European Union (Withdrawal) Act

Robert Neill Excerpts

Thursday 6th December 2018 Commons Chamber

[Mr Hammond]

Let me say this frankly to my hon. Friend: there is no deal that is negotiable that involves leaving the EU and maintaining the financial services passport. That is a fantasy world outcome. There will not be passporting. What we have negotiated with the European Union is an enhanced equivalence approach that will allow us to maintain our vital financial services networks with the European Union in the areas where there is significant financial services trade between us and to do so in a way that will provide the reassurance that commercial companies need in London to continue operating.

A mere equivalence finding is of no use to a company operating a book of derivatives worth several trillion dollars when there could be an abrupt ending of the equivalence arrangement unilaterally by one side. There has to be a more structured basis for that co-operation in the future. We have agreed that with the European Union, and I absolutely agree with my hon. Friend’s point that, even though we will not have direct influence over new European Union rules, we can have a significant influence over the shaping both of the global rules and, indeed, the European rules.

Over many decades of membership of the European Union, the UK has had a huge influence over the EU’s financial services regulatory environment. We have done that not through voting power, but through the skill, the diligence and the commitment of our civil service and industry teams who have engaged in Brussels and who have provided their expertise to try to shape the European Union’s financial services regulation in a way that is effective and that works for us all, and we will carry on doing so in the future.

[Robert Neill (Bromley and Chislehurst) (Con)]

I am very grateful to my right hon. Friend for giving way and I very much appreciate the realistic point that he makes about what is on offer to my constituents in the financial services sector. Does he agree that it is precisely because this is the best deal that we are likely to get and that it gets us into transition where these important technical matters can be resolved that it has been welcomed by all the representative bodies of the financial services sector across the country?

[Mr Hammond]

That is exactly right. It has been welcomed by all the major bodies. It has been welcomed by the City of London. First, this deal gives us the transition period, which is a vital respite for business in preparing for the future, and it gives us a commitment to a future deal that will protect our economy and, in particular, our financial services sector.

At the Budget in October, I made a Brexit prediction. I predicted that a deal that creates confidence in a smooth transition and a close future partnership will not only protect our jobs, businesses and prosperity in the long run, but deliver a short-term deal dividend for Britain. The Bank of England last week published its modelling of a range of scenarios to assess the potential impact as the economy makes the necessary adjustment to reflect the new trading relationship between the UK and the EU. The Bank estimated that a negotiated deal could boost British GDP by 1.75% in the short term, as businesses and consumers alike express their confidence in the future, while leaving the EU on WTO rules and without a transition period could cause a recession, with GDP reduced by up to 7.75% and unemployment rising to 7.5%. The Bank of England is clear: a no-deal exit would mean jobs lost, food prices up, house prices down and wage growth lower.

Businesses have made their views clear. The Federation of Small Businesses called this deal

“a welcome step back from the no deal cliff edge.”

The Institute of Directors warned that only 14% of its members

“would be ready to cope with a no deal outcome in March”.

The CBI has described no deal as a disaster for the economy.

This House has before it a deal that can deliver the certainty that will unlock the potential of our economy and assure Britain of the brighter future it craves. Let us not be the generation who have to explain to our children and grandchildren why we let that opportunity slip from our grasp. Let us choose now to move on to that brighter future, not to go back to square one with continuing uncertainty, division and disharmony.

As we make this decision and exercise our solemn duty in this Parliament in the interest of the nation, let us not forget the progress that we have made and what we would be putting at risk with no deal: eight straight years of growth; employment at a record high; 3.3 million more people in work; higher employment and lower unemployment in every region and every nation of the United Kingdom; wages growing at their fastest pace in nearly a decade; and the proportion of low-paid jobs at its lowest for at least 20 years. Britain is leading the world in breakthrough technologies—from biotech to fintech, and from robotics to genomics—and at the cutting edge of a technological revolution that will underpin our prosperity and success for decades to come, if we get Brexit right.

--- Later in debate ---

[Robert Neill (Bromley and Chislehurst) (Con)]

It is a pleasure to speak in this important debate. It is also a pleasure to follow the hon. Member for North Antrim (Ian Paisley). He and I come at this from a different perspective, but that is because I am concerned about the interests of my constituency.

My constituency voted very narrowly to remain in the European Union. I have always been a supporter of being a member of the European Union. I campaigned for remain; I voted to remain; and I would do so again. I do not believe that we will be advantaged by our leaving. However, we cannot wish away the outcome of the referendum. I stood on a manifesto at the election that said that I would endeavour to implement the outcome in a way that protected the interests of the businesses and jobs of my constituents. From my constituents’ point of view, the most important thing is to ensure continuity and business stability.

The largest proportion of the working population of Bromley and Chislehurst—some 36%—works in firms in and connected with the financial and professional services sector. London is the leading European centre for those businesses. A manageable Brexit, all those who work in those sectors tell me, would be an economic blow: we would not be as well off as we were, but it would be manageable; it could be contained and we would then, in due course, be able to build up opportunities and fresh markets elsewhere. But the one thing that would be disastrous for the financial services sector—which underpins the whole of our economy, it is worth stressing—would be a disorderly, no deal Brexit. WTO terms are of no assistance at all to the services sector, and since we are an 80% services economy, we should not forget that.

That is why although the deal is imperfect, because all compromises are, I will support it. I will support it because I am a Conservative on the grounds that I believe in free markets and capitalism; I am unashamedly a supporter of that system. I also do so because I am unashamedly a Unionist. I genuinely believe that the Prime Minister has used her very best endeavours to try to reconcile two very difficult, conflicting tensions within our United Kingdom in a way that is honestly intended to try to enable the Union to be preserved, but equally to enable us to have a sensible and organised departure from the EU, and a basis on which to build on our future relationship.

I would like to see more about services in the future relationship, but I accept that that is a compromise I must make. The key thing is that everybody in the sector says that this deal gets us into transition. There are very complex technical matters that we will need to sort out around the whole of the services sector. I mentioned financial services but I also mention legal services. The Justice Committee recently did a report on this. There are significant technical issues that we will need to sort through. That cannot be done in a matter of months, as has been said—40-odd years of integration will take time to unravel—but the transition period gives us the opportunity to do it in a constructive way. Otherwise we potentially put at risk billions of pounds of important trading revenue coming into this country, and therefore important tax revenue for our public services as well.

That is why I will put aside such qualms as I have and support the deal. I appreciate that the backstop is an issue for many of my colleagues. I do not much care for it, but I take the view of the Attorney General that we need to look at the balance of risks. Something that may not, at the end of the day, ever be needed—as I suspect will be the case—has to be balanced against the certain risk of the disruption to key elements of our economy of no deal and the risk of further division in our country if we do not accept the outcome of the referendum and find a new basis on which to go forward.