The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)
My Lords, with the leave of the House I will now repeat a Statement made today by my honourable friend the Chancellor of the Duchy of Lancaster in another place. The Statement is as follows:
“Thank you very much, Mr Speaker. This is the first time that I have appeared at the Dispatch Box since I moved on from the Department for Environment, Food and Rural Affairs, and I take this opportunity to thank the superb team of civil servants at the department who do so much to improve the lives of so many citizens of this country. With your permission, I will make a statement about preparations for our departure from the European Union.
More than three years ago, in the biggest exercise in democracy in our country’s history, the British people voted to leave the European Union, but so far this Parliament has failed to honour that instruction. Now our Prime Minister has made it clear that we must leave by 31 October, and so we must. Trust in this House depends on it, and trust in our democracy depends on it. Now, of course, this Government are determined to secure our departure with a good deal, one that paves the way for a bright future outside the single market and the customs union. The response that the Prime Minister has received from European leaders shows that they are ready to move. They want a deal, too. They are moving because the Prime Minister has been clear that matters must be resolved by 31 October. If we drift, the incentive on them to deliver will quickly dissipate. So I hope my colleagues in the House of Commons will give the Prime Minister the time and the space he needs to pursue the opening he has secured and get a good deal that we can all support.
But, of course, we must be prepared for every eventuality. The European Union may not change its position sufficiently before 31 October, it may be that a deal is not secured, so we must be ready to leave without a deal on 31 October. Leaving without a deal does not mean that talks with our European partners end altogether. In those circumstances, after we depart without a deal in place, we will all want to discuss how we can reach new arrangements on trade and other issues. But while those conversations go on, we must ensure that we are ready for life outside the EU, as a third country trading on WTO terms.
There has been extensive speculation about what leaving without a deal might mean for businesses and individuals. Moving to a new set of customs procedures, adjusting to new border checks and dealing with new tariffs all pose significant challenges. Nobody can be blithe or blasé about the challenges that we face or the scale of work required, but, provided the right preparations are undertaken by government, businesses and individuals, risks can be mitigated, significant challenges can be met and we can be ready.
Leaving without a deal is not an event whose consequences are unalterable. It is a change for which we can all prepare, and our preparations will determine the impact of the change and will also help us to take advantage of the opportunities of life outside the EU. We have, of course, to prepare for every eventuality. That is the function of Operation Yellowhammer; it is an exercise in anticipating what a reasonable worst-case scenario might involve and how we can then mitigate any risks. Operation Yellowhammer assumptions are not a prediction of what is likely to happen, they are not a base-case scenario or a list of probable outcomes. They are projections of what may happen in a worst-case scenario and are designed to help government take the necessary steps to ensure that we can all be ready in every situation.
Since the new Government were formed at the end of July, new structures have been put in place to ensure that we can be ready in every situation and to accelerate our preparations for exit. Two new Cabinet committees have been set up, XS and XO, to discuss negotiating strategy and make operational decisions about exit respectively. XO meets every working day to expedite preparations for exit and we are in regular contact with our colleagues in the devolved Administrations, including the Northern Ireland Civil Service, and thousands of the best civil servants across the UK are working to ensure the smoothest possible exit. We have been helped by the Chancellor’s move to double Brexit funding for this year, announcing an additional £2.1 billion on top of expenditure already committed—so £6.3 billion in total has been allocated to prepare for life outside the European Union. That money is being used to provide practical help to businesses and individuals.
Guaranteeing the effective flow of goods across our border with the EU is, of course, central to our preparations. That will require action by businesses to adjust to new customs procedures and intervention by government to ensure the freest flow of traffic to our ports. That is why HMRC has announced an additional expenditure of £16 million to train thousands of customs staff, traders and hauliers, so that trade with the EU continues as smoothly as possible. It is also why today we are announcing £20 million more to ensure that traffic can flow freely in Kent and trucks arriving at Dover are ready to carry our exports into the EU. On business, we have automatically allocated an Economic Operator Registration Indicator number, or EORI number, to 88,000 companies across the UK. Businesses can also register for transitional simplified procedures to delay the submission of customs declarations and postpone the payment of customs duties.
New transit sites have been built in Kent to smooth the flow of goods into the EU, and we are also recruiting 1,000 new staff to help maintain security and support flow at the border. The Government will do all they can to support businesses to get ready, but many of the steps required to ensure the smooth flow of trade fall to businesses. We will provide advice, finance and flexibility over how revenue payments may be settled, but it is important that businesses familiarise themselves with the new requirements that exit will involve.
That is why we have launched a public information campaign, Get Ready for Brexit, to give everyone the clear actions they need to prepare. As well as TV and radio advertising, there is now a straightforward, step-by-step checker tool available on the government website, GOV.UK/Brexit, so that all of us can identify quickly what we may need to do to get ready. The Government have also acted to provide assurances so that businesses and individuals can have the maximum level of confidence about the future.
We have signed continuity agreements with countries covering more than £90 billion in trade, and we have replacement civil nuclear trading agreements with Canada, the United States of America, Australia and the IAEA. We have secured aviation agreements with 14 countries, including the US and Canada, and we also have arrangements with the EU on aviation, roads and rail to ensure smooth travel between the UK and European nations. We also have arrangements on education exchanges, social security, fisheries, climate change and a number of other areas. It is also the case that arrangements are in place covering financial services, so that a range of transactions can continue to take place and financial and market stability can be underpinned. Of course, we have a robust legal framework in place.
Six exit-related Bills which cater for different scenarios have been passed by Parliament, the Government have laid more than 580 EU exit statutory instruments and they are of course also determined to ensure that we protect the rights of both UK nationals in the EU and EU citizens in the UK. I personally want to thank the more than 3 million EU citizens living and working here for their positive contributions to our society. You are our friends, our family, our neighbours. We want you to stay and we value your presence. Under the EU settlement scheme, more than 1 million EU citizens have already been granted status.
Let me be clear. EU citizens and their family members will continue to be able to work, study and access benefits and services in the UK on the same basis after we exit the EU. Of course, the Government will do everything in our power to make sure that UK nationals can continue to live in the EU as they do now. We will continue to offer support for UK nationals to help them secure their rights in their home member state, including those associated with residency, access to healthcare, voting, driving and the validity of their passports. Indeed, the Government are providing up to £3 million to assist UK nationals with registering and applying for residency as we leave the EU. However, the UK Government cannot protect the rights of UK nationals unilaterally. We welcome the fact that all member states have drafted or enacted legislation to protect the rights of UK nationals and fully reciprocate our commitments to EU citizens, providing UK nationals with the certainty they deserve.
Of course, there are other decisions that the EU and member states have said that they will take that will have an impact on us all if we leave without a deal. The EU’s commitment that we will be subject to their common external tariff in a no-deal scenario will impose new costs, particularly on those who export food to Europe. Indeed, the EU’s current approach to the rules of the single market will, as things stand, require the Republic of Ireland to impose new checks on goods coming from Northern Ireland. For our part, we will do everything we can to support the Belfast agreement and mitigate those impacts, including providing targeted support for our agriculture sector and for Northern Ireland’s economy.
While these are real risks that we must deal with, there are also many opportunities for life outside the EU. We can reform government procurement rules to support UK businesses and get a better deal for taxpayers. We can forge new trade relationships to help UK businesses grow. We can innovate more energetically in pharmaceuticals and life sciences. We can develop crops that yield more food and contribute to better environmental outcomes. We can manage our seas and fisheries in a way which revives coastal communities and restores our oceans to health. We can introduce an immigration policy that is fairer, more efficient and more humane. We can improve our border security and deal better with human trafficking and organised crime. We can open new free ports across the country to boost undervalued communities and we can support businesses more flexibly.
There are undoubted risks and real challenges in leaving without a deal on 31 October, but there are also huge opportunities and new possibilities for our country outside the EU. It is my job to mitigate those risks, overcome those challenges and enable this country to exploit those opportunities and extend to every citizen those new possibilities. That is why I commend the Statement to the House and am confident that, as a nation, our best days lie ahead”.
Baroness Ludford (LD)
My Lords, I too thank the Minister for repeating the Statement. I start by noting the fact that, after the welcome move of Dr Phillip Lee MP from the Conservatives to the Liberal Democrats, the Government have no parliamentary majority, let alone any majority for no deal.
Historians of Brexit will examine as a major theme how a party supposedly characterised by conservatism and caution about change got hijacked by radical and revolutionary forces that would make Marx and Trotsky blush. The marketing by Brexiters has morphed from a promise of sunlit uplands to at least a “smooth, orderly exit”, to the gritted teeth of “no deal is better than a bad deal”, to the reckless and irresponsible promotion of destruction, damage and chaos as an actual goal of government. Phrases such as “Do or die” or “Come what may”, which we heard this afternoon, show the incredibly cavalier attitude of the Government and the Prime Minister, who have no mandate whatever for no deal.
The contortions of Brexiters in trying to claim that the narrow leave majority in 2016 knowingly voted for a crash-out Brexit would be laughable were they not so despicable. The real interests of the economy, businesses, workers, citizens, consumers and patients are mere grist to the mill of a dogmatic, ideological obsession. As the TUC’s general-secretary Frances O’Grady has said, a no-deal Brexit will be a disaster for working families. The OBR tells us that the public finances will take a £30 billion hit, and I was interested in all the examples given by the noble Baroness, Lady Hayter. I want to pick up one assertion in the Statement—that outside the EU,
“we can innovate more energetically in pharmaceuticals and life sciences”.
That is the total opposite of what the pharmaceutical industry and the research sector have constantly said for the last three years.
To achieve this disaster, the Government are wasting £6.3 billion. Just think what could be done to improve the lives of British people with that money and, for instance, to help the victims of the Bahamas hurricane. After the confusion and then U-turn on the end of free movement on 31 October, can the Minister specifically tell us how the absence of any transition and of a stable legal framework will help not only to ensure the rights of EU citizens in this country, where we already know that there are difficulties with the settlement scheme, but to improve the prospects for UK citizens in the EU 27? It is difficult to see.
The dishonesty of this whole process is shown by the fact that Mr Gove has refused to publish even what the FT called a “watered-down” version of the Government’s Operation Yellowhammer no-deal contingency plans,
“after ministers decreed that the findings would … alarm the public”.
Indeed, but it is a cover-up. It is rare that I applaud the Daily Mail but it has apparently obtained, I think, the whole document—at least an annexe—showing exactly how major disruption will be caused for months. How can a Government inflict that on the country?
The right honourable Jacob Rees-Mogg outrageously accused a senior doctor who helped to write the Yellowhammer plan of fearmongering—a typical disparagement of experts—but it is legitimate to ask how many extra deaths the Government expect as a result of a lack of drugs and isotopes. I speak as someone whose husband’s life depends on insulin. Can the Minister please tell us the answer?
The Statement claims that,
“this Government are determined to secure our departure with a good deal”.
The former Chancellor tells us that that is nonsense, and even a story in today’s Telegraph says that it is untrue. As for the assertion that the Prime Minister has received a response from European leaders that they are “ready to move”, that is completely unconfirmed by the new noises coming out of Brussels. President Juncker has told the Prime Minister that the EU will look at proposals,
“as long as they are compatible with the Withdrawal Agreement”.
He added that the EU’s support for Ireland—that is, for the backstop—“is steadfast” and that a no-deal scenario will only ever be the UK’s decision, not the EU’s. The blame game is not working.
Meanwhile—I am coming to an end—I have seen an official document from last week about the work on alternative arrangements. It says:
“DExEU has been considering whether a paper consolidating the findings from all of the advisory groups should be published in late September/early October. However, we and other departments have cautioned against this given the potential negative impacts on the renegotiation with the EU and we understand No. 10 are in agreement that we are not in a position yet to publish anything”.
It is later explained that the complexity of combining all the aspects of claimed facilitation,
“into something more systemic and as part of one package is a key missing factor at present”.
I repeat: that document was published last week.
Finally, on the day after crashing out with no transition, the UK would have to come back to the negotiating table and pick up the bits from an even worse position. How would that improve the prospects of the country in the longer term? I hope that the Government can reassure us that, if the anti-no-deal Bill passes, they will obey it and that they will pull the £100 million being spent on the propaganda—I mean “information”—exercise as it will be unnecessary.
Lord Callanan
My Lords, I first thank both noble Baronesses for their comments. I see that they have both been well rested over the summer and have returned in a suitably combative mood. I particularly welcome the noble Baroness, Lady Hayter, back to her place on the Front Bench where she deserves to be. She is a worthy opponent and I for one would have been sorry to see her go. I am delighted to see her back.
A number of points were raised. I will first address the comments of both noble Baronesses about Operation Yellowhammer. I said in the Statement, but will say again, that Operation Yellowhammer is a series of planning assumptions based on a reasonable worst-case scenario. It is not—I repeat, not—a prediction of what might happen. It exists to underline government planning; it is a series of assumptions put together through a lot of work by independent experts. It is constantly revised as new information comes to light and new mitigations are put in place. The Cabinet Office’s Civil Contingencies Secretariat does the same thing in a number of different areas—on flooding, for instance. As it is predicted that we will have various flooding events, worst-case scenarios are considered: what they may involve and what we can do to mitigate them. The same thing is done in a lot of other areas that I could mention.
So, that is what it is: we use Operation Yellowhammer for planning assumptions. What is more useful for people is to know how they can mitigate any possible effects of no deal themselves, what changes businesses can bring about et cetera. The noble Baroness quoted a number of pathways from that; it is appropriate to bear in mind that the figures she cited are not predictions but reasonable worst-case scenarios to help us in our preparations to mitigate them.
With regard to food, there are often interruptions to the supply chain of foodstuffs, whether by the various strike actions of ferry operators, fishermen or farmers in France, or because of inclement weather conditions. But the UK food supply logistics chain is solid and robust, and we are, of course, working with the various companies to make sure supplies continue uninterrupted. The same thing applies to medicines: the Department of Health and Social Care has been making extensive preparations. It has contacted every supplier of medicines and medical devices in this country. We have helped them to increase their stockpiles—they already hold considerable stockpiles but we have helped to increase them further against any possible disruption. We have secured additional transport capacity should that that be required, and we are working extensively with companies to ensure there is no interruption.
I was interested in the comments of the noble Baroness as it appears that the Labour Party is now in the position of being against everything. It is against a deal, against no deal, against revocation of Article 50, and mostly against a referendum. I know that the job of the Opposition is to oppose but I would like to think that eventually, at some stage, the Labour Party will decide to be in favour of something.
I turn to the questions from the noble Baroness, Lady Ludford. I have been called many things in the course of these debates but “Marxist” and “revolutionary” are new ones, if she was indeed referring to me in those terms. It is, however, to the credit of the Liberal Democrats that at least they are honest about their intention to overturn the result of the referendum. Many of us suspect that this is also the intention of the Labour Party but that it has not yet—with one or two exceptions—got around to admitting it.
The noble Baroness, Lady Ludford, also asked about free movement. Yes, as it currently stands under EU law, free movement will of course end on 31 October when we leave; the Home Secretary will say more about that shortly. With regard to negotiations, the noble Baroness has, as do I, extensive experience in dealing with various EU figures. She will know as well as I do that they have maintained religiously for months that not one dot or comma of the withdrawal agreement will be changed, yet when there is a different attitude from this Government and we make clear that we are prepared to leave anyway, suddenly President Macron and Chancellor Merkel demonstrate some movement. Private discussions and negotiations are continuing but the noble Baroness knows as well as I do that we are seeing some movement. Whether it will be enough we will have to wait and see, but we are working extensively and at pace to try to get a deal that we can put to the House of Commons so that we can leave with a deal. As I have said repeatedly from this Dispatch Box, that is our preferred outcome, but we have to be prepared to leave without a deal if it is not possible to obtain one.
Baroness Hayter of Kentish Town
Will the Minister agree to write in answer to the three very specific questions I raised, which he has not answered?
Lord Callanan
I thought I had answered the noble Baroness’s questions; if I have not, I will be happy to write to her.
Lord Cormack (Con)
My Lords, I have great admiration for my noble friend the Minister; he is an extraordinarily resilient man, but I have to say that his Statement this evening has not filled me with great happiness. Is he aware that there is enormous unhappiness in Northern Ireland, where 56% of those voting voted to remain? They accept the result, as I do, but many worry that if we come out without a deal and stumble on the backstop, as it were, they will be in a very precarious position. Can he say something to calm people? Is he also aware that around 2 million EU nationals are very unhappy and worried? Can we have an absolute undertaking that legislation will be unilaterally introduced and fast-tracked if we should come out without a deal? Can he, finally, undertake—especially if Parliament is prorogued—to put all the Yellowhammer documents in the Libraries of both Houses so that they are accessible? Members will be able to come here during the prorogation period to look at them. It is a poor second best to a functioning Parliament, and I hope we will have one, but can he give that undertaking? We have the right to know—to see and read those documents.
Lord Callanan
My noble friend will understand that I view it as a considerable failure that I have not managed to reassure him and contribute to his happiness. I will do my best in the days and weeks ahead to bring that unhappy state of affairs to an end. To be serious, he makes a very valid point about Northern Ireland. We are incredibly conscious of the need to protect the peace process. For the avoidance of any doubt, I restate our total commitment to the Good Friday agreement and our commitment that there will not be a hard border in Northern Ireland; certainly, that will not be imposed by this Government. We are very happy to enter a legal commitment to that effect should it help the negotiations.
The noble Lord also makes a very good point about EU nationals. The settled status scheme that we have introduced has been incredibly successful. I said in the Statement that over a million citizens have applied under that scheme. When I checked last week, applications were running at over 15,000 per day. I do not think anybody has been refused under that scheme. The guarantees we have offered to EU nationals in this country are excellent. We guarantee all their existing rights, including access to healthcare and benefits. It would be nice if EU member states were prepared to offer to UK citizens living in their countries the same guarantees that we have offered. That would help to take the process forward.
Lastly, with regard to publication, we continue to make available a wide range of documentation. If my noble friend wants to consult GOV.UK, he will see the extensive documentation and guidance available for businesses and individuals on all manner of scenarios, with case studies. We will, of course, link this to the publicity campaign to try to make people—businesses, hauliers and others—aware of what they need to do to get ready for Brexit.
Baroness Finlay of Llandaff (CB)
My Lords, the Minister has mentioned planning a great deal. Can he confirm that planning for agriculture is not restricted to Northern Ireland—the subject of the paragraph where it was mentioned—but also applies to Wales and other hill farmers around the UK? Can he confirm that money will be available on 1 November to support those farmers who have been dependent on EU funding to maintain their ongoing viable production? Can he confirm that there is commitment to equitable food and medicine distribution across the UK, not only in England, particularly considering the logistics of the rural areas of Wales?
How much money is being allocated specifically to support the needs of Wales, where there are more SMEs per head of population than in other parts of the UK? They need money to tide them over. The first-tier producers who are trading are already seriously squeezed because they find themselves at a disadvantage in both food manufacture and component manufacture. The Welsh Government need to know that there is a firm commitment to funding.
My final question concerns whether the Cabinet will allow the Welsh Government to process the settled status to remain, a request that they put through some time ago but was previously refused. It would allow European passport holders resident in Wales to be assured of being processed rapidly.
Lord Callanan
There were a number of questions there; I think I wrote them all down but I am sure the noble Baroness will remind me if I forget any. On agriculture, I am happy to confirm that the Government have said that all existing CAP payments will be continued after we leave the EU. Indeed, it is possible that additional payments will be available to farmers if required because we recognise that one of the challenges that the farming community will face is the application of the EU’s common external tariff, which, because of the protectionist nature of the EU, is particularly high with regard to farming products. We recognise that agricultural communities face a particular problem.
Of course these guarantees apply across the entire nation. I can say with particular regard to Wales, but also with regard to Scotland, that the devolved authorities have been involved in all our planning. Indeed, Ministers from the Scottish and Welsh Governments, together with Northern Ireland civil servants, were present at our XO Cabinet committee meetings last week. Jeremy Miles from the Welsh Government was there last week.
I have to say that I did not understand the noble Baroness’s question about the settled status scheme. Obviously, EU citizens in Wales can apply to the Home Office for settled status, just as they can in every other part of the UK. I am not sure that there would be any particular benefits in having a separate process for those EU citizens living in Wales. I did not quite understand the point of that. Perhaps the noble Baroness can talk to me afterwards and we will try to resolve that issue.
Baroness Quin (Lab)
My Lords, the Prime Minister famously said earlier this summer that the chances of leaving without a deal were a million to one against. Does the Prime Minister still feel that those are the odds? If not, what is his assessment of what the odds are, faced with current circumstances? Following what has been said about Wales, is Operation Yellowhammer also looking at the regional implications within Britain of a no-deal Brexit? With regard to the point made about publication, it would be very welcome if information about this were to be published.
Lord Callanan
Probably like the noble Baroness, I am not particularly a betting fan, so I will decline the invitation to put odds on the prospect of a deal. I will just say that we are working extensively towards one. I repeat that we want a deal and we think that the EU wants one too, but I have to say that some of the movements in Parliament in another place are not making it any easier to get one.
With regard to local government, yes, we are in extensive consultation with local government across the UK. We fully realise the role that local government will have to play in the preparations. Additional funding has been made available to local resilience forums and to individual local authorities. The Secretary of State for Housing, Communities and Local Government has regular conference calls with leaders and elected mayors. All local authorities have appointed a Brexit lead with funding that has been made available, and we are working extensively with local government in the regions and around the country. The noble Baroness’s points are well made.
Lord Hannay of Chiswick (CB)
My Lords, will the Minister just answer a couple of questions on the Statement? First, he referred to the disadvantage that we were going to suffer through the application of the common external tariff, particularly to agriculture, which he attributed to a great deal of protectionism, which of course we ourselves have been applying for the past 45 years. Could he confirm that the application of the common external tariff to our exports is not a decision made in Brussels but one made under the rules of the World Trade Organization, from which we know nothing but good comes? It is required by WTO rules that if there is no agreement between us, the common external tariff and our external tariff have to be applied against each other.
Secondly, could the Minister explain his confidence that the internal security arrangements in the UK will not be damaged? How on earth will they not be damaged when we lose the use of the arrest warrant, the ECRIS information system, the Schengen information system and Prüm identifiers? Surely the view of the whole law enforcement community has been made quite clear that these will be serious losses.
Lastly, will he not admit that we might be in a better position than we are now if the Government had accepted the views of the House that an inquiry should have been conducted by the end of September into the costs and implications of leaving without a deal?
Lord Callanan
I thank the noble Lord for his questions. On his first, about the common external tariff, I did not quite understand the point he was making. The reason the EU’s common external tariff is so high is that that is what the EU has determined. It is the decision of Brussels, or rather the EU, that it should be so high. Of course, under WTO rules, once it has been determined that it is a high tariff, it needs to be applied consistently to all third countries, but I am not sure what point he was making.
On internal security arrangements, we are working extensively to try to mitigate the effects. We have had extensive discussions in the XO committee with all the security agencies. This is one of the areas where we are trying to persuade the EU to take a different approach. There are ways to mitigate the loss of some of these databases—there are alternative sources of information on passenger information records, for example—but we are one of the largest contributors to these databases as well, and not being able to exchange information with other EU member states on terrorism suspects, criminals and so on is a loss for both us and the EU. I hope the EU will be persuaded that this really is a lose/lose situation, that it will see sense and that we will be able to continue exchanging information. As I say, mitigations are in place with regard to some of the databases. We have discussed this with the law enforcement communities and they are working intensively to ensure that we can still make the appropriate interventions in terrorism and crime.
Baroness Smith of Newnham (LD)
My Lords, the Statement suggests that six pieces of legislation have been passed, but where are the agriculture, fisheries and immigration Bills? Should they not be made Acts before we leave the EU? Given that the ONS has now requested that our international migration statistics be deemed “experimental statistics”, can EU nationals already resident in the UK really trust the Government to understand and know that they are resident on exit day? Are their rights really going to be guaranteed?
Lord Callanan
Yes, EU nationals’ rights are guaranteed. As I said, the rights that we have offered to guarantee to EU nationals are more extensive than those offered by other EU member states to British citizens. Sorry, could the noble Baroness remind me what her first question was?
Baroness Smith of Newnham
We have apparently passed six Brexit-related Acts, rather than just SIs. Should we not also have passed agriculture, fisheries and immigration before we leave the EU?
Lord Callanan
There are indeed a number of other pieces of legislation currently held at various stages in both Houses. However, as my noble friend said earlier today, we do not require any of those Bills in order to have a functioning statute book on exit.
Lord Wigley (PC)
My Lords, I will press the Minister further on the sheep meat sector. It is not just a question of the CAP replacement, but of who will be buying up those sheep on 1 November. Millions of farmers in Wales and other highland areas will be destitute if they do not get money. The Government have said that there will not be a slaughter scheme; is that still the position? If not, will there be an intervention purchase scheme?
Lord Callanan
We are aware of the challenges that exist for the agricultural sector. I confirmed in a response to the noble Baroness earlier that CAP payments will continue, but we are considering what other interventions need to be made to support the farming sector at what will be a difficult time.
Lord Pearson of Rannoch (UKIP)
My Lords, does the Minister recall his recent Written Answer to me saying that if we end up trading on normal WTO terms, EU exporters will pay us some £14 billion per annum in new tariffs while our exporters will pay Brussels some £6 billion in new tariffs, making us an annual profit of £8 billion? Given the mess we are in, why do the Government not offer the EU a completely new deal in the shape of a very short treaty under the WTO? It could continue our free trade together exactly as now, thus getting rid of the Irish border problem and all the paraphernalia of Operation Yellowhammer. Would that not be a generous offer that even Brussels might find hard to refuse?
Lord Callanan
I always like questions from the noble Lord; they offer a degree of simplicity which perhaps does not always exist in real life.
Lord Liddle (Lab)
My Lords, I want to be constructive and say that I think it is very difficult to judge what the consequences of no deal will be. One of the reasons for this is that the Commission has put actions in place that will relieve some of the consequences temporarily. Also, we do not know with what rigour our one-time partners on the other side of the Channel will implement border controls, so there are uncertainties. Does the Minister accept that there will be consequences and that we will end up having to talk to Brussels about them? As a result, does he not think it very important that, if there is no deal, we adopt the most constructive approach possible to relations with our former EU partners? Does he therefore accept that threats of withdrawing the money—our financial obligations under the withdrawal agreement—are exactly counterproductive to what the Government will need to do with our partners, should there be no deal?
Lord Callanan
I thought I would be able to agree with everything the noble Lord said, for a change. I completely agree with the first part of his question. That is why, under our arrangements, we look at reasonable worst-case scenarios, because of course we do not know what the precise attitude of partner countries on the other side of the Channel will be. My colleague the Chancellor of the Duchy of Lancaster visited Calais last week and had extremely positive discussions with the French local and regional authorities. It is certainly not their desire to cause unnecessary disruption. However, the noble Lord is also completely correct that we will need to have discussions and make agreements with our European partners either before or after our exit. We have said this. We have a constructive relationship. We hope that the Commission might want to talk about some of these issues before we leave, but if it will not, there is nothing much we can do about it.
On the financial settlement, the financial offer in the withdrawal agreement is effectively a political agreement. We accept that there are some legal obligations; we are a law-abiding nation and we will meet these. However, if the withdrawal agreement is not passed and agreed, then the obligation to pay £39 billion will fall away—some of it has already been paid, of course, because of our extension. We will need to have discussions about precisely what our legal obligations are.