment—that the hon. Member for Dundee East talked about.
Finally, of course, we have the upside of the other free trade agreements, and that is another reason why I am sorry that the Chancellor is not present, because one of the big differences between him and me is that he does not believe free trade agreements deliver a large economic bang for their buck. The past 30 years of world history, however, show that there are billions of people in the world who might just take a different view on that.
The second option I want to talk to briefly is the Norway option. I looked at that option very carefully; indeed, I got castigated from my own side for paying it too much attention, but I thought that it was very important to ensure every single possible option was explored well, and I was approached by, and talked at great length to, my hon. Friend the Member for Grantham and Stamford (Nick Boles).
Norway plus appears to its protagonists to have three virtues. First, they say that it is the easiest option to negotiate; it involves the smallest movement and therefore is the simplest negotiation. Secondly, they say it meets the conditions of the referendum. Thirdly, they say it is the softest of soft Brexits. All those are possibly good arguments, except that they are not true. The negotiation would not be simple; we cannot simply stay in the EEA, as that does not work. Jean-Claude Piris, ex-head of the EU legal service, said in terms that we will have to renegotiate every single clause of the EEA arrangement. It will require unanimity from 30 different members, and they will exact a price. One of the advantages of Norway, we would think, is that we could control our own fisheries policy, but would we get that with a vote from Denmark, from France and from Spain? No, we would not. That is one of the problems: the negotiation hurdles are very big. It is reported that Michel Barnier said this was a possible outcome, but only in conjunction with customs union membership. With the two together, we are locked in; we are basically in a worse position than the Government’s proposal. We are basically locked into the single market—no say and no control, but in every other respect, including the free movement of people and paying money, we will be locked in. Norway does not find it satisfactory politically, and, frankly, a country like ours certainly should not. So that does not work. Finally, it is said that this option delivers on the result of the referendum. No, it does not. Free movement, money, independent trade policy, jurisdiction of the supranational courts, rule taker—on all those criteria, we fail under Norway.
So what is left? The last option is the free trade agreement. I have long thought this was the best option. This is the one that has been called Canada plus, plus, plus and super-Canada and a variety of other names, and somewhere buried in the middle of my old Department of DExEU there is a pile of papers laying out how this can be done in detail, including some legal text. The concept is simple, and that is important in this context, because we will have very limited time in the last few months to negotiate this. I made the point a couple of years ago when making this argument that these are the three months that matter: the EU always takes the negotiation down to the wire—to the last day, the last hour, the last minute, the last second, and sometimes it stops the clock to allow the negotiations to conclude. And that is what is going to happen here; I suspect we are going to go deep into time on this.
Why was this option attractive? It was attractive because we could build it from precedents. Canada is an EU-negotiated precedent, and we could add to it—this is the plus, plus, plus bit—all the bits that are not good about the Canada option. There is no decent mutual recognition agreement; we can lift that out of South Korea or the Australian deal. There are no decent phytosanitary arrangements; we can lift that out of New Zealand. So we can go back to the EU and say, “Here we have a proposal constructed entirely of your own precedents. It can’t undermine the single market, because you negotiated it. It can’t undermine the four principles, because you negotiated it.” That is the attraction of the Canada plus, plus, plus option—it is based on that template. It is all based on precedents previously negotiated by the Commission. So it is perfectly possible for us to create a draft legal text on the basis of where we are now and put that back to the EU and say, “The £39 billion rides on this. You have to agree the substantive elements before we sign off and then you have to agree the detailed elements by the end of 2019.” There is plenty of time to do that on the basis of existing boilerplate text. That is what we should be doing. We should stop grovelling to Europe and start grasping our future.
I stand proud to represent the borough of Hackney—proud that my borough voted 78.5% in favour of remaining in the EU, and proud that my borough is home to 41,500 European citizens, representing 15% of our population. And I am delighted to follow the right hon. Member for Mid Sussex (Sir Nicholas Soames), with whom I find myself in great accord in my distress that we are leaving the EU and making a long-term big mistake for this country. I celebrate the fact that the EU has brought peace and security to Europe for so many years.
But I am dismayed to follow the right hon. Member for Haltemprice and Howden (Mr Davis). He spent 20 minutes not telling us a great deal, but he was at the heart—on the frontline—of negotiations with the EU and he left: he walked away from the challenge and now comes to decry the Government option and nearly every other option on the table, rather than, when he had the chance, coming up with a solution. And I see the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) in his place, too. These are people who wanted to leave and have walked away, and they are now not even content when we are leaving.
Back in 2017, I voted against triggering article 50. Some might conclude that that is simply because I represent a borough that voted so heavily to remain, but, more than that, it was always practically impossible to disentangle from our long relationship with the EU in just two years. In my view we should have thought much more carefully about that.
There are huge practicalities in leaving which the right hon. Member for Haltemprice and Howden did not seem to cover at all. My Committee—which I am honoured to chair, and of which the right hon. Gentleman is a former Chair—has produced eight unanimous reports highlighting the challenges to the Government of preparing to leave the EU, and the civil service has been hampered by the need to develop plans for three different scenarios—whether we have a deal, no deal, or a transition—and all the various complications within them. This approach has been costly and confusing and means we lack real certainty, and businesses in particular—businesses in my constituency and up and down the country—are worried about the future.
In short, the Government have been reckless: they were reckless to call the referendum so quickly in the first place, with an ill-defined question that resolved nothing; in having no plan for what to do after that—not a single civil servant planning for an exit outcome; in triggering article 50 so quickly, again with no planning; and they have been reckless in leaving preparations so late in the day. We are not even going to get the legislation through Parliament. We possibly will if we sit 24/7 between now and the March, but there is a real risk we will not get that done.
The cost of uncertainty is also high in pounds and pence. I am proud to represent the tech sector in Shoreditch and the City fringe, but the cost of the deal is particularly harsh for small businesses. HMRC estimates that in terms of customs declarations alone small and medium-sized enterprises will have additional costs of between £17 billion and £20 billion a year just to comply with new customs if we crash out with no deal. There will be huge supply chain disruption even if we have a deal, let alone if we crash out with no deal. There is also the huge issue of access to skills. As came out earlier in the House today, there is not even an understanding yet of what the Government’s new proposals for immigration will be. Many in the tech sector rely on immigration from around the world, including Europe, and that free movement has been crucial in filling some very particular skills gaps, but the Government have been silent on that as we approach this huge vote.
So I back my right hon. Friend the Member for Leeds Central (Hilary Benn) because I believe that the House must not sanction no deal; it cannot be an option. I do not believe there is a majority in the House for no deal, but I fear that it could happen by default, and that would be a real betrayal of our role and responsibilities to the British public. So I urge all colleagues to rule out no deal emphatically. It is not a good solution by anyone’s count.
We also need seriously to consider extending article 50 or, if not, at least having a much clearer purpose about extending the transition period to combat the uncertainty that my right hon. Friend the Member for Hayes and Harlington (John McDonnell) has already highlighted. I shall not repeat what he said. We need to get to a better solution. We need preparation and certainty for business. We need the understanding of what immigration will be like, and we need to reach consensus. If we cannot do that, we will have failed the British public.
Many of my constituents have asked me to support a people’s vote. I certainly did not rush into supporting this. I think that the right hon. Member for Mid Sussex and I share some of the concerns about what it could do to our country and to the trust placed in referendums. The proposal is riddled with challenges, not least that it would take a great deal of time. We would also have to have a majority for it in this House, and the Government would have to heed that. They would have to bring forward a Bill, and that Bill would have to have a majority. This is before we have even decided what the question would be.
The Government have so far failed this country at every step of the way. The deal on the table is bad for Britain, and I cannot in all honesty support it. I do not believe that the Government will get it through next week, so Parliament will need to step up. If we cannot agree at that stage, there will be no alternative but to return to the people, with all the damaging consequences that that could lead to.
Thank you, Mr Speaker. It is always a pleasure to follow the hon. Member for Hackney South and Shoreditch (Meg Hillier). By my calculation, I am the 93rd speaker in this debate, so the challenge is clearly to find something new to say. This is an issue that excites high passions, and sometimes destructive and dangerous ones, but if Parliament is to do its job—this institution is being tested as much as possible—we need to temper those emotions with calm judgment.
The root of our difficulties is the fact that the referendum result was 52% to 48%. How do we turn a binary referendum result like that into a treaty and legislation? We need to do two things. The winners need to see that they have won. I say that as someone who campaigned as hard as anyone on what was the losing side. But at the same time, the settlement of that win needs to aim at uniting the country, as the Chancellor said. I have come to the conclusion that the best way to do that is to support the deal that is on offer. There are many positive aspects to the deal, including the free trade area to which the Chancellor referred. Also, it meets the needs of EU citizens here and of UK citizens in EU countries.
The financial settlement is a considerable improvement on the €70 billion to €100 billion we were originally told we would owe. Some of our negotiating has been extremely successful. Indeed, I appear to think that it was more successful than one of the previous Brexit Secretaries thinks it was. I am also, unfashionably, an admirer of Ollie Robbins. One of the key things we have negotiated is the transition period, which is not only sensible but essential for the future economic health of this country. However, to have the transition period, we have to have a deal. No deal means no transition. We are three and a half months away from a completely new set of rules, for which no one is prepared. So we should now, logically and unemotionally, work out which is the best possible deal on offer and also, among the hierarchy of things on offer, work out what is the worst possible one. Contrary to what the previous Brexit Secretary believes, I believe that no deal is by far the worst thing on offer.
I recently visited the port of Dover to receive a practical briefing on the implications of any disruption to the Dover-Calais crossing for the approximately 10,000 trucks a day that pass through the port. This is not so much about complaints about the British Government’s preparations for no deal; it is more about what would happen on the French side. I shall give the House one small but vivid example. A lot of the trade that goes through the port involves food, and if we have no deal, the French will want to check that our food meets their health standards. To do that, they will have to stop many of the trucks, first to check whether they are carrying food and then to inspect it. There would be queues within hours, and within days the whole of Kent would be gridlocked. It would be a disaster for my constituents and for the country. That has nothing to do with any preparations in this country; it is about the preparations in France.
The Dover-Calais crossing is one small example of what the Chancellor was saying about industries around the country, and I believe it illustrates that the result of no deal would be chaos, dislocation and huge economic difficulties. I will no doubt be accused of promoting “Project Fear”. If I am, it is because I am afraid. I am afraid for my constituents and my country if no deal is where we find ourselves in March. And to those who are advocating trade deals, I would gently point out that if trade deals are so good, which I agree they are, why are we starting the process by wanting to pull out not just of a deal with our largest trading partner but of all the other trade deals it has negotiated around the world?
This vote is about more than the economy. It is about Britain’s role in the world. It is more than 60 years since an American friend observed that Britain had
“lost an Empire and has not yet found a role”.
Today, the country has decided to lose its EU membership, but it is nowhere near finding a new definition of our national purpose. Global Britain is a good slogan and a great aspiration, but at the moment it is nothing more than that. We need to find a new national purpose, and we need to do so as quickly as possible. I will be supporting the Government, and I urge the House to do the same.
After two wasted years of wrangling with her own Cabinet and her own party, the Prime Minister has come back from Brussels with her deeply flawed and unacceptable EU withdrawal deal. And she has achieved the impossible: she has united the country in horror against it. According to all the official forecasts, this is a draft treaty that will make our country poorer. Far from taking back control, the deal we are debating today gives away both our sovereignty and our influence. And as the Attorney General’s advice has confirmed, this treaty gives the EU a veto on our leaving a temporary customs union arrangement even if talks on a new trade deal have irreparably broken down. This is a deal that transforms us from rule makers into rule takers and diminishes our influence in the world.
The Prime Minister promised to provide a detailed and substantive document on our future relationship with the EU alongside the draft treaty. She has actually supplied a half-baked 26-page wish list of banal aspirations that was cobbled together at the last minute and has no legal force. The failure to outline the nature of our future relationship with the EU makes this agreement a blind Brexit, and that is completely unacceptable. The Prime Minister expects this House to endorse her deal without any clear idea of what our future trading arrangements might be. She asserts that there is no alternative to her deeply flawed deal apart from a catastrophic no-deal Brexit, which we know would decimate our economy. This negotiation is an abject failure by a Government who have wasted two years negotiating with themselves rather than doing the right thing for our country.
This could all have been so different. The Prime Minister has badly mishandled the Brexit process from the beginning, making a series of catastrophic misjudgments, and she is now reaping what she has sown. As a newly installed Prime Minister, she could have shown some real leadership. She could have recognised that although the country had voted to leave the European Union in 2016, there was no instruction from the people on what sort of Brexit the Government should pursue. She could have launched a national process of debate and reconciliation to build consensus around the best way forward as a way of healing the raw divisions that the referendum exposed. She could have involved the Opposition parties in this endeavour, recognising that her predecessor in Downing Street had done nothing to prepare the country for what would happen if the leave campaign won. But she did not.
The Prime Minister chose instead to kowtow to the irreconcilable Brextremist ideologues in her own party. In place of a national debate and a hope of reconciliation we were told, “Brexit means Brexit”. In her first conference speech as party leader, she set the tone by lambasting citizens of the world as citizens of nowhere, insulting and worrying EU citizens working in the UK. She has since accused them of jumping the immigration queue. Absurdly wrapping herself in the Union Jack to appease her own Eurosceptics, she then set a course in her Lancaster House speech for a hard, “red, white and blue” Brexit. The Prime Minister interpreted “taking back control” as centralising power to herself and her increasingly dysfunctional Government. Far from reaching out and respecting the sovereignty of Parliament, she attempted to ride roughshod over the constitutional role of this House. She had to be dragged kicking and screaming back to Parliament by the Supreme Court, which confirmed that legislation was required to invoke article 50 and fire the starting gun on the withdrawal process.
Once the Prime Minister had triggered article 50, she promptly called a general election in the expectation that she would win by a landslide—
And we are all grateful for that. In the event, the Prime Minister squandered three months’ negotiating time and the first Conservative majority for 25 years. This Prime Minister has repeatedly invoked her own partisan definition of “the national interest” when, in truth, she has acted at all times in the narrow sectional interest of her own deeply divided party. That is why her belated pleas for unity and an end to division rang so hollow when she opened the debate on Tuesday. Rarely has such narrow rigidity and authoritarian instinct met a situation that required maximum flexibility and creativity. Rarely has there been such a catastrophic failure of imagination, political judgment and party management. I cannot support this botched blind Brexit deal. It fails to protect jobs and economic prosperity, and it will make us poorer.
The reverse is true. It is also a pleasure to speak after the right hon. Member for Mid Sussex (Sir Nicholas Soames), and I particularly enjoyed his reference to Lewis Carroll. While listening to the hon. Member for Dundee East (Stewart Hosie), who is not in his seat, I was put in mind of Milton:
“No light, but rather darkness visible.
Serv’d onely to discover sights of woe”.
Of course, that comes from “Paradise Lost”, which is exactly what the hon. Gentleman’s speech sounded like. As we are on a literary theme, I want to quote the Attorney General, who described the deal before us as akin to Dante Alighieri’s first circle of hell which, as we all know, is limbo. In fact, it is worse than limbo, because it is a bit like imprisonment, and it is why I, on the behalf of my constituents, from whom I have received many thousands of representations, will not be able to support this deal. If there was a guarantee that we could secure a trade agreement at the end of the transition period and if there were no automatic backstop, I may have been able to support it. However, I am doubtful that we would able to secure this trade agreement. The Chancellor said that he would prefer to see an extension of the transition period, and then there would probably be another extension, which is what the Attorney General was referring to.
I see no reason why there could not be a time limit on the discussions for a trade agreement with the EU. Canada has already been there and done that with the comprehensive economic and trade agreement, and those negotiations make me doubt that we would reach an agreement in the first phase of the transition. CETA took seven years, and it has still not been signed off and ratified—it is still a provisional agreement. We may not reach a trade agreement with the 27 member states, and we have already seen how difficult it is to negotiate with them. Belgium was incredibly difficult during Canada’s negotiations with the EU, for example. If we do not reach an agreement, we will have to ask the 27, “Can we leave?” There is no unilateral way to exit, which is like taking us into the transition period, but in a pair of handcuffs, and I simply cannot agree to that. That is not what people voted for. They did not vote for limbo or to continue to be dictated to by the 27 member states.
Turning to the backstop, whatever side of the House or the argument they are on, I know of no Member who will answer positively to, “What do you think the chances are of us negotiating a trade agreement with the EU in the transition period?” Almost everyone says, “Absolutely none.” We will therefore end up in the backstop by default. According to the legal advice, which the Attorney General provided at the Dispatch Box without having to publish it, that will put us in an extremely difficult position. Again, there is no unilateral way out, and it will precede the break-up of the Union. It puts us in an invidious position with regard to the Northern Ireland agreement. It will lead to a scenario that we do not need to be in.
I started talking about Canada, and that sort of agreement was offered to us by Barnier. Our negotiators refused to accept it, but it was what was articulated in the Lancaster House speech. If the Prime Minister had come back with an agreement based on that speech and on the Canada plus agreement that she was offered by Barnier, I would vote for that on the behalf of my constituents and they would agree with it, too. Sadly, however, she did not, and I cannot support this withdrawal agreement.
I rise to speak today on what is the United Kingdom’s 96th birthday. The United Kingdom of Great Britain and Northern Ireland started 96 years ago. When I think back to John Major talking in the ’80s about 1,000 years of British history, I have longed to utter those words and make people realise that the UK is not as old as he thought.
On this 96th birthday of the United Kingdom, we are in what I would call a Laurel-and-Hardy situation with Brexit. It is clear that Brexit is crazy, silly, nuts, wacky, cuckoo, potty, daft, cracked, dippy, bonkers—the list goes on. In Gaelic, I could say that it is gòrach, faoin, amaideach, caoicheil, air bhoil—the list again goes on. We are seeing that the UK will struggle to see its 100th birthday as a result of this nonsense. As the Chancellor laid out in his speech earlier, Brexit will have opportunity costs. He gave us five scenarios, but we are down to two scenarios from the Government. The Prime Minister has given the UK a choice between a deal or no deal, leading to economic damage of between 3.4% and 6.4% of GDP or 6.3% to 9% of GDP respectively. Each percentage point of GDP equates to up to £26 billion. By way of contrast, the 2008 crash was a 2% event. Those percentage points mean a loss of jobs, wages, prosperity, housing, infrastructure, taxation for health and education funding and so on.
How does all that happen? Well, there are a few examples. For instance, Toyota takes 50 lorries a day across the channel to factories in Derbyshire, with a four-hour lead-in time. If there are snarl-ups at the border, that will not happen. Honda takes 200 lorries. It is no wonder that the Japanese Prime Minister, Japanese companies and Japanese diplomats here in the UK are concerned, and we should be worried, too. The situation will affect our lamb, shellfish, cattle and many of our other exports, and chemical companies, such as BASF in my constituency, are well aware of that. Some people suggest that we should use ports such as Zeebrugge rather than Calais, but that would take longer to do the same thing. The UK is already laggard in productivity, so to take longer to do the same thing will make matters worse.
Why are we in this situation? The Prime Minister made contradictory promises. She said, “We will be out of the customs union and the single market,” but she also said, “There will be no border in Ireland.” Something had to give and, as we know now from the loss of the DUP’s support, she reneged on those promises. She had to, because there was a catastrophe coming down the way. One of the funny things about the Brexiteers is that they all want Brexit, but they do not want it in March, because they know full well the damage that Brexit is about to do. While they want Brexit in their wild abstractions, they do not want it coming this March, because they know what Brexit will do. Brexit will be economically damaging to everybody in the United Kingdom, and as a result, it is a folly for us that we are stuck in the United Kingdom.
In this crazy fantasy, 96 years later, the Irish are delighted that they have left. For those who voted no in Scotland in 2014, there is an awakening going on, and that is without a campaign—incidentally, people can visit SNP.org/join if they want. People are seeing the two unions differently. One is a union of independent nations of Europe meeting as equals, and the UK now knows the muscle of independent Ireland and Varadkar, with 26 behind them in a regional trade agreement. Leaving that union is tearing up trade arrangements. By contrast, when Scotland leaves the United Kingdom, we will merely be completing devolution to move political powers from here to Edinburgh, closer to the people.
Had we left in 2014, this folly and nonsense of Brexit would not have happened. Brexit, in actual fact, overturns the will of the Scottish people. It does not respect Scotland or the result of the votes of the Scottish people. Brexit shows the epic misgovernance of England, so what chance is there for Scotland when England cannot govern itself well? The escaped Irish have belly laughs, and their biggest wind-up is to go on television at various points of crisis and tell the UK to stay calm. Back in Tipperary, Waterford and Galway they are laughing, because they know exactly what it means to tell London to stay calm. The UK has many problems, and they are of its own making. The UK has crashed the Rolls-Royce, and the Prime Minister is trying to tell us that the choice now is to go down the second-hand car shop to choose a second-hand car or a moped. It is an absolute mess.
David Schneider, the comedian, tweeted today that in 2016 the Brexiteers said “‘Take back control! Make Parliament sovereign again!’”, which he contrasted with Lord Digby Jones, who said on Twitter yesterday, “Beware the tyranny of Parliament!” As Laurel and Hardy said, what a fine mess they have got themselves into.
I pay tribute to the Prime Minister for her dedication, hard work and resilience in these extremely difficult negotiations with the EU.
I start by making it clear that I have always been a supporter of European co-operation. The EU has been an important economic expression of the western alliance. In the 1980s, when countries looked to the west for freedom and security, they were looking partly for important economic freedoms, which they saw as being represented by the EU.
I had no doubt when the referendum came that I should support staying in the EU. I was a founder member of ConservativesIN. I campaigned hard, and I said throughout that I would accept the national verdict, but I was as disappointed as my right hon. Friend the Member for Mid Sussex (Sir Nicholas Soames) when we lost the referendum.
I will be voting for this agreement next Tuesday. I never thought I would do such a thing, but I will be voting for Brexit. It will be hard for me to do that, but I am compromising because I think I have to do so, given the vote of the people. I am a democrat, and this is something I just have to do, but it will not be easy.
My area relies on advanced integrated European manufacturing, and we have enormous businesses. For example, we have Johnson Matthey, a FTSE 100 company, in Royston. It is a world leader in catalysts and chemical technology, and it has 2,000 employees in Royston. The company is desperate that we should have an agreed deal, and the CEO has written to me this morning:
“Our business relies on just-in-time supply chains, closely aligned regulatory frameworks and access to scientific cooperation networks…any disruption will adversely affect the competitiveness of our business and…future innovation, trade and investment…an agreed ‘Deal’ is better than ‘No Deal’… It allows us to work with our customers and suppliers to maintain business and plan strategically for future trade scenarios.”
Johnson Matthey is not a company that took sides in the referendum. My hon. Friend the Member for Mid Bedfordshire (Ms Dorries) might like to know that the company is optimistic that we can build a globally competitive Britain post Brexit, but the point it is making is that we must avoid the disruption of a no-deal Brexit.
The Attorney General has done a marvellous job of explaining the legal position on the backstop to the House. He did it in an exemplary fashion while also defending client privilege and the Law Officers’ convention. It is true that the backstop arrangements are unsatisfactory, but the legal basis for it is a temporary one, and there is no question but that, if it comes to a point where negotiations have broken down, there are things that can be done—a joint conference and independent arbitration—to resolve the matter. As the Attorney General made clear, performance in good faith is a key concept of international law. For rule-of-law countries not to perform a treaty in good faith would be extremely damaging to their international reputation and standing.
Above that, permanent continuation of the backstop would be vulnerable to legal challenge in international law, on the basis that the treaty purpose had ended in that no agreement had been achieved, and could not be achieved. That would allow a challenge under article 62 of the Vienna convention of 1969, and under EU law because article 50 provides a legal basis for a temporary arrangement only, namely an orderly withdrawal. I am confident that the backstop could not last forever.
When the Attorney General was asked this question by my right hon. Friend the Member for New Forest East (Dr Lewis), he said that, no, it would not be permanent. He has to make a decision, as I do, on how to vote, and he said he would look at the legal risks and, having assessed them, he will vote with the Government, because he believes that the risks are such that it is still better to follow this agreement. I share that view. Overall, my judgment, like the Attorney General’s, is that we should support the Prime Minister in this.
Britain is a strong country, capable of weathering storms, but that does not mean we have to call down the heavens upon us. We must deliver a Brexit that brings out better weather, gives the UK the opportunity to put a spring in its step and puts the storm clouds behind us. It is time for a deal. It is time to compromise.
The Government projections that came out recently reveal that the proposals will probably impoverish the UK economy by about 3.9% over 15 years, removing some £100 billion from the economy. To those who say that the UK continues to grow, I would simply say that, if they systematically starve their children, they may well grow but they will end up much shorter than they might otherwise have been had they been fed properly.
That figure is significant in several ways. There was no hint of it in the referendum. The talk was of sunny uplands, of a Brexit dividend and of Britain booming through trade across the world. We now know that to have been a bare-faced lie. We know that the replacement of substantial elements of our trade arrangements with the EU by bilateral world deals would replace only a fraction of what might be lost. It is not a manageable loss, as the Chancellor says when he tries to defend the deal. It is a serious and permanent shrinkage of the UK economy over a sustained period. Of course, not only is it a permanent shrinkage but it is a shrinkage of those parts of the economy that need the economy to work most. London may well survive the shrinkage, but other parts of the country will not do so well. Indeed, many of those places were attracted to Brexit because they thought it would be good for the country as a whole.
That all brings me to the central question. The analysis was published relatively recently, but the Government surely knew much of the content previously. A disastrous series of red lines informed the negotiating process. The eschewing of the single market, the avoidance of the customs union and a number of other starting prejudices shaped the negotiations and led to the pitiful outcome that has now been presented to us. They were conceived in the knowledge that what would transpire from those positions would impoverish the country to the extent that is now apparent.
That is what we have in front of us: a group of politicians who negotiated all along knowing their stance was wilfully leading to a national impoverishment, yet they persisted and kept up a pretence of it being otherwise while they proceeded to throw away the country’s prospects and future in pursuit of a deal they thought could square away the arch-Brexiteers in their midst, who thought, even more catastrophically as it turns out, that salvation lay in crashing out of the EU in an unco-ordinated way—and they still apparently think that, despite all the evidence now before us. That is just an unacceptable way of going about dealing with the future of our country. No one went to the polls knowingly willing to do grievous damage to our country’s future economic welfare.
So here we are now, four months before the self-imposed timetable for exit is due to expire, with a half-cooked deal that will damage our country substantially. We all know now that it is not fit for purpose and will be roundly rejected by Parliament, and we are facing the need to pull something positive out of the wreckage into which this incompetent Government have plunged us. It is imperative that negotiations are restarted on the basis of known parameters that will not harm the UK economy. We know that the economy will be harmed if they continue to be ignored. I refer to membership of the customs union and close association with the single market—in other words, getting the best out of a disadvantageous situation rather than pouring petrol on the flames and making it worse.
Of course, the final rather obvious observation that goes with this is that an imperative first step in any plan to recover from this disaster is to put in for an extension to article 50 to enable meaningful negotiations to proceed. The fact that the Prime Minister keeps repeating that that is not going to happen just underlines how out of touch with the realities of the current position she appears to be.
Given what I have described, it is hard to see that anyone should have any confidence in the Government to conduct such future negotiations, and it would be preferable for someone else to do them. However, I know that is not the way things always happen, and it may well be that we will have a Government who have the confidence of the House but are practically unable to do anything: a zombie Government who are unable to respond properly to public concerns about the future of our country. If that is the outcome, it will be essential to test what the public think of all this. It will be evident that Parliament, for all its best endeavours, may not be able to resolve matters. That is where I think, in the end, a test might need to be effected: a half-baked non-deal against perhaps remaining in the EU and fighting for the changes that the country wants from the inside, rather than outside its structures.
I speak to the amendment that stands in my name and those of my right hon. and hon. Friends. At times, although not so much in this debate, there has been a sadness of tone in these debates, but I wish to recognise how well the Prime Minister has handled herself during these testing times and commend her for that.
Part of the problem is the way we have approached these negotiations from the start. Some saw Brexit as a problem to be managed, but it should have been an opportunity to be seized. I believe that that opportunity is still there. We have the prospect of trade deals around the world, and we do prefer constructive trade deals to WTO terms—of course we do. We also have the opportunity of introducing an immigration system that no longer discriminates against the rest of the world outside Europe—we currently have to sign up to such a system as members of the EU. We could have a fair immigration system, roll back the ECJ and take control of our finances.
Those opportunities are still there, but the problem is that we have descended into the situation, partly because of an unnecessary general election, whereby we have encouraged EU intransigence. Concessions have been offered and they have been pocketed with nothing in return, and we now find ourselves, via this agreement, in the position that Mervyn King, the former Governor of the Bank of England, correctly described as sacrificing
“the benefits of remaining without obtaining the benefits of leaving.”
That is where we find ourselves at the moment.
The withdrawal agreement is in two parts—the transition period and the backstop. Let me make it clear that there are elements of the transition part that I find difficult to stomach. We know about the bits about the money and the ECJ, but, in essence, the transition period itself is like staying in the EU; it is a question of staying on for those extra 18 months while we try to negotiate a trade deal. It is a transition period—there is a definite end.
What I have a problem with is the backstop. We have to be clear that we have to be pragmatic; we are where we are. After 40 to 45 years of integration, one is not going to leap from imperfection to perfection in one bound—it will take a series of steps, so we have to be pragmatic. As a keen Brexiteer, I am prepared to swallow the transition period, because one hopes we will negotiate a free trade deal of some sort that will be mutually beneficial, and this is a transition period, with a definite end. I can stomach that, but what I find more difficult to stomach is a backstop in which we could be permanently entrapped, in suspended animation, being able to leave only at the behest of the EU. That is like entering a contract of employment that gives only the employer the right to terminate the contract. Nobody would enter that with their eyes wide open—it is completely wrong. During that period of suspended animation, we would not be able to form trade deals, and the precious Union with Northern Ireland would be affected. Having served in the Province in the 1980s, I, too, have seen people die for that Union. That precious Union would be put at risk. Meanwhile we would be an EU taker.
We should take it with a pinch of salt when the Government say, “Ah, but it would be uncomfortable for the EU and therefore it would not be permanent.” Not only would it be uncomfortable for us as well, but the EU has a long track record of cutting its nose off to spite its face in order to achieve political objectives. So I do not buy the argument that we would automatically find ourselves out of the backstop because the EU would find it uncomfortable. Situations such as this make the alternatives more attractive.
In summary, my amendment would give the UK a unilateral right to exit the backstop. It does reflect reality and I hope that the Government will go a long way towards giving this issue of unilaterally getting out of the backstop serious consideration.
I have had many opportunities to comment on Brexit in respect of Wales, the UK and the implications for our European partners, so today I wish to outline some concerns I have as a constituency MP that lead me to say that I will oppose the Prime Minister’s deal when I have the opportunity to vote on it.
Arfon is part of the West Wales and The Valleys region. We have a low GDP; it is on a par with that of Spain, Portugal and parts of former communist eastern Europe. As such, we receive EU cohesion funding and other European money, such as Interreg funding to promote links, for example, with Ireland. Agriculture is a significant part of the local economy and, again, it depends on some EU funding. The EU has had these regional and cohesion policies in place for many years, but there is much concern locally about the complete lack of detail as to the arrangements for the shared prosperity fund, which is going to replace the EU funding. That concern is sharpened further by an appreciation that time is very short. Bangor University and Ysbyty Gwynedd, the local district hospital, depend on having EU staff. Bangor University has also recruited many students of EU origin and has excellent EU research links. The university has received significant sums from EU sources.
Arfon also has a number of private sector employers who are headquartered in the EU27. Crucially for our own local economy, we have small exporting businesses, ranging from craft and music businesses to specialised exporters of live plants and a specialised steel forging company that produces equipment for the climbing world. It has already been considering what to do as a result of Brexit and is setting up a distribution centre, not in Llanberis in the heart of Snowdonia, but in the Netherlands—it is taking that step now.
EU employees at the university are worried about the potential future effects, both personally, and in respect of their work, careers and research interests. Terming them as “bargaining chips” and, outrageously, as “queue jumpers”, has only added to their worry and indeed their anger. Many EU staff came to the university because of particular aspects of their academic work in which Bangor excels. They worry that paths and possibilities will not be open to them in future.
We also have links with Ireland. Some time ago, I attended a scientific colloquium in Bangor and a member of staff from University College Cork said about Brexit: “The problem is, you see, Hywel, that the fish don’t know where the international boundary lines are. Bloody stupid fish.” Only, I do not think he was referring to fish at all.
Like other parts of the NHS, Ysbyty Gwynedd has difficulty recruiting staff, and EU staff work there, too.
Arfon is one of the most intensely Welsh speaking areas of Wales, with around 70% of adults speaking Welsh and 85% of young people speaking Welsh because of bilingual education. The Welsh language has received financial support from EU sources. Furthermore, it is intangible but important that the normality of EU multilingualism, at not only official but societal and cultural levels, is a significant source of confidence for the future of the Welsh language. Many of us feel Welsh and European as well, with nothing in the middle. Arfon is also a major centre of Welsh-language television production, with programmes produced not only by the BBC but, more significantly, by private sector producers that work closely with EU partners.
Those are just some of the real concerns about Arfon’s future outside the EU. Those concerns are reflected strongly in local political results. In the 2015 general election, every seat in Wales swung to the UK Independence party, save for Arfon, which swung strongly to Plaid Cymru. In the referendum on exiting the EU, and like most Welsh constituencies with similar socioeconomic characteristics, Arfon voted strongly in favour of remaining, by a margin of 60 to 40.
There is much else I could say, but I have restricted myself to a few examples of why, on the basis of purely constituency matters, I will certainly oppose the Government’s deal. Those constituency matters are strong enough in and of themselves for me to do that.
I am pleased to be able to speak in this important debate on our withdrawal from the EU and to contribute on the day on which we discuss the economic aspects—including the economy, jobs, opportunities, trade and business—that are so important to the future of our country. I praise the speech given by my right hon. Friend the Chancellor of the Exchequer and all the work that he has done to help working people in this country in the past few years, particularly in his recent Budget, which was well received in my constituency. I am thinking particularly of things like the increase in the personal allowance, the measures on home ownership and the fuel duty freeze. My constituents are optimistic about and supportive of the Budget and believe that it will give us the basis for a great future outside the EU.
Bexleyheath and Crayford voted heavily for Brexit, with two thirds of people voting to leave. Brexit is a fantastic opportunity for our country, although the House would never believe it from listening to so many people on the Opposition Benches today. We have to embrace it to reap the benefits for years to come. We have the fifth largest economy in the world and great employment figures, and we are in a good economic state thanks to this Conservative Government. With an independent trade policy, Britain can reach markets around the world, opening up access to fast-growing markets, which will further strengthen our economy and the economies of our trading partners. We have to believe; we have to lead; and we have to act. The British public want a Brexit deal done soon. They want an independent and global Britain that can take advantage of controlling its own destiny. We need to be upbeat and believe in ourselves: we are a great country with a great future. Let us be positive on this matter. We need to look beyond Europe to the developing world, the far east and other markets where there are trade deals to be done. We should therefore be upbeat, positive and enthusiastic about this country after we leave at the end of March.
I have to be definite: I do not want a no-deal Brexit. I do not think that would be good for our country, and we have to work hard to make sure that it does not happen. Nevertheless, the majority of my constituents feel that this particular withdrawal agreement contains some difficulties. A lot in it is good, but I am afraid that certain things are not. The political declaration is an interesting document and I welcome its content. We should be working towards having
“no tariffs, fees, charges or quantitative restrictions across all sectors”.
There are many good words in the document and good things that we believe in.
There are plenty of good points, but I have one area of concern. It has been raised everywhere in the debates this week, some of which I have sat through, and it is, of course, the backstop. It is a real problem. We want a deal that gets us out and we want to have good relations with Europe, because Europe is home to our neighbours and trading partners. We want to do business with them, but we do not want to be their prisoner before we can make the trade deals that we need with the countries of the world. Let me use the example that I used in a meeting with the Prime Minister. If I am buying a house, I want a completion date. I do not want to give over the money—in this case, the £39 billion, although my house would not be worth that much because in Bexleyheath and Crayford we do not have those kinds of properties—without an end date. We want a completion date, so I am really concerned about the backstop.
I listened to the Attorney General on Monday and his exposition was very good, but he did leave me with some questions. I am concerned that Northern Ireland would be treated differently from the rest of the country. It is not acceptable to separate one country that is part of our United Kingdom. Negotiation requires compromise, but for me the backstop is a step too far and leaves uncertainty as the central feature of our negotiations and the conclusion of our exit from the EU.
Let me conclude with this thought. Will the withdrawal agreement allow Britain to take control of its laws, its money and its borders? If not, there is something wrong with it. If it does, we should support it. However, if the backstop is not looked at and dealt with, and if there is no end date, the deal is flawed. I urge my right hon. and hon. Friends on the Front Bench to look again at the agreement to make sure that our United Kingdom remains united and that there are no differences for different parts of this country when we leave the EU.
In the referendum, Sheffield voted 51% to 49% to leave. My constituency voted two to one to leave. Like the country, the city was split, with the more affluent western parts voting to remain and the poorer eastern part voting to leave. Whatever happens with this deal and the vote on it, we have to understand the reasons that led many of the poorest parts of the country to vote to leave. People feel left behind, disadvantaged, and that the burden of austerity has been placed on them unduly. That is the truth of the matter, and we have to recognise that. As I said to the shadow Chancellor, my right hon. Friend the Member for Hayes and Harlington (John McDonnell)—and I think he agreed—we need a major programme of economic and social reconstruction to help these areas.
We also need to understand the issue of migration, which affected many people in these areas. It is not good enough simply to dismiss the concerns and fears that people had as racism. We should recognise that migration from eastern Europe had real impacts on communities, which got very little help to deal with it—in fact, they got no help at all from the Government. We also have to recognise the feeling that people come over here and claim benefits, having paid nothing into the system. We did not use the 90-day rule in the way that countries such as Belgium did to prevent that from happening. It could have removed many of the concerns, or more appropriately dealt with them.
I think back to Sheffield in the 1970s and 1980s, when we lost 45,000 jobs in steel and engineering in the Don valley alone. Now, with the advanced manufacturing research centre, we have Rolls-Royce coming in, and Boeing and McLaren, and, building on the companies that are left, such as Forgemasters and Outokumpu, we have created new, high-tech, advanced jobs. I will not vote for any deal that puts those at risk. That is the fundamental issue for me to consider in deciding whether to vote for this or any other deal.
Some 56% of Sheffield exports go to the EU. That is higher than the national average. I have had a lot of advice, as I am sure all hon. Members have, from constituents telling me how to vote. Interestingly, very few people have written to me saying, “Vote for this deal.” The Prime Minister has managed to unite leavers and remainers against her deal. I have, however, had one letter, from Tinsley Bridge, an important exporter in my constituency, saying, “Please vote for the deal,” not because it thinks it is a particularly good deal, but because it worries that the alternative is no deal, which would put its just-in-time business at risk. I say to Tinsley Bridge and other businesses that we are not going to leave with no deal; that is not a good reason for voting for the bad deal that the Government are putting forward.
In the end, businesses are concerned about uncertainty, and the Government’s deal is all about uncertainty. It perpetuates uncertainty. Everything is postponed until 2020, at the earliest, and almost certainly until later, and the chances of getting a good deal then will be lessened because we will have given away all our bargaining power. The EU can keep us in the backstop until it chooses to let us go. We will have no bargaining power whatsoever. According to an article in the Financial Times, the path to an independent trade policy
“is one of the most ambiguous and contradictory parts of the political declaration.”
This is an uncertain deal, an unclear deal and a contradictory deal. I cannot vote for no deal, because that is the greatest risk to jobs in my constituency, but I cannot vote for an inadequate deal either. I want a deal that keeps us in a customs union and closely tied to the single market. If we cannot get a deal that protects jobs in my constituency and preserves living standards, environmental protections, health and safety protections and workers right—or rather if we cannot get a change of Government to secure that deal, since no one can trust this Government any more to secure a deal in the interests of the British people—I will, at that point, be prepared to consider voting for a second referendum, so that the British people, knowing clearly what they are voting for, can choose between clear-cut options. If we have to do that, it should be seen as an enhancement of the democratic process, not a negation of it.
It is a huge privilege to contribute to what I believe is the most significant debate to be held in this Chamber for approaching half a century. The decision we come to on its conclusion will determine nothing less than whether the United Kingdom takes its place in the world as a free and independent country once again, or whether it becomes the fragmented client of a foreign power and subject to the jurisdiction of a foreign court.
I was an enthusiastic campaigner for a leave vote in the 2016 referendum. It was clear to me then, and it is clear to me now, that at least in the part of the world that I represent there is strong support for the United Kingdom to leave the European Union. The referendum was decisive. The House has a mandate from the British people—indeed, an absolute duty—to restore British sovereignty. The way to do that is set out in article 50 of the treaty on the European Union. It shows the way. It provides that any member state wishing to leave must give notice of its desire and that at the end of a maximum period of two years the European treaties cease to apply to it.
Ceasing to be part of the EU means, essentially, ceasing to be part of the arrangements established under the European treaties, which means ceasing to be part of the single market and the customs union and, most importantly, ceasing to be subject to the jurisdiction of the European Court of Justice, the institution in which the sovereignty of the EU resides. The Prime Minister acknowledged that in her excellent speech at Lancaster House last year. In that speech, she specifically rejected partial or associate membership of the EU or anything that left us “half in, half out”, as she put it. She said:
“We will not have truly left the European Union if we are not in control of our own laws.”
That speech demonstrated a perfect understanding of what it was to be part of the EU and how we should leave, but the withdrawal agreement is so utterly different from what was envisaged by the Prime Minister at Lancaster House that it is with great sadness that I must say that I cannot support it. As many other right hon. and hon. Members have set out, the key problem is of course the backstop. It is ostensibly designed to ensure that there is no hard border in Northern Ireland, but the reality as far as the United Kingdom is concerned is that we are at huge risk of remaining confined in the customs union indefinitely and consequently unable to conclude our own free trade agreements with third countries around the world. That deeply disturbing state of affairs will continue until it is replaced by an undefined political agreement, an agreement that may well never be concluded, in which case we remain in the backstop.
As it stands, the withdrawal agreement is hugely beneficial to the European Union. It preserves tariff-free access to the fifth largest economy in the world. It enables the EU to deploy the strength of the UK economy in any treaties it may wish to conclude with third countries. I have therefore no doubt that, contrary to what we have heard earlier from other hon. Members, there is every incentive for the European Union to keep the United Kingdom in the backstop. In other words, we would remain locked into this arrangement at the pleasure of the European Union. We would effectively become a client state of the European Union and our freedom to depart would be impossible. Furthermore, the agreement establishes a state of affairs under which an integral part of our sovereign territory, Northern Ireland, effectively becomes a colony of the European Union, subject in large measure to the single market and the customs union and ECJ jurisdiction, and legally semi-detached from the rest of this country. As a Unionist, I cannot support that happening to Northern Ireland any more than I could support it happening to the Isle of Wight, the Isle of Skye or the Isle of Anglesey.
This is a thoroughly bad deal. There are many aspects of concern in it, not least the £39 billion, which we would, for some reason, be paying for this false Brexit, but the single biggest objection must be that it robs the United Kingdom of its sovereignty, of its freedom of self-determination and, potentially, of a large and important part of its territory contrary to the wishes of its people. For that reason, with a heavy heart, and recognising the efforts of the Prime Minister, I am afraid to say that I cannot support the agreement and I shall be voting against it on Tuesday.
I am grateful to you, Mr Speaker, for the opportunity to take part in this debate, which, as others have already observed, is likely to be one of the most important—or the most important—that we will ever know in our parliamentary lives.
In Orkney and Shetland, we voted to remain in the European Union in June 2016. In Orkney, the vote to remain was 63.2% and in Shetland it was 56.5%. I reflect, however, that it has not always been thus. In 1976, when very nearly the entire country voted to enter the European Economic Community as it then was, only Shetland and the Western Isles voted not to. In Shetland, the vote then was in the region of 56.3%. It is worth reflecting on what has happened in the succeeding 40-odd years that has brought about this change.
For communities such as ours, there have been some significant downsides to EU membership. The operation of the common fisheries policy has been one of the most obvious—I will touch on that later on—but there have been other aspects. The operation of state aid rules has often left me perplexed and baffled, but for communities such as ours—communities with small populations far from the centres of power and the larger centres of population—membership of the European Union has been a positive. It has given us opportunities to grow and to keep up in circumstances where we might otherwise have expected to fall behind. Opportunities have been given to us through the availability of structural funds, the guaranteed money that could come to communities such as ours to be invested in our roads, our piers and our airports. I suspect that if we were waiting for the Treasury, or even for Edinburgh, to fund those projects, we would still be waiting today. The existence of a guaranteed system of agricultural support payments has allowed our farmers and crofters to continue to farm the land and to keep the land in the way that we know and value. It worries me that beyond the guarantee of those farm payments up to 2022, there is still no clear indication of how this will work in the future.
Access to the single market has been good for us; it has allowed us to grow new industries in the past 40 years. Forty years ago, there simply was not the aquaculture industry of farmed salmon and mussels that we now know. That market was not available in the real-time basis on which my constituents can now sell into it. Our tourism has blossomed and grown in these years, and in more recent years that has seen a bigger reliance on the workforce coming from other parts of the European Union. An awful lot has changed in the world since 1976.
I was struck by the contribution of the right hon. Member for Mid Sussex (Sir Nicholas Soames), who is here as the grandson of a Prime Minister and the great-grandson of a Member of Parliament. No one in my family has ever served in this House before; we have all been hill farmers and crofters. I am here because I am part of a generation that had opportunities that were not given to my parents, just as my parents had opportunities that their parents had not been given. It grieves me beyond measure that I now risk handing on to my children a country and a world in which they will not have the opportunities that we have had.
Yes, we know about the slow and reluctant pace of reform, the bureaucracy and the over-centralisation. But although I often criticise the CFP, I would not have believed it possible that we would find a worse system than we will have when we leave the European Union in March next year, when we will leave our fishermen and our fishing fleet bound by its rules without having any say in how they are made. That surely has to be the worst of all possible worlds, and it is a bitter regret to me that the right hon. Member for Haltemprice and Howden (Mr Davis) would not take my intervention, because he owes my fishermen an explanation why he thought that was a necessary step to take.
We are a divided country; that is beyond measure. Those who resist the idea of putting this deal to a vote of the people seem to think that somehow we are not. The only possible way that we can hope to heal these divisions is by putting this matter to a vote of the people.
It is a pleasure to follow the right hon. Member for Orkney and Shetland (Mr Carmichael), who was right to speak about the opportunities that generations in this country have had, provided in part by freedom of movement and the ability to travel and work in countries across Europe.
We are being asked to consider one of the most important decisions in our post-war history, and there are no good choices. At the time of the referendum, I voted to remain as I took, and still hold, the view that we could not get a better deal than the one we already had with the EU. However, we held the referendum and I made a pledge to implement the result, and to do so responsibly. That is why I voted for article 50 and the EU withdrawal Act, despite my misgivings. This is not a perfect deal, but it does deliver the referendum result. I therefore feel honour-bound to vote for it, as I believe that it delivers that result in a responsible way.
This deal delivers in a number of areas. It gives the UK tariff-free, quota-free access to EU markets, while ensuring that we are out of free movement and have control of our agriculture and fisheries. More importantly, it keeps us out of ever-closer union. Does this deal live up to the promises made in the referendum? No—nothing could. We were promised that Brexit would be easy, that we would have the exact same benefits outside the EU as before and that we held all the cards in the upcoming negotiations. Those who promised sunlit uplands now criticise a deal that requires compromise. To choose WTO terms over this deal, about which I do have some concerns, would be an act of the utmost irresponsibility, for which the British public would rightly punish us.
For the past two years, I have been a member of the Business, Energy and Industrial Strategy Committee. Over many weeks and months, I have heard evidence about the impact of Brexit. Like everyone, I am certainly better informed now than I was in 2016, and an email from one of my constituents—I will call him Mr D—reflects much of the evidence that I have heard. He said that since the vote to leave,
“our business has endured significant hardship. Not all of this can be directly attributed to Brexit but the deterioration in sterling has impacted costs and economic uncertainty has made long term investment decisions next to impossible… The forthcoming vote in parliament provides our country with an opportunity to bring about a little more certainty and stability.”
He claimed that while those who think the Prime Minister’s proposal is not ideal may be right,
“as the person most heavily involved in the negotiation—a negotiation that leading Brexiteers ran away from after the vote—she is well placed to judge whether it is the best we can get. Certainly EU leaders are unanimous in that view.”
He goes on to say that whatever deal is put in front of Parliament, one faction or another will be dissatisfied and that the notion that we can leave a club and no longer pay its subscriptions, yet pick and choose which services to continue to enjoy is frankly delusional. We are not in a position to select from a menu of membership benefits to suit our needs—we are leaving.
Mr D continues:
“When people find that the prices of goods and services rise sharply, and when they find that food starts to run short—I work in the grocery supply chain—and when they find that they are losing their jobs, they will judge you, and I doubt they will forgive you.”
That reflects the evidence I have heard from countless businesses that have come before the Business, Energy and Industrial Strategy Committee. Those businesses provide jobs and employment to my constituents, and they speak with one voice when they ask us to vote for this deal. My right hon. Friend the Member for Mid Sussex (Sir Nicholas Soames) spoke about the need to come together, compromise and work towards an outcome that delivers for our country. It may not be perfect, but it is a good deal.
I stand today to discuss the economic aspects of this deal, but the fact is that too much is still uncertain. We know, however, that the Government’s own economic analysis illustrates that the deal will make our country poorer, and with GDP falling by around 3.9%—£100 billion in real terms—every region of the UK will be worse off. I note with enormous disappointment that the Prime Minister has dropped achieving frictionless trade as a priority, and it seems there will be barriers to trading goods. For the service sector, the political declaration states that market access will be limited, and in areas such as financial services, it offers no firm mechanism to protect the industry.
Like many in this Chamber, I was devastated when I realised that more areas had voted to leave the EU, but it soon became apparent that no one really knew what it meant and how it would affect all regions and nations of the UK. In that respect, the referendum lacked clarity as the precise effects of leaving have only recently become clear.
There is much speculation about why our nation voted the way it did and what that meant, and like my hon. Friend the Member for Sheffield South East (Mr Betts), I think that we must consider why people voted in such a way. Lost in the division and debate of the past two years is any analysis of why people voted the way they did and why it varied and was so different in many parts of our country. It is clear, however, that poverty and an ongoing lack of opportunity played a part.
A report by the Joseph Rowntree Foundation revealed that poverty levels are high and affect 14 million people, including 4.1 million children—a shocking statistic. The recession and long and hard-hitting austerity have seen many people made redundant. People have been forced to take on zero-hours contracts, and some may have two or three jobs but still live in poverty. Food and fuel prices have risen, and wages have fallen behind the standard cost of living. There has been a sharp spike in private rental accommodation, in which people often live in unbearable conditions. Property in certain parts of the country has become unattainable, and social housing waiting lists are forever growing longer. People, especially in London, are being placed in B&Bs and temporary accommodation, often too far away when it comes to taking their children to school, going to their place of work or caring for their loved ones.
There has been an increase in the threat of terrorism and the prison population, and the ability to attain higher education has moved further away from some people and their families. The rise in food bank provision makes people feel like they have failed in life, when really it is the Government who need to be held to account.
The leave campaign focused on a contentious message of blame culture: “Let’s blame others—immigrants.” They used them as a scapegoat when the nation’s sense of dissatisfaction should have lain at the Government’s doorstep. It is successive Governments who are failing to create jobs, to correct the benefits system, to provide education bursaries, to regulate rents in the private sector and to build more social homes. They are failing to root out racism and discrimination in our society, to promote gender equality by giving pensions to WASPI women, to invest more in education, including higher education, and to invest in our public services.
Many of my constituents are proud to be called Europeans: 70% in the borough of Lewisham voted to remain. A deal is an agreement, but this deal has not been ratified by our country. What is the only way to regain a mandate on a clear way forward? I have faith in Members of this House, but the gravity of this decision is too much for us alone.
If the Prime Minister is confident with her proposed negotiations, she should be confident enough to bring them before the electorate. In the circumstances, it is only right that the people are given some say over what happens next.
This is not about frustrating Brexit; it is about allowing people to make an informed decision across the country about a known quantity. Before the Prime Minister sets her Brexit boat sailing, she needs to consider the weather and the course of the journey. It will be too late to turn back if the weather gets tough. I could not vote for anything that will make our country poorer.
It is a pleasure to follow the hon. Member for Lewisham East (Janet Daby). From my experience as a divorce lawyer before I came to this House, I can say that no divorce ever results in parties being better off financially immediately afterwards. That is the reality of the situation we are going to be in as we divorce ourselves from the European Union.
There has been a compelling analysis during this debate from my right hon. Friends the Members for Haltemprice and Howden (Mr Davis) and for Clwyd West (Mr Jones). I wish to associate myself with that analysis. During the past two years, it has been a privilege to serve on the Select Committee on Exiting the European Union. As you will know, Mr Speaker, that is one of the largest Select Committees and contains representatives of five different parties in this House. I can say that the membership of that Committee is overwhelmingly against this deal.
The feeling also applies in my constituency, where the deal is anathema. Tom Blyth, who runs the Christchurch Conservative political forum, has succinctly described the problem. He says that his membership is dispirited by the
“Government’s deceitful, cowardly, supine capitulation to EU bullying in a senseless obsessive pursuit of a Withdrawal Agreement that betrays the Nation”.
That is the message from my constituency and my Conservative association membership, in case anybody was in any doubt about that.
In preparing for the deal, the EU has clearly taken inspiration from the plant kingdom. In its negotiating strategy, it has looked to the Venus flytrap, which uses nectar to get its victims inside, from where they cannot get out. That is exactly the model that the EU has drawn up for us in the Northern Ireland protocol. My right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald) was interpreting the Attorney General’s statement as suggesting that there might be a way out of that protocol, but that is not what is said in the actual text of the Government’s legal advice, which we have now seen. So let us not be seduced into thinking that somehow the EU is on our side and will eventually let us out of this protocol. The EU will let us out of the backstop only if we agree to further demands that it places on us.
On page 36 of the 2017 Conservative party manifesto, it says:
“We believe it is necessary to agree the terms of our future partnership alongside our withdrawal, reaching agreement on both within the two years allowed by Article 50.”
Obviously, that has not happened. Why have we reneged on that promise, given that not doing so would have ensured that we would not be parting with £39 billion of taxpayers’ money without a guarantee of a good future trading relationship? As the EU is desperate for our money, why has the United Kingdom unilaterally thrown away its strongest negotiating card and, in so doing, also gone back on the Prime Minister’s oft-repeated promise that nothing is agreed until everything is agreed?
The Government are now intent on also throwing away our second-best negotiating card—that no deal is better than a bad deal. The 2017 Conservative party manifesto asserted:
“we continue to believe that no deal is better than a bad deal for the UK.”
The Prime Minister set out in her Lancaster House speech the reasons why she believed that and the benefits that would come from having a no-deal solution. It is extraordinary that she now seems to have reneged on what she was saying then—that no deal would deliver us the opportunity to trade globally and enable us to attract overseas investment into our country. Why has she gone back on all those agreements and left us in a situation now where we have no option but to vote against this withdrawal agreement?
I would like to focus my comments on the practicalities of transporting and storing products and goods.
No one could disagree that the more we have learned about Brexit in the past couple of years, the more complicated leaving the EU has become. Falkirk voted remain. The real issues that will impact on my communities have become self-evident. This country is clearly unprepared to leave the EU, whether one was a remainer or a leaver. In other words, fail to prepare; prepare to fail. The Government are responsible for this confusion and uncertainty, and no one else: not the EU; not even the people who voted to leave. I do not believe that the Government or the people who voted to leave were fully informed or aware of what we were all letting ourselves in for. But the impact, as usual, will end up with the poorest in society, once again paying for the mistakes of the wealthiest in society.
I have had correspondence from many businesses in Falkirk, Scotland and the UK, particularly from a business that supplies food to millions across the UK. It has highlighted an absolutely critical issue—that the cold storage facilities it uses for its products are at capacity and there is no space left. The products in that cold storage system will certainly include perishable goods such as those of, as we heard earlier, the highly successful Scottish shellfish industry, which supplies all the major capitals of Europe with the highest-quality langoustines, mussels and so on, as well as the soft fruit industry, which is being hit from all sides. What will happen if these goods do not make it to market? The producers simply will not get paid. They will have to pay for the discards—and no doubt, in turn, their insurance premiums will absolutely rocket.
These storage facilities are used for goods and products in many other industries, such as the pharmaceutical industry. In business questions this morning, my hon. Friend the Member for Central Ayrshire (Dr Whitford) expressed her concerns about vaccines. There will also be the storing of chemicals. The just-in-time trading system using these cold storage facilities will indeed run out of time. The system is creaking at the moment, and it simply will not able to cope with the strains demanded of it. That concern of my local business in Falkirk is echoed across the UK.
There have been so many unfounded assumptions—for example, about how this Government would tell the EU the UK’s terms of business. That assumption has sailed down the Forth. The chemical industry, which is one of the UK’s biggest industries, has legitimate concerns. It has huge responsibilities and safety issues. Some examples of the difficulties faced by the chemical industry were given to the Environmental Audit Committee, on which I serve. We received evidence from a variety of stakeholders for our inquiry, and one of the principal conclusions about the impact of leaving the EU was that it would be difficult to transpose into UK law the chemicals regulation framework established by the EU through REACH. Companies face significant uncertainty over the validity of current REACH registrations after the UK leaves the EU. The Chemical Industries Association and the Chemical Business Association indicate that a sizeable proportion of their members are already considering moving or have moved out of the country.
For the coatings and paint industry—a just-in-time industry—any border delays make industry less competitive. Delivery to a car plant incurs a penalty of £800 per hour if the line stops, but of course the biggest penalty is that business will simply go elsewhere.
In September, the National Audit Office reported that the Department for Environment, Food and Rural Affairs was still to present its business case for the UK’s new chemical regulation regime to the Treasury because it did not have detailed cost estimates. How on earth can DEFRA have a database comparable to the European Chemicals Agency’s on day one of Brexit?
How prepared are the businesses running the UK’s utilities? Some ports have not gained the authorised economic operator accreditation, which is recognised by all international trade authorities, including the EU. Forth Ports in Scotland, which owns Tilbury docks, has that accreditation, but I believe that other major ports do not. It took years to make REACH the recognised gold standard worldwide in the chemical industry. That will be broken. We could put Humpty Dumpty back together again easier than this mess of a so-called plan.
For too long, Scotland has been overlooked in these discussions by the Prime Minister and the Government. It is almost as if they think that ignoring Scotland will make it go away. Scotland will not be ignored, but I certainly hope we are going away.
I am grateful for the opportunity to speak in this important debate. I pay tribute to the hon. Member for Falkirk (John Mc Nally) for his dulcet tones and helping us get through the afternoon.
We find ourselves here because of a series of events. We must remember that the day after the referendum, the campaigns disappeared. When we got to the leadership competition, many of the competitors disappeared. When we got to the election, sadly many of our seats disappeared, and we found ourselves without a majority. Despite that, we have a Prime Minister who, thank God, has shown fortitude, devotion and duty, when so many others have, sadly, disappeared.
I have plenty of criticism to make of the way these negotiations have been conducted, and I am sure I am not alone in doing so. I think we started the wrong way round. Rather than negotiating our way down, as it were, from our existing membership, we should have admitted the truth, which is that we have left the European Union—we left when the votes came in—and we should be negotiating our way up towards the relationship we want to see in the long term. Sadly, that is not what happened.
We find ourselves now looking towards a transition. After 45 years’ membership—about the same time that Elizabeth I was on the throne or the German empire existed—it is hardly surprising that the transition to a new relationship is important. We must use this opportunity to focus on not only what the interim stage looks like, but what the future looks like. That is why I would welcome much more effort going into the future agreement. It is true that the political declaration sets out some aspects of interest, and the backstop supposedly is used as a building block, but we need to see much more than either of those.
So what are we looking at today? We are looking at a stage. We are looking at—let us be frank—the only deal on the table. We are looking at a temporary, imperfect compromise, and an uncomfortable one at that—one that, were we to ever enter the backstop, splits the four freedoms of goods, capital, services and people.
The option we have is pretty simple. It is threefold: either we agree with this compromise; or we push for a second referendum, which I think is a terrible idea, as it will simply lead to more uncertainty and more indecision; or we walk away. As I represent a community—I am blessed to represent one of the most beautiful communities in the country—that, sadly, is surrounded by motorways entirely reliant on the port of Dover, there is a danger for us that those motorways will become parking lots, as many hon. Members will have heard me say when I raised this with the Transport Secretary. I am afraid that I cannot go for the referendum and I cannot go for walking away, so I am left really with only one choice. I do not say this with any joy. However, it is not our role to shirk responsibility or to avoid decisions; it is our role to take decisions. When I have excluded the impossible, I am left with only one—and that I have to say with a very heavy heart.
The backstop is not, however, as final as many have said, and here I quote from Policy Exchange’s work by Professor Verdirame, Sir Stephen Laws and Professor Ekins, about what the best endeavours obligation in the withdrawal agreement puts on the EU. They say:
“EU conduct in breach of such an obligation and indefinitely prolonging the application of the Protocol could thus amount to a material breach of the Withdrawal Agreement and the Protocol. Faced with this situation, the UK would be entitled to invoke this material breach as a ground for the suspension or termination of the Withdrawal Agreement and the Protocol.”
So there is a legal way out, and the legal way out is if the EU does not negotiate with best intent. I am confident that it will, because this is as bad for the EU as it is for us, though, frankly, it is not good for anyone.
I will end simply with a word about the referendum. It was legitimate. It did not go my way, but democracies do not always reflect the way we choose. When we get through this period, the next few years of this country’s history will be truly glorious. We are on the cusp of massive investment. We have companies sitting on cash and ready to throw it into the economy. We have a huge opportunity before us, and I look forward to our grasping it.