EU Exit Negotiations

David Davis Excerpts

Tuesday 17th October 2017 Commons Chamber

[The Secretary of State for Exiting the European Union (Mr David Davis)]

With permission, Mr Speaker, I will update the House on the fifth round of negotiations with the European Union. In view of the fact that the October European Council is this week, I will also review the progress of the five negotiation rounds since June.

While the negotiations have been tough at times, both Michel Barnier and I have acknowledged the new dynamic created by the Prime Minister’s speech in Florence. That momentum was maintained during October, and both negotiating teams have continued to work constructively together. Since June, we have steadily developed our shared political objectives. Nevertheless, there is still some way to go to secure our new partnership, but I am confident that we are on the right path.

I will now take the House through each of the negotiating issues in turn. On citizens’ rights, we have made further progress towards giving British citizens in the EU, and EU27 citizens in the UK, the greatest possible legal certainty about the future. Our legal orders will be distinct and different in the future. Last week, we explored how we will ensure that the rights we agree now will be enforced in a fair and equivalent way. We also explored ways in which we can fully implement the withdrawal treaty into UK law, giving confidence to European citizens living in the UK that they will be able to directly enforce their rights, as set out in the agreement, in UK courts.

The two sides also discussed ways of ensuring the consistent interpretation of our agreement. Although we have not yet arrived at single model to achieve that, we have explored a number of options. We should also not lose sight of the fact that we have made significant progress in that area since June. We have reached agreement on the criteria for residence rights, the right to work and to own a business, social security rights, rights for current family members, reciprocal healthcare rights, the rights of frontier workers, and the fact that the process for securing settled status in the UK will be streamlined and low cost. However, there are of course still some issues outstanding for both sides, including the rights: to continue to enjoy the recognition of professional qualifications; to vote in local elections; to onward movement as a UK citizen already resident in the EU27 and to return; to bring in future family members; and to export a range of benefits. In many of those areas, it is a straightforward statement of fact that our proposals go further and provide more certainty than those of the Commission, but both sides are trying to find pragmatic solutions. In the fourth round, we offered the guaranteed right of return for settled citizens in the UK in exchange for onward movement rights for British citizens currently living in the EU. We look forward to hearing the Commission’s response to that offer.

I recognise that there has been some concern regarding the new system that European citizens will have to use to gain settled status in the UK. While there will be a registration process, I confirmed last week that the administration process will be completely new, streamlined and, importantly, low cost. Furthermore, any EU citizen in the UK already in possession of a permanent residence card will be able to exchange it for settled status in a simple way and will not need to go through the full application process again. The tests associated with the process will be agreed and set out in the withdrawal agreement. As a result of our productive discussions, the Commission is also able to offer in return similar guarantees to British citizens in the EU. Those clarifications from both sides have helped to build further confidence.

This round also saw further detailed discussions on Northern Ireland and Ireland. In a significant step forward, we have developed joint principles on the continuation of the common travel area and associated rights. The joint principles will fully preserve the rights of UK and Irish nationals to live, work and study across these islands. They will also protect the associated rights to public services and social security. To provide legal certainty, the principles recognise that the withdrawal agreement should formally acknowledge that the UK and Ireland will continue to be able to uphold and develop bilateral arrangements.

Our teams have also mapped out areas of co-operation that function on a north-south basis, and we have started the detailed work to ensure that that continues once the UK has left the EU. We also agreed a set of critical guiding principles to protect the Belfast or Good Friday agreement in all its dimensions, and we are working on the necessary steps to make that a reality. Throughout the process, we have reaffirmed our commitment to the rights of the people of Northern Ireland to choose to be British or Irish, or both. I have set out before our shared determination to tackle the unique circumstances of Northern Ireland by focusing on creative solutions, and we have begun to do so. But we cannot fully resolve the issues without also addressing our future relationship. As the Prime Minister said in her statement to the House last week:

“We owe it to the people of Northern Ireland—and indeed to everyone on the island of Ireland—to get this right.”—[Official Report, 9 October 2017; Vol. 629, c. 43.]

On the financial settlement, discussions continued in the spirit fostered by the Prime Minister’s significant statements in her Florence speech. The Prime Minister reassured our European partners that they will not need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. She reiterated that the UK will honour the commitments we have made during the period of our membership. Off the back of that, we agreed in the September round to undertake a rigorous examination of the technical detail on which we needed to reach a shared view. That work has continued. It has not been a process of agreeing specific commitments—we have been clear that that can come only later—but it is an important step, so that we will be able to reach a political agreement when the time comes.

Finally, on separation issues, we have continued to work through the detail on a range of issues, particularly areas relating purely to our withdrawal, such as nuclear safeguards, civil judicial co-operation, and privileges and immunities. While we have made good progress, the remaining issues are dependent on discussions about our future partnership. We are ready and well prepared to start those discussions.

Our aim remains to provide as much certainty as possible to businesses and citizens on both sides. I have made no secret of the fact that to fully provide that certainty we must be able to talk about the future. We all must recognise that we are reaching the limits of what we can achieve without considering our future relationship. The Prime Minister’s speech in Florence set out the scale of our ambition for the new partnership with the European Union. She also laid out our case for a simple, clear and time-limited period of implementation on current terms. At the European Council later this week, I hope the leaders of the EU27 will recognise the progress made and provide Michel Barnier with the mandate to build on the momentum and spirit of co-operation we now have. Doing so will be the best way of allowing us to achieve our joint objectives and move towards a deal that works for both the UK and the EU.

There has been much discussion of what will constitute sufficient progress. Let me be clear that sufficient progress, and the sequencing of negotiations, has always been a construct of the EU, not the UK. Negotiations require both parties not just to engage constructively, but to develop their positions in advance. For the UK’s part, I have always been clear that we will be conducting these negotiations in a constructive and responsible way. We have been entirely reasonable. The work of our teams and the substantial progress that we have made over recent months proves that we are doing just that, and we are ready to move these negotiations on. I commend this statement to the House.

[Keir Starmer (Holborn and St Pancras) (Lab)]

I thank the Secretary of State for advance sight of his statement.

No one should underestimate the seriousness of the situation in which we find ourselves. At the first hurdle, the Government have failed to hit a very important target, which leaves EU citizens in the UK and UK citizens in Europe in a continued state of uncertainty. There is insufficient progress on Northern Ireland, and it appears that the deadlock on the financial settlement is such that both sides are barely talking.

The Secretary of State says he is confident that we are now on the right track. I cannot fault him for his confidence in his own negotiating ambitions. The problem is that most of those ambitions have failed to materialise. One ambition was that the sequencing of talks would be the row of the summer and that he would not agree, but he agreed by coffee time on day one. His suggestion that sequencing and the concept of sufficient progress are EU constructs leaves out the fact that he agreed to them and signed up.

The Prime Minister and the Secretary of State were right to go to Brussels last night. Obviously, I would like to claim that was in response to the letter I wrote to the Secretary of State last Thursday, but even I recognise that would probably be over-claiming for my letter. Because of the seriousness of the situation, both sides—I include the EU—need to do whatever they can to break the impasse by Friday. More flexibility is needed on both sides by Friday.

I hear what the Secretary of State says about the Florence speech, which was an important speech, but he would be on stronger ground if what the Prime Minister said in Florence had not been immediately undermined by the self-interested antics of some Cabinet members. I also hear what the Secretary of State says about the statement of intent last night to accelerate the process. Given the glacial speed so far, it is not exactly a high ambition—a car going from 2 miles per hour to 4 miles per hour is accelerating, but it is still going slowly.

If we want investment in our economy to continue, and if we want businesses to stay here and others to come, we need to start talking about transitional arrangements now. Those transitional arrangements need to be on the same basic terms as now—in the single market and within a customs union. Every passing week without progress on transitional arrangements makes things worse for businesses, not better. We need to make progress this week, before December.

We also need to drop the nonsense about no deal. Only fantasists and fanatics talk up no deal. No deal is not good for the UK, is not good for the EU and is not what the Secretary of State wants, but he must now realise that the slow progress of these talks raises the risk of no deal.

We need the Secretary of State to answer these critical questions from the Dispatch Box today. What does he intend to do between now and Friday to deliver on the commitment to accelerate the talks? What words does he want to hear on Friday to evidence that progress? How confident is he, on a scale of one to 10, that he will hear those words? And what does he intend to do if he fails?

[Mr Davis]

As ever, we get carping from the right hon. and learned Gentleman and not a single proposal or suggestion. It is interesting that he does not have another strategy, and we have a measure of that because he started by criticising the fact that citizens’ rights have not been resolved, whereas on Sunday he said, “I agree with David Davis, who says you cannot simply separate out the issues we are dealing with now and the later issues.” He talks about Northern Ireland in the same terms: “To be fair to David Davis, he is right on issues like Northern Ireland. There is only so far you can get before we move to the next phase.” When he has to appear reasonable on Peston he is very different from when he has to appeal to his Back Benchers here.

The simple truth is that there has been extremely productive activity in these negotiating rounds. Mr Barnier is going to the European Council on Friday to present his case, which I hope will argue for more progress both on transition and on the future relationship, but it is for him to make that persuasive case on the day. I know from my own visits across Europe, and Mr Barnier will also know this, that a large number of the 27 member states want to do the same.

The right hon. and learned Gentleman talks about talking up no deal. I cannot think of a time, a day, a moment when I have talked up no deal. We are in the middle of a negotiation, and we want to negotiate in good order and with good faith on both sides, but if we do not prepare for all outcomes, we will leave ourselves exposed to an impossible negotiation. We saw that again this weekend when he and the shadow Chancellor said, “Oh, we’ll pay in perpetuity for access to the single market. We’ll pay whatever it takes. £100 billion. £200 billion. Whatever it takes.”

The simple truth of the matter is that the right hon. and learned Gentleman carps and carps, but he has no options of his own.

[Sir William Cash (Stone) (Con)]

My right hon. Friend has said that in the discussions we have also explored ways in which we can fully implement the withdrawal treaty in UK law. Does that suggest he has in mind legislative enactment of the withdrawal treaty? When he talks about the role of the UK courts, does he mean that the enactment will be overseen by our courts, and not by the European Court of Justice?

[Mr Davis]

A range of models are available for how we bring the withdrawal treaty into British law—British law, not European law—and the key criterion I am applying is that it gives certainty to those EU27 citizens who are here now that their rights will be preserved. It will, of course, be adjudicated by British courts.

[Several hon. Members rose—]

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[Peter Grant (Glenrothes) (SNP)]

I am grateful to the Secretary of State for advance sight of his statement.

About a year ago, the Prime Minister said that we cannot expect a running commentary, but in truth we would not have to run very fast to keep up with the negotiations. The right hon. and learned Member for Holborn and St Pancras (Keir Starmer) has already commented in similar terms to the BBC’s Laura Kuenssberg, but he might have added that, before pressing the accelerator, we should check whether we are heading towards or away from a cliff edge.

We have seen one humiliation after another for this Government. They tried to drive a wedge between the Commission and the 27 sovereign states from which it takes its mandate and authority, so will the Secretary of State assure us that the Government will stop playing these games and accept the Commission’s mandate, rather than attempting to undermine it and thereby undermine their own position? He claims that the UK is being reasonable, but is it reasonable to go in with red lines already firmly dug into the sand before the negotiations have even started? That does not look too reasonable to me.

The Secretary of State assures us that he has never talked up no deal, but he has not talked it down, either. Other influential voices in his party talk up no deal all the time. The Prime Minister still has not withdrawn her claim that no deal is better than a bad deal. Rather than just not talking up no deal, will the Secretary of State absolutely rule out no deal today as the worst of all possible deals?

Finally, on the rights of EU nationals living here, I had a distressing meeting last week with representatives of the Fife Migrants Forum. They told me of their first-hand experience of immensely talented, hard-working young people who have made Fife their home but who are now making plans to head back to Poland, Slovakia or wherever else, not because they do not like living in Scotland but because they do not think the United Kingdom will make them welcome. Will the Secretary of State commit to guaranteeing in law the rights of those citizens, rather than continuing to use them as negotiating capital?

[Mr Davis]

There were three questions there, which I will take in sequence. First, on separating the 27, nothing could be further from the truth; the worst thing for the UK would be for us to have to deal with fragmentary groups of the European Union, as we would never get an answer and that would lead us to the Walloon Parliament outcome on the Transatlantic Trade and Investment Partnership and the Canadian treaty, so we have not done that at all. However, we should also talk to each of the 27 to see what their own interests are, as those of Poland and Lithuania may differ from those of littoral states such as Holland or Belgium, and differ again from those of Spain and Italy. We talk to all of them on a continuous basis to make sure we know what they want.

To pick up the hon. Gentleman’s last point, about his Polish constituents, let me say that we also go to those Governments to explain precisely what we have on offer. There have been times in the past few months when the European institutions have not reflected what we intended to do. For example, in a perfectly legitimate and reasonable mistake, Guy Verhofstadt said that we were not going to give European citizens the right to vote in local elections. That was not true, so we corrected it directly with the Governments.

As for no deal, the issue is straightforward: we are intending, setting out and straining every sinew to get a deal. That will be the best outcome, but for two reasons we need to prepare for all the other alternatives. The first is that it is a negotiation with many people and it could go wrong, so we have to be ready for that. The second is that in a negotiation you always have to have the right to walk away: if you do not, you get a terrible deal.

[Mr Owen Paterson (North Shropshire) (Con)]

Today, a report estimated that should we move to a tariff regime, the German motor car industry alone could lose between 8,600 and 29,400 jobs. It is massively in the interests of the UK and our 27 partners that we establish reciprocal free trade based on a recognition of conformity of standards. In his conclusion, the Secretary of State says that he recognises that we have reached the limits of what we can achieve without consideration of our future relationship. When are our partners going to recognise that it is massively in their interests that we establish reciprocal free trade and start talking about our end trading relationship?

[Mr Davis]

My right hon. Friend makes a good point. Of course it is absolutely in everybody’s interest that we have an outcome that encourages free trade in all directions, across the EU and with us. The simple truth is that we are in a negotiation and they are using time pressure to see whether they can get more money out of us—that is what is going on, as is obvious to anybody. That will take some time, but I am sure we will get there in time to get a decent outcome for everybody.

[Hilary Benn (Leeds Central) (Lab)]

As evidence mounts that leaving the EU with no deal would involve an unacceptably high price, it is also clear that although the Prime Minister’s speech in Florence improved the atmosphere, it has not broken the logjam in the negotiations. Will the Secretary of State tell the House what the Government now propose to do or to offer so that the talks can move on to phase 2 and in particular to the nature of the transitional arrangements, for which British businesses are waiting because they urgently need to know that those arrangements will happen and what their terms may be?

[Mr Davis]

First, I say to the right hon. Gentleman that he should not jump to conclusions, as we have yet to hear the Council conclusions on Friday. Let us wait to see what they are before we make the next move; if I do, I probably will not make it from the Dispatch Box —I will probably make it in Brussels. On the implementation period, transition period or whatever he wants to call it, the Prime Minister has made it clear from this Dispatch Box that things will be as close as possible to where we currently are for up to or about two years. That was what her estimate was and I have no reason to differ from it.

[Several hon. Members rose—]

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I am very grateful, Mr Speaker. What expectation does my right hon. Friend have that on Friday a decision will be made that sufficient progress has been made on the people issues of the island of Ireland, which would very much be welcomed, but that, given that any decision on goods and services across what we hope will continue to be a soft border cannot be made without second-guessing any future UK-EU relationship, this should be carried over into the next phase?

[Mr Davis]

My hon. Friend is right to say it is difficult to come up with a solution to create an invisible border if we do not know what the border around the rest of the United Kingdom will be. I think that, over time, the European Union has come to a similar view, although it may never have said so explicitly. I do not want to predict what the conclusions will say when they come out on Friday, but I suspect they will pay proper attention to the fact that we have made quite a lot of progress on Northern Ireland, possibly as much as we can.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I have sympathy with the Secretary of State because he has to come here every month to report on negotiations that resemble the holding pattern at Heathrow airport, where the planes go round and round but never actually move forward. May I return him to this crucial issue of no deal? Members of his party have spent the past two or three days touring TV studios saying that they are relaxed about that outcome, yet the Resolution Foundation and the International Trade Policy Observatory have today published a report saying that it would mean added costs for families of between £250 and £500 per year, with the burden falling most heavily on families in the midlands and the north. Is he relaxed about that kind of additional burden on hard-working families?

[Mr Davis]

If I thought it reflected the reality, I would not be relaxed about it, but the simple truth is that it does not. It does not reflect the effect of free trade and the free trade deals, and it does not reflect what we would have to do in those circumstances. [Interruption.] The hon. Member for Bermondsey and Old Southwark (Neil Coyle), from a sedentary position—he has not been here very long and obviously thinks this is the way to do it—shouts that I am talking up no deal. No, I am not. I am dealing with scaremongering and I am knocking down scaremongering, so I think the answer there is no.

[Anna Soubry (Broxtowe) (Con)]

May I commend my right hon. Friend for his statement and the advance in the negotiations made by both him and the Prime Minister? Does he agree that it is not just within this House where there is no majority for no deal, but that by their vote on 8 June the British people did not give this Government any mandate for no deal, because not only would it be bad for everybody in England, Wales and Scotland, but it would be particularly bad for our friends in Northern Ireland?

[Mr Davis]

I would say two things to my right hon. Friend. First, the election gave us a bigger mandate than it gave the Opposition. Secondly, we are seeking to get a deal, as that is by far and away the best option. The maintenance of the option of no deal is both for negotiating reasons and for sensible security; any Government doing their job properly will do that.

[Chris Bryant (Rhondda) (Lab)]

If there is no deal, agricultural products from Wales will probably face tariffs in Europe, and European agricultural goods coming into the UK will face tariffs. That will dramatically increase the cost of family food budgets, which is wrong and bad for my constituents. The Secretary of State for Transport has a brilliant answer to this; he says that we are just going to grow more food. In order to grow more food in this country, will we not need agricultural workers from elsewhere in Europe and the common agricultural policy to remain? Might we not just be better off staying in the EU?

[Mr Davis]

I am very fond of the hon. Gentleman, but if he wants to look at the pricing of food, he should look at how much of it is down to the common external tariff barrier on food.

[Mr Shailesh Vara (North West Cambridgeshire) (Con)]

Those who threaten economic Armageddon if we leave the EU without a deal are, in effect, engaging in “Project Fear 2”. Does my right hon. Friend agree that “Project Fear 1” did not materialise and there is every possibility that “Project Fear 2” will not either?

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[Mr Davis]

My hon. Friend is right about that. I am not a great believer in mathematical forecasting, but I can tell him that if he really wants to look at an independent view of what a World Trade Organisation outcome would look like, he could look at an OECD report out today, which says that growth will continue.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

The Secretary of State must be gutted that after not one, two, three or four, but five rounds of negotiation we still have not even a sign of this potential for a transitional arrangement, which is so essential for businesses. They are not necessarily thinking of the cliff edge in March 2019; that cliff edge is beginning at the end of this calendar year, when businesses are starting to look at relocating to other jurisdictions. Will he therefore tell us specifically, because this week’s European Council is mission critical, who he will be talking to between now and Friday to make sure we get that transition done this week?

[Mr Davis]

We are in a negotiation. As the hon. Gentleman quite rightly points out, we have been talking for five rounds so far, and indeed I had another meeting with Mr Juncker and Mr Barnier last night. Let us just see what the European Council comes out with on Friday, shall we?

[Nicky Morgan (Loughborough) (Con)]

The Secretary of State said in his statement that

“we cannot fully resolve the issues without also addressing our future relationship”.

He is obviously right in saying that, but is it not also the case that it is impossible to address the future relationship if talks do not take place? Will he therefore resist the siren voices who are tempting him to say that if there is no progress this week, we should get up and walk away? If we get up and walk away, we will never solve the issues that he talked about in his statement.

[Mr Davis]

There are no plans to get up and walk away.

[Caroline Lucas (Brighton, Pavilion) (Green)]

With it looking increasingly likely that the Prime Minister’s claim that no deal is better than a bad deal might be put to the test, and with new research out today—not only the report mentioned by the right hon. Member for Wolverhampton South East (Mr McFadden) but the OECD report—indicating that that would result in an horrendous economic situation, will the Secretary of State assure the House of Commons that it will have a meaningful opportunity to vote on what would be a disastrous outcome of the current gridlocked negotiations? That vote is going to be crucial because this is not what the referendum was about.

[Mr Davis]

During the passage of the European Union (Notification of Withdrawal) Act 2017, the Government gave an undertaking that there will be a vote on the deal.

[Mr William Wragg (Hazel Grove) (Con)]

Mr Juncker used the uncharacteristic analogy of ordering 28 beers; does my right hon. Friend agree that our moving into the second phase of negotiation on our future trading arrangements would be a welcome sign of a “Sober October” in which minds are clear and focused on what is in the best interests of both the UK and the EU?

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[Mr Davis]

My hon. Friend puts it better than I can.

[Heidi Alexander (Lewisham East) (Lab)]

Will the Secretary of State set out the implications of the Prime Minister’s Florence speech for the UK’s relationship with EU regulatory bodies such as the European Medicines Agency during transition? Will we in effect seek to remain a member of such organisations, despite our having formally left the EU?

[Mr Davis]

As the Prime Minister said in her Florence speech, we start by identifying the regulatory position, and the question is then how we manage divergence. Britain will bring the control of such matters back within its own shores, and we will then have a procedure between us by which we manage divergence.

[Mr David Jones (Clwyd West) (Con)]

I commend my right hon. Friend on the patience and good humour with which he conducts the negotiations. At what time does he think he will be obliged to inform the EU that that patience is not infinite and that if it continues to refuse to discuss the future relationship, which is after all prescribed by article 50 and which is something we want to do, we will assume that it is not serious about doing so and therefore consider other options?

[Mr Davis]

I think I learned patience and good humour from standing at the Dispatch Box and dealing with that lot on the Opposition Benches. The simple answer to my right hon. Friend is that I expect the EU to do what is in its own best interests. That is what normally happens in a negotiation and that is what will happen in this one. As my right hon. Friend the Member for North Shropshire (Mr Paterson) stated earlier, there are massive interests for the EU in getting a deal, and that is what will happen.

[Emma Little Pengelly (Belfast South) (DUP)]

I thank the Secretary of State for his statement. I particularly welcome the references to Northern Ireland and the related progress that has been made. Sadly, thus far, too much of the focus by too many has been on the obstacles to be overcome in relation to a hard border. Does the Secretary of State agree that the best approach is to get the best possible trading relationship with the Republic of Ireland, ergo minimising any obstacles to be overcome? Does he commit to keep emphasising that point to the Taoiseach, speaking for the United Kingdom of Great Britain and Northern Ireland on these matters?

[Mr Davis]

The hon. Lady is entirely right. It is important to the Republic of Ireland not only because it intends to maintain the peace process and an invisible border, but because the direct interests of the Republic of Ireland are in maintaining a very good trading relationship with the UK. I think the trade between us is worth around £1 billion a week, so the Republic of Ireland would not want to see that handicapped.

[Rishi Sunak (Richmond (Yorks)) (Con)]

Will my right hon. Friend confirm that the Government will initiate the implementation phase only if our final relationship with our European allies has been agreed, at least in principle, so that what is meant to be a transitory state of affairs does not become a permanent bridge to nowhere?

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[Mr Davis]

There are two answers to my hon. Friend. First, we will try to get the nature of the implementation phase agreed as soon as possible so that, as the right hon. Member for Leeds Central (Hilary Benn) said, businesses can take it into account. Secondly, my hon. Friend is right that such a transition phase will be triggered only once we have completed the deal itself. We cannot carry on negotiating through it, because our negotiating position during a transition phase would not be very strong.

[Mike Gapes (Ilford South) (Lab/Co-op)]

The Secretary of State claimed that progress has been made on the questions of EU citizens here and British citizens living in other EU countries. Will he confirm that British citizens living in other EU countries will maintain the protections of the European Court of Justice for the foreseeable future, whether or not we are inside the EU?

[Mr Davis]

I am not sure that I heard the hon. Gentleman correctly. Did he ask about EU citizens here or UK citizens there?

[Mike Gapes]

UK citizens there.

[Mr Davis]

Yes, UK citizens in the EU will of course maintain the protection of the ECJ, because by being inside the EU they will be within the ECJ’s remit.

[Mr Marcus Fysh (Yeovil) (Con)]

Is it sensible to allow the EU to focus on the nature of an implementation phase before we are clear about what the final relationship is? Would not it be a good idea at this point to have Crawford Falconer, who is very experienced in trade negotiations, involved in the negotiations with the EU in a principal position?

[Mr Davis]

Mr Falconer works at the Department for International Trade, of course, but we are in constant communication with him. With respect to the sequencing of decisions on the implementation phase and the ongoing relationship, my hon. Friend is correct in theory, but in practice we need the implementation phase to be decided early for it to be beneficial to a large number of companies. In his response to the statement, the right hon. and learned Member for Holborn and St Pancras (Keir Starmer) pointed out that some companies will have to make decisions at the end of this year or in the first quarter of next year so that they are able to carry out any necessary changes, so we want to get things under way as quickly as possible.

[Helen Goodman (Bishop Auckland) (Lab)]

Further to the question asked by my hon. Friend the Member for Lewisham East (Heidi Alexander), some representatives from the pharmaceutical industry came to see me last Thursday, and they are desperate for some clarification on future trading relations and regulation. If they do not get some certainty, investment is going to be put back or spent in other countries. Nobody thinks that we should give the EU a blank cheque, but can the Secretary of State not see that if arguing about every £5 billion takes so long that we lose more in GDP, it is not worth it?

[Mr Davis]

First, the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Worcester (Mr Walker), had a meeting with the industry this morning, and not for the first time. I have met industry representatives a couple of times as well. Secondly, part of the point of the implementation phase is that it gives them an extra two years of decision making, and that is well within their decision cycle. Thirdly, as for giving a blank cheque, that is Labour’s policy.

[Kelly Tolhurst (Rochester and Strood) (Con)]

I very much welcome the update that my right hon. Friend has given the House. As we leave the EU, the talented people and their businesses will drive our economy forward, whatever the outcome of the deal, because that is what we do in British business. Does my right hon. Friend agree that it is now time for the EU to move on with trade discussions and that British businesses that operate throughout Europe should be lobbying the Commission and the member states in which they operate so that the EU moves forward and we can start to see some clarity and certainty?

[Mr Davis]

I entirely agree with my hon. Friend, and, indeed, a number of British businesses are doing just that.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

As I have told the House before, my wife is an EU citizen, and I can assure the Secretary of State that his comments today will not give her any more comfort about her settled status in the future. What EU citizens want are guarantees. On the process to which he has alluded, what does a streamlined system look like? What does low cost mean, because I am sure that his definition is different from that of my constituents? How many additional resources will be employed by the Home Office to put that system in operation?

[Mr Davis]

The Home Office is already working on that and we will be publishing a White Paper in due course and bringing a Bill to that effect before the House.

[Richard Drax (South Dorset) (Con)]

The decision to leave the EU in its entirety has been made, and any other consequence will be a betrayal of that vote. Is it not right and logical that a no-deal option has to be on the table in the event that we are forced, through bad negotiation and lack of will on the other side, to stay in an organisation that we voted to leave?

[Mr Davis]

My hon. Friend’s point is entirely logical.

[Wes Streeting (Ilford North) (Lab)]

The writing is on the wall and the warning signs are there for the economy, whether on growth, foreign direct investment, and the decisions that businesses are already taking in anticipation of there being no deal or no agreement on transition as soon as business needs it. Despite that, the Chancellor has been savaged not by the Opposition but by members of his own party for no reason other than drawing to the attention of this House and the public the risks associated with making a series of bad judgments, or indeed no judgments at all, about our future relationship with the European Union. Given that many firms, including manufacturing firms with supply chains in the EU, will be making irreversible decisions before Christmas about jobs and activity, what assurance can the Secretary of State give them this afternoon that there will be a transitional deal before manufacturing and every other sector are faced with a series of unpalatable decisions?

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[Mr Davis]

One thing that I will say to the hon. Gentleman about his fantasy economics—I can put it no better than that—is that people like him have been talking down the economy for two years. They said that there would be recession in the economy immediately following a Brexit decision, but the reverse has been true: we have higher employment than we have ever had; lower levels of unemployment than we have had for 30 or 40 years; and the economy is growing as fast as it has done.

[Will Quince (Colchester) (Con)]

Will my right hon. Friend assist me? Not to countenance a no-deal scenario would surely be writing a blank cheque to the European Union. Is it, in his view, naivety in negotiating strategy or is it in fact a vehicle for those who wish us to stay within the European Union against the wishes of the British people?

[Mr Davis]

It is a good question, but it is not really for me; it is a question for those on the Labour Front Bench. My hon. Friend is quite right that it does not hold up as a negotiating strategy.

[Kerry McCarthy (Bristol East) (Lab)]

The core cities represent nearly 20 million people in the UK and a significant sector of our economy. Michel Barnier is meeting them soon. Why, despite repeated requests, has the Secretary of State not met them?

[Mr Davis]

I have been meeting mayors of the major cities at my behest and not at anybody else’s, starting with the Mayors of London, Liverpool, Manchester and Teesside and others will follow.

[Tom Brake (Carshalton and Wallington) (LD)]

rose—

--- Later in debate ---

[Wera Hobhouse]

Thank you, Mr Speaker. The Secretary of State has said in his statement that we have made further progress on certainties for EU citizens in this country. May I tell him what creates great uncertainty for people? Those EU nationals who have lived here for many years and now want to apply for British passports are being delayed because they have to apply for settled status first. Can he explain why those citizens cannot apply for British citizenship straight away, rather than being delayed, which causes yet more uncertainty?

[Mr Davis]

I must say, with respect to the hon. Lady, that that is news to me. If she sends the individual case to me, I will take it up with the Home Office for her.

[Tom Brake]

This is something that the Minister’s office will not have to leak to Guido Fawkes. Does the Secretary of State accept that some of the consequences of crashing out of the EU will be: destabilising the lives of millions of EU citizens in the UK and of UK citizens in the EU; gridlock at our ports; and a loss of investor confidence in sectors as varied as the creative industries, the automotive sector and the food and drink sector? Will he rule out once and for all the so-called no-deal option, even if it does appeal to some of the fanatics on his Back Benches, and work instead towards a solution that keeps the United Kingdom in the single market and the customs union permanently?

[Mr Davis]

The first thing that I point to is the right hon. Gentleman’s wonderful selective choice of fantasies—none of them is true. He has ignored the fact that inward investment in the UK was at record levels in the first half of this year. As he raises the point about how a letter of his came to the attention of Guido Fawkes—he did it in a point of order yesterday and has alluded to it again today—let me tell him that that letter came to me via a journalist who already had full knowledge of its entire contents. I am afraid that he has no apologies coming from me on that either.

[Mr Speaker]

That discussion can continue on a subsequent occasion.