Exiting the European Union
The Secretary of State was asked—
The Chancellor and I are both determined to ensure we get the best possible deal for our financial services sector—a crucial part of our economy—and not just for the City of London but for the country more widely. Two thirds of financial services jobs are outside the capital, including 150,000 in Scotland. We are determined to ensure that this UK-wide industry continues to thrive. The Chancellor and I have met to discuss this, and, as one would expect, agree that financial services will be of great importance in these negotiations, that we must remain in a position to attract the brightest and the best in the global battle for talent, and that we will seek the best possible terms of trade for our financial services in the European market. We are also working together to maximise opportunities for financial services arising from our exit from the European Union. We have already met representatives of the financial services industry and expect to do so again as we shape our negotiating position.
Will my right hon. Friend make securing agreement on a transitional period for financial services an urgent priority for Brexit negotiations to avoid the risk that firms feel they have to start making decisions to change their businesses now based on a worst-case scenario because compliance obligations mean that they cannot wait to see what the final deal will look like?
We are seeking to ensure a smooth and orderly exit from the European Union, and it would not be in the interests of either side—Britain or the European Union—to see disruption. To that end, we are examining all possible options, as one would expect. We are approaching these negotiations in good faith and with good will towards our negotiating partners—we hope the same applies in reverse—focused on the mutual interests of the UK and the EU, including financial stability. I would say that having London as the No. 1 global financial centre sitting at the heart of the global capital markets is not just in the UK’s interest but in the European Union’s interest. I am confident that everyone will see the value of not undermining that.
In his answer to my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), the Secretary of State talked about all possible options. Yesterday in the Treasury Committee, I asked the Chancellor whether he accepted the likely need for transitional arrangements. Has my right hon. Friend met regulators to discuss systemic risk, and major financial institutions to discuss loss of business, if those transitional arrangements are not put in place?
The Chancellor’s response was much the same as mine will be. Yes, we have been talking to the European institutions, in particular, about this matter, and they take the same view as we do.
We look forward to hearing from the Secretary of State once the new Select Committee has been established. May I press him on transitional arrangements, which are absolutely fundamental to the task in hand? He will be only too well aware that uncertainty about our future trading relationships, including for the financial services industry, is the major concern of business. Can he give the House an assurance that if we have not been able to negotiate a new trade and market access agreement with the European Union by the end of the article 50 process, the Government will seek a transitional arrangement, because if they do not say that now the business uncertainty will continue, and businesses may begin to take decisions because they do not know what the future holds?
I congratulate the right hon. Gentleman on his new post. I am very pleased that he is the Chairman of the Brexit Committee, and look forward to a great deal of discussion with him on these subjects. He is quite right—we have to treat as absolutely central to what we do maintaining the stability of the City but also of the European financial markets, which have been a little fragile over the past few years. We will therefore do anything necessary. In the financial sector, as in other sectors, at the point of exit from the European Union, all the standards, conventions and regulations will be identical, so the transition should be capable of being managed very clinically. We will do everything necessary to maintain that stability.
Can the Secretary of State confirm, in relation to press reports earlier this week, that the Government may in future pay the European Union, in some form or another, for access for financial services? Is it the Government’s position that under no circumstances will they in future pay for market access for financial services?
I do not comment on leaks. I am not going to comment on that newspaper report or, indeed, on its veracity or otherwise. On the accountability of Government activity, I said during last week’s debate that I want to be as accountable and open as possible with the House of Commons, but the Labour party accepted enthusiastically the amendment to the motion, which said that we would do nothing to undermine or prejudge our negotiating position, and that is what we will do.
Rather disgracefully, the Treasury did its best to play a prominent role in the remain campaign, including the release of a highly dodgy dossier predicting economic doom and gloom. Is my right hon. Friend confident that the Treasury has now caught up with the result of the referendum and that it is singing from the same page as his Department?
I am afraid that I do not agree with my hon. Friend. The simple truth is that the Treasury is looking at all the options, just as we are. Forecasts of the sorts that he described are contingent entirely on the assumptions that are put under them. If a lot of deleterious assumptions are made, they will result in a deleterious outcome. If serious policies are introduced to correct any of the risks and maximise the opportunities, they will result in a very much better outcome, and that is what we will do.
The Secretary of State has said that he does not want to discuss leaks, but it is important that we get factual information out there. According to the Financial Times, the Government are to spend billions on keeping the City of London in the single market. Will the Secretary of State confirm what steps he is taking to ensure that the people of Scotland get a similar deal?
As I have said, I do not comment on leaks, but what I will say is this: I said at the beginning that a very large number of financial services jobs are outside London and many of them are concentrated in Scotland. It has been a fundamental part of Scotland’s advantage down the years to have strong financial services, and we will do every bit as much to protect Scotland as we will to protect London.
Tens of thousands of jobs in Britain depend on euro-denominated clearing. The United States has secured equivalence for its clearing houses. How confident is the Secretary of State that euro-denominated clearing will be permitted in the UK after we have left the European Union?
The right hon. Gentleman identifies a very important point, as I would expect from him, and that is certainly one of our major aims. I reiterate the point that I made to the new Chairman of the Brexit Committee: we start at the point we leave with absolute equivalence, because we meet all of the requirements at that point, and I would seek to ensure that that was maintained.
The discussions on financial services are intended, as I understand it, to build consensus on the Government’s plans. Eight days ago, the Government gave a clear commitment from the Dispatch Box that
“there should be a transparent debate on the Government’s plans for leaving the EU”.—[Official Report, 12 October 2016; Vol. 615, c. 414.]
Yesterday I wrote to the Secretary of State to ask a very simple question: when will the plans be made available? That is an important question because we need time to debate and scrutinise the plans before article 50 is invoked, and no doubt the new Brexit Committee will want to see them. The Secretary of State replied promptly to my letter, but failed to answer that central question, so I ask him again: when will the Government plans for leaving the EU be made available to this House?
I could not have been clearer that I consider engagement with Parliament on the process of exiting the EU to be of paramount importance. That was the whole thrust of my speech in last week’s debate and of everything I said previously to various Select Committees and to the House. That is why I supported the Opposition’s motion last week that
“there should be a full and transparent debate on the Government’s plan for leaving the EU”.
That was the hon. and learned Gentleman’s wording.
It has always been our intention that Parliament should be engaged throughout. However, the House also agreed a vital caveat that such a process must respect
“the decision of the people of the UK when they voted to leave the EU on 23 June and does not undermine the negotiating position of the Government”.
There will be a balance to be struck between transparency and good negotiating practice, and I am confident that we can strike that balance. Over the course of the coming—[Interruption.] Whether it is six months or less, I do not know, but over the course of the coming period before the triggering of article 50, much information will be put out and I think that the House will be in no doubt about our aims and strategic objectives.
The question was: when will the plans be made available? For the second time, it has not been answered. The plans are important not only so that this House can hold the Government to account, but so that some certainty can be provided. There has been so much evidence of uncertainty. I met representatives of the Council, Commission and Parliament in Brussels yesterday, and it is absolutely clear that the Prime Minister’s words about Brexit at her party conference have been widely interpreted as an indication that she wants the UK to leave not just the single market, but the customs union. I have no doubt that that will come up in her discussions in Brussels this evening, but will the Secretary of State assure the House that that is not the Government’s starting position for the article 50 negotiations?
Actually, it is a good example of the reason why we are taking our time to come to a conclusion on this. [Laughter.] No, these matters have serious implications, whichever way we go with them. Being inside the customs union gives some advantages but cuts off, to some extent, free trade areas around the rest of the world. Being outside the customs union creates some handicaps but opens up those other benefits. That decision is not part of what the Prime Minister has said to the European Union.
The Government continue to undertake a wide range of analysis covering all parts of the UK to inform the UK’s position for the upcoming negotiation with the European partners. A key part of that understanding is the differences across the UK. The Welsh economy has particular strengths in aerospace, automotive, higher education, electronics, steel and agriculture, for example. It is important that we understand the impacts and the opportunities for all parts of the Welsh economy.
I visited Cardiff on Tuesday this week, when I met the First Minister and the Finance Minister, and I am grateful to them for giving me time on their Budget day. I also met university vice-chancellors in a separate meeting. Wales has a particular reliance on a range of EU funding—more so than much of the rest of the UK—on which the Chancellor has already offered a number of guarantees.
As the Secretary of State will be aware, the Welsh economy produces a substantial trade surplus of more than £5 billion per annum as a result of our membership of the single market, the customs union and the associated 53 international global trade deals. The UK as a whole, on the other hand, has a massive deficit of nearly £120 billion. Does the Secretary of State acknowledge, therefore, that the Government’s favoured policy of leaving the single market, the customs union and the associated 53 international global trade deals—a hard Brexit—will have a significant effect on Wales?
No, because the Government’s aim is to maintain the freest and most barrier-free access to the single market that we can obtain. That is the aim, and parts of the kingdom such as Wales are very much at the forefront of our thoughts in that strategy.
Many businesses in Wales are wondering how EU directives that have been signed but not yet enacted—some may not be enacted until 2017 or 2018—will impact on them. At what stage will the Government say that directives are no longer applicable in the UK?
My hon. Friend makes an important point, which goes to the heart of the previous question about maintaining stability and confidence. We have said in terms that the great repeal Act will put into domestic law all the acquis as it exists at the point at which we depart. Everything that is in European law at that point goes into British law.
In Blaenau Gwent, the successful dips company Zorba Foods faces a bigger bill for bringing its ingredients into the country. With petrol prices going up, the falling pound is making every step of the journey to the dinner plate much more expensive. What are the Government doing to help businesses that are faced with a steep increase in costs and families who are faced with higher food bills?
It is not the place of the Government to judge what is the right and wrong exchange rate. The hon. Gentleman is quite right to say that the exchange rate has gone down quite notably, but that gives both advantages and disadvantages. It has already changed, for example, the success of various industries in exports and some other domestic industries. We hope—more than that, we intend—that the balance will work out to everybody’s advantage in the long run.
Yesterday, I was delighted to hear the Under-Secretary of State for Wales confirm that the Treasury will underwrite the approximately £110 million that is due to come from the EU regional development fund for the electrification of the valleys lines in Wales if that money has not come through before we exit the European Union. In his discussions with the First Minister, was the Secretary of State able to give him greater clarity about all the funds that come into Wales from the EU? Businesses require that stable background against which to operate.
My right hon. Friend picks up on a very important point. Wales is more dependent on European funding at the moment than many other parts of the country. One of the set of things the Government have done to protect people from any instability is to underwrite very quickly—the Treasury undertook to do this in August—the existing structural funds. The Welsh Government were cognisant of that and welcomed it, particularly as they—as I said, I visited them on budget day—were able to make their budgets balance. From that point of view, the Government will continue to look at any areas where financial risk is induced as a result of our departure and the possible severance of EU funds as we leave.
Since the referendum, the Government have met companies from every sector of the British economy, including tourism, to discuss the risks and opportunities. I believe that as we build an ever more outward-facing, agile economy, with firms trading more widely across the world, there is enormous potential for the UK to be an even better place to do business. We are meeting representatives of business regularly, and the detailed analysis shared with us by many of them is informing the preparations for the negotiations.
On tourism specifically, foreign visitors contribute £22 billion to our economy, and the industry as a whole supports some 1.6 million jobs. A record 3.8 million people visited the UK in July. My right hon. Friend the Culture Secretary has met industry leaders to discuss our exit from the EU, and we debated this matter in Westminster Hall last week. As the Prime Minister has said, we are confident our exit presents opportunities for growth in tourism, and we will work closely with the industry to realise this.
Businesses in Amber Valley say that what would help them most in deciding what investment to make in the coming years is some clarity about what our overall trading position with the EU will be. They are nervous that waiting two and a half years for that will not be helpful. When does the Secretary of State think they will be able to understand at least what the big picture will be?
At the strategic level, businesses should be able to understand that very clearly now. We have some very clear strategic aims: we will respect the views of the British people—I know my hon. Friend campaigned on our side—to bring back control over our laws and bring back control of immigration; we will aim to maintain our consideration of security exactly as it is now; and on the market front, we are seeking the most open possible market with the European Union.
I thank the Secretary of State for his comments about engaging with the tourism industry. As he said, we are achieving record visitor numbers and record spend. To sustain this growth, should we investigate marketing the UK even more aggressively overseas, taking advantage of the weak pound, with increased budgets for VisitBritain, for example?
I congratulate my hon. Friend on the excellent debate he held last week, and indeed on his excellent speech on this subject. He is right that the industry continues to thrive, with 3.8 million people visiting the UK. I am quite certain—I am sure he will look at Hansard later—that my right hon. Friend the Secretary of State for International Trade will take up his point about promoting Britain abroad as a place to visit.
Does the Secretary of State agree with the International Trade Secretary that we should leave the European customs union, or with the Business Secretary and the Chancellor that we should not do so?
I gave the answer to that some moments ago.
The Secretary of State talks about a smooth transition, but the truth is that businesses are concerned we will have to fall back on WTO rules. Our European partners have so far refused to say that they will enter trade talks alongside our article 50 negotiations. What will the Government and the Secretary of State do to avoid the cliff edge in March 2019, when we leave the EU, of our falling out of the EU single market and back on WTO rules?
The hon. Lady says that our European partners have said that. Some of them have said it, but that was some time ago, and they are now starting to read what article 50 actually says. Article 50 implies that there will be parallel negotiations. That is what we will have because, as she quite rightly says, we need to conclude them within two years to avoid any cliff edge.
My hon. and learned Friend might remember that I said in my conference speech that to take part in the global competitive economy we have to win the global battle for talent, too. My task is to bring back to the UK the right to decide who can come to Britain; the Government’s task will be to exercise that right in the national interest. Clearly, it will not be in the national interest to restrict the movement of talent—the free movement of brainpower, as it were—so she can be confident that we will not be limiting highly intelligent, highly capable people’s access to universities.
Will the Secretary of State tell us what assessment his or any other Department has made of the impact of leaving the EU on the economy, and when he will make that available to this House?
We currently have in place an assessment of 51 sectors of the economy. We are looking at those one by one, but the aim at the end is that this will inform the negotiating approach so that no one gets hurt. Given the hon. Gentleman’s context, I should mention that we are also doing that assessment in a way that will throw up whether something has an impact on the individual nations of the United Kingdom, as well as on the UK as a whole.
I obviously welcome that new information from the Secretary of State, but the Fraser of Allander Institute has already told us that this will cost up to 80,000 jobs in Scotland alone. The CBI, the British Chambers of Commerce and the Institute of Directors have warned about the impact of limiting freedom of movement. They have done their homework, Secretary of State. You did not do your homework during the Vote Leave campaign, when you had a blank piece of paper to campaign on. If the Secretary of State is going to Scotland, he will need to do better than that. When will that assessment be published?
I have always done my homework, and I strongly resent any suggestion to the contrary.
I venture to suggest that if you did your homework, Mr Speaker, you would not have it marked by the hon. Gentleman.
I have not seen the Fraser of Allander report, so would be grateful if the hon. Gentleman directed me to it. One thing about these reports is that they all base themselves on single assumptions. We need to look at those assumptions to see whether they are realistic, and that is what we will do. There have been a large number of forecasts of the effect of Brexit. Some are very pessimistic about certain aspects of policy that we do not intend to allow to happen. I will look at that particular report carefully and talk to him about it after I have done so.
The US Chamber of Commerce, which represents companies with investments in the UK worth almost $600 billion, warned our ambassador in Washington last week that to retain and attract those investments in the years ahead we will require access to the single market. Will the Secretary of State tell the House whether he accepts the figure I have given and, if he does not, how much US business investment he thinks will be at risk if this Government do not secure access to the single market?
One reason—although only one—why we are seeking to maintain the most open and barrier-free access possible to the European market is to encourage foreign direct investment. We have had discussions with a number of countries, including the US; indeed I met a US congressional delegation that came here whose members were very enthusiastic about Brexit. There are many views about this.
EU Regional Funding
The Chancellor has already announced that the Government will guarantee EU structural and investment funding signed before we leave the EU. In addition, when UK organisations bid directly and competitively for EU funding for projects, that funding will be guaranteed by the Treasury if the bids are won before our departure. Those guarantees will extend to 2020, effectively the end of this Parliament.
The Minister has quoted part of what the Chancellor said, but he also said that finance will be guaranteed to bidders
“whose projects meet UK priorities”.
Does that imply that the UK Government will try to change agreed priorities for EU expenditure?
No. Over the coming months the Government will consult all interested parties—including the devolved Administrations, who clearly have an interest in this policy—to ensure that future funding commitments represent value for money and are in line with our strategic priorities.
Does my right hon. Friend agree that one great advantage of the UK leaving the EU is that it will give us greater flexibility over how we spend our regional aid, and that as we will no longer be paying as a net contributor to the EU, we will have more money to spend on these schemes?
My hon. Friend is right. This particular area, like many other aspects of policy, gives the United Kingdom the opportunity to reassess these arrangements and ensure that they meet the UK’s priorities.
UK Citizens in EU Countries: Rights
I congratulate my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) on his election as Chair of the Science and Technology Committee.
We had a very good debate on this matter yesterday and it was clear that Members on both sides of the House wanted to provide reassurance. The Government fully intend to protect the status of EU nationals already living here and the Prime Minister has been clear on that point. We expect UK citizens’ rights in other EU member states to be protected in return. I find it hard to imagine a scenario where, in negotiations, that is not the outcome. At every step of the negotiations, we will seek to ensure the best possible outcomes for the British people at home and overseas.
To follow on from the question asked by my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), the Government have made clear their desire to control the borders and the fact that free movement cannot continue as it is now. However, will my hon. Friend reiterate that a degree of free movement will be necessary to protect key areas of our economy such as science and technology, and in particular research collaboration?
I absolutely recognise my hon. Friend’s point and the need to strike that balance. As the Secretary of State said in his conference speech, to which he has already referred, pulling out of the European Union does not mean pulling up the drawbridge. He said:
“We will always welcome those with the skills, the drive and the expertise to make our nation better still. If we are to win in the global marketplace, we must win the global battle for talent. Britain has always been one of the most tolerant and welcoming places on the face of the earth. It must and it will remain so.”
This is particularly true in areas such as science and technology. The UK is a science superpower and we intend to make sure it stays that way.
As well as ensuring that British pensioners living in other EU countries retain the right to remain in those countries, will the Government make sure that their pensions are protected under their current terms?
My hon. Friend raises an important point. Clearly, this is something that we will want to secure in the negotiations. We are working on the basis that what is fair to UK citizens in the EU should also be fair to EU citizens in the UK. We will certainly be looking to protect the interests of British pensioners as we go through this process.
The most recent census indicates that 1,588 of my constituents were born in other EU countries. From personal experience, I know that they include doctors, dentists, teachers, nurses, home care workers, residential care workers, pupil support assistants and many more. Why are the Government already able to give unilateral guarantees about the remaining rights of bankers but unable to give the same guarantees to my constituents?
We are clear that it is important to secure the rights of EU citizens in the UK and UK citizens in the EU. We will seek to do so through the negotiations.
The Minister is seeking to brush away concerns about this issue. Last month, the British Chambers of Commerce reported that 41% of companies said that their staff had expressed uncertainty about their future. Across the country, EU staff in our universities, who make up 15% of academics and contribute hugely to our research, are reconsidering their position. NHS England’s chief executive is so concerned that he has called for early reassurance about the future of EU workers. Will the Government simply resolve this uncertainty by committing to implement the decision of this House on 6 July and acting with urgency to give EU nationals currently living in the UK the right to remain?
As I said in yesterday’s debate, the Government recognise the enormous contribution that EU citizens make to our health service, our universities and business. We want to ensure that their rights are protected, but we need to do so through the process of negotiation and agreement.
Will the Minister now answer the question from my hon. Friend the Member for Glenrothes (Peter Grant)? Why was the Chancellor yesterday, in front of the Treasury Committee, able to give an unambiguous guarantee about the travel and residential rights of bankers that he is not prepared to give to our hard-working fellow European citizens?
When the right hon. Gentleman intervened on me in yesterday’s debate, I had a sneaking suspicion that he might be, perhaps inadvertently, misrepresenting the comments of the Chancellor to the Select Committee. Having read the transcript, it is clear that the Chancellor was making it clear that his role was to advocate on this in the policy discussions to come with the Home Office and other Departments. He was not doing as the right hon. Gentleman says.
Devolution of Immigration: Scottish Government
Immigration is a reserved matter. However, we are working closely with the Scottish Government and we will get the best possible deal for all parts of the United Kingdom as we leave the EU. We will give the Scottish Government every opportunity to have their say as we develop the negotiating strategy.
During the European Union referendum, the former Justice Secretary, the right hon. Member for Surrey Heath (Michael Gove), said that Scotland could decide its own immigration policy in the event of Brexit. Was that proposal defenestrated at the same time as the former Minister?
As I have indicated, immigration is a reserved matter, but as I have also indicated, we will continue to have discussions with all the devolved Administrations, including the Scottish Government, and there will in due course, as the matter develops, be discussions about where powers should lie.
London is a great global city and we expect it to continue to be so. I am sure that the hon. Gentleman will join me in welcoming the record-breaking jobs figures for London that were published yesterday—I think they show the lowest rate of unemployment in London in our lifetime. The Secretary of State has already met the Mayor of London and we expect to hold meetings with regions across the UK to ensure that their views are taken into account.
I am sure the Minister welcomes the LondonIsOpen campaign led by the Mayor of London, so will he give a commitment today that he will look with an open mind at the case being developed by London’s business community for a work permit system for London that would enable us to continue to recruit the best and the brightest talent from around the world?
The precise way in which the Government will control the movement to the UK of EU nationals and people from around the world is something that we will be working on with the Home Office. We will certainly take into account representations from London and other devolved areas, but we clearly need to come up with a policy that works for the whole of the UK.
I am holding a Brexit forum next month with local businesses in my constituency involving interests ranging from information technology to the creative industries, retail and property. What is the Minister’s advice to those local businesses about engaging with Brexit? Is it to embrace the challenges and opportunities presented, or is it to follow the lead of the Opposition that is full of pessimism and denial?
My hon. Friend is absolutely right that we need to make sure that we embrace the full range of challenges and opportunities in the Brexit process, and we need to engage with business through that process. It is excellent that my hon. Friend is holding a forum and it is good that he is listening to businesses in his constituency. That is certainly something that we as the Department will be doing all around the country.
The Government’s shocking record on tackling air pollution is well documented, with almost 10,000 associated deaths in London in just one year. Given that the Government regularly flout EU regulations on air pollution even now, what assurance can the Minister give me that once we exit the European Union, they will not simply abandon all legal protection on air pollution in the capital and, indeed, in the country more widely?
The Government are firmly committed to improving the UK’s air quality and cutting harmful emissions. That is why we have committed more than £2 billion since 2011 to increase the uptake of ultra-low emission vehicles, to support greener transport schemes and to set out a national plan to tackle pollution in our towns and cities.
I have visited the Institute of Cancer Research. It wants to develop a London cancer hub, which I hope the Government will support, and, if that development happens, it expects to be able to develop two new cancer drugs in five years. One of its concerns is that 30% of its postgraduates come from the European Union. What guarantees can the Minister give that these essential London workers will be able to continue in post, and indeed that the institute will be able to recruit from the EU in the future?
I refer the right hon. Gentleman to my earlier answer to the Chair of the Science and Technology Committee. We want to continue to attract the brightest and the best, and we will certainly make sure—I have already engaged with cancer charities and a wide range of voluntary organisations—that we take concerns into account as we have conversations with the Home Office and other Departments about the UK’s future immigration policy.
The Prime Minister is clear that we want the most open and free access possible. All countries have access to the single market; the question is on what terms and to what extent. We are seeking a bespoke outcome on terms of trading with and operating within the European market. As one of the world’s largest economies, we are confident that we will negotiate the right deal for England, Scotland, Wales and Northern Ireland. We are acutely aware of the significant trading links between Ireland and Northern Ireland, and we are determined to ensure a smooth transition. Disruption is in no one’s interest.
The Secretary of State’s answer suggests that nothing has yet been set in stone. With that in mind and given the importance of membership of the single market to the all-Ireland economy, will the Secretary of State commit to exploring ways in which Northern Ireland can remain in the single market, because of its importance to our business, in the eventuality that Britain leaves?
What I will commit myself to—I have already committed to this—is extensive work to ensure that we keep an open border between the north and the south, maintain the common travel area, and maintain the most effective open market that we can achieve. Within that, I do not intend to specify any particular outcome at this point.
The remain campaign was perfectly clear that we have to leave the single market. [Hon. Members: “Do you mean the leave campaign?”] No, I mean the remain campaign. Are not the really important questions whether the French wish to sell us wine without tariffs, whether the Germans wish to sell us cars without tariffs, and whether the whole of Europe wishes to continue its current level of access to the City?
My hon. Friend makes a very important point. When the Prime Minister is at the European Council tonight and tomorrow, she will reiterate what we have said many times already: we want an outcome that is successful for both the United Kingdom and the European Union. As my hon. Friend suggests, if the UK and the EU do not achieve an open, free and barrier-free trading relationship, it will be harmful to many European countries and harmful to European financial stability, and no one wants that.
Were we to leave the customs union, the businesses exporting 44% of our exports to the EU would face extra costs for compliance with the rules of origin, which the OECD estimates at 25%. Does the Secretary of State not agree that membership of the customs union is even more important than membership of the single market?
As I said earlier, these matters are assessed very carefully, but perhaps the hon. Lady should look at various other countries around the European Union, although they are all smaller than us, so they are not really good models. There is Turkey, which is inside the customs union and outside the single market; there is Norway, which is inside the single market and outside the customs union—actually it manages to trade with Sweden very easily—and there is Switzerland, which is outside both the customs union and the single market. What we are looking for is the best balance to achieve the best outcome.
Obviously the Minister cannot speculate on how the negotiations will go, but the one thing we do know is that we have already had a Brexit dividend. With the pound falling by 15.2% against the euro, our exports are so much cheaper and our imports are so much more expensive that more jobs will come into this country and more goods will be produced here, which is a very good thing.
It is not for this Minister, at any rate, to comment on what is the appropriate or right level of the pound. However, as my hon. Friend says, this has its disadvantages in terms of the effect on inflation, but some serious advantages in terms of our trading capability, and those are much bigger even than the tariffs that people talk about.
Order. I would call the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) if she were standing, but she is not, so I will not.
Ah! She is. Enlightenment has dawned.
What I can undertake to do is to ensure that we secure the freest and most open possible trading arrangement with Europe. That is what matters, not titles such as “single market”, “hard Brexit” or “soft Brexit”—all those amazing terms that people come up with. We want the maximum possible access, which will encourage job growth, wealth growth and revenue growth in this country.
Membership of the single market means accepting EU laws, having to accept rulings from the European Court of Justice, probably still making contributions to the EU budget, and accepting free movement of people, all of which flies in the face of what the British people voted for in the referendum. Is not the only question of principle that is at stake the question of whether the EU wants to continue its tariff-free trade with the UK or if it wants to commit economic suicide?
My hon. Friend makes a good point. Let me reiterate what I said earlier. Our aim is to come up with an outcome that is good for the United Kingdom and good for the European Union, and that is a free trade area with us.
EU Environmental Regulations
The UK has been a leading player on environmental policy, setting the international agenda on climate change, as demonstrated by the Prime Minister’s commitment to ratify the Paris agreement as soon as possible. As recently announced, Britain will take back control of its laws through the great repeal Bill. Any changes to our environmental regulations after that time will be for the Department for Environment, Food and Rural Affairs and this House to decide. The UK will continue to be a leader on international environmental co-operation.
The European directive on bathing water has actually been part of a very good environmental law—water companies have cleaned up our beaches throughout the country, including the south-west—so can we rest assured that we will not row back on environmental laws that are good? Not all environmental laws from Europe are bad.
I can see my hon. Friend’s point that it is in the UK’s interest to ensure that we have the cleanest possible bathing water. That issue will be something for future debates perhaps with DEFRA, but we will ensure that we maintain at least the standards that we have maintained in the past. I remind him of our manifesto commitment to be the first generation to leave the environment in a better state than we inherited.
Is the Minister not aware that on environmental issues—waste, water and energy—we have such close relationships throughout Europe and we are very dependent on the high level of its technology and co-operation with us? Many people in that sector have read Matthew Parris’s article describing Brexit as the worst decision this country has made since Suez. Does the Minister agree with that view?
I do not think now is the time to refight the referendum, on which the hon. Gentleman and I may have been on the same side, but it will be absolutely in our interest to co-operate with our neighbours on matters of the environment that affect us all.
Absolutely. I can assure my right hon. Friend that there is close co-operation between my Department and DEFRA and indeed there have been a number of productive meetings between Ministers in our Department and agricultural interests, including the National Farmers Union and agri-business representatives from the whole of the UK.
Employment and Workers’ Rights
A large component of the people who voted to leave the EU could be characterised as the British industrial working class. It is no part of my brief to undermine their rights—full stop. As a Government, we have been clear that we will do nothing to undermine workers’ rights. All law in this area at the time of exit will be brought under UK law as part of the great repeal Bill, ensuring continuity.
The 2000 part-time workers regulations implemented the EU directive that guarantees that the rights of part-time workers are equal with those of their full-time colleagues. Will the Secretary of State guarantee that those rights will not be removed or diluted in any way when the UK leaves the EU?
As I said, all law will be incorporated—no exceptions.
On that point, employment law is a devolved matter in Northern Ireland, so under the great repeal Bill will that competence be automatically devolved, or will it be held in some sort of holding room here before it is devolved?
The hon. Gentleman raises an important point. That is why I said last week when we were talking about the great repeal Bill that we will have extensive discussions with all the devolved Administrations to ensure that each appropriate piece of law goes to the right place.
We have engaged with a number of higher education institutions, including groups such as Universities UK. Over the next few months, the Department will continue to engage with key stakeholders in business and civil society, including universities, through a series of round tables, bilaterals and visits throughout the UK. We have been clear we want to create an environment in which the UK as a whole can continue to be a world leader in research, science and tertiary education.
There are 4,512 students at the University of Edinburgh from other EU countries and several thousand other EU nationals engaged in research, teaching and administration at the university. I ask Ministers again: do they not realise that the refusal to guarantee the status of those people in our community is placing in jeopardy much of the work of that great institution and is causing unnecessary anxiety in our community?
I refer the hon. Gentleman to the answers I gave earlier on the Government’s full intention to secure the rights of EU citizens in the UK and UK citizens in the EU. The Government recently announced that EU students applying for a place at an English university or further education institution in 2017-18 will continue to be eligible for student loans and grants for the duration of their course, and I believe the Scottish Government have made the same guarantee.
The Prime Minister has made it clear that she will trigger article 50 by the end of March 2017. It is in everyone’s interests that we take time to establish a UK approach and clear objectives for negotiations. Equally the Prime Minister has been clear that there will be no unnecessary delay. We have also been clear that we will trigger when the time is right for Britain and we will certainly, where possible, give people and businesses in Britain and other European countries the time to consider for themselves what the outcome will amount to. That is what we are doing.
Does my right hon. Friend agree that this Government are absolutely right to deliver the Brexit that 17.2 million people voted for, and to do it in a responsible fashion that allows it to deliver the great deal for Britain that we know it is going to deliver?
That is exactly right: it is what the Prime Minister said and it is what we intend—and I have to say that I doubt it is what the Opposition intend.
Is my right hon. Friend aware that in the last 24 hours the House of Lords has reported that there should be a vote in this House
“to debate and approve the negotiating guidelines, at least in outline”?
Does he accept that Parliament as a whole, including the House of Lords, has to not only respect, but also accept, the verdict of the British people and furthermore that it is for this elected House to determine its own procedures, standing orders and votes?
My hon. Friend is right: we should respect the will of the British people. I have not had a chance to look at the Lords report yet, but I will comment on it when I do.
As my right hon. Friend will know, a very important court case has been heard in the High Court in the last week. What plans has he drawn up, including legislation, in the event that he loses that case and that therefore it will be this place, including the House of Lords, that will trigger article 50, not the Government using the royal prerogative?
Let me say gently to my hon. Friend that Ministers do not comment on court cases in progress.
Last week I updated the House on our progress towards leaving the EU. I have been clear that the Government’s overarching aims are bringing back control of our laws to Parliament, bringing back control of decisions over immigration to the UK, maintaining the strong security co-operation we have with the EU, and establishing the freest possible market in goods and services with the EU and the rest of the world.
The great repeal Bill will end the primacy of EU law. It will minimise uncertainty and return sovereignty to the institutions of the United Kingdom, because that is what the referendum was all about—taking control.
We will work to ensure the UK’s exit from the EU serves the interests of the whole country, from citizens to businesses. We will reap the opportunities exit provides all over the world and deliver an orderly and smooth transition, but I have been clear, as has the Prime Minister, that we will not be providing a running commentary on the negotiations; that would not be in our interests. Parliament will however be fully and properly engaged, as will the devolved Administrations.
We want to build a national consensus around our position and discuss our options with a range of stakeholders. Last week, I committed to a series of debates so that the House can air its views and we look forward to engaging with the new Select Committee. I congratulate again the right hon. Member for Leeds Central (Hilary Benn) on his election as Chair of that Committee.
From the Mill bakery next door to my constituency office to the wards of Kingston hospital, thousands of EU citizens work and live in Kingston, and they are very welcome. What process does my right hon. Friend have in mind for ensuring their rights are protected post-Brexit, as well as the rights of British ex-pats living in the EU, something that none of the 27 Heads of State is yet to guarantee?
As the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Worcester (Mr Walker) has made clear already, we want to be able to guarantee the rights of all those European migrants in the UK. Many of them are already in the position of having indefinite leave to remain, or will have by the time we leave in two and a half years’ time or thereabouts, so we are talking about a small fraction of those people, but nevertheless we take this incredibly seriously and we will seek to get the agreement with the other European countries that we will uphold their rights and British citizens’ rights abroad as soon as possible.
I don’t know about you, Mr Speaker, but the British people have had enough of being misled over these issues. Will the Secretary of State tell the House and the country whether his plan—as it evolves—will involve this country agreeing to continue to make payments to the European Union after we have left it?
The hon. Lady had a great deal of trouble keeping a straight face while she was asking that question. That is because she knows it is one that I am not going to answer.
I look forward to being able to ask the Secretary of State a question with a straight face in anticipation of getting a straight answer. Could he perhaps try to tell the House and the country how much he estimates will need to be spent on settling legacy commitments prior to the completion of Brexit? The Financial Times estimates—this is not a leak; it is an analysis—that our historical liabilities could cost up to £20 billion.
I have no trouble keeping a straight face when dealing with the Opposition. I am afraid that, from time to time, they do things that are seriously not in the country’s interests. Let me quote a rather more authoritative source than the Financial Times. The European Commission has guidelines on how it handles negotiations and what it puts in the public domain beforehand. It states:
“The negotiations and their texts are not themselves public. This is entirely normal for trade negotiations, not just those involving the EU. There are several reasons for this. A certain level of confidentiality is necessary to protect EU interests and to keep chances for a satisfactory outcome high. When entering into a game, no-one starts by revealing his entire strategy to his counterpart from the outset: this is also the case for the EU.”
The Opposition are trying to put us in a disadvantaged position with the European Union, and that is not in the national interest.
My right hon. Friend raises an important point. Many hon. Members are seeking to identify the challenges associated with exiting the European Union, but there will also be a great number of opportunities, not least because we will be in charge of our own affairs and our own trade policy. For that reason, my Department and the Department for International Trade are engaging regularly with businesses not only in the United Kingdom but around the globe.
Most EU funds will be guaranteed post-departure by the Treasury, as we said in August. After that, the decision will be one for the British people, the British Parliament, the British Government and the relevant Department. I am sure that they will take on board what the hon. Lady has said.
Absolutely. We do not think that there is any doubt about that. London has once again been ranked as the No. 1 global finance centre in 2016. The next highest ranking EU location was not even in the top 10. Being part of the EU market is partly responsible for our ranking, and we are looking to maintain the best possible terms of trade with the EU market, but that is not the only factor. London clearly leads the world with the depth and expertise of its labour force, the breadth of its knowledge, services and infrastructure and its wide array of links to markets around the world. It is in the interests of the UK and the EU that that should continue.
The hon. Lady makes an important point. As I said earlier, we want the UK to remain a scientific superpower. We have already seen significant guarantees from the Treasury in the lead-up to 2020. It will be in the interests of future UK Governments to ensure that we remain one of the world’s scientific leaders.
My hon. Friend makes an extremely important point. As I indicated previously, the Chancellor has effectively guaranteed structural funding to 2020. It is important that such programmes deliver value for money and to that end the Government will liaise closely with the devolved Administrations and local authorities such as Cornwall Council.
Given the Secretary of State’s answer to Question 1 on financial services, I am sure he is well aware that Merrill Lynch has 1,000 staff in Chester and that Santander has more than 1,000 staff in Bootle. However, he has staff only in London and Brussels. Will he therefore commit to base staff from his Department in every region of England so that businesses can share their views directly with them?
This is not about the allocation of staff. If I put one staff member in every region, only one will be left in Whitehall. The simple truth is that we have been around from Belfast to Blackburn to the port of Tilbury and many other places in the UK and will continue to do so throughout the process, both up until the point at which we trigger article 50 and thereafter.
I reiterate that my Department’s task is to bring decisions back to the United Kingdom so that the British Government and the British Parliament can make them in the interests of the United Kingdom. My right hon. Friend can be absolutely sure that those interests will not be interpreted into somehow denying staff to the NHS—just the reverse.
The Secretary of State said yet again that there will be no running commentary on the negotiations. Yesterday, the Chancellor announced plans to protect financial services workers over other EU nationals. Did the Secretary of State agree that strategy with the Chancellor or is it just proof that the Government do not have a clue what they are doing?
As I have said several times in debates that the hon. Gentleman has attended, I will make as much information public as possible without prejudicing our negotiating position. That is what he is witnessing.
The hon. Member for Stafford looks very happy. Presumably, like me, he is celebrating Arsenal’s 6-0 victory last night.
I am, Sir. Will the Secretary of State reassure many factories in the west midlands and my constituency that the smooth, tariff and hassle-free operation of supply chains is of the utmost importance to him?
I will indeed. We have been studying in some detail the effect on integrated manufacturing operations across borders to ensure that they are not jeopardised, whatever the outcome.
In a written answer to me yesterday, the Secretary of State for Wales talked about the full engagement of the devolved Administrations in Brexit negotiations. The best way to protect Wales’s interests would be to put the First Minister in the Government’s negotiating team. What good reason is there not to do so?
I met the First Minister and the Finance Minister on Tuesday to talk about Wales’s interests. That is how we will do it.
Companies in the supply chain to the motor industry, such as Automotive Insulations in my constituency, have benefited from multinational investment in the sector in recent years. What recent discussions have taken place to reassure the sector that the UK is a great place in which to invest?
The Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Worcester (Mr Walker) was with sector representatives just a day or two ago and Nissan went to see the Prime Minister just this week.
People in Scotland are scared about being left on a relatively small island without the protection of the EU and with perpetual Tory Governments in charge of employment law. Will this Government commit to fully devolving employment law so that we can better protect our workers?
I have to say that it was this Minister who gave the commitment that we would not undermine or in any way reduce the protection available to British workers’ employment rights in all the nations of the United Kingdom. Tomorrow, I am meeting Mike Russell, the Scottish National party’s representative, in Glasgow to discuss this sort of thing.
Will Ministers reassure farmers in my constituency that in reviewing agricultural and environmental regulations they will have at the forefront of their minds the need for our farmers to produce the high-quality food that they do in a profitable way, just as any other business does?
My hon. Friend makes an extremely important point, and of course one benefit of leaving the European Union is that not only will we be able to adhere to stringent environmental requirements, but we will be able to design those so as best to suit the needs of this country and the agricultural industry.
Both Nissan and Jaguar Land Rover have made it clear that access to the single market is crucial to their future investment decisions in this country. What discussions has the Minister had with those companies to give them reassurance that access to the single market is the Government’s highest priority?
More important than me, the Prime Minister had a meeting with Nissan only this week, and the communiqué that came out after it was extremely positive on both sides.
Brexit has been widely welcomed by leaders of the fishing industry in the Grimsby-Cleethorpes area. The industry was badly let down in the original negotiations in the 1970s. Can my right hon. Friend assure me that that will not be the case on this occasion?
My hon. Friend makes an extremely important point. The interests of the British fishing industry are at the forefront of the Government’s mind. Indeed, we have already had meetings with the Scottish fishermen and had round-table meetings at the Department for Environment, Food and Rural Affairs.
Finally and extremely briefly, Jim Shannon.
In Northern Ireland, my constituency has some of the best export businesses in agri-food and fishing, and they need attention. Minister, may I invite you to my constituency to hear what they have to say?
I would be delighted to visit, as I would be to go to other parts of the country that have an important fishing industry.