Leaving the Eu: Economic Impact of Proposed Deal

– in the House of Commons at 12:44 pm on 20th February 2019.

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Photo of Ian Blackford Ian Blackford SNP Westminster Leader 12:44 pm, 20th February 2019

(Urgent Question): To ask the Prime Minister if she will make a statement on the economic impact of her Government’s proposed deal for the UK exiting the EU.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

At the end of November, the Government published our analysis that assessed the economic impact of leaving the European Union. It not only included an analysis of the Government’s negotiating position, as set out in the July 2018 White Paper, but went further still and considered three other scenarios: a free trade agreement, a European economic area-type relationship, and a no-deal scenario.

Specifically, the analysis showed that the outcomes for the proposed future UK-EU relationship would deliver significantly higher economic output—about seven percentage points higher—than the no-deal scenario, which would result in lower economic activity in all sector groups of the economy compared with the White Paper scenario. That is why we should pass the deal, to avoid no deal and support jobs and the UK economy.

In publishing the work, the Government delivered on their commitment to provide an appropriate level of analysis to Parliament. In addition, the House has had plenty of opportunity to debate both the analysis and the deal that is on the table. As the Prime Minister has said, we will bring a revised deal back to the House for a second meaningful vote as soon as we possibly can.

In the meantime, it is right that that the Government are afforded the flexibility and space to continue our negotiations. That is because the agreement of the political declaration will be followed by negotiations on the legal text. The UK and the EU recognise that that means there could be a spectrum of different outcomes. We need to approach the negotiations with as much strength as possible. The focus must now be on the future, planning and prioritising that which matters.

Let me remind the House that we will have an implementation period, a new close relationship with the EU and, crucially, the ability to strike trade deals around the world. We are bringing back control over our money, borders and laws to mould a prosperous and ambitious new path for our country, and on our terms. No matter what approach we take, the UK economy will continue to be strong and grow into the future.

Photo of Ian Blackford Ian Blackford SNP Westminster Leader

With respect to the Minister, this was of course a question to the Prime Minister, and it is the Prime Minister who should be answering. This is a matter of the utmost importance, because this House is going to be asked to vote on the Prime Minister’s deal. The specific question I asked was about the economic analysis that the Government have done on their deal. It is quite clear from the Minister’s answer that the Government have done no analysis on this deal. On arguably the most important matter that this House has voted on since the second world war, we do not have an economic impact assessment from the Government. It is, once again, this Conservative Government treating this House and the United Kingdom with contempt. It is a disgrace that the Government have continued to duck and dive in respect of their responsibilities.

Economists are clear: the Prime Minister’s deal is set to hit GDP, the public finances and living standards. Analysis published by the London School of Economics estimates that

“the Brexit deal could reduce UK GDP per capita by between 1.9% and 5.5% in ten years’ time, compared to remaining in the EU.”

The National Institute of Economic and Social Research has warned that

“if the government’s proposed Brexit deal is implemented, then GDP in the longer term will be around 4 per cent lower than it would have been had the UK stayed in the EU.”

Bank of England analysis states the UK Government’s deal will raise unemployment by 4% and inflation by 2%. The Prime Minister is running feart of the truth, with her Government refusing to admit the damage that her deal will do.

The Government cannot claim that their November document covers their deal. Let us look at the facts. Page 17 of the Treasury analysis looks at the modelled average free trade agreement and states:

“As such, it does not seek to define or model a bespoke agreement.”

But the Prime Minister tells us she has a bespoke deal. The Treasury analysis continues:

“This scenario is not indicative of government policy, as it would not meet UK objectives including avoiding a hard border” in Northern Ireland.

There we have it in black and white: the Treasury analysis conducted last year does not account for the Prime Minister’s deal. So, I say to the Government, where is the analysis? MPs continue to be expected to vote on the proposed deal without the Government explaining the economic consequences. That is the height of irresponsibility.

The deal would be a disaster for Scotland, taking us out of the EU single market and customs union. We know that up to 100,000 jobs in Scotland are under threat. The Government are sticking their head in the sand. Everyone knows this Government are bringing our economy to its knees. We cannot allow the Tories to drive us off the cliff edge.

No Government can be allowed to bring forward a vote on such a significant matter without an economic assessment. It must be published. Shame on the Prime Minister if she fails to protect our economy, shame on those on the Government Benches if they allow businesses to collapse and jobs to be lost, and shame on any MP, including the Leader of the Opposition, if they march through the Lobby to deliver a deal that secures economic catastrophe.

No Member should believe that there is a binary choice; there is not. This is not a choice of no deal or this deal. Both are bad. Both will plunge our economy into an unmitigated disaster.

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

Order. Before I ask the Minister to apply, I very generously did not interrupt the flow of the right hon. Gentleman’s eloquence—or, indeed, for that matter the eloquence of his flow. However, by way of a public information notice, may I say to the House—this is not directed particularly at the right hon. Gentleman, as I have seen this burgeoning phenomenon in recent times—that an urgent question is supposed to be that, not an urgent oration? With whatever rhetorical force and insistence it is delivered, it is supposed to be a question and I have noticed over recent times an increasing tendency on the part of Members who have secured such an opportunity, through the courtesy of the Chair, to launch into a lengthy preamble, sometimes constituting the entirety of their remarks.

For future reference, because in future I will have to cut people off if they abuse the parameters, however inadvertently, it is supposed to be a question; a sentence of preamble is one thing, but thereafter a Member should put a series of inquiries to the Minister on the Treasury Bench. We will leave it there for now. The right hon. Gentleman has made his point, but I know that he will not misbehave again.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I thank Ian Blackford for his vociferous oration, but vociferous orations are no substitute for the facts. Let me remind him of some of the facts in respect of the points he made. He says that we have made no analysis of the impact of these arrangements on the United Kingdom economy, and that is simply not the case. The information we have come forward with is a robust analysis of the future outcomes of the four different scenarios that we consider in that analysis. He levels the charge that we are in some way treating the United Kingdom with contempt, and that is certainly not the case. The House has been very deeply preoccupied with matters of Brexit and the nature of how we might exit the European Union, and the Prime Minister has set out that there will be further debate this time next week to be followed, in the event that we do not pass a meaningful vote, with another amendable motion to be considered by the House.

The right hon. Gentleman also says that the deal, as he terms it, would have a negative impact on the UK economy. The analysis clearly shows that under every single scenario it analyses it is better to have this deal than no deal or any of the alternatives. Finally, he decried the fact that we had not put forward a bespoke deal for analysis within our analysis, and that illustrates his lack of understanding of what the future political declaration is all about, which is a range of possible outcomes. That is entirely what the analysis models.

Photo of Kenneth Clarke Kenneth Clarke Father of the House of Commons

It is perfectly obvious to all those involved in the negotiations, both the British negotiators and the EU negotiators, that if Britain were to leave the EU with no deal, it would be disastrous for the British economy in the medium to long term and extremely damaging to the economies of many EU countries, particularly those nearest the UK. Does the Minister accept that it is rather silly to think that it is useful in these negotiations to take up the simplistic view that we must pretend we are threatening to leave with no deal to improve our bargaining position? Will he reassure me that the negotiations are proceeding on the basis that both sides know that they do not want no deal and that they are therefore trying to limit the damaging consequences of risking that? What we should really pursue is retaining the benefits of the customs union and the single market and continued free trade with our largest customer in the world, as it will always be, as is being urged on us by every industrial leader in this country.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

My right hon. and learned Friend is entirely right that no deal would be a very unsatisfactory outcome. Of course, what the House will appreciate is that the only way to avoid a no deal is to secure a deal. That is why the Prime Minister will shortly return to Brussels to have further discussions with the EU Commissioner, Jean-Claude Juncker, in pursuit of one.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

For more than two years, businesses and trade unions have called for clarity about the Government’s Brexit deal, and for two years there has been nothing but delay and a total lack of clarity. What has been clear from the wide range of independent analyses that we have received is that the Government’s Brexit deal is not good news for our economy. Even the Government’s own modelling said that the economy would be nearly 4% smaller if the Government’s deal was agreed, equivalent to £83 billion if it happened today. It is no surprise that the Prime Minister’s deal has struggled to command any widespread support, leading to the largest ever defeat in the House of Commons.

The climate of uncertainty created by the Government’s Brexit blundering, particularly their refusal to take no deal of the table, led first to businesses delaying investment decisions. Now, decisions are being taken, but as a result of the uncertainty and insecurity created by the Government, those decisions are to cut investment and jobs. The result, as the Governor of the Bank of England, Mark Carney, told us this month, is that business investment in 2018 fell by 3.7% in year-on-year terms.

Let us go through some of those decisions. Jaguar Land Rover has cut 4,500 jobs, Ford cut 1,000 jobs in Bridgend and Honda’s Swindon closure, supposedly not related to Brexit, will mean that 3,500 will lose their employment. In financial services, HSBC has announced that it will move seven offices from London to Paris in 2019. Deutsche Bank has said that it is considering moving 75% of its balance sheet from London to Frankfurt.

This is not just about Brexit. It is about how the Government have failed to produce an economic plan that tackles our productivity crisis and increases investment for the long term. They are a Government putting our economy at risk through failed economic management and failing to secure a Brexit deal that would protect jobs and the economy.

May I ask the Financial Secretary first, what happened to the promise of frictionless trade? Secondly, where is the detail businesses need about the promised customs arrangements? Thirdly, can the Government tell us what mysterious technology will facilitate their proposed customs arrangements? Fourthly, why have the Government failed even to mention the issue of intellectual property protections in the future partnership agreement? Finally, will the Government confirm that there has been a dilution of protections from road hauliers and passenger transport operators since the earlier Chequers commitments?

It is the role of the Government’s Treasury team, above all others, to stand up to protect our economy. It is as though the Chancellor has simply gone missing. The Government have run out of time. We cannot wait any longer for the answers we need and the country cannot wait any longer for the answers it deserves.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The hon. Gentleman accuses Government Members of having a lack of clarity on the issues around Brexit. I find that slightly rich coming from the Labour Front Bench, given that the position of the Leader of the Opposition has flip-flopped as to whether to be in or out of the customs union, and whether or not to honour the pledge that he appeared to make at his party conference for a second referendum, which appears to have been parked now. It seems to me that the Opposition are trying to ride at least two horses on this issue, if not more, and we know what happens if you do that, Mr Speaker—it tends to get rather painful in the end, as we are perhaps seeing in more recent events.

The hon. Gentleman refers to the parliamentary defeat that the Government suffered more recently. He chose to overlook the fact that the House did unite around a particular way forward, and that is to seek changes to the backstop arrangements. That is now the main focus of the negotiations that are continuing in Brussels. He referred to various impacts of employers’ decisions and changes, and the impact on the economy and employment, which gives me a good opportunity to remind him of some facts. As a country, we have about the highest level of employment in our history; we have the lowest level of unemployment since the mid-1970s; and we have halved youth unemployment since 2010. Lest it be forgotten, every Labour Government in history have always left office with unemployment higher than it was when they entered office.

Photo of John Redwood John Redwood Conservative, Wokingham

Will the Treasury issue a codicil or a clarification of its economic forecasts, looking at what happens if we leave in March under the managed World Trade Organisation model, when we spend the £39 billion-plus of the withdrawal agreement on boosting public services and boosting our economy at home? We are bound to be better off—is that not true?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

It is important to recognise that the modelling is on the basis of the status quo, so the model would not take into account factors of the kind that my right hon. Friend has raised, or indeed changes in productivity or trade flows and other factors. It will be for individual Members to assess the specific issues that he raised, in that context.

Photo of Hilary Benn Hilary Benn Chair, Committee on Exiting the European Union

Things have come to a pretty pass when here we are, 37 days from Brexit, and the House of Commons is actually discussing which of several options—all of them economically damaging—we should choose for the future of our country’s economy. Since it is the Government’s policy that they are planning for a no-deal Brexit, could the Minister explain to the House what possible justification there is for that? Given that their own economic assessment shows that it would have the most damaging impact on the British economy, how could such an act of economic self-harm ever be justified?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

What the right hon. Gentleman overlooks is that whilst he is absolutely right that no deal, in essence, is something to be avoided, and indeed is not in the interests either of the United Kingdom or of the European Union, that is not the same thing as saying that we should be reckless and not make sure that we are prepared for it, should it happen. That is precisely what we are doing.

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks

Will the Financial Secretary undertake to publish to the House, in good time for the meaningful vote, the decisions that he and his colleagues are currently taking on the tariffs that would apply in the event of no deal, including which industries would be protected, at what rate, and what the impact would be on prices?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

Tariff policy in the event of no deal is clearly something that we are heavily engaged with. My right hon. Friend rightly identifies the aspects or elements of tariffs that relate to protecting domestic producers, and that of course will be a very important part of the considerations that we are undertaking at the moment. We will come to the House in due course with the details of those tariffs.

Photo of Vincent Cable Vincent Cable Leader of the Liberal Democrats

Brexit uncertainty is one of several factors contributing to the crisis in the car industry, which previous Governments—Conservative, Labour and coalition—did so much to promote. What assurances have the Government had from Toyota, BMW and Vauxhall that they are not going to follow the pattern of disinvestment that we are now seeing?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I think the right hon. Gentleman’s question would be most appropriately directed to the Department for Business, Energy and Industrial Strategy as to the specifics of the companies that he listed. Honda, a company that has already been mentioned in this respect, has made it clear that its decision to leave the United Kingdom is not a consequence of Brexit; it is more to do with international changes around cars and the position of diesel, and of course the deal that Japan has struck on zero tariffs in a few years’ time for exports from Japan to the European Union.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

What would be the economic impact of membership of a customs union where access to our market was conceded to a third party without any reciprocal arrangement of our access to theirs?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

My right hon. Friend asks a specific, interesting question, which prompts many other questions as to exactly the form of the model that he is postulating. The important thing, when it comes to access to our markets in future, is that we have a tariff policy that protects domestic producers in our economy where they require protection, and ensures that our trade remedy regime is robust, so that we can prevent the dumping of products into the UK market, and also is sufficiently liberalised such that the cost savings that would accrue from liberalised tariffs are there for the benefit both of consumers and those who use those products in their production processes within the UK market.

Photo of Helen Goodman Helen Goodman Shadow Minister (Foreign and Commonwealth Affairs)

I am sorry that Anna Soubry is not in her place to ask this question herself. Last week she withdrew her amendment asking the Government to publish their papers on the impact of no deal. Will the Government still hold to their promise, even though she has defected from the Tory party?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The analysis that the hon. Lady refers to is contained in the cross-Government analysis that we are discussing as part of this urgent question.

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

As the Treasury’s forecasts before the referendum were woefully inaccurate, and the Office for Budget Responsibility was set up specifically to stop politicised reports coming out, would it not be better to consult a newspaper horoscope than Treasury forecasts?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I hate to disappoint my hon. Friend, ingenious and amusing though his question is, but I should point out just one fallacy in the premise of his question: these are not forecasts.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport)

In the search for a withdrawal agreement that we can all support, can the Minister now confirm that the draft proposals have been put forward to Europe that would make a legally binding textual change to the withdrawal agreement?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

We have made it clear that our ambition is to strike an amended deal with the European Union, so that we put beyond doubt the issue of how permanent or otherwise the backstop arrangements might be. I am not in a position to comment on the specifics of the ongoing negotiations because I am not intimately involved with them.

Photo of Kirstene Hair Kirstene Hair Conservative, Angus

We know, of course, that the economic impact assessment on the Chequers deal showed that there would be no impact on growth in Scotland. However, does the Minister agree that nationalists have made it very clear that they will accept no deal that is put on the table, and—as I know, the Minister knows, my constituents know and businesses in Scotland know—this is all just to cause the ultimate chaos to pave the way for independence?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The analysis shows that in all the scenarios being considered, including no deal, a deal based on the 2018 White Paper will give a better result for our economy for every sector, for every region and for every country—including Scotland—of the United Kingdom.

Photo of Mark Francois Mark Francois Conservative, Rayleigh and Wickford

As the Chairman of the Select Committee on Exiting the European Union said, today is D minus 37, so in some five weeks from today we will have honoured the wishes of 17.4 million UK citizens and left the European Union. Military veterans living in Cyprus will also be affected by some of these changes, not least because we recently signed a double taxation treaty with the Cypriot Government. The Minister personally intervened in that negotiation, to allow a five-year transition period for military veterans receiving state pensions to have longer to adjust. He played a blinder and honoured the covenant, and on their behalf I thank him today for everything he did to look after them.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I sincerely thank my right hon. Friend for his extremely kind words. As ever, he is too modest. It was not my effort alone that secured the result that we achieved for those very important veterans in Cyprus—he raised the issue, brought it to my attention in Committee, and worked hard with me to make sure that we achieved the right, just and desired outcome.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

Of course, the economic effects are already being felt. I have spoken to businesses in my constituency that have gone from profit to loss and others that have cut investment. This week I spoke to Cardiff University, which cited Brexit as a factor in the job losses that it has proposed. This is very serious, so does the Minister accept that we need to get serious? Ministers know that no deal would be a catastrophe. They know that every single Brexit would lead to a worse economic outcome for this country, so do they accept that the issue needs to go back to the people so that they can decide, based on the facts?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

If I may summarise, the hon. Gentleman makes the point that uncertainty is not good for business. He is entirely right, and that is all the more reason why we should get behind the deal, and get it sorted. We would then have an implementation period in which nothing would change until the end of 2020. The businesses in the hon. Gentleman’s constituency to which he referred could then begin to increase employment and invest with confidence.

Photo of Stephen Crabb Stephen Crabb Conservative, Preseli Pembrokeshire

There are a great many voices in the international investor community that have made it clear that the underlying fundamentals of the British economy remain sound, but they warn that we are in a period in which investment decisions have been put on hold, and trade deals are in abeyance. Does my right hon. Friend agree that the single most important thing that we can do right now to unlock new investment in the economy is to pass the deal?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

My right hon. Friend hits the nail firmly on the head. What we must do to move from uncertainty to a situation in which we can begin to concentrate on negotiating our future relationship with the European Union while everything remains stable and the same until the end of 2020 is to pass the deal as he suggests.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention), Shadow PC Spokesperson (Business, Energy and Industrial Strategy)

The fundamental problem with the British Government’s policy as it stands is that the deal offers certainty only for the duration of the transition period. Owing to the chaos in the Conservative party, is it not the case that all the deal does is move the cliff edge to the end of the transition phase?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

No, not at all. The deal would, first, resolve the three critical issues on which the withdrawal agreement focuses: the Northern Ireland-Ireland border; the situation as it relates to EU and UK citizens; and the financial arrangements that we will enter into as we leave the European Union. Critically, it would give us time to put into effect the political declaration, which is the other part of what has been negotiated, until the end of 2020.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

With the Scottish economy growing at half the rate of the rest of the United Kingdom, can my right hon. Friend offer any advice on economic growth to the Government north of the border?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

My advice, although I doubt very much that the Scottish National party will take much advice from me, is, first, get behind the deal and let us get certainty and increase investment; and secondly, accept the result of the 2014 referendum, stay with the United Kingdom and do not end up in a situation that creates a border between the country of Scotland and the rest of the United Kingdom.

Photo of Meg Hillier Meg Hillier Chair, Public Accounts Committee

In response to the Chair of the Exiting the European Union Committee, the Minister said that it would be reckless of the Government not to plan for no deal. However, the detailed work of the Public Accounts Committee has clearly shown that the Government are not prepared for no deal, and are woefully prepared for a deal. Would not the responsible thing be to delay any exit or extend the transition period and take stock, and make sure that the D-minus-37 uncertainty that is hanging over our country is resolved? It is too late just to pass the deal—uncertainty is now built in.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I do not accept that we are not adequately prepared or are not deeply preparing for the possibility of no deal. This work has been going on for many months, and in far greater depth than many people appreciate. In my area of ministerial responsibility, Her Majesty’s Revenue and Customs and borders, we have staffed up, and we have 4,500 more personnel ready for this work. There will be over 5,000 in place by 29 March. We have engaged with stakeholders across the piece by making sure that we have the most facilitated possible customs arrangements in place, particularly in respect of the short straits crossing—Dover and Calais—and so on. An immense amount of work has been carried out.

Photo of Kevin Foster Kevin Foster Conservative, Torbay

In considering the economic impact of the proposed deal, has the Minister reflected on the key drivers of economic performance and the policies that we decide domestically—on productivity, business structure and tax structure? We need only look at what the SNP is doing in Scotland to realise where we could go wrong.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I will not be drawn into the Scottish National party again, but I thank my hon. Friend for his question. He is absolutely right—fundamentally, the way in which we manage the economy is one of the most important things that we do as a Government, which is why we have record levels of employment and the lowest level of unemployment since 1975. It is why we have halved youth unemployment since 2010, reduced the debt and have reduced the deficit by 80%, and it is why the economy is moving in the right direction.

Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

As many of my hon. Friends have said, all credible economic analysis shows that a no-deal Brexit would be disastrous for the economy. The draft withdrawal agreement would be only slightly less disastrous for the economy. Given that the report published by the Resolution Foundation today predicts an increase in child poverty of 6% by 2023—that is equivalent to an additional 1 million children living in poverty since 2016—what are the Minister’s estimates of the additional effect on child poverty of no deal or the draft withdrawal agreement?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

Absolute poverty is at a record low. The Government have an enviable record of helping those who require work to get into work, and I have outlined at length our success in that area. We have made sure that work pays with the benefit system and our roll-out of universal credit. Underpinning the hon. Lady’s question is a denial of the result of the 2016 referendum. The country made a decision to leave, and on that basis the decision has to be whether we have a sensible deal, as we have negotiated, or whether perhaps we end up with no deal, which I think the vast majority of Members in the House would not want to happen.

Photo of Stephen Kerr Stephen Kerr Conservative, Stirling

My right hon. Friend knows, and the people of Scotland know, that the SNP Government, by their refusal to contemplate any form of withdrawal agreement whatsoever, are deliberately dragging Scotland to a no-deal situation—a crisis of their making—which they would use as a platform to demand independence. What possible excuse, to the best of my right hon. Friend’s knowledge, does the First Minister of Scotland have for not attending the Prime Minister’s Brexit cabinets?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

It is for the First Minister of Scotland to answer on the reasons why she attends functions and to deal with the points that my hon. Friend made. There is no doubt that this is a matter that affects the entire United Kingdom, including Scotland. I believe that the vast majority of us in the House wish to avoid a no-deal Brexit. The Scottish National party could play a pivotal role in helping us to do so by supporting the negotiated deal.

Photo of Marsha de Cordova Marsha de Cordova Shadow Minister (Work and Pensions) (Disabled People)

It is no secret that the Government’s deal will hit people’s livelihoods and jobs, along with economic growth. All credible economic analysis says that a no-deal Brexit would have a devastating effect. With just 37 days to go, does the Minister agree that we need to get serious, and that we need to consider extending article 50?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The hon. Lady urges us to get serious. We have been extremely serious in negotiating a deal with the European Union for a considerable amount of time, and we continue to engage in that endeavour. She is absolutely right to say that most of us in this House wish to avoid no deal, but the way to do that is by Opposition and Government Members uniting and making sure that we avoid no deal and have a good deal for our country.

Photo of Tom Brake Tom Brake Liberal Democrat Spokesperson (International Trade), Liberal Democrat Spokesperson (Exiting the European Union)

We know that the Government have done no economic impact analysis of the proposed deal, but has the Minister done an economic analysis of the failure of the Secretary of State for International Trade to secure the 40 roll-over trade deals the he promised would be signed one minute after 11 o’clock on 29 March?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The right hon. Gentleman says that we have done no analysis of the deal, as he refers to it, but as he knows, the deal is actually the political declaration, which inherently will include a range of particular possible outcomes for that deal. That is modelled in the sensitivity analysis that we have brought forward to Parliament. [Interruption.]

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

Order. Mr Seely, sit down young man. It is very discourteous. The Father of the House comes in—[Interruption.] Order. Do not sit there looking at your phone, man. I am speaking to you. Show some respect and manners in the Chamber.

Photo of Chris Elmore Chris Elmore Opposition Whip (Commons)

As the Minister will know, 23% of all the European funding that comes to the UK goes to Wales. He said that discussions on the shared prosperity fund would start before Christmas; I wonder whether he has played any part in that. Leave campaigners said that Wales would not be a penny worse off if we left the European Union, so will the Minister set out how the fund will work and who will make decisions to ensure that the Welsh economy does not tank if we are to have this botched Brexit deal?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

As the hon. Gentleman knows, we will set out those details in due course.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury), Shadow SNP Spokesperson (Housing, Communities and Local Government)

The Scotch Whisky Association recently reported that the value of Scotch whisky exports to Mexico last year was £131.5 million—which is up 18.5% on 2017—and that Mexico is the fourth largest export market by volume for Scotch whisky. However, the Under-Secretary of State for Exiting the European Union, Chris Heaton-Harris has confirmed by letter to the Procedure Committee that the Government

“do not…expect to replicate the existing Mexico spirits agreement in time for 29 March”.

What assessment has the Financial Secretary made of the impact that will have on geographic indicators for Scotch whisky and on the wider Scottish economy?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

This Government totally understand and get the significant importance—not just to Scotland but to the entire United Kingdom—of Scotch whisky exports, which account for some 20% of all exports of food and drink from our country. That was also signalled in our recent Budget, which once again froze duty on Scotch whisky. The hon. Lady can rest assured that we will make sure that we do the right thing by Scotland’s most important export.

Photo of Stephen Timms Stephen Timms Labour, East Ham

The Department’s assessment is that any form of Brexit will leave us worse off than if we stayed in the European Union. Will the Minister simply confirm that that is his Department’s view?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The analysis, quite rightly, does not assess staying in the European Union, and there is an obvious reason for that, which is that in June 2016 the country took the decision—17.4 million people voted—to leave the European Union, and that is an outcome that this Government will respect.

Photo of Louise Haigh Louise Haigh Shadow Minister (Home Office) (Policing)

Will Operation Stack have to be replicated across all major ports in the event of no deal?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The hon. Lady can rest assured that an extensive amount of contingency planning has gone on, and will continue to go on, in terms of the arrangements that we may have to bring into force at our ports to make sure that goods keep flowing.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Energy)

We have heard the usual nonsense of “SNP bad” from Conservative Members because we do not support this Government’s so-called deal. If the deal is so good, why are the UK Government not brave enough to take control and publish evidence on the financial impact? Has the Minister seen the Bank of England analysis that his deal will raise unemployment by 4% and inflation by 2%? If the UK Government do not agree with that analysis, why do they not disprove it by publishing their own evidence?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The hon. Gentleman says that we have not had the courage to produce an analysis of the deal, as he terms it, but we have done precisely that, as was required by this House, with a range of potential landing points for the deal set out in broad terms in the future political declaration. The Government have done just that.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

The Father of the House knows better than others that Margaret Thatcher was instrumental in creating the single market and in encouraging Japanese companies to come here to platform into it. Given that the EU now has a free trade agreement with Japan and the Government intend to Brexit, is not the loss of Japanese investment and associated jobs painfully predictable? Is it not now incumbent on the Government to give business and the people, including Honda workers and others, the final say on whether this botched deal is really what they want, or whether they want to stay in the EU to secure future jobs?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The hon. Gentleman overlooks the fact that the trade deal with Japan has been struck at a time when we are members of the EU. There will be an impact on car producers, and we see that as part of the reason why Honda has taken its decision. The most important thing is that we enter into an arrangement with the EU where we minimise the frictions at our borders, have a free trade agreement with the EU27 and make sure that trade continues to flow. The best way to do that is to support the deal we are negotiating with the European Union.

Photo of Jeff Smith Jeff Smith Opposition Whip (Commons)

The Government’s letter to Nissan promised that its ability to export to and from the EU would not be adversely affected by Brexit. How on earth can that possibly be reconciled with the Prime Minister’s red lines?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

My right hon. Friend the Prime Minister has a clear commitment to entering into a future trading relationship with the European Union based on the political declaration, which has at its heart a free trade area—tariff-free trade—and to making sure that we have the customs facilitations in place to ensure that that trade flows as freely as possible.

Photo of Marion Fellows Marion Fellows SNP Whip, Shadow SNP Spokesperson (Small Business, Enterprise and Innovation)

In spite of Conservative Members shouting, “SNP bad,” the UK Treasury analysis does not cover the PM’s deal; it covers no deal, a free trade agreement, the European economic area without a customs union and the Prime Minister’s failed Chequers plan. Does that mean that the Prime Minister plans to ditch her plan for one of those or to proceed without knowing the consequences?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The analysis needs to model the future political declaration, upon which the negotiations will rest. Of course, that is a relatively broad document with a number of potential outcomes. The analysis has quite rightly taken a range of possible outcomes to make that assessment and most accurately reflect the range of outcomes of where the deal itself may land.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales)

Unlike the EEA or single market model, the PM’s deal assumes that regulatory checks will be essential to the proper functioning of separate EU and UK markets. Does not the Minister agree that we need to understand the impact of such trade barriers now?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

That is precisely what the analysis is setting out—a series of potential outcomes and the economic impacts thereof. Some Members are suggesting that we should analyse where we are at the moment, but that would not be appropriate given that we are leaving the European Union. At the same time, it has to be recognised that we have not yet fully concluded the new trading relationship with the European Union—the EU27—and therefore the analysis sets out a range of possible landing points for those negotiations.

Photo of Patrick Grady Patrick Grady SNP Chief Whip

My sense is that the Minister is actually starting to admit that there is no analysis of the withdrawal agreement, so I just want to press him. The withdrawal agreement was laid before the House on 26 November, so on what specific date did the Government publish their specific economic analysis on that withdrawal agreement, and what title or Command Paper number should I ask for in the Vote Office or the Library to see the analysis?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The analysis, as demanded by the House, sets out the different possible outcomes, including modelling a range of options between those contained in the White Paper of June last year and an FTA, as well as a point somewhere between the two of them, to allow an informed look at the likely impact of the various outcomes implicit in the future declaration. The hon. Gentleman will know that that is, of necessity, the way in which this analysis has to be conducted, given that we have a period during which we will be negotiating a precise exit arrangement with the European Union.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader

This is Schrödinger’s analysis—even the Minister does not know whether or not it exists at this moment in time. Will he answer a simple question: does he believe that the UK would be better off if it were to leave the EU with the Prime Minister’s deal or if it were to stay in the EU?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I have been asked this question a couple of times, and the reality is that it is entirely hypothetical. To end up staying within the European Union would be to fly in the face of the result of the June 2016 referendum —the referendum had a higher turnout than any other electoral event in our country’s history—and this Government are going to respect the outcome of that referendum.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

This urgent question was aimed at the Prime Minister, so I can only assume that the Minister is undergoing an audition as the future leader of the Conservative party. On that basis, if he were Prime Minister, would he take cognisance of the analysis published by the London School of Economics that shows a 5.5% hit on GDP due to the incumbent’s plan, or would he, like her, simply ignore it?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

What we must do is to make sure that we conclude a good deal for our country; what we must do is to make sure that we avoid a no-deal scenario; and what we must do is to make sure that we respect the result of the June 2016 referendum. That is the mission of this country and of this Government. We are negotiating the final elements of that, and as, I hope, the Prime Minister comes back with changes to that deal in relation to the backstop, if we are to do the right thing and the best thing for the whole United Kingdom, we should support it.

Photo of Stewart McDonald Stewart McDonald Shadow SNP Spokesperson (Defence)

I am stunningly impressed by the Minister’s performance at the Dispatch Box. We can tell a big Downing Street lollipop is on its way when that intellectual heavyweight, Huw Merriman, has nodded in agreement with everything the Minister has said for the last three quarters of an hour.

Let me ask the Minister this: the deal ends freedom of movement—one of the reasons why I will not support it—but where can I find the economic analysis of the impact of ending freedom of movement on Scotland and on the city of Glasgow? Following his answer to the Chair of the Public Accounts Committee, Meg Hillier, will the Minister also tell me, as well as the discussions he has had with HMRC, whether Revenue Scotland has been consulted?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

On the impact of immigration, if the hon. Gentleman looks closely at the analysis, he will see that the various scenarios I have outlined during this urgent question are analysed both in terms of the current free movement arrangements and in terms of more restrictive arrangements that would be expected to follow on from the further negotiations we will have with the European Union.

May I just make one very important point on immigration? There will have been a multitude of reasons why 17.4 million people voted to leave the European Union in 2016. There is little doubt in my mind that immigration was one of them, and it is absolutely vital that this Government stick, as we will, to our commitment to ensure that we put an end to free movement and gain control of our borders.

Photo of Stewart McDonald Stewart McDonald Shadow SNP Spokesperson (Defence)

There’s a big lollipop coming your way.

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

Order. The hon. Gentleman continues to chunter from a sedentary position about the merits or otherwise of lollipops, but when his appetite has been satisfied, and perhaps even if it has not been, we will move to the next urgent question.