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EU Exit: Negotiations and the Joint Committee

Volume 682: debated on Monday 19 October 2020

With your permission, Mr Speaker, I would like to update the House on the Government’s negotiations with the European Union on our future trading relationship and also the work of the UK/EU Joint Committee established under the withdrawal agreement.

First, on the talks on the new trade agreement, we had hoped to conclude a Canada-style free trade agreement before the transition period ends on 31 December this year but, as things stand, that will not now happen. We remain absolutely committed to securing a Canada-style FTA, but there does need to be a fundamental change in approach from the EU if the process is to get back on track. I have come to the House at the first available opportunity to explain why and how we have reached this point.

We have been clear since the summer that we saw 15 October—last Thursday—as the target date for reaching an agreement with the EU. The Prime Minister and the Commission President Ursula von der Leyen agreed on 3 October that our negotiating team should work intensively to bridge the remaining gaps between us, and we made clear that we were willing to talk every day. But I have to report to the House that this intensification was not forthcoming. The EU was willing to conduct negotiations only on fewer than half the days available and would not engage on all of the outstanding issues. Moreover, the EU refused to discuss legal texts in any area, as it has done since the summer. Indeed, it is almost incredible to our negotiators that we have reached this point in the negotiations without any common legal texts of any kind.

On 15 October, the EU Heads of State and Government gathered for the European Council. The conclusions of that Council reaffirmed the EU’s original negotiating mandate. They dropped a reference to intensive talks that had been in the draft and they declared that all—all—future moves in the negotiation had to be made by the UK. Although some attempts were made to soften that message by some EU leaders, the European Council reaffirmed those conclusions as authoritative on Friday. That unfortunate sequence of events has, in effect, ended the trade negotiations because it leaves no basis on which we can actually find agreement. There is no point in negotiations proceeding as long as the EU sticks with that position. Such talks would be meaningless and would take us no nearer to finding a workable solution.

That is the situation we now face, and that is why the Prime Minister had to make it clear on 16 October that the EU had refused to negotiate seriously for much of the past month or so. The EU had now, at the European Council, explicitly ruled out a free trade agreement with us, like the one that it has with Canada, and therefore this country should get ready for 1 January 2021 with arrangements that are more like Australia’s, based on simple principles of global free trade.

Now, if the EU wants to change that situation—and I devoutly hope it will—it needs to make a fundamental change in its approach and make clear it has done so. It has to be serious about talking intensively on all issues and trying to reach a conclusion, and I hope it will. But it also needs to accept that it is dealing with an independent and sovereign country now. We have tried to be clear from the start that we would not be able to reach an agreement inconsistent with that status. I do not think that we could be accused of keeping that a secret. Yet the proposals that the EU has discussed with us in recent weeks, which it presents as compromises, are simply not consistent with our new sovereign status—certainly not yet.

While I do not doubt that many on the EU side are well intentioned, we cannot accept the negotiators’ proposals that would require us to provide full, permanent access to our fishing waters, with quotas substantially unchanged to those that were imposed by EU membership. We cannot operate a state aid system which is essentially the same as the EU’s, with great discretion given to the EU to retaliate against us if it thought that we were deviating from it. More broadly, we cannot accept an arrangement that means that we stay in step with laws that have been proposed and adopted by the EU across areas of critical national importance.

In a nutshell, we have been asking for no more than what has been offered in trade agreements to other global trading countries, such as Canada—terms that, of course, the EU said last year it had no difficulty offering to us. We are not even asking for special favours reflecting our 45 years as a member state—during which we paid in every day more than we took out—quite the reverse. But even if this new arrangement is impossible for the EU, I must inform the House that we will be leaving on 31 December on Australian-style terms and trading on the basis of WTO rules.

With just 10 weeks left until the end of the transition period, I have to emphasise that that is not my preferred outcome and nor is it the Prime Minister’s. We recognise that there will be some turbulence, but we have not come so far to falter now, when we are so close to reclaiming our sovereignty. We have to be in control of our own borders and our fishing grounds. We have to set our own laws. We have to be free to thrive as an independent free trading nation, embracing the freedoms that flow as a result. So it is important that I turn to the preparations that we are now intensifying for the end of the transition period. These apply whether we have a free trade agreement or otherwise, of course.

I am not blithe or blasé about the challenges ahead, particularly given the additional problems that we have dealing with the covid-19 pandemic. However, leaving the EU on Australian terms is an outcome for which we are increasingly well prepared. Ever since the UK decided it would leave the single market and the customs union on 31 December, Government and businesses alike have been working hard to prepare for the new procedures that were the inevitable result. I congratulate businesses on the resourcefulness they have shown so far. We want to work with them so that they continue responding as energetically, flexibly and imaginatively as possible to the challenges of change. We also want to work with them to prepare for the opportunities ahead, including those stemming from our new free trade deals, such as the agreement with Japan struck by the Secretary of State for International Trade, which, of course, grants us far more favourable access to the world’s third biggest economy than we had as an EU member.

I would like to put on record my particular thanks to the road haulage industry, customs intermediaries and others for their constructive engagement with Government, including at our extensive roundtable last week.

This week, the Prime Minister and I will be speaking again to business leaders to discuss preparations for life outside the EU. We will continue to listen to their concerns, and we will redouble our efforts to help them to adjust and prosper. The XO Cabinet Committee—the EU Exit Operations Committee—meets daily and will intensify its operational focus on business readiness. We continue to work closely with our partners in the devolved Administrations because we want to ensure that every part of the UK is ready for the end of the transition period.

In these final 10 weeks, we are intensifying our public information campaign. Every firm will find the information it needs on new rules which govern trade between Britain and the EU at gov.uk/transition. Today, HMRC is writing to 200,000 traders that do business with the EU to reinforce their understanding of the new customs and tax rules. We are also putting in place IT systems to help goods flow across borders. We are giving business access to customs professionals to help with new ways of working and we have also planned how to fast-track vital goods in the first few weeks to get around EU bureaucracies. We have already published and indeed updated our border operating model. We have announced £705 million-worth of investment in jobs, infrastructure and technology at the border. We have also strengthened our maritime security to protect our fishing fleets and safeguard our seas.

In addition to the steps we are taking, we are also continuing our work with the EU in the Withdrawal Agreement Joint Committee. I would like to update the House on its latest meeting, which took place earlier this morning. Coming only three weeks after the last meeting, I am pleased to report that in this forum the approach from the EU is very constructive. There is a clear imperative on both sides to find solutions and we remain committed to working collaboratively with the EU through the Joint Committee process.

At our last meeting in Brussels I agreed with my co-chair, Vice-President Šefčovič, that we would intensify discussions to implement the withdrawal agreement, primarily around citizens’ rights and the Northern Ireland protocol. Our officials have since held numerous sessions and today in London I reiterated the UK’s commitment to upholding all our obligations under both the withdrawal agreement and the Belfast agreement. We agreed that we will publish a joint update on citizens’ rights and I am pleased to confirm that almost 4 million EU citizens in the UK have now received status under our scheme. We have also discussed our work to implement the Northern Ireland protocol. We are taking steps to implement new agrifood arrangements. We also acknowledge the EU’s concerns about appropriate monitoring of implementation. We now have a better understanding of its requests and the reasoning behind them. We have confirmed that the specialised committee will work intensively to ensure that we can make progress in this area, and with respect to Gibraltar and the sovereign base issues.

A lot remains to be resolved before the end of December, but we have made substantial progress on implementation. I look forward to further engagement with Vice-President Šefčovič in the weeks ahead. I want to put on record my personal appreciation for the constructive tone and the pragmatic spirit with which he and his team have approached our discussions.

In his statement on Friday, the Prime Minister looked ahead to 2021 as a year of recovery and renewal when this Government will be focused on tackling covid-19 and building back better. We are getting ready to do now what the British people asked of us: to forge our own path and not to acquiesce to anyone else’s agenda. On the negotiations, our door is not closed. It remains ajar, and I very much hope that the EU will fundamentally change its position, but, come what may, on 31 December, we will take back control. I commend this statement to the House.

I thank the Minister for advance sight of his statement this afternoon.

At the last general election, the Prime Minister said that he had an oven-ready deal ready to go. The withdrawal agreement was the starter course, but we are still waiting for the main meal: a trade agreement with the European Union. At the weekend, the right hon. Gentleman was reminded of some of his previous remarks in 2016 when he assured the country that the one thing that will not change is our ability to trade freely with Europe. Even at this late stage, Labour expects the Government to reach an agreement with the European Union that honours that commitment. It is a question of competence and it is a question of trust; it is what this Government promised the British people.

Of course we were supposed to have a deal by now. This is the third deadline that the Prime Minister has set himself, and it is the third deadline that the Prime Minister has missed. Initially, he said that a deal with the EU would be sorted by July. Then he said by September, and then he said by last week. Will the right hon. Gentleman explain to the House why the Government find it so hard to meet their own deadlines and so hard to achieve their own promises?

Yesterday, when the Minister toured the television studios, he was asked what the chances were now of securing a deal, and he said it was less than two thirds. Can he tell businesses and this House the current probability, given that he has just said that events have, in effect, ended the trade negotiations? Over the past three days, we have heard more posturing than solutions, more excuses and explanations. It is time for the Government to take responsibility.

Of course everyone needs to prepare as best they can, but it is a bit rich for the Government to lecture businesses on getting ready when the Government cannot even tell them what they are getting ready for. Let us be clear: if the talks have run out of road, many industries will face prohibitive tariffs—from 10% for exporting cars to at least 40% for exporting lamb—to Britain’s biggest market in just 10 weeks’ time. I ask again: is that what the Government want businesses to get ready for, and is it even possible for those businesses to do business on those terms?

The Minister will recall that I raised the concerns of the car manufacturing industry on 1 October at Cabinet Office questions and the possibility of tariffs, and also on rules of origin. He agreed to meet the automotive industry and trade unions. The Society of Motor Manufacturers and Traders and Unite followed up with a joint letter on the same day—1 October. However, I am now informed that, 18 days later, that letter has not been replied to and that meeting has not happened. At what point did the British Government give up on British industry, and when will the Minister be meeting those businesses? It is all well and good to say prepare, but he cannot even be bothered to get round a table with them. I ask again: what are they supposed to be preparing for and what support are the Government giving them?

In his statement today, the Minister thanked the road haulage industry for its efforts, but you will also remember, Mr Speaker, that, at Cabinet Office questions, he said that the road haulage industry had been far from constructive, so I welcome the thanks that he gave them today. Earlier this month, I was with a haulage firm in Hull with my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy). It was a fantastic business, established more than 100 years ago, yet it does not know how many of its fleet of lorries will be able to operate in the EU come 1 January. How are they supposed to prepare for that?

Ministers have blithely referred to leaving with no trade deal as trading on “Australian terms”. This morning, the Business Secretary was pressed on the difference between an Australian deal and leaving with no deal, and he admitted that it was “semantics”—semantics! They can call it no deal. They can call it an Australia-style deal. They can call it a Narnia deal, as far as I am concerned, but let us be honest about what that means and how damaging it is for this country. [Interruption.] Someone says from a sedentary position that it is not damaging—10% tariffs on British cars being exported to the European Union is damage; 40% tariffs on lamb being exported to the European Union is damage. If any Member wants to stand up and tell their constituents, British industry and British farming that that is not damaging, they can be my guest, but it is not the truth.

The Prime Minister promised that the UK would “prosper mightily” without a trade deal with the EU. Given that confidence, will the Government publish their full economic impact assessment of the implications if no trade deal is achieved, broken down by industry and by the regions and nations of our United Kingdom? That may at least help us to understand what we are supposed to be planning for.

While the Government lecture businesses about being match-fit, their own preparations are badly off pace. In late July, the Government announced £50 million of funding for customs intermediaries. Could the Minister update the House on how much of that fund businesses have drawn down and give us the latest figures for the number of customs agents trained up to be ready for 1 January? The Government have given authorisation for a number of lorry parks, so how many of these “inland border facilities”, as the Minister likes to call them, have had work started on them, and how many are now completed? Can he list how many of the IT systems needed are on track and whether the crucial goods vehicle movement system has been tested with all haulage businesses? He mentioned business preparedness. What is happening in terms of security and data sharing?

This Government must deliver a deal that provides guarantees and safeguards on workers’ rights, environmental standards and animal welfare, protects jobs and does nothing to jeopardise the Good Friday agreement. That was all promised last year. Time is short, so my message to the Government is blunt: stop posturing, start negotiating and deliver the deal that you promised to the British people.

I am grateful to the hon. Lady for her questions. With respect to an oven-ready deal, the withdrawal agreement was concluded happily and voted on by the House of Commons, so we had a deal—a deal which many on the Labour Benches opposed, but a deal which means that our destiny is certain and that we are fulfilling the wishes of the British people. In the same way as 52% of the population of the United Kingdom and 53% of the population of Leeds West—her constituency—voted to leave, we will leave. We are honouring our commitment to the British people.

The hon. Lady was kind enough to refer to some of the past statements I have made that were quoted on the television briefly at the weekend. I have to say—and this is no reflection on her—that if she is going to talk about past statements, she had better clear that with the Leader of the Opposition, who in the past has favoured EU membership, then said he would accept the referendum result, then said that we needed a second referendum in order to satisfy the first, then said that we should have an extension of our membership of the European Union and the transition period, and is now silent on all those questions.

I was merely pointing out, Mr Speaker, that we had an oven-ready deal, and from Labour we had an indigestible dog’s breakfast and a Leader of the Opposition who will not eat his words.

The hon. Lady asked about the various deadlines. Those are deadlines that the UK Government have set but that the EU has not met. In any negotiation, both sides have to honour their commitments. As I pointed out in my statement—and she did not, of course, acknowledge this—we were available to talk every day in the weeks preceding the European Council, and the European Union was not. But our firmness on this proposition is now bearing fruit. As we were exchanging thoughts across the Dispatch Box earlier, my colleague David Frost was in conversation with Michel Barnier. I now believe it is the case that Michel Barnier has agreed both to the intensification of talks and to working on legal texts—a reflection of the strength and resolution that our Prime Minister showed, in stark contrast with the approach that the Opposition have often enjoined us to take, of simply accepting what the EU wants at every stage.

The hon. Lady asked about preparation. It is absolutely right to say that we should talk to the automotive sector. That is why, as I pointed out in my statement, the Prime Minister has a business roundtable tomorrow with business representative organisations. She also asked about inland sites. I can confirm that we will have two inland sites at Ashford—Sevington and Waterbook—and one at Ebbsfleet, one at Thames Gateway, one at North Weald, one at Birmingham, one at Warrington, one at Holyhead, one in south Wales and another at White Cliffs in Dover. All those sites will bring extra jobs and investment to the UK as we forge a confident path ahead.

I thank my right hon. Friend for his statement. The Government appear resigned to the prospect of no deal, yet one area in which they should not be resigned to the prospect of no deal is security. I note that my right hon. Friend made no mention of security in his statement this afternoon, and the Prime Minister made no reference to security in his letter to parliamentarians on 16 October. Will my right hon. Friend confirm that, if the UK walks away with no deal, then our police and other law enforcement agencies will no longer have the necessary access to databases such as PNR—passenger name records—to be able to continue to identify and catch criminals and potential terrorists in order to keep us safe?

My right hon. Friend makes a very important point about security. I would say three things. The first thing to say is that significant progress has been made in respect of security co-operation, but it is the case that the EU is insisting that, before we have access to systems such as the Schengen information system II, that we have to accept the jurisdiction of the European Court of Justice. We cannot accept that.

The second thing I would say is that there are many areas in which we can co-operate more effectively to safeguard our borders outside the European Union than we ever could inside. Through a variety of methods and arrangements open to us, open to Border Force and open to our security and intelligence services, we can intensify the security that we give to the British people. The third thing I would say to my right hon. Friend is that I agree with her. When it comes to everything—security and other matters—no deal is better than a bad deal.

So here we go. The coveted no deal is now within touching distance. The dance of the no-deal seven veils is now down to its Brexit underwear. The easiest deal in history will now mean the UK leaving on Mongolian terms. The absolute rubbish we had to listen to about oven-ready deals and holding all the cards is now just the stuff of grotesque bad jokes. And whose fault is it? Well, not the Minister’s or that of this cabal of Tory anti-EU obsessives. It is all the fault of these Europeans. How dare they ask the Tories to stand by what they agreed, and how dare they ask for a level playing field and to retain the integrity of the single market! The EU must have the patience of saints to try to negotiate with these clown shoe-wearing goalpost shifters. As we have just heard, the EU has once again offered to have intensive talks, so it is back in your court, Minister.

The Minister somehow expects Scotland to go along with this disaster. Well there is a saying that he will know as a proud Scot, which will be Scotland’s response to this: he can go awa’ an’ bile his heid. Independence is now the settled will of the Scottish people, with 58% of Scots now in favour, so here is a proposition for the Minister: why does he not just go off and get his no-deal Brexit if that is what England indeed wants, and in Scotland we can now secure our independence—what our people want—which will allow us to design our own future European relationship? Surely there is nothing wrong with that. He gets what he wants and we get what we want. Will he agree to that at last, and say goodbye to his rotten Union and his rotten no-deal Brexit?

As ever, I am in awe of the hon. Member’s ability, in a very short period, to bring so many metaphors together in what one can only describe as a car crash of similes. The Government, according to him, is wearing seven veils and clown shoes while also shifting goalposts. I have to say that I would love to see that circus performance, but I suspect that I will have to wait, because the SNP conference has I think been cancelled this year.

The second thing I would like to say in response to the hon. Member is that he refers disparagingly to this deal as a “Mongolian deal”. I do not know what Mongolia has ever done to offend the people of Scotland, but we in the UK value our friendship with the people of Ulaanbaatar and others. Certainly, we do not believe that this looking down on other peoples in other nations is appropriate. It may be appropriate for the atavistic nationalism which some SNP supporters avail themselves of, but those of us who believe in the Union, believe in friendship among all nations.

On the hon. Member’s final point about working together, I absolutely agree. The devolved Administrations must work with us and we must work with them to make sure that, as we leave the European Union, the communities of all parts of the United Kingdom prosper. One of the things I do regret is that, even though I value my close working with his colleague the Cabinet Secretary for Rural Economy and Tourism, Fergus Ewing, unfortunately, Scottish Government policy would mean that we would be back in the common fisheries policy. That would mean the people of Scotland’s coastal communities would lose out. I am sure he would not want that, and that is why I hope we can continue to work together to reap the benefits of the sea of opportunity that Brexit will bring.

I thank my right hon. Friend for his statement. I think he is right, because it was clear in the whole agreement that both sides needed to negotiate in good faith with a view to reaching an agreement. Yet it has been quite clear throughout that, for example, the refusal of those on the EU side to engage on financial services, which are 80% of our economy, but their determination to get a deal on the majority of theirs, which is trade in agri-products, is not good faith. How exactly does he intend to go forward with regard to the problems in the withdrawal agreement that will now be outstanding even if we make no trade deal?

My right hon. Friend makes two very important points, the first of which relates to the approach that the European Union has taken. As I mentioned, even while I have been at the Dispatch Box it has been reported that there has been a constructive move on the part of the European Union, and I welcome that. Obviously we need to make sure that we work on the basis of the proposed intensification that it proposes. I prefer to look forward in optimism rather than necessarily to look back in anger. However, as he says, the difficult period that we have had over the past two weeks has been the result of some on the EU side not being as energetic as we have been in trying to reach agreement. He also makes an important point about making sure that we iron out all the difficulties in the withdrawal agreement. That is part of my role in the Joint Committee. I am grateful to him and to others for the advice they have offered as to how we should approach these difficult issues.

Despite what the Minister said in his opening remarks, it is quite clear that negotiations are continuing, and the war of words now needs to stop. Both sides need to get together and agree a deal, recognising that both will have to compromise. On preparations for 1 January, given that businesses do not know exactly how trade between GB and Northern Ireland is going to work—the pharmaceuticals industry does not have a clue—and given that the goods movement IT system is not yet in operation because it is not ready, while nowhere near enough customs agents have yet been recruited, why is it the Government’s approach to say to firms that they have their head in the sand and are not ready, when the Government cannot tell them exactly what they are meant to be getting ready for?

I actually think that is a fair question that contains at least two very important pieces of wisdom. On the first, the EU took a position last week and in the weeks beforehand that was, as was widely acknowledged, not constructive, not designed to achieve progress, and not engaging with the detail. If, as a result of our clear view that we could not proceed on that basis, there has been movement, as it seems as though there has been today, then no one will welcome it more than me. But we cannot have from the EU the illusion of engagement without the reality of compromise: I completely agree with the right hon. Gentleman on that.

On the second point, yes, both with regard to trade in Northern Ireland and more broadly, there are aspects that need to be worked out. That is why we want to intensify these negotiations. If occasionally, in the crossfire between different parts of business, Government and others, different people express their frustration, that is fine. The most important thing is that we make sure that we work together in order to deliver.

I thank my right hon. Friend for his statement. If the EU does not want to complete negotiations by this time, then we have to ensure that the whole country is ready for the consequences, so nothing is more important than keeping our ports working efficiently and effectively. Will he join me in commending the work of the local resilience forum in Hampshire on plans to ensure that Portsmouth, which has particular local transport challenges, can continue to support EU-bound freight? Will he update the House on funding available to help make sure that resources for these very important plans are in place?

My right hon. Friend makes a very important point. Both the local resilience forum in Hampshire and the authorities in the port of Portsmouth have been working incredibly hard to make sure that they are ready for every eventuality. New facilities are being built at the port of Portsmouth. The port of Portsmouth is putting in an application to the port infrastructure fund for them. I had the opportunity to meet the leader of Portsmouth council and the chief executive of the port alongside my right hon. Friend the Paymaster General last Thursday. It is the case that some additional resource will be required to make sure that we can avoid any potential traffic congestion near Portsmouth, and we are working with the local authority to achieve just that.

The Government are planning to break the withdrawal agreement they signed only last year, thereby breaking international law and sending us into economic self-isolation. The Chancellor of the Duchy of Lancaster knows that a Canada deal is possible if he agrees the protections that are required for workers’ rights and our environment. Will he go back and agree those protections and, with them, a tariff-free trade agreement so that we can avoid the self-infliction of a no-deal Brexit alongside a raging pandemic, which would be a complete disaster for everyone in the UK?

I have great affection for the hon. Gentleman, but he gets three things wrong. He says that we are planning to resile from the withdrawal agreement, he says that we will go into economic self-isolation, and he suggests that we should accept EU rules in all the areas that he mentions. My reply is: no, no, no.

As my right hon. Friend mentioned in his statement, Warrington is set to be the location of a new inland border facility on a former coach interchange in my constituency. Will he tell us a little more about what that will mean for jobs in my local area? What assurances can he give to local residents who are concerned about lorries clogging up village roads?

My colleague Lord Agnew, the Cabinet Office Minister, has been in touch with my hon. Friend and with the local authority to stress that there will be additional investment, which will mean more jobs in Warrington. We expect that there will be an additional 375 jobs created in Warrington, split between new jobs for colleagues in the Border Force, Her Majesty’s Revenue and Customs, Mitie and the haulage firm Wincanton. The current expectation is that that number will rise to around 460 jobs by December next year. We are also working to make sure that there is appropriate additional funding to ensure that there is no additional traffic problem for him, his constituents or those in neighbouring villages.

I have known the Chancellor of the Duchy of Lancaster all his political career. May I urge him not to keep the door ajar but to open the door to continuing negotiations? Not to have a deal would be a historic, shameful failure. It would hurt my constituents and his, with broken businesses and unemployment, and blight the future of a new generation and generations to come. Please, I beg him to try again for all of us.

I am grateful to the hon. Gentleman for his comments. We sincerely want an agreement, but we cannot have an agreement on any terms. I know that his constituents, like mine, voted to leave the European Union—

Oh, a curious absence, then, in Yorkshire. Whatever our disagreements, the hon. Gentleman and I agree that we should work together in the best interests of all the citizens of the United Kingdom. I am always grateful for his wisdom. Ever since I first arrived in the House, he has been a good friend and a wise head, and whenever I have gone wrong it is because I have not paid too much attention—sorry, it is because I have not paid enough attention to his words.

The UK will prosper mightily as an independent free trading nation with control over our money, laws and borders. What support has my right hon. Friend put in place to help business leaders in West Bromwich East prepare for the changes and opportunities that that will bring when we leave the transition period at the end of this year?

My hon. Friend makes a very good point. Fundamentally, whatever turbulence may occur, whatever bumps in the road there might be in the months ahead, the strengths and resilience of our economy mean that we will prosper mightily. The manufacturing leaders in her constituency in West Bromwich and more widely across the Black Country and the west midlands are benefiting directly from the investment that we are making in customs intermediaries, in new IT processes and systems, and in our Prime Minister’s broader commitment to levelling up. We must make opportunity more equal across the United Kingdom, and my hon. Friend’s championing of business in West Bromwich is a critical part of that.

Protecting the Good Friday agreement means protecting Northern Ireland’s place as an integral part of the United Kingdom, for that is the settled will of the people of Northern Ireland exercised through the principle of consent. Will the Secretary of State give us an update on discussions in the Joint Committee on the issue of export declarations and the fact that they are not required for goods travelling from Northern Ireland to Great Britain? Will he also give us an update on the issue of goods at risk and the EU attitude on this, to ensure that goods from Great Britain to Northern Ireland that are not passing on to the Republic of Ireland are not subject to unnecessary and costly disruption?

My right hon. Friend makes three very important points. On the first, about exit declarations, he is absolutely right: the protocol is there both to help us safeguard the EU’s single market, but also to affirm Northern Ireland’s integral place in the United Kingdom and within its customs territory, and there is no need for customs declarations for goods coming from Northern Ireland to the rest of Great Britain. As for his point about goods at risk, he is absolutely right about that as well: bread that is baked in Huddersfield and goes into a supermarket in Ballymena should not be subject to tariffs, because it is trade within the United Kingdom. And his final point is right as well: the Belfast agreement was a balanced agreement, and sometimes some of the rhetoric we hear about the Belfast agreement seems to me to be inadequate in its understanding of the vital importance of the fact that the majority of people in Northern Ireland have voted to stay part of the United Kingdom. Their rights, their views, their loyalty needs to be respected.

The toughest negotiators in this country are the farmers in my constituency, and my farmers recognise at this moment that my right hon. Friend and Lord Frost are excellent negotiators. That is borne out by the news that the talks are intensifying, including on legal texts. May I ask my right hon. Friend to meet me to talk about business engagement, especially in the agricultural sector in the devolved Administrations environment, since the devolved Administrations seem hostile to us getting any kind of successful deal?

My hon. Friend is absolutely right: I have met farmers in his constituency, and a tougher bunch of negotiators we would be hard-pressed to find. But he is absolutely right also that their interests need to be protected, and not just by the UK Government but by the devolved Administration—by the Government in Wales. We need to work together to ensure that we are supporting them. In the event of an Australian-style exit, one of the sectors that we will need most energetically to support is the sheepmeat sector, and we will—and to be fair to the hon. Member for Leeds West (Rachel Reeves), she made that point.

The UK imports 37 million packets of medicines from the EU every single month. The pharmaceutical industry has highlighted the difficulty in rebuilding full stockpiles for the end of transition due to the impact of covid, so, with just 74 days to go, how will the right hon. Gentleman ensure that there are no drug shortages, particularly of insulin, which the UK does not produce, and radioisotopes, which cannot be stockpiled?

The hon. Lady brings formidable expertise to this area, and she is absolutely right to highlight the fact that we need rapid access to both insulin and radioisotopes. That is why the Department of Health and Social Care and the Department for Transport have put in place contingency arrangements should there be any risk of disruption, but we are also confident that the steps we have taken more broadly will ensure that we have freight flowing freely between the UK and the EU, including in this critical area.

First, I should pay tribute to the Under-Secretary of State for Transport, my hon. Friend the Member for Redditch (Rachel Maclean), for her exemplary communications with my constituents who live near the Sevington lorry park; I am very grateful.

I still hope and expect that we will get a deal, but either way, may I ask my right hon. Friend how confident he is that the smart freight system will be fully operational by 1 January, and if it is not, what does he think will happen?

I join my right hon. Friend in praising the efforts of the Transport Minister, who has been incredibly energetic and determined to make sure that colleagues in Kent from all parties are kept informed on the progress of our preparations. The smart freight portal is being shared with hauliers and others as we speak. It is currently in its beta phase and we want to ensure that it is further refined, but the straightforward approach that it should provide should enable us to minimise any disruption that my right hon. Friend or his constituents face. I am absolutely confident it will be in place; if it were not, other measures would need to be taken, but they would not be as helpful as the smart freight system.

We have heard it all now: it is just, according to the Chancellor of the Duchy of Lancaster, “an unfortunate sequence of events”, otherwise known as the Lemony Snicket defence—all the fault of evil uncle Olaf and his foreign friends. But on the serious point about this, consider how it will affect, for example, our musicians who go on tour. They are usually not part of large operations. They might take their instrument, fly on a budget flight, try to sell some of their merchandise, cross a few borders in the European Union—that is how they scrape a living. They are making no money now. Will he please consider the consequences of no deal, admit that this is not a frivolous issue but a matter of people’s livelihoods, and seriously engage with it rather than take this frivolous and superficial approach?

I am very grateful to the hon. Gentleman, but I certainly would not take a frivolous approach towards the livelihoods of anyone, whether they are freelance musicians or anyone else who contributes to the health, prosperity and economy of this country. That is one of the reasons why we are so anxious to secure an agreement with the European Union and why we have been working so hard and in such a dedicated fashion in the Withdrawal Agreement Joint Committee. I mentioned earlier that as a result of the progress that we have made with Vice-President Maroš Šefčovič, the rights of 4 million EU citizens in the UK are now guaranteed, as are the rights of over 1 million citizens of the UK in the EU. More needs to be done to ensure that we can have a free trade agreement, but I absolutely take seriously the rights of citizens—whether they are, as I say, freelancers or others—to continue to be able to work and live freely.

Has my right hon. Friend seen how much popular and excellent quality fresh food there is in our supermarkets with the Union flag on the packaging? Will he confirm that if the EU insists on high tariffs on food trade, where it sells us massively more than we sell it, that would be a huge opportunity for our farmers to grow and rear more for the domestic market and get back the huge amounts of market share stolen from them under the common agricultural policy?

My right hon. Friend makes three very important points. The first thing is that UK producers are doing a fantastic job in increasing production in a sustainable way. Championing the quality of UK produce is something that we should all do and recognise, whether it is Orkney cheddar or Welsh lamb, that the UK flag is a symbol that connects quality not just to our consumers but worldwide. The second point that he makes, which is absolutely right, is that the common agricultural policy has been harmful, and our escape from it will ensure both that our farmers can prosper and that our environment can improve. His third point is that we should be confident not just that we can sell more excellent produce here in the UK but that, as we emerge into the world as a global free-trading nation, new opportunities to sell our excellent produce are available to our farmers, and he is absolutely right to be optimistic.

The Minister has acknowledged the issue of the free flow of medicines into this country. Will he respond to the urgent appeal today from the pharmaceuticals industry to find a deal, and will he accept the approaches from the European Union and do everything in his power to ensure that my constituents, like those across the country who need medicines such as insulin, will have the deal that ensures that they can rely upon it?

My right hon. Friend knows from our time in Cabinet together that I have nothing but the greatest possible respect and admiration for his negotiating skills and abilities. Given that we are advised that fish and state aids are the main stumbling blocks to a deal, will he draw to the attention of Monsieur Macron, the President of France, the fact that if there is no deal on fishing, there will not be any French boats fishing in British waters, and that the size of the British fishing industry is approximately 1.7% of the size of the British car and automotive industry? Finally, will my right hon. Friend remember that one of the reasons that Mrs Thatcher imposed a three-line Whip in support of the European single market Act was to stop false competition as a result of the unfair use of state aids?

I am very grateful to my right hon. Friend for the three important points he makes. First, I am sure that the French President and others are increasingly aware of the point he makes about the consequence of no deal. Secondly, the automotive sector is vital not just to the economy of the west midlands but to the whole UK, and we need to make sure that we invest in it for the future. And his third point is right: we need to have our own state aid regime, not the European one, but we also need to make sure that it is consistent with our market principles.

The Road Haulage Association is afraid that trade will grind to a halt if there are insufficient customs agents to help goods to cross the border in January. Some 50,000 customs agents are needed. On paper, the Government have allocated £84 million to the task of training the necessary people. I know the Minister has good attention to detail, so will he tell me how many customs agents have been trained from the allocated money?

What preparations are being made by the Royal Navy to provide requisite support in a potential no-deal situation to our fishery protection vessels to prevent what would then be the illegal plunder of our seas by an armada of French and Spanish trawlers?

We have a series of assets to make sure that we can safeguard our waters, such as the offshore patrol vessels—the River class fishery protection vessels that are at the disposal of the Royal Navy—and other assets, including aircraft and drones. Of course, the joint maritime security centre in Portsmouth provides us with maritime domain awareness so that we can safeguard our waters.

We have 73 days to go here and businesses, deep in the middle of a pandemic, are trying their best to prepare, but there are many unanswered questions that add up to costs that Northern Ireland cannot afford. Firms and families here desperately want a deal, but we are hearing only about a blame game, brinkmanship, deflection and jingoism. People in Northern Ireland are more anxious than they have been in decades, with absolutely no sense that the Government understand that, given the misrepresentation of the agreement even in the last hour. I ask the Minister whether there is any upper limit to the damage that he thinks Northern Ireland should have to sustain for a Brexit that it has rejected at every possible opportunity.

I am grateful to the hon. Lady for her points. In my statement, I made the point—I hope that she will forgive me for making it again—that we made significant progress today in the Joint Committee, thanks to the constructive approach taken by Vice-President Maroš Šefčovič. We are lucky that he and his team are so committed to making sure that the protocol works. I remind her that the protocol is there to give effect to the Belfast agreement, which is about agreement across communities, rather than a culture of grievance.

My right hon. Friend may not have known it before December 2019, but Carshalton and Wallington residents voted to leave the European Union and are keen to see us get on and return to being an independent, free-trading global nation. Although we hope that the EU will return constructively to the table, will he confirm that, irrespective of whether a deal is struck, we will continue to go out into the world to seek free trade agreements, such as the one we recently secured with Japan?

Absolutely. A cloud lifted from Carshalton and Wallington in December last year, and we were able to see at last that the people of that constituency who voted for Brexit had a representative who believed in them.

The Government say that they just want the terms that Canada enjoys with the European Union. Last year, exports to the European Union accounted for more than 60% of Welsh trade; Holyhead alone accounts for more than 400,000 freight movements each year across the Irish sea. Wales’s relationship with the European Union is nothing like that of Canada. Do those facts not demonstrate that, for Wales, the Minister’s preferred Canada-style agreement is just not good enough?

I am grateful to the hon. Gentleman, but I think that Government and Opposition Front Benchers recognise that a Canada-style agreement is entirely consistent with how people voted in the referendum, including the people of Wales, who did vote to leave. It provides us with an opportunity to trade freely with the European Union but to chart our own destiny.

I share my right hon. Friend’s disappointment in the EU’s continued intransigence. It is right that we do everything we can to prepare for all outcomes on 31 December, but it remains the case that it is in the best interests of both the UK and the EU to reach a long-term trade deal. Can he confirm that if the EU does shift its position and return to the negotiating table, the Government stand ready to talk and that we are prepared to consider individual deals or agreements on specific areas such as haulage and security?

My hon. Friend is absolutely right. I was not party to the telephone call that took place earlier between Michel Barnier and Lord Frost, but if it does presage a change of approach on the part of the EU and a proper intensification, no one would welcome that more than I do. It would mean that we could make progress, but obviously the proof of the pudding remains. On my hon. Friend’s second point, if we leave on Australian-style terms, we will be negotiating and discussing with our friends and neighbours to ensure that we have effective interim arrangements, particularly in areas such as freight transport.

I am pleased that, at least on the face of it, the Government appear to be standing up to the bullying tactics by Brussels and have indicated that we will not leave on the basis of an agreement that compromises our sovereignty or our independence. On the Joint Committee, the right hon. Gentleman mentioned two things. First, he said that the Government had outlined what steps they had taken to deal with the new agrifood arrangements. Secondly, he said that the Government now understood the EU’s position on monitoring those arrangements. Will he tell us whether the EU has agreed that the goods at risk will not include those goods that stay in Northern Ireland and that those goods will therefore not be taxed or subject to controls? Secondly, has the EU demanded that the implementation of that monitoring will require EU officials to be present in Northern Ireland?

On the first point, nothing is agreed until everything is agreed, but I think that the EU has a very good understanding of exactly the points we make. On the second point, we want to have a pragmatic approach whereby the UK is responsible for the administration of these controls, but we want to provide the EU with reassurance wherever possible.

I voted to leave in the referendum, and I strongly agree with my right hon. Friend that we have to have the right deal, but does he agree, given the economic challenges and the common security threats that we are facing from Russia, China and the middle east, that a deal is still the best outcome for both the UK and EU?

Absolutely. The broader point that my hon. Friend makes about the need for solidarity among democracies at a time of increasing insecurity across the globe is an important one. We cannot agree to a deal at any price—we have been very clear about that—but the broader context that he provides is very helpful.

My very first question in this place was to ask the then Prime Minister whether she would consider separately negotiating access to Erasmus and Horizon, which did not need to be part of the wider agreement, because of the risk of a deal falling down. Now that the deal has fallen down and all predictions about this incompetent Government have come true, will the Government consider a separate track to negotiate Erasmus and Horizon entry—which they can do and which the European Union was willing to do—so that our students and universities can have security on this issue?

The hon. Gentleman makes an important point, and we would like to continue participation in both those programmes, but obviously that depends to a significant extent on conversations that are still going on.

Can my right hon. Friend elaborate a bit more on his point about state aid? Is there state aid that we wish to give to UK companies that we were not able to do under the EU regime, or is the dispute more about the retaliation mechanism, as he put it in his statement?

My hon. Friend is absolutely right to say that this is significantly about the retaliation procedures, but it is also about the mode of governance by which we would report and notify the state aids that we might wish to issue.

The Prime Minister promised the nation an “oven-ready” deal, and it was avowedly going to be

“one of the easiest in human history”

to negotiate. Instead, this Conservative Government have shown that they are happy to rip up an agreement only months after signing it, thereby breaking international law, and they are now hurtling us towards a disastrous no-deal Brexit. So, on behalf of the Prime Minister, would the right hon. Gentleman like to apologise to the British people for having made false promises? Will he tell us what changes he will be making to his approach to prove that the UK can be taken seriously and act in good faith, despite the best efforts of this incompetent Government?

First, as the hon. Gentleman will acknowledge, since last Friday, since the Prime Minister’s statement and since the preparation of my statement earlier, we have seen a welcome indication of movement on the part of the EU. I think that those who were prepared to criticise the Prime Minister on Friday and over the weekend should perhaps, in fairness and with appropriate humility, recognise that he has been standing up for Britain, and therefore no apology is required.

As the clock ticks down, the pressure will undoubtedly mount on the British Government and on the EU government. It would be reassuring to hear from my right hon. Friend some assurance that he will not go wobbly and reach for any deal on offer at that time just because it is on offer, and that as the likelihood of not securing a free trade agreement with the EU rises, he and his Department are working on a plan of retaliatory fiscal, tax and government state aid actions that could then be put in place.

First, may I say that I wish I had my hon. Friend’s lean physique, because I am afraid that bits of me are wobbly? That is not the case with him. On the substance, he is right: we both need to be firm in these negotiations, as the Prime Minister has been, and ready for any eventuality. That means that if we do go to Australian terms, we need to use the freedoms that that affords.

In 2019, £300 billion of UK exports went to the EU, which was 43% of our entire total, and not even 2% went to Australia. This is the Minister who told us that these would be the easiest negotiations ever, but businesses in Southwark tell me that they have lost patience with the Government, that uncertainty is costing them and that their employees face losing their jobs as a result of his failure to secure a deal. The simple question is: why do my constituents face losing their jobs as a result of his inability to do his?

I think that is what we call a leading question, but the hon. Gentleman misattributes the earlier quotation—I think someone else, rather than me, made that point. More broadly, however, prosperity for his constituents and mine depends on making sure that we embrace the free trading, outward-looking approach that the Prime Minister has outlined. That is the best way of making sure that can export not just to Europe and Australia, but across the world.

At the Munich security conference last year, the term “westlessness” was first coined, meaning an absence of what the west now stands for, what we believe in and what we are willing to defend. I hope my right hon. Friend agrees that European defence and security must sit above the politics of Europe, because the threats are increasing, no longer recognising state borders or indeed membership of international institutions, but the Galileo project illustrates how EU politics is weakening collective European resolve. I hope he will reconfirm our commitment to joint European security, not least through NATO.

My right hon. Friend makes a very important point; NATO is the keystone of our defence architecture. More broadly, I hope that whatever occurs in the next couple of months as we resolve our economic relationship with the EU, the strong bilateral and multilateral ties we have with European allies, from Estonia to France, remain and are strengthened in order to make sure that the west is strong and democracy is reinforced.

More than 40% of UK external trade is with the EU27, whereas about 10% of the EU27’s trade is with the UK, so clearly the UK badly needs a deal. If we end up with a World Trade Organisation rules outcome, there still needs to be agreement in the Joint Committee about goods at risk, so will the right hon. Gentleman give businesses and households in Northern Ireland a firm guarantee that in no circumstances will any tariffs be levied down the Irish sea interface?

Businesses in Dudley South and across the Black Country trade with countries in every part of the world. Further to the earlier question from my hon. Friend the Member for West Bromwich East (Nicola Richards), what support is available for businesses to understand the changes to customs and tax rules, so that they can prepare to take advantage of those opportunities as we become an independent trading nation again?

My hon. Friend makes an important point. It is the case that we are intensifying our communications campaign. On the Government Digital Service gov.uk website, the transition page outlines some of the information required. The Prime Minister and I are meeting business representative organisations tomorrow in order to reinforce that, but I would be very happy to talk to him and other colleagues in the west midlands, in our manufacturing heartland, to reinforce exactly what it is that we can provide businesses to support them to take advantage of these new opportunities.

As the Chancellor of the Duchy of Lancaster knows, his earlier pessimism that the talks had broken down was misjudged, because in fact we know that, while he has been on his feet, the European Union has said that it is happy to talk about any legal texts. Therefore, his pessimism that we were headed towards an Australian-style deal was misjudged, but can he just confirm for my constituents why he would be so pessimistic about an Australian deal, because his own Brexit analysis in 2018 said that such a deal would cost 8% of GDP, or £2,500 per person in layman’s terms. Are those figures still correct? Is that the price of this failure?

I am grateful to the hon. Lady for her point. She is absolutely right. As a result of the Prime Minister standing firm in defiance of criticism from some in this House, it appears—it appears—that, at this stage, the EU has moved in a way that intensifies talks and sees legal texts being exchanged. I sincerely hope that that is the case. We will find out more in the days ahead. As for the analysis that she quotes, that was not mine.

My right hon. Friend recognised earlier the importance of, if at all possible, obtaining continuing arrangements for security co-operation and access to the very important Europol, Eurojust and related databases. All of those matters require an agreement on data sharing, as does much access for the financial services business. What specific advance has there been in relation to data adequacy and data sharing?

My hon. Friend is absolutely right: we need to secure data adequacy in order to have the best possible set of arrangements for business and for security. It is an autonomous process, but we believe that the EU should grant us adequacy on the basis of the information that we have provided. More broadly, there are a variety of security and law enforcement tools to which we believe we will have access, but, because of European Court of Justice jurisdiction, there are one or two that remain difficult.

We have heard the Chancellor of the Duchy of Lancaster basically blame the EU for the breakdown in the talks, but the EU has not walked away from the talks despite the Government setting out a course of action that will break international law and the withdrawal agreement that was reached less than a year ago. Has the right hon. Gentleman considered that his Government bear responsibility for any collapse in negotiations, given their obligations to respect the rule of international law?

I know the point that the hon. Gentleman is trying to make, but I think that it is misconceived, and recent events underline that.

The Government should be congratulated on their trade deal with Japan, the world’s third largest economy. Can my right hon. Friend confirm that, irrespective of a deal with the EU, the UK will continue to pursue trade opportunities with the world’s biggest and fastest-growing economies, including those that might benefit exporters in Stockton South?

My hon. Friend is absolutely right, and the credit should go to my right hon. Friend the Secretary of State for International Trade. She has not just concluded a free trade agreement with Japan, but has made progress on free trade agreements with Australia, on our accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and on other opportunities for businesses, including those in Stockton South, for which he is such a brilliant advocate.

I have been listening patiently for the past hour and I am still not certain whether we are heading for a no-deal Brexit or for a deal Brexit. Business always says that it wants certainty. What certainty can the right hon. Gentleman offer business at this very late stage now for 1 January 2021?

The certainty that I can offer is that we will be out of the customs union and out of the single market, and that as a result we will be able to take our place as an independent free trading nation. Businesses in Bath and elsewhere know what it is that they need to do. That is certainty. It is very different from the proposition that the Liberal Democrats put forward at the last general election, which was a second referendum or a third referendum—I have no idea how many referendums the Liberal Democrats wanted. One thing I do know is that they returned fewer than a dozen MPs, which shows what the country thought of that.

If what my right hon. Friend has told the House today is accurate—that the EU has realised at the eleventh hour that it is in its best interests to reach an accommodation with the United Kingdom and it can no longer dictate to this country—can he tell me what will happen with those businesses that have not prepared for the end of the transition period? The permanent secretary of his Department told the Public Accounts Committee last week that 36% of our small businesses had not made preparations. Has that figure now been reduced? What further communications are planned to ensure that all businesses are ready for the end of the year, whether we get a deal or not? May I say that I very much hope we do get a deal?

I absolutely agree with my right hon. Friend: we do very much want a deal. We hope that developments this afternoon are moving us in the right direction. She is also absolutely on the button when she says that, with or without a free trade agreement, businesses need to prepare. The number that are getting prepared is increasing all the time, and it is my Department’s responsibility, along with HMRC, to make sure they have the information they require, whatever happens. Outside the single market and the customs union, there will be new procedures. I look forward to working with her and others on the Public Accounts Committee to ensure that we communicate the detail required through our new intensified campaign.

In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I suspend the House for a few minutes.

Sitting suspended.