(6 years ago)
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John McDonnell (Hayes and Harlington) (Lab)
(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the Government’s publication of the economic and fiscal analysis of various Brexit scenarios.
The Financial Secretary to the Treasury (Mel Stride)
Today the Government published the analysis of the economic and fiscal effects of leaving the European Union, honouring the commitment we made to the House. It is important to recognise that the analysis is not an economic forecast for the UK economy; it only considers potential economic impacts specific to EU exit, and it does not prejudge all future policy or wider economic developments. The analysis sets out how different scenarios affect GDP and the sectors and regions of the economy against today’s arrangements with the European Union. Four different scenarios have been considered: a scenario based upon the July White Paper; a no-deal scenario; an average free trade area scenario; and a European economic area-type scenario. Given the spectrum of different outcomes, and ahead of the detailed negotiations on the legal text of the deal, the analysis builds in sensitivity with effectively the White Paper at one end and a hypothetical FTA at the other.
The analysis shows 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. The analysis shows that a no-deal scenario would result in lower economic activity in all sector groups of the economy compared to the White Paper scenario. The analysis also shows that in the no-deal scenario all nations and regions of the United Kingdom would have lower economic activity in the long run compared to the White Paper scenario, with Northern Ireland, Wales and Scotland all being subject to a significant economic impact.
What the Government have published today shows that the deal on the table is the best deal. It honours the referendum and realises the opportunities of Brexit. [Interruption.] It is a deal that takes back control of our borders, our laws and our money. [Interruption.] Let me be very clear to the House and to those who say that the economic benefits of staying in the EU mean that we should overturn the result of the referendum: to do so would open up the country to even further division and turbulence, and undermine the trust placed by the British people in our democracy. What this House and our country face today is the opportunity presented by the deal: a deal that honours the result of the referendum and safeguards our economic future; or the alternative, the risk of no deal or indeed of no Brexit at all. [Interruption.]
Mr Speaker
Order. Somebody said something about “dishonest”. No Member should accuse another Member of being dishonest in this Chamber. I am not quite sure who I heard, but that must not be repeated. This is a disagreement between right hon. and hon. Members, and colleagues must remember that.
John McDonnell
The Chancellor promised us that the House would have a detailed economic analysis of the options ahead of the meaningful vote on Brexit. The least we could expect is that, instead of touring the broadcast studios, the Chancellor would be here himself to present an oral statement on the information.
Let us be clear. We are now in the ludicrous position of seeing an analysis produced today on the economic implications of Brexit, which is in fact largely an assessment of the Chequers proposals abandoned months ago. What the analysis produced by the Treasury today shows us is that if a no-deal scenario with no net EEA migration comes to pass—something the Government have recklessly, if incredibly, been threatening—we could see GDP almost 11% lower compared to today’s arrangements. Under the hard Brexit some Government Back Benchers have been promoting, it would be 7% smaller. Only a Chancellor who talks about “little extras” for schools would talk about this kind of effect as being “a little smaller”.
Can the Minister confirm that no deal is not an option the Government will allow to happen? Does the Minister agree that the one thing this document shows is that the deal on the table is even worse than the abandoned Chequers deal? Have the Government done any analysis whatsoever of the actual proposed backstop arrangements and will they be published in advance of the vote in a few days’ time? What fiscal assumptions is the Department making about extending the transition period, given that there may be no limit to what the European Union could ask for in return for such an extension? To be frank, if the Minister’s Government are not prepared to put jobs and the economy first in their Brexit negotiations, is it not time that they stepped aside and allowed Labour to negotiate that deal?
Mel Stride
Let me deal first with the point the right hon. Gentleman made about the Chancellor. The Chancellor is of course accountable to this House. He will be appearing before the Treasury Committee on Wednesday to give full account of the arrangements we are discussing today. Indeed, the Prime Minister herself will be appearing before the Liaison Committee.
The right hon. Gentleman raised the Chequers deal and the fact that analysis is being based around that in this paperwork. That is entirely appropriate given that, as he will know, the political declaration suggests a spectrum of possible outcomes for the arrangements. That is why we not only analyse the Chequers proposal, but have a sensitivity analysis around that proposal as well.
The right hon. Gentleman raises the issue of a no-deal scenario. It is the Labour party that is pushing us more in the direction of a potential no-deal scenario by—I have to say it—deciding for its own political reasons to object to the deal we have put forward. To be clear, that deal is good for safeguarding the economic future of our country and it delivers on the 2016 referendum, giving us control of our borders, our money, our laws and ensuring we protect the integrity of the United Kingdom, while allowing us to go out and make future trade deals. This Government are totally committed to achieving that.
Mr Kenneth Clarke (Rushcliffe) (Con)
Does my right hon. Friend accept that it is not possible to leave a free trade area with our largest and most important wealthy customers and introduce tariff barriers, custom delays, regulatory divergences and delays at borders without making this country poorer than it otherwise would be? It is difficult to see how anybody who follows economic policy can argue the contrary while keeping a straight face. Can he reassure me that the withdrawal agreement that is being put before the House enables no change at all to be made to our economic and trading arrangements through March next year until we go into a transition period that can be extended as long as is necessary to introduce practically any economic arrangement for the future that we want? It is obvious to me that we should stay in the single market and the customs union. Can he reassure me that that is still a perfectly reasonable possibility?
Mel Stride
My right hon. and learned Friend raises a number of points. The paper does not duck the question of the economic impact of the proposed deal compared to the status quo—the relationship with the European Union as it persists today. It makes it very clear that it will be detrimental in the economic sense. That is extremely clear. But I would put it to him that the deal is the best for the economy going forward as part of a deal that also delivers on several other things, some of which are entirely non-economic, such as control of our borders and free movement.
Kirsty Blackman (Aberdeen North) (SNP)
Before and after the EU referendum, the Scottish National party said that leaving the EU would damage our economy. In December 2016, almost two years ago, the Scottish Government produced “Scotland’s Place in Europe”, our compromise position that makes it clear that, second only to staying in the EU, remaining in the single market and the customs union would be the best thing for Scotland’s economy and for the economy of the UK as a whole. The Prime Minister’s deal will cost every person in Scotland £1,600 compared to staying in the EU. The economy will grow more slowly. The agri-food sector will be particularly affected across all scenarios. Trade deals that we might strike will only increase GDP by a potential 0.2%. Public sector net borrowing will be higher. In what alternative reality is this a good deal?
Mel Stride
The hon. Lady is arguing to remain in the European Union. That would not respect the will of the British people as expressed in the referendum, the largest turnout in any electoral event in this country’s history. She talks about the imposition of trade barriers and the impact on the economy. There would be few impacts worse, I suggest, than Scotland becoming independent and having a customs barrier between ourselves and Scotland.
John Redwood (Wokingham) (Con)
Will the Treasury publish the average 25-year growth rate in the last 25 years before we joined the European Economic Community and the average 25-year growth rate since 1992, when we have been in the full single market? In Treasury terms, this will show a massive loss of income and output as a result of belonging to those things, so the sooner we get out, the better.
Mel Stride
My right hon. Friend seems to have already availed himself of precisely that information to make his point. What I can assure him is that Stephen Nickell, formerly of the independent Office for Budget Responsibility, will, at the behest of the Treasury Committee, be looking at all the facts and figures and the model that we have employed in this respect. He will be given access to officials across all Departments to assist him in doing just that.
Several hon. Members rose—
Mr Speaker
I inadvertently neglected to congratulate the right hon. Member for Leeds Central (Hilary Benn) on an important birthday on Monday, but I belatedly express the hope that he enjoyed himself, being fêted by family, friends and, as appropriate, his Select Committee—I call Mr Hilary Benn.
Hilary Benn (Leeds Central) (Lab)
Thank you very much, Mr Speaker. There was nowhere I would rather have spent my birthday than in the House of Commons questioning the Prime Minister on the Brexit deal, and I am sure that the same is true of the Prime Minister. On today’s urgent question, the Government are of course unable to analyse the political declaration because no one has the faintest idea about what kind of economic relationship will result from it, so instead, they have chosen to model the Chequers plan—the facilitated customs arrangements and the common rulebook—which has already been explicitly rejected by the European Union, which is why we have ended up with a vague political declaration. What is the purpose of trying to rest the Government’s case about minimising economic damage to the country on an option that the EU has already told us that it will not agree to?
Mel Stride
I echo your congratulations, Mr Speaker, to the right hon. Gentleman on his very special day. In the case of the political declaration, the right hon. Gentleman will know that it does not give a specific outcome because that is to be negotiated as we go forward, as was always going to be the case. However, while the analysis that we are presenting today is anchored on the Chequers arrangements and the July White Paper, it of course provides a sensitivity analysis around that to reflect the fact that there is a spectrum of potential outcomes.
Mr David Davis (Haltemprice and Howden) (Con)
The Treasury, the OBR and the Bank of England between them produce numerous forecasts every year. When was the last time that any of them got one right?
Mel Stride
I suspect that in the history of highly detailed, complicated economic forecasts with myriad variables, there is probably not one in the entire history of the planet that has been entirely right in every respect. However, that is not an argument that my right hon. Friend can deploy not to go out and do an honest, sensible appraisal of what the likely outcomes are going to mean, both fiscally and in terms of GDP, as we go forward.
Sir Vince Cable (Twickenham) (LD)
The Government have confirmed this morning what the independent National Institute for Economic and Social Research set out yesterday: relative to continued membership of the European Union, the country will be substantially poorer, with no Brexit dividend for the budget relative to the position now. Is it not also the case that the Government’s relatively optimistic forecasts are based on the assumption of a smooth and rapid transition to a trade deal, or an indefinite period in a transitional arrangement, and that the likely outcomes and scenarios are potentially a great deal worse?
Mel Stride
No. The right hon. Gentleman raised specifically the issue of a Brexit dividend, and the Chancellor has rightly always been very clear on that. There is uncertainty in the economy at the moment and this is one of the key reasons why, if we can agree a deal, get that deal to stick and get rid of that uncertainty, a huge level of investment will come to our shores and this will be a huge shot in the arm to the British economy.
Nicky Morgan (Loughborough) (Con)
Let me start by saying that this economic analysis has been published at the behest of the Treasury Committee, but none of the three men called before me so far from the Government side is on that Select Committee. I say to the Minister that I was very clear in the letter that I wrote to the Chancellor of the Exchequer on 27 June, which is available on the parliament.uk website for any interested parties. I said:
“The long-term analysis should consider the economic and fiscal impact of… implementing the Withdrawal Agreement and the terms of the future framework”.
It is clear, sadly, that that is not what has been published today. It may be the case that it is not possible, as we have heard, to model particularly those agreements and the future framework, but that should then be explained to the House out of respect for the House. This is only the first part of the economic analysis to be published. We will have the Bank of England’s economic analysis at 4.30 pm and that of the Financial Conduct Authority, and then there will be various relevant witnesses, including the Chancellor, giving evidence to my Committee in the course of next week. So I say to hon. Members that, rather than leaping to conclusions about what is on the printed page today, we should all take the time to read it in detail—all 90 pages, and the technical amendment of over 70 pages—and the Bank of England’s analysis, and we should listen to the evidence given next week, then listen to the debate, and then we will make our judgments on 11 December.
Mr Speaker
Order. Before the Financial Secretary responds, and I note what the right hon. Lady said, I just say to the House that by contrast with the experience of earlier periods, during and indeed throughout my tenure, it has been my overwhelming and almost invariable practice—[Interruption.]—as the sedentary nod of the hon. Member for Wellingborough (Mr Bone) testifies, to call everybody in urgent questions and statements. That did not use to happen. It almost always happens with me, so if people would just be a little bit patient, rather than everybody thinking, “I am more important than the other person,” everybody will get in. I called the Father of the House and two Secretaries of State of some standing. [Interruption.] And the right hon. Member for Loughborough (Nicky Morgan) was a Secretary of State, but the Chair decides who to call and when, and I will always ensure that everybody gets a fair opportunity. It has to be that way. I have always treated the right hon. Lady with the very greatest of respect and I will always do so. I will also try to equalise the gender balance, but I hope that people will understand when I say that there are limits to what the Chair can do. The Chair also depends on who is present and who is standing. I am doing my best and I always will.
Mel Stride
I think my right hon. Friend the Member for Loughborough (Nicky Morgan) is entirely right in her exhortation to the House about the importance of making sure that we fully digest the two documents that are being brought forward—and indeed, as she suggests, the announcement that will be made by the Bank of England at 4.30 this afternoon—and that we in turn review very closely the evidence that the Chancellor and others give to the Treasury Committee. We do not want to make the kind of mistake that the Leader of the Opposition made when he dismissed our deal without even having read a word of it.
Alison McGovern (Wirral South) (Lab)
I cannot help feeling sorry for Government economists today, because not only have they had people in the House disparaging their work, but what is more, they seem to have been asked by the Government to do what appears to be a spin job. May I ask the Minister whether the Chancellor of the Exchequer even asked the Government Economic Service what model could appropriately be produced based on the political declaration about the future that we are going to have to vote on?
Mel Stride
What I can tell the hon. Lady is that this analysis has been carried out, for example, not solely by the Chancellor or the Treasury, but right across Whitehall. Every Government Department has been involved in that. No direction as to the detail or what the outcome of the analysis should be has been made by Ministers, and it is important that I go on the record in this urgent question to defend those officials who are not able to speak for themselves in these circumstances and say that the Government have absolute confidence in them and their integrity.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
I am sure that my right hon. Friend recalls the wild inaccuracy of the Treasury’s forecasts before the referendum—of a punishment Brexit and an increase in unemployment of 800,000—but is there not a major flaw in the document we have before us? Global trends have not been modelled, yet it is thought that 90% of future global economic growth will come from outside the European Union. Without thinking about that, this forecast is worthless.
Mel Stride
I would make two points to my hon. Friend. First, this is not a Treasury report, as such, but as I have just outlined, it has involved discussions right across the whole of the Government. Secondly, on future trade deals, he will find buried within the detail that in fact assumptions have been made about future trade deals with countries such as the United States, China and India.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The analysis published by the Government today, while not entirely clear in its picture, does highlight the specific impact that a bad Brexit would have on the north-east region. Today’s figures provide the modelling for the north-east against a Chequers deal and an average free trade arrangement, but uses no deal as a base for that analysis. Can the Minister confirm today the impact on the economy of the north-east of a no deal and the Government’s intended deal as compared with the status quo—remaining in the EU?
Mel Stride
As I identified earlier, a no deal, as compared to the Chequers deal and the sensitivity analysis around that, would see every region, country and sector of the UK economy disadvantaged as a consequence. As the hon. Lady will see from the analysis presented, the impact of a no deal would be particularly felt in the north-east. That is the case also with the west midlands and the east midlands, where manufacturing is particularly prevalent. The model also showed potential impacts on agriculture, with a strong impact in areas such as Wales, Northern Ireland and Scotland.
Anna Soubry (Broxtowe) (Con)
As you know, Mr Speaker, the hon. Member for Streatham (Chuka Umunna) and I tabled an amendment to the Finance Bill calling for the publication of precise modelling based on the status quo but to include the Government’s political declaration. The Exchequer Secretary to the Treasury, my hon. Friend the Member for Newark (Robert Jenrick)—he is my friend, and I am not by any means saying he has done anything dishonest—gave the following assurance at the Dispatch Box to this House, and as a result, the amendment was not pushed to the vote. Had it been, it would have been passed. Hansard records that my hon. Friend gave the following assurance to the House:
“The analysis will consider a modelled no-deal scenario, or World Trade Organisation terms; a modelled analysis of an FTA scenario; and a modelled analysis of the Government’s proposed deal.”—[Official Report, 19 November 2018; Vol. 649, c. 661.]
At that time, it was the “proposed” deal, because it was before last weekend, when it became the political declaration. It is not the fault of my right hon. Friend the Financial Secretary to the Treasury, but it is somebody’s fault, because a promise was made at the Dispatch Box and in private that led to a course of action that meant that an amendment was not put to the vote that would have been put to the vote and agreed. I would like to know, please, why that solemn promise has been broken.
Mel Stride
I have huge respect for my right hon. Friend, whom I count as a friend, but I gently say to her that I do not believe that any promises have been broken. We have come forward with an analysis of the deal, and that analysis, of necessity, is a spectrum of possible outcomes. The political declaration very clearly does not identify a specific end point, so the choice we are left with is taking a position on a particular set of circumstances—in this case, the Chequers deal, as set out in the July White Paper—and then doing a sensitivity analysis so that we capture the different scenarios in which the final deal could land, although that, as we know, is currently unknown because it is subject to detailed negotiation.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
The Minister has blown apart the Prime Minister’s entire claim by admitting that he cannot do any kind of assessment of the political declaration of the deal because, as he said and as it says in paragraph 28 of the political declaration, there is a spectrum of outcomes and controls. The trouble is that his assessment of that spectrum includes a huge range of possible outcomes for the growth of the economy, ranging from a 1% drop to a 7% drop. That is a substantial range. He is asking us to vote for this deal blindfolded, with no idea, and undermining our negotiating strategy in the process. Will he confirm that that is what he has just done?
Mel Stride
I am sorry to disappoint the right hon. Lady, but I will not confirm that, because, as I said in my last answer, the deal, as set out and elaborated upon in the political declaration, does indeed set out a spectrum of potential outcomes, so it is logical that it is that spectrum of potential outcomes that we should be modelling, and that is precisely what we have done.
Mr David Jones (Clwyd West) (Con)
A few minutes ago, the Prime Minister twice regaled the House with a catalogue of the economic successes that this country is currently enjoying. That success is all the more remarkable when one recalls that prior to the referendum the Treasury solemnly warned that in the event of a leave vote the country would immediately enter recession. Given the historical shakiness of Treasury forecasting, is my right hon. Friend prepared to make not only the modelling but the working assumptions applied by the Treasury available to responsible third parties, such as economists of free trade, so that they may review them and see whether they agree?
Mel Stride
I can reassure my right hon. Friend that, as I outlined earlier, Stephen Nickell, formerly of the OBR—an independent body—will at the behest of the Treasury Select Committee have full access to all the information, data and methodology used to produce these impact estimates, and I can assure him that officials will co-operate fully.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
In 13 days, we in this House will vote on the future of our country, and yet the Government rushed into triggering article 50 and went recklessly into a general election without any timetabled plan for getting to 29 March, which is now the date. Will any information be made properly available to the House in the next 13 days to enable us to make a decision without being blindsided?
Mel Stride
I am slightly surprised by the hon. Lady’s question, because that is the very purpose of the information we are discussing. That information has been set out in great detail. As my right hon. Friend the Chair of the Treasury Select Committee has exhorted, it is incumbent on us all, given the magnitude and importance of the decisions we are about to take, to go away and digest that information in great detail.
Neil O'Brien (Harborough) (Con)
The recession under the last Labour Government was the worst since the second world war and saw GDP fall by 7% and unemployment increase by 1 million. How would the effect of moving from a deal-based Brexit to a no-deal Brexit compare with that terrible outcome under the last Labour Government? Does my right hon. Friend agree that, because modelling future differences in regulation are involved, the process of modelling Brexit is a fundamentally uncertain one and that we should be very cautious and understand that there will be inevitable uncertainty in any forecast?
Mel Stride
My hon. Friend is absolutely right in his latter point about uncertainty. Of course, this is simply a set of estimated outcomes, and everybody in the House will look at it closely and form their own opinion upon it. The impacts of a no-deal Brexit are estimated within the papers, but he is absolutely right that what we inherited in 2010—the largest peacetime deficit in our history—is a very frightening comparison to contend with.
Ms Angela Eagle (Wallasey) (Lab)
The Government, like a third-rate conjurer, hope that if they produce a range of examples for scenarios that are not going to happen, such as no deal or Chequers, somehow we will be taken in by it. Is it not about time the Government do what the House asks them to do, whether on legal advice publication or giving us the facts to make the decision, so that this House can take back control on behalf of the British people?
Mel Stride
We have done precisely what the House required us to do in setting out the estimated impacts of the deal, of an average free trade agreement, of an EEA-style scenario and, indeed, of a no deal. As for the hon. Lady’s point about the legal advice, I know that the Attorney General will be making a statement to the House in due course.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Is not the truth that the range of economic forecasts published today show the importance of trying to secure the withdrawal agreement? When I look at my constituents, I see the small to medium-sized enterprise manufacturing base that employs so many people who feed into the supply chain to the big companies that export frictionlessly into the European Union. It is important that we honour the result of the referendum, but that we also do everything possible to ensure that we do not fall off the cliff edge. The figures published today show that that would be catastrophic. We can argue about the size of those figures, but one thing is clear: if we do not allow a proper withdrawal agreement to take place, there will be a catastrophic economic impact, and it is the responsibility of us in the House to make sure we do everything possible to avoid that.
Mel Stride
My hon. Friend’s assertions lie at the heart of what we are all considering: the future of our country and the expressed will of the British people at the time of the referendum. What this deal—as opposed to no deal—will do is safeguard our economy and the jobs that we have created as a Government, ensure that we deliver on our pledge to take control of our borders, our money and our laws in order to protect the integrity of the United Kingdom, and enable us to go out as a globally facing nation and do deals with other countries around the world.
Caroline Lucas (Brighton, Pavilion) (Green)
The Government are treating both Parliament and the people with contempt. The economic analysis published today is essentially worthless, because it does not model the Prime Minister’s blindfold Brexit. We have just heard why that is: because there are not enough facts in there, and it is just a leap into the dark. Does the Minister accept that the British public deserve better than this? Does he accept that they deserve facts, and that they also deserve a say on those facts?
Mel Stride
I assume that the hon. Lady is referring to the suggested second referendum. As I said in my opening remarks, I think that that would be entirely the wrong route. The British people took a decision in 2016. At that time the hon. Lady and I were on the same side of the argument, but the difference between us is that I respect that democratic decision. It would not be appropriate to go back with what would be a politician’s vote to seek a different outcome.
James Heappey (Wells) (Con)
There is no point in sugar-coating it: there is clearly a cost to Brexit. However, there would also be a democratic cost were we to ignore the will of the people as expressed in the referendum. Does my right hon. Friend agree that if the House were to turn its back on a deal that minimises that cost and respects the will of the British people, we would plunge our economy into a period of great uncertainty, which would have huge costs and at the end of which the options would still be exactly the same?
Mel Stride
My hon. Friend is absolutely right. The choice before the House is to go for a deal that will safeguard our economy for the future and deliver on the aspirations and the messages that we saw at the time of the referendum. To go into uncharted territory beyond this deal—which could potentially end in a no deal—would not, I suggest, be in the best interests of any of our constituents.
Mr Ben Bradshaw (Exeter) (Lab)
The Chancellor said, very sensibly, on the radio this morning that if, or rather when, the Government’s proposals were voted down by the House, the Government would have to consider all other options. If one of those options is the so-called pivot to Norway, may I say to the Minister, as someone who has voted for that in the past, that the ship has sailed? The only option left available to get us out of this mess is a people’s vote.
Mel Stride
The right hon. Gentleman will have heard my response to the hon. Member for Brighton, Pavilion (Caroline Lucas) in respect of a people’s vote. As for the so-called Norway option, that of course comes with single market membership, and would require us not to relinquish and absolve ourselves from free movement, which I believe is one of the essential things on which the electorate voted in 2016.
Luke Graham (Ochil and South Perthshire) (Con)
When taking part in the debate on Scottish independence, I often saw how economic forecasts could be used to muddle the debate, and also to confuse constituents. Although I welcome the analysis—[Interruption.] Hang on; will Members just let me finish? I welcome the analysis that has been released today, but may I ask my right hon. Friend to release, as the tool in the analysis prescribes, further sensitivities that would allow us not only to see the difference between the assumptions in the Chequers deal and those in the political declaration—as assumptions can be clearly stated—but to see, in the context of what is said by many on the leave side of the argument, what potential upside, if any, we could gain from other trade deals with the United States, Australia or indeed China? That would help to inform our decision making.
Mel Stride
My hon. Friend has invited me to go into some of the technical detail of what has been put before the House this afternoon. Let me direct him to my earlier remarks about the work that Stephen Nickell will be doing. It will be very detailed and very forensic, and will deal with all the assumptions, including the trading assumptions to which my hon. Friend has referred. Of course, that information will in time—in a short time—be available to the House.
Rachel Reeves (Leeds West) (Lab)
However people vote, they expect the Government to put our national interest first. The deal on which we will vote in 13 days’ time clearly does not do that, and we are now confronted with circumstances in which the Prime Minister and the Chancellor are expecting us to vote for a deal that they know—and we all know—means that our economy will grow more slowly, and we will have a smaller economy with fewer jobs and less investment. No one voted for that in the referendum in June 2016, so can the Minister understand why so few MPs are going to vote for this deal in 13 days’ time?
Mel Stride
What the British people voted for in 2016 was this. They voted for a responsible Government to enter into robust negotiations with the European Union on behalf of the British people and secure a deal which safeguards our economy, the jobs and the economic future of all our constituents, but which also—critically— delivers on several other issues including an end to free movement, an end to the common fisheries policy and the common agricultural policy, control of our borders, not sending vast sums of money to the European Union, maintaining the integrity of the United Kingdom, and ensuring that we are able to go out and strike trade deals around the world as a global country. That is what we are delivering on.
Mr Peter Bone (Wellingborough) (Con)
I spluttered over my cornflakes this morning when I heard the Chancellor spinning away on television and radio about something that had not yet been announced to the House. May I gently say to the Minister that it would have been proper for the Chancellor to make a statement to the House, rather than the Minister’s being dragged here by an urgent question?
The Government’s forecasts before the referendum told us that after the referendum there would be massive unemployment, a recession and an emergency Budget. That was proved to be totally wrong, so why should anyone believe a Government forecast for years and years in advance? Is this not just another Project Fear?
Mel Stride
My hon. Friend’s question is predicated on the erroneous assumption that this is a Treasury forecast. It is not actually a forecast. It is a set of impact assessments, and it is not a Treasury document, but one that has been brought together through intensive work across Government.
Several hon. Members rose—
Mr Speaker
The hon. Member for Manchester Central (Lucy Powell) has a particularly beguiling approach to seeking to be called, which is to show that she has a bigger and more enthusiastic smile than any other Member of the House.
Mr Speaker
We can all do beguiling, but—well, we will leave it there. Lucy Powell.
Lucy Powell (Manchester Central) (Lab/Co-op)
Thank you very much, Mr Speaker. I always thought that my teeth were one of my better features.
Lucy Powell
Yes!
I suspect that the fairly candid approach today has actually hardened opinion on both sides of the debate. Given that, and given that the only really clear piece of advice that we get from this analysis is the catastrophic impact of a no deal, what action are the Government taking, legally and in terms of parliamentary procedure, to ensure that there will not be a no deal?
Mel Stride
The Government have taken a large number of actions, over thousands of hours of negotiation with the EU, to ensure that we do not have a no deal. The history of these negotiations is clear. We were told many months ago that we could not possibly arrive at a point at which we agreed the phase 1 issues, and we did just that. We were told that we were never going to agree an implementation period, and we did just that. We were also told that we would never agree a deal with the EU that we could bring back to the House, and we have done just that. The mission of this Government is to work tirelessly, day in day out, to ensure that we have the right deal for our people.
Charlie Elphicke (Dover) (Ind)
As a member of the Treasury Committee, may I put on record, Mr Speaker, that you do indeed get in every colleague in an urgent question and statement, and that, in the Chair, you have, in my experience, been more committed to fairness, the rule of law and natural justice than some other Members of this House?
The Treasury Committee will look at the backstop and the risks of entering the backstop, but I cannot see the modelling for the backstop in this document. Can the Financial Secretary tell me where it is, and if it is not in this document, can it be provided before the Chancellor appears before the Treasury Committee so we can fully assess this deal and the risks—and economic risks—of the backstop?
Mel Stride
As my hon. Friend will know, our position on the backstop is extremely clear: we do not envisage requiring the backstop. We anticipate a deal by the end of 2020, which is the end of the implementation period. There are alternatives to the backstop, as he will know, including a short-term extension to the implementation period, and of course in the event of our actually ending up in the backstop there is a mechanism through the Joint Committee and independent arbitration to pursue an exit from it. But we do not anticipate using the backstop.
Several hon. Members rose—
Mr Speaker
Ah, yes, the hon. Member for Nottingham East (Mr Leslie); he is a patient and laid-back fellow.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
Thank you, Mr Speaker—I think.
On reflection, it was probably quite wise of the Chancellor not to come here to give this statement. He definitely owes the junior Minister a stiff drink afterwards, because he is not waving, but drowning, especially as in this dodgy prospectus he has essentially admitted that we will not know on what free trade agreement the country is being asked to vote on 11 December. Does he not realise that the reason so many Members will not buy the dodgy sales pitch he is peddling today is that nobody is convinced about this Brexit lottery and just being told “Have faith, keep your fingers crossed, go with us in this giant leap in the dark”?
Mel Stride
It is not a giant leap in the dark to have a political declaration that makes clear that the deal that both sides will pursue in good faith will have at its heart a deep free trade agreement between ourselves and the EU27 with no tariffs, no quotas, no additional charges and so on, and will give us an end to free movement, end our sending vast sums of money to the EU and see us free to go out and do deals with other countries around the world.
Simon Hoare (North Dorset) (Con)
We can trade predictions until we are either blue or red in the face, but the common-sense folk in the country know that as we leave the EU there are bound to be issues that need to be mitigated. On behalf of my constituents, I just seek this one, hopefully simple, assurance: that the Treasury has the resolve, the agility and the flexibility to address those issues as, when, or if they occur.
Mel Stride
I think I can keep my answer fairly short and say to my hon. Friend that we do indeed have precisely the resolve that he seeks.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The Chancellor said this morning:
“There will be a cost to leaving the European Union, because it makes our trade less fluid and it cuts us from an important export market. It creates some level of barriers.”
In another interview, the Chancellor agreed with the interviewer’s analysis that every scenario under which we leave will be detrimental to our country’s GDP. Constituents of mine have already been in touch this morning appalled by these admissions from Government. Why does the Minister believe democracy was suspended two and a half years ago, and why will he not ask the country if this is actually what people really want?
Mel Stride
I gave my reasons earlier on the question of the second referendum: the country took a decision in June 2016, in the highest turnout of any electoral event in our history, and they decided that we should leave the EU. It was then incumbent upon us as a responsible Government to deliver on that decision; to us, that has meant that we should safeguard our economy—and this deal does that—but critically also deliver on a number of the other issues, which I have outlined at length in this urgent question, to make sure we deliver all those things for the British people.
Dame Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
The Minister says that the report will draw a comparison between current arrangements and various unspecified alternatives. Current arrangements in Liverpool have turned Liverpool’s fortunes around and the EU has been pivotal in Liverpool’s regeneration. We simply do not know what the Government proposals in the long term actually mean; we do not know what they are as they are merely speculative. So how will the Government make an assessment of the impact of Brexit on Liverpool? How far will this undermine its current success?
Mel Stride
Within the papers we have produced today there are regional impact assessments, including for the hon. Lady’s part of the country, of the various possible outcomes. The direction of travel that this Government are taking is to make sure we have as frictionless arrangements as possible with the EU27 going forward so that just-in-time delivery exports and imports can flow freely; indeed, that was at the heart of the July White Paper model. The hon. Lady will also know that at the heart of the political declaration is a no tariff, no quota, free trade arrangement. All those things will be important to ensuring we protect the jobs of her constituents.
Chuka Umunna (Streatham) (Lab)
This is totally unacceptable. Had amendment 14 to the Finance (No. 3) Bill been put to the vote last week, it would have passed and it would have required the Government to provide a model with remain as the baseline against their proposed withdrawal agreement. On the basis of promises made at the Dispatch Box, we did not press it to a vote. The Minister has denied that those assurances were given, and I do not want to do this but I am going to read what the Exchequer Secretary said to me and the right hon. Member for Broxtowe (Anna Soubry): “I will explain at the Dispatch Box that we will look at three scenarios: WTO, FTA and the Government’s proposed deal.” There is no doubt about the promise that was made to us, in return for which we agreed not to press amendment 14 to a vote. Can the Financial Secretary tell me why I should not think that the right hon. Member for Broxtowe and I have not been misled, and does this analysis not prove the overriding point that the best deal on offer is the one we have now, which is why we need a people’s vote on this issue to settle it?
Mel Stride
What the Exchequer Secretary said at the Dispatch Box was right, and these reports deliver on exactly what he said. [Interruption.] If the hon. Gentleman gives me a moment, I will try to explain the answer to his charge. First, he sought a comparison with the baseline, as he termed it. The baseline comparison is there: it is the status quo—it is our arrangement with the EU27 that we have at the moment as a member of the EU. He then suggests that we did not make a comparison of the deal with that, but many Labour Members have said, “We don’t know exactly what the deal is and we want to know what it is now.” We do not know what the deal is because the political declaration—understandably, given that we have a negotiation now to go through—sets out the parameters and the spectrum of potential outcomes. Therefore, in order to fulfil the obligation the Exchequer Secretary made at this Dispatch Box, we have made just that comparison—a comparison of the Chequers arrangement, with a sensitivity around that, with the base case. That is exactly what the Exchequer Secretary said we would come forward with.
Sammy Wilson (East Antrim) (DUP)
It is probably a gross understatement to say that economic forecasts have a very poor record. Since the referendum, all the forecasts have indicated that we should now be in the midst of a deep economic recession, yet the Government are boasting—and have real-time evidence—that we are riding the crest of the economic wave. In the Minister’s initial response, he said that this document was only about the potential fiscal impacts. He also said that it did not anticipate future policies, that it was based on a hypothetical free trade arrangement, and that some of the effects would be felt only in the long run, which of course is very uncertain. Can he understand why many of us in the House do not believe that it is worth the paper it is written on? This is certainly not the basis on which we should make a judgment on whether to vote for a flawed and deeply damaging deal.
Mel Stride
These papers put forward an honest appraisal of the estimated impacts of the different scenarios that we have been discussing this afternoon. The right hon. Gentleman makes a more general point about the inexactitude of economic forecasting, and he is right. We have a whole slew of variables, and we are looking at casting 15 years beyond the end of the implementation period—in other words, to 2034-35—which is quite a challenge. However, that is not the same as saying that we have not taken an honest and robust approach to this task. We have done that, and we have gone further. At the behest of the Treasury Committee, we have said that we will have an expert to go through all the details of the analysis, with access to all the officials across all the Departments involved, and that that information will in turn be made available.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The Government’s conduct in this matter has been appalling. There is only one clear message that the public should hear from this: Brexit makes you poorer. Every scenario, including the European Economic Area scenario that many of us put forward as the least worst option, will make people poorer. Even though the Treasury—or the Government, or whoever the Minister is trying to claim it is—has not modelled this scenario, the National Institute of Economic and Social Research has modelled the Government’s deal, and that modelling also shows that we will be poorer. So why will the Government not simply agree to take this back to the people and let them make the choice in a people’s vote?
Mel Stride
Given that this is about the fifth time that I have been asked that specific question, I hope you will forgive me, Mr Speaker, if I refer the hon. Gentleman to my previous answers.
Tom Brake (Carshalton and Wallington) (LD)
If the Prime Minister will not rule out no deal for sound economic reasons, will the Minister do so for vital health reasons? Is he aware that, according to specialist cancer charities, patients are already scaling back on their doses and stockpiling medicines because of fears over the prospect of no deal? Why will the Government not deal with their concerns and rule out the prospect of no deal now so that those patients can have the reassurance they need?
Mel Stride
It will be for Parliament ultimately to decide whether the Government’s deal prevails. I think that the right hon. Gentleman and I are on the same side here, because I believe that the prospect of a no deal is deeply unattractive—notwithstanding the fact that we are making extensive preparations for no deal—partly for the reasons he has identified. We want a deal. We want this deal. We want a deal that is good for our country, and we want to avoid the very situations that he has elaborated on.
Owen Smith (Pontypridd) (Lab)
I don’t know about you, Mr Speaker, but I remember this Government lecturing Labour Members for years about the problems of saddling future generations with borrowing and debt. The Brexit deal that the Minister proposes is modelled in this bogus paper. Will he confirm that it states on page 76 that we will be borrowing an extra £37.5 billion by 2035 as a result of this deal?
Mel Stride
The hon. Gentleman is right to say that there are figures of that nature in this report, because it is an honest and open report about the implications of all the possible outcomes. However, we have to compare that with no deal, or with the EEA or an average FTA deal. We have negotiated with the European Union and we have to deal with politics not just as perpetual opposition but as the art of the possible and the art of doing a deal that will be good for this country, safeguard our economy and deliver on those things that the referendum result told us in 2016.
Chris Bryant (Rhondda) (Lab)
The trouble with the Government being in denial is that they just keep on denying that they are in denial until they go blue in the face. What we have learned today is that this Minister cannot read the writing on the wall, even when he has written it himself. The truth of the matter, when we boil this all down, is that the country will have to pay a price if Brexit goes ahead, and the people who will have to pay the most are the poorest in the land—my constituents. Should they not have the right to a final say on this?
Mel Stride
This is now the sixth or seventh time that I have been asked whether we should have a second referendum. I shall just reiterate what I have said on each previous occasion. As the hon. Gentleman will know, we had a vote in 2016 and it had the largest turnout of any electoral event in this country’s history—[Interruption.] He rolls his eyes, but I think that fact is significant. It would be a betrayal of the will of the British people to now go out and say, “We didn’t actually like the answer you gave the first time, so how about a different answer this time?”
Emma Reynolds (Wolverhampton North East) (Lab)
The Chancellor said on the radio this morning that the Prime Minister’s deal—he said the Prime Minister’s deal, not Chequers—would lead to a smaller economy than at present. Will the Government therefore commit to publishing the economic analysis behind what the Chancellor said this morning? Does the Minister not think it odd and wrong for the Government to ask us to vote for a deal that will make the economy smaller and people worse off?
Mel Stride
This deal protects the economy over and above the other options and possible outcomes, which is what this House wanted us to assess. We have done that, and this deal is clearly the best option on the table economically. It also delivers on the other elements, including the non-economic ones, that are important to people up and down the country, including intra-EU migration.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
It is clear that Brexit makes people poorer. As chair of the all-party parliamentary group for disability, I have been inundated by correspondence from concerned people with disabilities up and down the country. What will the impact be for people with disabilities? Will an equalities impact assessment be undertaken? Given that many of those people are already living on a shoestring and could become poorer, what safeguards will the Government put in place?
Mel Stride
The hon. Lady asks specifically about those with disabilities. This Government have an outstanding record in that respect. We spend £50 billion—[Interruption.] We spend £50 billion on those with disabilities and long-term health conditions. The critical point here is that the only reason we can provide that support is because of our effective, responsible stewardship of the economy. The responsible thing to do for the economy now, in order to protect just the constituents to whom she refers, is to ensure that this deal prevails, that we get economic certainty behind us and that we see the economy safeguarded, improving and growing into the future.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The 90-page economic analysis repeatedly cites the importance of trade to the north-east, and the significant negative impact of no deal. Will the Minister confirm that, because of our manufacturing strengths, our exports and our integrated pan-European supply chain—which, regardless of claims by the European Research Group, cannot be replaced by deals with Australia, America or China—the only deal that could possibly work for jobs in the north-east is permanent membership of a European customs union?
Mel Stride
The hon. Lady is absolutely right to identify and characterise the businesses in her constituency in that way. They are deeply connected through supply chains to the European continent. That lies right at the heart of the political declaration and of our commitment to having the most frictionless trade possible and having no barriers, quotas or additional charges involved in that aspect of the relationship. I would say to her, respectfully, that she cannot view this deal in a vacuum. She has to consider it in the context of the alternatives. There is a danger, as she will recognise, that if we end up in no-deal territory, all the very things she fears may come to pass. It is really important for all of us across the House who have manufacturing businesses in our constituencies to stand up for them and support this deal.
Kate Green (Stretford and Urmston) (Lab)
The Minister has been at pains to make it clear that he is speaking to a Government-wide document, so may I ask him about an aspect of Government policy that will be material to the economic outcome of whatever deal the Government bring forward—that is, policy in relation to migration? Despite promises of an immigration White Paper, last year through to this summer, it is still not in front of us. Will the Minister guarantee that we will have that White Paper, clarity about the Government’s immigration policy choices and a proper economic analysis of their impact, in time for the vote on 11 December?
Mel Stride
We will of course come forward with further information about the policies that we intend to pursue in the area that the hon. Lady raises, but I point her to the fact that within the analysis being presented today, there is of course an analysis on both a “no net migration” basis between ourselves and those based in the European economic area, compared with the free movement that we have today. So that is actually factored into the analysis that we are reviewing now.
Phil Wilson (Sedgefield) (Lab)
The Chancellor admitted this morning that any Brexit deal will make the British economy and the British people worse off. Does the Minister agree with him?
Mel Stride
What matters now is that we support this deal, to support the economy. The analysis clearly shows that compared with the other options, particularly no deal, it is by far preferable, in terms of the economics and the impact on the economy, to support this deal.
Hywel Williams (Arfon) (PC)
Every assessment that the Government have published this morning shows Wales being worse off. I will not burden the Minister with yet another question about a people’s vote, but can he confirm from the Dispatch Box that in the entirely hypothetical case that we were to stay in the European Union, Wales would be not worse off but better off?
Mel Stride
I am afraid that the hon. Gentleman’s question is predicated on a train that has left the station, because we are leaving the European Union on 29 March—we are going to honour the will of the British people as expressed in June 2016—but I can reassure him that of the various scenarios that these papers review, this Government’s hard-won deal with the European Union is by far the best of all the alternatives for his constituents.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
I should say, with a background in local government, that had our cabinet been expected to make such an important decision without any financial information and without the legal advice being made available to the decision makers, the council would be in special measures by now. Let me just put the Government on warning: Members of this House will not accept this as fulfilling their responsibility when casting such important decisions. Does the Treasury accept that part of the reason why the economic shock will be felt in our regions is the chronic under-investment and the stubbornness, through austerity, in hitting those economies right at the heart of their communities?
Mel Stride
No. If the House agrees to this deal, and we proceed to get a deal with the European Union that does all the things that I have many times in response to this urgent question outlined to Members, it will provide confidence. It will provide further investment. It will support jobs. It will seek growth. It will see unemployment, which is already at a 45-year low, nice and low, where we want it to be. So I would urge the hon. Gentleman to support the deal and to do so on behalf of his constituents.
Tonia Antoniazzi (Gower) (Lab)
Today, I am absolutely incandescent, because it is insulting to my constituents that that piece of paper that the Minister has produced today is going to make them poorer. The Minister has not had the decency to compare the current situation with what it would be like to remain in the EU. Welsh farming unions are being told that they have to accept the deal because otherwise there will be no deal. That is scaremongering—absolute scaremongering. I am fed up with people coming to me and telling me to back the withdrawal agreement. I will not back something that makes my constituents, my family and everybody else poorer. I am an unapologetic people’s campaigner; I want a people’s vote. This spin—what the Minister is saying and what the Government are saying to the people—is absolutely wrong. The Government are misleading them, and I am angry. Everybody is angry. We want a people’s vote.
Mel Stride
A second referendum would be deeply divisive for our country. It would send a signal—[Interruption.] The hon. Lady has had her say. She and I campaigned on the same side in the referendum. I wanted us to stay in the European Union, but the difference between us is that I am a democrat, and I believe that when we have a referendum, which was widely debated over a long period, and a result is given, on the highest turnout of any electoral contest in our country, that result must be respected.
Alison Thewliss (Glasgow Central) (SNP)
UK Government analysis in 2014 said that Scottish independence would cost the economy 0.4% to 1%, but HM Treasury analysis today says Brexit will hit the UK economy by 3.9%. With apologies to my former colleague Callum McCaig, the previous Member for Aberdeen South, does the Financial Secretary to the Treasury honestly believe that the UK can afford to be independent?
Mel Stride
Yes is the answer. We have a bright future ahead of us. We have the opportunity, with this deal, to go out and do other deals around the world with other countries. The report makes specific reference, for example, to the United States, China, India and other important trading nations. We know that those parts of the world outside the European Union are growing far more strongly than countries within the bloc of the EU27, so I am optimistic about the future of my country.
Peter Grant (Glenrothes) (SNP)
I am not going to draw any conclusions, Mr Speaker, on your assessment of how big or beguiling any of my attributes might be, because they obviously have not been enough to catch your eye until now. I draw the Minister’s attention to footnote 42 of the analysis, which states:
“For the purposes of EU exit modelling, the UK is assumed to pursue successful trade negotiations with the United States, Australia, New Zealand, Malaysia, Brunei, China, India…Brazil, Argentina, Paraguay…Uruguay”,
United Arab Emirates,
“Saudi Arabia, Oman, Qatar, Kuwait and Bahrain”.
In the real universe, in which none of those deals is fully in place by the end of the transition period, how much worse than the Government’s own grim forecasts will the economic impact of Brexit really be?
Mel Stride
The hon. Gentleman is questioning some of the assumptions within a very complicated model, and as he has identified, the assumptions include that free trade agreements will be entered into with a variety of other countries. It is incumbent on him, if that is an area of the model that he wishes to stress-test particularly forensically, to look further into it, to look at the work that I have already outlined to the House will be carried out independently on behalf of the Treasury Committee, to question Ministers on that specific issue as he sees fit and to proceed in that manner.