DOMESTIC GAS AND ELECTRICITY (TARIFF CAP) BILL

House of Commons, 18 July 2018.

Ongoing relative tariff differential

Claire Perry (Conservative, Devizes)

I beg to move, That this House disagrees with Lords amendment 1.

Lindsay Hoyle (Labour, Chorley)

With this it will be convenient to take Government amendment (a) in lieu of Lords amendment 1.

Claire Perry (Conservative, Devizes)

As Members will know, the Bill has received very broad and very strong cross-party support during its passage through this House. I thank all of those who have spoken, who have worked behind the scenes, who have lobbied and who have voted for a very important piece of legislation. I repeat my thanks to the hon. Member for Leeds West (Rachel Reeves), who is not in her place, for her excellent stewardship of the Business, Energy and Industrial Strategy Committee, which contains Members from all parties, and for her continued support on the Bill. The Committee did some excellent work during the Bill’s pre-legislative scrutiny.

I also extend my thanks to the hon. Member for Southampton, Test (Dr Whitehead) and the Labour Front Bench team for their extremely constructive approach to this Bill and for helping us to develop an amendment that we will come on to debate in a moment.

First, we must consider the amendment that was made in the other place about what will be done to protect consumers when the price cap comes to an end. That is an extremely important question. As the Government have made clear, the price cap is a temporary intervention to protect consumers on standard variable and default tariffs while other reforms continue apace to bring about the conditions for effective competition in the retail market. I understand the concerns, which have been raised by Members from all parts of the House and by Members in the other place, that there is a risk that some features of the market may remain that will need to be addressed. For instance, as the energy market is reformed, it is absolutely vital that the protection of vulnerable customers in this market is kept under review, and action taken if necessary to afford those customers the protections they need.

There are also concerns about the possible return of practices such as tease and squeeze, which is essentially enticing people onto cheap fixed tariff deals only to move them on to higher tariff deals when the fixed period ends. I agree wholeheartedly that we must seek to end those practices. However, introducing a requirement such as the Lords amendment seeks to do, which essentially commits us to an indefinite price cap, is not the appropriate solution. Instead, the Government propose amendment (a) in lieu of the Lords amendment, which will ensure that Ofgem must conduct a review before the end of the price-cap period into the pricing practices of suppliers and, in particular, identify whether there are categories of customers who are currently paying, or who may in future be at risk of paying, excessive charges for standard variable and default tariffs.

In reviewing the practices of suppliers and identifying whether consumers are paying excessive charges, the regulator must consider whether there are consumers who will be excessively negatively affected when they move from fixed rates to standard variable tariffs—the tease and squeeze problem—and also whether vulnerable customers continue to require protection. If it is the regulator’s view that protections are indeed required, then the amendment says that necessary steps must be taken to provide those protections, using a broad set of existing powers under the Gas Act 1986 and the Electricity Act 1989.

It is the Government’s view that amendment (a) therefore futureproofs something that we all care so strongly about in this place—the protection of consumers from excessive charges, particularly on SVT and default rate tariffs, and rightly provides in the Bill the necessary impetus and discretion to the regulator to consider the most appropriate response to those excessive tariffs under its existing powers.

Stephen Kerr (Conservative, Stirling)

Let me speak in relation to the amendment to the amendment. Amendment (a) says:

“customers who appear to the Authority”—

that is Ofgem—

“to be vulnerable by reason of their financial or other circumstances are in need of protection.”

How will the data be made available for anyone to be able to make that assessment, because, currently, there is a restriction in the availability of that data to pinpoint the help that is necessary?

Claire Perry (Conservative, Devizes)

I pay tribute to my hon. Friend’s work as a member of the Business, Energy and Industrial Strategy Committee and his doughty championing of consumers. He will be aware that the Government have taken through another piece of legislation, which was required to ensure that the regulator can work with Government datasets in order accurately to pinpoint vulnerable customers. I am sure that the whole House will be pleased to know that if that legislation has not yet received Royal Assent, it will do imminently. I look to my officials to ensure that that is the case.

Jim Cunningham (Labour, Coventry South)

Perhaps I misunderstood the Minister; will Ofgem carry out a review constantly, or will it be a one-off review with a time limit?

Claire Perry (Conservative, Devizes)

I can reassure the hon. Gentleman that the original provisions in the Bill give Ofgem very broad powers, from the date on which the Bill receives Royal Assent, to implement the cap and then to review it as often as Ofgem feels is necessary. When the cap is operating, it can be reviewed many times. We have instructed Ofgem to conduct a review when the cap ends to ensure that the groups of customers identified can be helped. My understanding is that there is nothing in Ofgem’s existing powers that will prohibit it from doing the same thing in future. The regulator was in the past given extremely broad powers under the gas and electricity Acts, and it would be within its discretion to carry out such reviews. However, across all parties we felt it was important to put on the face of this Bill, which is the first piece of legislation to introduce these sorts of tariff caps and to empower further the regulator to use its powers, the requirement to carry out the initial review.

Ian Murray (Labour, Edinburgh South)

On the same theme, what powers does the regulator currently have to ensure that energy companies are not artificially inflating prices ahead of the Bill coming into force?

Claire Perry (Conservative, Devizes)

The hon. Gentleman refers to the regrettable series of price increases that we have seen from all the major, big six energy companies. Prices will of course go up because, as the hon. Gentleman will know, the wholesale price of gas in particular doubled—I believe; I will make sure the record is correct—in the last six months. The regulator can always define price rises as excessive, but the point of this very welcome cap is that those who are particularly vulnerable and who are on standard variable and default tariffs—often people who are elderly, perhaps less well-educated and furthest from the digital market, in which we all compete to switch—will be protected without having to switch. Indeed, the work that Ofgem is currently undertaking to ensure that the cap is set at a fair level will be vital to making sure that those protections come forward.

Amendment (a) will ensure that the legacy of the Bill, of which we should be extremely proud, is not undone by a return to business as usual by those suppliers that have thought up or carry out additional practices, such as tease and squeeze. I thank Members of this House, including Members from the Opposition Front-Bench team, for helping to create the amendment, which we believe is the most appropriate response to the concerns raised by members in this House and in the other place. I am delighted to see my hon. Friend the Member for Weston-super-Mare (John Penrose) nodding during my speech. Along with the right hon. Member for Don Valley (Caroline Flint) and others, he has been vital in driving this issue up to the top of the Government’s agenda and making sure that we get the Bill and this amendment right. I offer huge thanks to my hon. Friend and the others who have been involved.

James Heappey (Conservative, Wells)

Will the Minister confirm that while the Bill has had to take this unexpected second lap of this place, Ofgem has been hard at work on its preparations for enacting what is likely to be in the Bill when it is passed? Will she join me in advising any energy companies that are considering legal action over the summer that it would be rather inappropriate for them to get in the way of legislation passed in this place quite legitimately?

Claire Perry (Conservative, Devizes)

I thank my hon. Friend for that intervention, because it enables me to say four things. First, I am grateful to the noble Members at the other end of the House, because legislation is always better when it is scrutinised carefully. I think amendment 1 is helpful, so I am not unhappy to have the chance to talk about it.

Secondly, the new chair of Ofgem, Martin Cave, who will shortly take up his post, is a brilliant campaigner in support of the idea that customers should benefit from this regulated energy market. Indeed, I think he proposed the original idea of a tariff price cap. His appointment and the Bill will both help to strengthen Ofgem’s powers. Members will know that he wrote to the Chairman of the Business, Energy and Industrial Strategy Committee—I think it was only last week—setting out Ofgem’s determination to use its powers as widely as possible.

Thirdly, I reassure my hon. Friend that I have come to the House from a meeting with Ofgem, at which we discussed its progress on the price cap. That is well under way, and Ofgem has an extremely good team working on it. Ofgem has already published various technical papers setting out the methodology behind the cap calculation, and it intends to publish in full the details of that in very short order. That will give everybody a chance to scrutinise the cap and make sure that there is nothing untoward.

Fourthly, I wrote to the chairmen of the big six—I think they are all men—last week setting out that the Government would take an extremely dim view of companies that sought to frustrate the introduction of the cap, for which we have all worked so hard, by some sort of legal challenge; and that instead they should work with Government in this exciting time in the energy markets and look to their own activities to see how they can drive down costs, and drive up efficiency and customer service.

Rebecca Pow (Conservative, Taunton Deane)

On that note, does the Minister believe that the Bill will narrow down competition, and thereby affect prices, or increase it? Competition is generally viewed as good for a market, because one tends to get lower prices as companies try to attract customers.

Claire Perry (Conservative, Devizes)

I strongly believe in competitive, well-regulated free markets. Indeed, in this market there are now more than 60 energy suppliers, all bidding for our business. I have recently switched again to a company that appears to be offering a very good green tariff. However, the problem, and the reason for the Bill, is that there is a very large group of customers who are sticky—who stay on expensive standard variable and default tariffs because they do not know how to switch, or they are not aware that they can. We can all think of grandparents, parents and others who fall into that category—it also includes young people who are renting accommodation—and they tend to be the furthest from the white heat of the switching market.

Understanding what the Bill does to the economic conditions in the market is, of course, an important part of Ofgem’s role. To go back to the original CMA report, however, we also know that the current pricing practices result in £1.3 billion of what it described as “excessive” returns, and we expect that number to come down. If you will indulge me, Madam Deputy Speaker, I wanted to make sure that the House was aware of that.

It is important that we have a level playing field for companies in the market. I have received representations stating that the customer accounts threshold for offering warm home discounts and ECO should be dropped to ensure that more companies can offer them to customers. We introduced legislation recently to reduce that threshold from 200,000 to 150,000, in increments of 50,000. Customers in receipt of warm home discounts will have a lower chance of losing them if they switch.[Official Report, 4 September 2018, Vol. 646, c. 2MC]

I hope the House agrees that amendment (a) is the most appropriate response to the concerns that have been raised, and that it will be welcomed by Members in this place and the other place. I hope that we will be able to move swiftly on this issue and keep our remarkable outbreak of cross-party consensus going, because I think the Bill is an absolutely vital piece of legislation.

John Redwood (Conservative, Wokingham)

Can the Minister give us some indication of the kind of saving we that we could expect from the managed market, as a result of the amendment, compared with where we are at the moment?

Claire Perry (Conservative, Devizes)

I do not know whether my right hon. Friend is referring to the per-household saving. We have been quite careful not to talk about that, because although we can understand that a total maximum excessive disbenefit of £1.3 billion is created by current pricing practices, how much of that is saved and passed on to consumers will depend on all sorts of things, including changes in the wholesale market and the efficiency of companies. I can reassure him, though, that the absolute price cap that was brought in to protect customers on pre-payment meters and those classified as vulnerable has led to savings of about £60 per household since it was introduced. Of course, prices go up, but customers are still better off than they would have been. Our expectation is that both overall and per household, consumers will see bills lower than they would otherwise have been.

James Heappey (Conservative, Wells)

Will the Minister reassure the House that she does not see this price cap as “job done” in terms of reducing people’s bills, and that she and her team in BEIS will continue to drive forward innovation in the energy markets so that new tariffs can come forward, and continue to focus on energy efficiency measures so that we can drive down people’s bills in those ways as well?

Claire Perry (Conservative, Devizes)

My hon. Friend uses his great experience in this area to point to this being two halves of an equation in making sure, first, that energy is going into a property at the lowest possible price, and secondly, that consumption is as low as can be.

With ECO now at over £600 million, we are targeting that entirely at fuel poverty. The consultation has closed and we have the responses to come out. There is the whole challenge of getting energy efficiency levels up so that, overall, households are more energy-efficient. I am looking at the hon. Member for Neath (Christina Rees) on the Opposition Front Bench. I very much enjoyed a visit to her constituency to see an energy-positive home. That is an incredible innovation funded by her local excellent councillors, looking at how to design homes that return energy to the grid and are cool and lovely to live in. That is the kind of technology and innovation that we want to see.

I hope that we can all agree on this amendment, send it up to be agreed in the other place, and get on and pass the Bill before this place rises, because the regulator has told us that it will need up to five months to calculate the mechanism. It is absolutely vital, as my hon. Friend the Member for Wells (James Heappey) said, that that mechanism is absolutely watertight so that energy companies do not seek to frustrate further the introduction of this measure. We want it in place by the end of this year so that people can start saving on their energy bills this winter.

Alan Whitehead (Labour, Southampton, Test)

Labour Members are delighted that the Bill to institute an absolute price cap on energy costs is about to pass into law, mechanisms notwithstanding, this afternoon. We are delighted because of the parentage of the Bill, which emanates from the Labour Benches. If hon. Members are worried about the authenticity of the parentage, I can produce a birth certificate: the motion that was debated in this Chamber on a Wednesday afternoon, at exactly this time, on 6 November 2013. It said:

“That this House calls on the Government to freeze electricity and gas prices for 20 months whilst legislation is introduced to ring-fence the generation businesses of the vertically integrated energy companies from their supply businesses, to require all electricity generators and suppliers to trade their power via an open exchange, to establish a tough new regulator with the power to force energy suppliers to pass on price cuts when wholesale costs fall, and to put all over-75-year-olds on the cheapest tariff.”

That motion was in the name of my right hon. Friend the Member for Don Valley (Caroline Flint). When it was debated that afternoon, it did not, I have to say, receive a terribly positive response from the Government of the day.

James Heappey (Conservative, Wells)

How times have changed.

Alan Whitehead (Labour, Southampton, Test)

Indeed.

Five and a half years later, we are almost there. I hope that the procedures on the market issues that we have discussed during the Bill’s progress ensure that while there is a price cap those issues are addressed so that we can, as the mechanism in the Bill suggests, come out of the price cap with market conditions resolved in a much better way for customers. Indeed, just as was suggested in that motion, the Bill provides for a procedure to declare the market in place, at which time the cap is ended. That could be about 20 months or perhaps three years, but nevertheless there is a mechanism for that.

What happens at the end of cap conditions is important, and that is what the amendments that have come from the other place at the end of the Bill process deal with, rather than the principle of the absolute cap—the central principle of the Bill—which, I am delighted to say, was received in the other place as warmly as in this House. On termination of the cap, the Lords amendment would put in place a relative tariff differential that would limit the price range between the highest and lowest tariff a company can charge—the so-called “tease and squeeze” problem that the Minister mentioned. That would be not within the absolute cap but part of the return to market conditions that would nevertheless shape how the market subsequently works for the benefit of customers.

I am delighted that the Government have responded positively in the shape of their amendment in lieu, which I am pleased to say the Opposition not only were given sight of but had the opportunity to work on in detail, to ensure that between us we had a resolution to the outstanding issue from the other place. We can endorse the amendment and recommend that their lordships consider it a worthy response to the message we received.

The amendment is slightly different, using an Ofgem mechanism to bring about a solution to tariff ratios, but from the amendment’s drafting I am confident that Ofgem would receive the message in no uncertain terms of how it should use its powers, should the report it is required to write before termination of the cap comes about demonstrate a continuing problem in tariff differentials.

The Bill has always had more than a tinge of Labour parentage to it and now its offspring has further elements of Labour input, which I, for one, very much welcome. It is now a Bill that all sides can agree does the right thing on energy prices and how the market works. That signal of unity from all sections of the House sends an important message to all those affected by the legislation—that this is a serious piece of work, which will work, and that we are all determined to make it happen. If the Bill can pass back to the other place for its final procedures on that basis, that will strengthen considerably the efforts that we are embarking on to ensure that prices are maintained in the interests of customers over the next period through the freeze mechanism.

I thank the Minister very much for the constructive and open way in which she has conducted discussions on the Bill hitherto, and I at least note in distinguished messages the input of the hon. Member for Weston-super-Mare (John Penrose), and of course my right hon. Friend the Member for Don Valley, who I mentioned at the beginning of my comments, whose role in the Bill’s parentage should be not underestimated at all; indeed, it should be written up in dispatches.

John Penrose (Conservative, Weston-Super-Mare)

We are nearly there. With fingers firmly crossed, it looks as though this is the last, or last but one, trot around the track for the Bill before it goes off for Royal Assent. I echo the thanks that have come from all sides for the combined and cross-party efforts to get us here. The fact that everyone is rushing to claim a degree of authorship shows the truth of the old saying that success has many parents, whereas failure is an orphan. Thankfully, this is not a failure.

I was extremely concerned by the Lords amendment as it came to us before the amendment in lieu was tabled. That was not because I disagreed with the principle of a relative cap—in fact, I spoke strongly in favour of relative caps at earlier stages—but because, in trying to install a relative cap, their lordships had made it an open-ended intervention in this market. For people like me—perhaps more on the Conservative side of the House—who are avowed free marketeers, a temporary intervention is very important. An open-ended commitment would create a great deal of unease among many of us, on the grounds that the opportunity for regulatory meddling would be extremely strong, and that the temptation would prove too hard to resist over time.

I am therefore delighted to see the proposed amendment in lieu. Not only does it not add any fresh powers—it asks Ofgem to use its existing powers, giving it a firm and direct mandate from this House that those powers should be used—but it refocuses the Bill. I for one—I do not think I am alone in this—had become a little bit concerned that the Bill had gone a little off track or off topic in its passage through Parliament.

The Bill was proposed in the first place in response to an underlying mischief or immorality—that of “tease and squeeze” behaviour. People could start off on a razor-keen introductory tariff and then, without taking any firm decisions, they might find that when the tariff came to an end after one or two years, they had in a surreptitious way become liable for a sky-high default tariff. That would happen without their saying yes to anything, because of the tease and squeeze tactics, particularly of the big six. The central behaviour, which is deeply embedded in this market, of taking advantage of people’s loyalty and inertia—their stickiness, as my right hon. Friend the Minister said—was griping everybody and making them feel that customers were being taken advantage of. That was why the Bill was first conceived, and why it rightly garnered so much support throughout the House.

The amendment in lieu brings us back to that central point. It reminds us why we are here and, most importantly, it means that Ofgem will no longer have an excuse to look the other way. We all want this temporary price cap, when it comes to an end, not to be needed any more because the market—the big six in particular, but also the market as a whole—will have learned the error of its ways and will stop behaving in the way that has griped everybody, so that there is no need for further interventions. However, I do not think I am alone in being a little bit cynical and saying that that might not happen, even with all the other interventions and reforms that Ofgem is rightly introducing to try to sharpen competition, improve consumer choice, and both improve the behaviour of suppliers and help us as customers to use our freedoms more actively.

It is just possible that, even after all the changes introduced by Ofgem during the period of the cap, the market is not yet properly reformed. We are all here because Ofgem has in the past refused to use the powers it has. I have had conversations with senior people in Ofgem, as I am sure have many others in the Chamber, asking, “Why don’t you get on with it? Why don’t you use these powers? You’re being weak-willed, and you are pathetically—like wet lettuces—not doing what you are there for. What’s the point of having an economic regulator if you aren’t going to stick up for people who are vulnerable and people who are being taken advantage of?” We all got fed up with arguing that it should do so, and it would not do so, and that is why the Bill came into being. The amendment in lieu should solve that because, for future reference, it should ensure that Ofgem has a backbone statutorily inserted into it.

We all hope that those powers are not needed, and that the reforms designed to sharpen competition mean that they will never be needed, but the amendment in lieu means that they can be used in the future. With any luck, as with a good nuclear deterrent, no one will ever have to press the button, but my goodness me, they will know that they are there. That is the crucial point. With that, I welcome the amendment in lieu. I hope that the message goes out loud and clear to Ofgem that we will not put up with its being weak-willed in the future. It is up to Ofgem to ensure that this market functions properly, not just during the temporary period of the cap, but on an ongoing basis in the future. With any luck, after that none of us will ever have to worry about the energy market’s mispricing again.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

It is a pleasure to follow the hon. Member for Weston-super-Mare (John Penrose), and I pay tribute to his work, as well as that of the right hon. Member for Don Valley (Caroline Flint) and my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson). The hon. Gentleman lost me a wee bit at the end when he compared the amendment in lieu to the nuclear deterrent. Apart from that, I concurred with his comments.

I will be brief, because there seems to be consensus across the House, and will simply outline my thoughts on the Lords amendment and the Government amendment. When Labour originally tabled the Lords amendment, I chose to abstain because, as I said at the time, I remained unconvinced by their arguments. Labour was against a relative cap, so it seemed anomalous to me to introduce a relative measure on a permanent basis. The risks and arguments are the same about the relative aspect—it really does risk increasing the price of standard variable tariffs and there is a further risk that if that came into operation in the absence of an absolute cap, we might see prices creep up again, which would be counter-productive.

The Business, Energy and Industrial Strategy Committee was against the absolute cap when it did its pre-legislative scrutiny. Consumer organisations were against it and even the Competition and Markets Authority has outlined where relative aspects have not worked in other sectors, so why would they work in this situation? That was certainly the concern. There seems to be cross-party agreement that an absolute cap is a temporary measure, so this would effectively be a temporary Bill. Why introduce a permanent measure into the Bill?

One good thing about the Lords getting the amendment through is that it has clearly allowed the Government to rethink and it is clear that the Government have worked with the Opposition to strengthen the Bill. They have agreed to introduce these measures, which basically instruct Ofgem to review the operation of the absolute cap and how it affects customers, including the most vulnerable, and to ensure that the companies take action to protect those customers. I welcome the Government’s amendment and, given the cross-party consensus, it is time to get on with it and get the Bill finished, and for the Government to concentrate on getting cheaper energy through renewables and by scrapping nuclear.

Stephen Kerr (Conservative, Stirling)

I join others in paying tribute to the work done by my right hon. Friend the Minister in leading the Bill through the House. I also pay tribute to the Opposition spokesman, the hon. Member for Southampton, Test (Dr Whitehead), and to my hon. Friend the Member for Weston-super-Mare (John Penrose). There has also been mention of the right hon. Member for Don Valley (Caroline Flint). I agree with much—indeed everything—of what I have heard, including from the Scottish National party spokesman, which is always noteworthy, as I think he would agree.

I want to take this opportunity to comment on the nature of the marketplace because, as my hon. Friend the Member for Weston-super-Mare rightly mentioned, this is a marketplace where consumers are punished, or at least treated as suckers, by the companies they are loyal to, and that surely cannot be allowed. I am therefore proud to stand in support of this Bill, and to see it progress quickly from this place to the other place and, very quickly after that, into law. A lot of significant issues have been discussed as the Bill has made progress through pre-scrutiny, Committee and back to the Floor of the House.

I genuinely cannot understand the justification for the Lords amendment. I agree with the hon. Member for Kilmarnock and Loudoun (Alan Brown). The idea that we could legislate in a temporary Bill for an energy market in 2023 seems to me to be quite absurd. Sitting here today, we have no idea what the energy market will even look like in 2023-24. Perhaps the noble Lords have a crystal ball that allows them foresight that we do not enjoy in this House, but somehow I doubt that they do. With the rate of change in the market being what it is, we can comfortably expect that, when we get to the sunset year, 2023-24, the landscape will be much changed from what it is today.

While we have debated many issues on the Bill, I would disappoint the Minister if I did not mention smart meters, as a sideline. I know that the Bill is a temporary measure to fix the energy market, which is badly broken, but it also gives consumers control. It should also give them the right to see how their energy usage is affected by their choice of appliance and how they use their appliances. One way we will do that is through the roll-out of smart meters. I support that but continue to have what I hope are felt to be genuine concerns about the nature of the roll-out and how it is being conducted.

The SMETS1 meters are a poor substitute for the real thing. We have not heard recently how many SMETS2 meters are installed and connected to the Data Communications Company but, bearing in mind the £11 billion cost and that this is a vital part of our national infrastructure for the energy networks of the future, I feel that it is appropriate to mention in passing that we need a stronger handle on where the SMETS2 programme is, its cost and all the issues surrounding it.

James Heappey (Conservative, Wells)

I very much agree with my hon. Friend. Rushing into the deployment of SMETS2 meters before the technology has been properly proven and the Data Communications Company is fully up and running might lead to a collapse in consumer confidence in smart meters generally, which would have an adverse effect on the smart programme.

Stephen Kerr (Conservative, Stirling)

I agree, and that is why it is important to discuss the real-time issues surrounding the SMETS2 meter and the future smart meter network, which is so important to the future of our energy market.

In conclusion, at the heart of this issue is the need for lower energy prices, and helping consumers to understand how much energy they are using and how they can save money by changing supplier. I look forward to the day when through an app, or rather, with one click, it will be possible for consumers to make smart choices painlessly. If we do this right—and I think we are—this tariff cap measure can fall away in 2023 without causing any problem, and more consumers will be engaged and able to make the right decisions for their households. We will also be able to see the energy companies properly competing and creating the competitive market that the Bill seeks to create.

James Heappey (Conservative, Wells)

What a joy it is to be in this Chamber when consensus abounds, after a couple of days of tearing strips off one other. It is really rather nice to be in here, all agreeing. That has rather characterised the progress of the Bill throughout its time in this place and in the Bill Committee, on which I had the privilege to serve. I think it is right that we seek to remove the amendment that the Lords have sent back, but I am glad that a compromise has been agreed between the two Front-Bench teams and I think that the amendment in lieu that we have proposed is very sensible.

Since the Bill has been delayed by this extra lap in Parliament, I think it is worthwhile to rehearse the arguments once again. The price cap is only a part of the challenge, so I want to add a few other things to the exhortation from my hon. Friend the Member for Stirling (Stephen Kerr) about smart meters. The Government must push on with those very urgently, because the savings from them will be far greater than the savings that we will achieve for our constituents from this Bill.

First, on decentralised generation, putting storage in behind the meter and aggregated demand-side response, I know that the Minister is looking at what comes after feed-in tariffs when they start to run out next year. I hope that she can see merit in finding a mechanism to replace them that really unlocks the market for people who want to install generation in their homes or businesses, storage, demand response and the capacity that comes from electric vehicles.

Secondly, I hope that we can send a strong signal to industry and the regulator over the delivery of heat as a service. Heat as a service is a huge opportunity for energy efficiency to become the responsibility of the supplier, not out of obligation, but because it sees an opportunity to make bigger margins by providing energy more cheaply and efficiently. If we can make that happen, we will secure huge savings for consumers. Thirdly, as we replace the green deal, let us allow storage to be a part of this so that again people can find savings. Fourthly, on replacing the ECO, the consultation has been completed and responses have been had, and I know that plenty of tech companies have made representations for smart thermostats and other clean tech to be included within the ECO catalogue. Let us make that the case.

We have put in an awful lot of time, in this place, the other place and in Committee, to deliver a saving to our constituents of around £100. That is not to be sniffed at, but we can prove to an awful lot of people that an enduring price cap is not the answer by getting all sorts of other things right at the same time. Energy efficiency, storage, the flexibility of demand response and decentralised generation have the potential to slash bills to a fraction of what they currently are. Let us not let this price cap distract us from the real prize, which is huge savings for our constituents from clean tech.

Rebecca Pow (Conservative, Taunton Deane)

I welcome the Bill, as it places consumers at its heart. That is really what we are talking about. In particular, I welcome the amendment in lieu, which is a tweak but a valuable tweak that makes the Bill really work. I also reiterate what my hon. Friend the Member for Wells (James Heappey) said. How wonderful it is to have unity in the Chamber after these last few days. It is welcome and a lovely feeling.

Alex Chalk (Conservative, Cheltenham)

It’s quite unsettling.

Rebecca Pow (Conservative, Taunton Deane)

Quite unsettling, yes.

I believe that pressing for an absolute cap over a relative one is the right way to go. As the Business, Energy and Industrial Strategy Select Committee stated, a relative cap could force cheaper energy tariffs to disappear, harming consumers, not protecting them. That would run counter to the sentiment of the Bill. As we have heard, Ofgem will be given the task of making the cap work effectively with its formula and will be responsible for setting the cap and reviewing it every six months. As outlined by my hon. Friend the Member for Weston-super-Mare (John Penrose), it is beholden on Ofgem to get this right and hold people to account, otherwise it will not have been worth while. It is vital that energy companies do not take advantage of any price cap and lift their tariffs to the maximum allowed. As I mentioned earlier, the energy sector needs more price competition to encourage lower prices, and an absolute cap can help to achieve this.

I am delighted that the Government will require the Gas and Electricity Markets Authority to protect consumers beyond the end of the energy price cap. Energy companies must not slip back into their old habits as soon as the cap is lifted, putting ordinary people back in the position they were in before the cap and leaving them paying over the odds. The Bill will ensure better value for money for many people who, frankly, have been taken for a ride and been paying over the odds for the self same energy that the person down the road has been getting cheaper.

As the Minister stated, it cannot be fair that between 2012 and 2015 customers paid £1.4 billion more than they ought to have done. In 2016, this escalated to an incredible £2 billion. As I have said before, many of these people fall into the “vulnerable” category. Many are elderly. My constituency and wider Somerset have a great many elderly people. The number of over-75s is set to double in the next 10 years and they could be the people who would have been adversely affected. The Bill will help them. They are the people who do not switch very often, as are younger people and tenants. My children, in their 20s, have raised this with me. The Bill will help them. It is right that the cap system should be temporary. It is an artificial lever to control the market for a short while and is being applied in the interests of consumers. This is the right way to go, as it will still enable competitiveness in the market, which is essential. We want the market to work better for everybody.

As other Members have said, it is essential for us to engage all the different methods in the energy market, such as smart meters—and we must get them right—and technology, including data-driven technology. What has not been mentioned before, however, is the need to encourage people to use less energy. There are now many devices on the market that we can put in our homes to ensure that we do not waste so much of it, and I shall be presenting a ten-minute rule Bill on that subject fairly soon. We also need even more investment in renewables. If we are to hit our clean growth strategy targets, we must do all those things, and I am delighted to say that the Government are indeed doing them. We are going in absolutely the right direction.

As I have said, I fully support the Government amendment, which will make the Bill really work for those for whom it was designed: the consumers. It is a valuable addition to the Bill, and I congratulate all those who have brought it this far and will make it into law.

John Bercow (Speaker, Buckingham)

Marvellous. The hon. Lady has completed her oration? Yes. [Interruption.] Well, it was an oration. That is a good thing.

Lords amendment 1 disagreed to.

Amendment (a), in lieu of Lords amendment 1, agreed to.

Future Relationship Between the UK and the EU

Dominic Raab (Conservative, Esher and Walton)

I bet to move,

That this House has considered the future relationship between the United Kingdom and the European Union.

Let me begin by paying tribute to my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson). I could not make it into the Chamber, but I listened to his personal statement from my office. I pay tribute to the huge service that he did to our country during his tenure as Foreign Secretary, and also to the passion and optimism with which he spoke in relation to Brexit.

Last week the Government published their White Paper “The future relationship between the United Kingdom and the European Union”. It is a principled and pragmatic plan for the relationship that we wish to build for the future.

Ian Murray (Labour, Edinburgh South)

I congratulate the Secretary of State on his promotion to his new role. He mentioned the personal statement made by the former Foreign Secretary in the House a few hours ago. I wonder if he could tell us which parts of it he disagreed with.

Dominic Raab (Conservative, Esher and Walton)

I was paying tribute, and paying my respects, to the service that my right hon. Friend had done to this country as Foreign Secretary, and admiring the optimism and the passion with which he had spoken, particularly in relation to Brexit. It is not for me to pick at the detail of his statement. I think that all Members, whatever their views on Brexit, recognise the convictions held by other Members on all sides, and in all parties, in relation to this important matter.

As I was saying, the White Paper is a principled and pragmatic plan for the relationship that we wish to build for the future. It delivers on our dual strategic aim of taking back control over our laws, our money and our borders, while preserving and building on the historic ties with our EU friends—such as trade and security—that we all rightly prize.

The White Paper proposes a free trade area for goods to maintain frictionless trade, supported by a common rulebook and a new facilitated customs arrangement, but only for the rules that are necessary to provide frictionless trade at the border. That will help to secure the complex supply chains and just-in-time manufacturing processes that we have developed with the EU over 40 years. It will give businesses certainty and clarity, and will help us to preserve the jobs that thrive on the basis of frictionless trade across the border. Under those arrangements, businesses from Stockholm to Sunderland and from Cardiff to Krakow will be able to rely on smooth procedures to avoid any potential disruption of their livelihoods.

A key component of the free trade area will be our proposal for a facilitated customs arrangement, a business-friendly model that removes the need for new routine customs checks and controls between the UK and the EU while enabling the UK to control its own tariffs to boost trade with the rest of the world. The UK would apply the EU’s tariffs to goods intended for the EU, and its own tariffs and policy to goods intended for consumption in the UK.

Mike Gapes (Labour/Co-operative, Ilford South)

I have not yet had a chance to welcome the Secretary of State to his interesting post. What assessment has he made of the EU-Japan trade agreement that has just been announced? Will he take this opportunity to welcome it as a potential boost to trade for our country, and confirm that the Government are not planning to take us out of that arrangement?

Dominic Raab (Conservative, Esher and Walton)

I thank the hon. Gentleman for his kind words. That is a draft agreement, which has not yet entered into force. We will of course be champions of global free trade with precisely those emerging markets of the future, from Asia to Latin America, which is where the jobs and opportunities will come from. Like him, I want to see more of that. In fact, one of the advantages of leaving the EU is that we will be able to have an even more energetic and liberal approach to free trade.

Edward Leigh (Conservative, Gainsborough)

My right hon. Friend was talking about the facilitated customs arrangement. Before Monday, it was already going to be difficult enough to persuade the EU that it was in its interests for us to collect tariffs on its behalf, but after Monday’s vote the arrangements must be reciprocal. Is there the remotest chance of us persuading the EU to collect tariffs on our behalf on some distant border? It just will not happen. It’s dead in the water, isn’t it?

Dominic Raab (Conservative, Esher and Walton)

My hon. Friend mentions the earlier approach. Under the earlier proposals for a new customs partnership, businesses would only receive tariff rebates after tracking goods through the entire supply chain to the point of final consumption in the UK. In contrast, the FCA—I hope this addresses his point—will be an upfront system. That means that most businesses, the overwhelming majority, would pay the right tariff to begin with. Other businesses could claim a tariff repayment as soon as possible in the supply chain. We will agree with the EU the circumstances in which repayments can be granted. As the White Paper makes clear, we will negotiate a reciprocal tariff revenue formula, taking into account goods destined for the UK entering via the EU and goods destined for the EU entering via the UK.

Jim Cunningham (Labour, Coventry South)

What discussions has the Secretary of State had with companies in this country, such as Jaguar Land Rover, regarding their concerns about Brexit? What reassurances has he given them, or is it too early to ask him that question because he is fairly new in the job? I congratulate him on his appointment.

Dominic Raab (Conservative, Esher and Walton)

The hon. Gentleman is being far too kind, but I appreciate it. I have already met business leaders, from the Federation of Small Businesses to the CBI. The devil will of course be in the detail as we negotiate, but we have received a positive and constructive response. I will be meeting more business leaders on Friday, so perhaps next week I can fill him in further. I think it is widely understood that we have a principled but pragmatic and flexible approach that will preserve frictionless trade. The key advantage of the model we have is that it protects the UK-EU supply and value chains, and the businesses he refers to which rely on them. As well as supporting business, the approach would meet our shared commitments to Northern Ireland and Ireland in a way that respects the autonomy of the EU without harming the UK’s constitutional and economic integrity.

John Redwood (Conservative, Wokingham)

Will my right hon. Friend confirm that a very large number of components and materials come into this country from non-EU sources every day and fuel just-in-time systems alongside things from within the EU, proving that there is not a border issue about running just-in-time without being within the EU ring fence?

Dominic Raab (Conservative, Esher and Walton)

I understand the point my right hon. Friend makes. What we are trying to do, and what I think this model does achieve, is to make sure that any potential disruption to businesses through the supply chains is minimised as far as possible to the lowest degree. That is the aim, but I do understand the point he makes.

Owen Smith (Labour, Pontypridd)

Will the Secretary of State give way?

Dominic Raab (Conservative, Esher and Walton)

I will make a little progress, but I promise the hon. Gentleman I will come back to him.

Alongside the close arrangements for goods, we will negotiate a wide-ranging but different approach on services, including the digital sector, one of the fastest growing sectors for the UK. That will protect businesses from unjustified barriers or discrimination. It will cover mutual recognition of professional qualifications and it will also preserve our regulatory freedom.

On financial services, we will seek a new partnership in that area, reflecting the mutual interests of the UK and the EU. This approach to services is based partly on the absence of any of the risks of border disruption that might affect trade and goods, coupled with the distinct advantage of regaining domestic regulatory control and the ability to forge new trade deals with fewer fetters so we are well placed to grasp the opportunities of the future.

Owen Smith (Labour, Pontypridd)

I welcome the right hon. Gentleman to his new position. I hear what he says about the Government’s desire to retain as frictionless trade as possible, but does he share my concern that the chief executive of Airbus has said only today that he is so concerned about the prospect of friction that Airbus is having to stockpile components in this country lest the Government make a further mess of Brexit and we end up unable to have frictionless, just-in-time trade?

Dominic Raab (Conservative, Esher and Walton)

I think that, in the hon. Gentleman’s own elegant way, that was a backhanded welcome for these proposals to minimise any risks in that regard, and what we should now all do in all parts of this Chamber is not call for second referendums or returning to the customs union, but get behind the Government’s plan and show a united front so we get the very best deal for everyone in this country.

Owen Smith (Labour, Pontypridd)

Will you tell the former Foreign Secretary that?

Dominic Raab (Conservative, Esher and Walton)

I shall indeed, but I appreciate the support.

This is the ambitious and balanced approach reflected in the White Paper. As well as sensibly managing the risks of disruption to trade with our EU friends, it frees the UK to trade with greater vim and vigour with the rest of the world, and particularly to capture the growth markets and opportunities of the future. It will allow us to seize the opportunities for more liberal and energetic free trade arrangements with the export markets of the future from Mexico to Japan, which is important for creating the jobs of the future, and for cutting the costs of goods in this country to ease the cost of living for lower and middle-income families.

As we leave the EU, free movement will end. Our immigration policy will be set not in Brussels but by hon. Members elected by the people of this country in this House. We will design a new immigration system that works in the national interest: a system that enables us to control the numbers of people coming to live in this country and that places stronger security checks at the border. We will end free movement, but that does not mean pulling up a drawbridge or turning away the talent we need, and indeed want, for the UK to be an outward-looking nation attractive to investment and open to business.

In line with the arrangements we will negotiate with our close trading partners around the world, the White Paper makes it clear that we want to support businesses being able to transfer to their UK offices those from the EU with the bespoke expertise or experience required to deliver services here. We also want people to be able to travel without a visa between the UK and the EU for temporary business activity. We want families and youngsters to travel for holidays and tourism, and students to study at university across the continent. We can agree these common-sense reciprocal arrangements while regaining control of our immigration policy. That is the balanced approach that will best serve the UK.

Bob Neill (Conservative, Bromley and Chislehurst)

I welcome my right hon. Friend to his post. Will he bear it in mind that there must be linkage between the very welcome liberal approach to visa regimes that he mentions and, in relation to professional services, mutual recognition of qualifications so that lawyers and other professional advisers can operate on the current fly-in, fly-out policy that is critical to the City of London and other financial sectors?

Dominic Raab (Conservative, Esher and Walton)

My hon. Friend makes the right point, and he will see extensive text in the White Paper covering precisely that point.

Our vision for a security partnership covers those vital areas and interests that we share in common. Our proposals will maintain operational capabilities that are necessary to protect our citizens, and enable rapid and secure data exchange, practical cross-border operational co-operation, and continued participation in key agencies including Eurojust and Europol, which already have partnerships with many non-EU countries. We will also pursue arrangements for co-ordination in other areas where we have mutual interests: foreign policy, defence, development issues, joint capability development and wider co-operation.

On the return of democratic control over powers and authority to the UK, the White Paper proposals end the jurisdiction of the European Court in the UK. Laws will be decided by elected Members in this House, and UK courts will no longer refer cases to the Luxembourg Court. In a limited number of areas we will choose to adopt common rules to ensure the free flow of goods, but that body of law is relatively stable and where there are any changes Parliament—this House—must approve them. When the UK and the EU need a clear and consistent interpretation of such rules, as between the UK and the EU, we can choose to make a reference to Luxembourg Court for such an interpretation, but the UK will have to agree to that first, and reference for legal interpretation is very different from giving the European Court the authority to apply the law to the facts or to decide which party to any litigation is successful in its claims. When the UK Supreme Court is no longer subordinate to the European Court, it will finally do what it says on the tin.

This is a principled and practical approach. We have shown flexibility as we strive for a good deal for both the United Kingdom and the European Union and as we demonstrate our ambition for a close partnership through the White Paper.

Karin Smyth (Labour, Bristol South)

I am grateful to the Secretary of State for giving way, and I welcome him to his new position. He might be coming on to talk about Northern Ireland, but just in case he has no more to say than his brief comment, may I ask him a question? His predecessor admitted that he had not actually visited the border area, apart from on one brief occasion recently, for more than 20 years, since when, times have changed massively. Will the Secretary of State give an indication today of whether he has any more plans, besides his rather vague infrastructure promises, for dealing with the question of the border between the Republic of Ireland and Northern Ireland?

Dominic Raab (Conservative, Esher and Walton)

I understand precisely the hon. Lady’s concern. This is an important and sensitive issue, and I will be engaging on the EU track in relation to it. I will also, at the right time, make sure that I am properly versed and properly briefed on the matter, and indeed that I visit the border area to take a look for myself.

It is worth emphasising two key principles that we share with our EU friends. The first is that article 50 dictates that a withdrawal agreement must come alongside a framework for the future agreement. The second, flowing from that, is that nothing is agreed until everything is agreed. The Government respect and prize both those principles, and we will not sign away our negotiating leverage or spend taxpayers’ money in return for nothing. In December, we agreed that the financial settlement would sit alongside a framework for a deep and mutually beneficial future partnership. We agreed that we would meet our commitments as they fell due, with ever-declining payments over a finite period that will add up to a tiny fraction of what our net contribution would have been as a member. If either side should fail to meet their commitments under this overarching package—we certainly do not expect that to be the case—that would have consequences for the deal as a whole that we are striving to secure.

Stephen Kinnock (Labour, Aberavon)

I thank the Secretary of State for giving way and I should also like to take this opportunity to congratulate him on his appointment. On Tuesday, I hosted an event here in Parliament where the BeLeave whistleblower, Shahmir Sanni, told us that every member of the Vote Leave campaign committee knew precisely about the £680,000 that was donated by Vote Leave to BeLeave. The Secretary of State was of course an active member of the campaign committee for Vote Leave, and presumably therefore knew about that £680,000 donation. Given the importance of his role now in the negotiations with Mr Barnier, will he take this opportunity to set out in precise detail what he knew about that donation to BeLeave? This could be an opportunity to enhance and reinforce his authority and credibility in the negotiations.

Dominic Raab (Conservative, Esher and Walton)

I appreciate the hon. Gentleman’s efforts to try to strengthen my leverage in the negotiations to get Brexit delivered, and I take him at his word. I had nothing to do with any of the financial arrangements; I was on the campaign board. Those details are subject to investigation by the appropriate authorities, and I would just gently say to him that trying in this rather backhanded way to undermine the credibility and the verdict of the British people will only rebound on him—

Stephen Kinnock (Labour, Aberavon)

It is the verdict of the Electoral Commission.

Dominic Raab (Conservative, Esher and Walton)

But the verdict of the British people is the one that we in this House must give effect to.

Dominic Raab (Conservative, Esher and Walton)

I will not give way.

Tomorrow I will be in Brussels to meet my counterpart, Michel Barnier, to discuss the details of the White Paper and to take stock of the negotiations. The UK will extend the arm of friendship in a spirit of optimism and goodwill, backed by an ambitious and innovative plan that respects the position, interests and concerns of the EU. I certainly hope that that ambition and goodwill will be reciprocated.

Hugo Swire (Conservative, East Devon)

I also welcome my right hon. Friend to his place. When he meets Mr Barnier for the first time tomorrow, will he ask him, as evidence of that good will as the pace of the negotiations starts to increase, whether he will look again at the exclusion of Britain from some parts of the Galileo project and also address why the Department for International Development is being excluded from some projects that it co-funds with the EU?

Dominic Raab (Conservative, Esher and Walton)

I will certainly consider all those areas not only in detail, but in terms of the strategic overview and the state of play of the negotiations as a whole. As I said, I hope that the ambition and good will reflected in the White Paper will be reciprocated.

Equally, it is the duty of any responsible Government to prepare for every eventuality, including the unlikely scenario that we reach March 2019 without agreeing a deal. It is essential that plans are in place to mitigate risks and ensure stability whatever the outcome of the negotiations. The Government have been working on nearly 300 no deal plans for almost two years, and some of them are already in the public domain. Last month, we passed the Nuclear Safeguards Act 2018, which provides the legal basis for developing our own regulatory system in that vital area. We have also been taking other practical action to ensure that the infrastructure is in place. For example, we have recruited 300 extra border staff, and a further drive to create another 1,000 was launched earlier this year.

Many of our no deal preparations have so far been developed internally and through targeted engagement with relevant parties. However, more of the preparations will now become public, and I can tell the House that the Government will release a series of technical notices over August and September to set out what UK businesses and citizens will need to do in the event of a no deal scenario, thereby making the public more aware of our preparations. That due diligence is designed to provide reassurance. In reality, such planning cannot properly be done without some public-facing engagement.

Thangam Debbonaire (Labour, Bristol West)

I add my congratulations to those of other hon. Members on the right hon. Gentleman’s appointment. He mentioned advance preparations, but I find it incredibly curious that it took two years before we even started them. He says that no responsible Government would wait to make backstop arrangements, but what happened before the referendum? What has happened over the past two years? Why have we waited until there are just weeks to go before making backstop arrangements?

Dominic Raab (Conservative, Esher and Walton)

I listen carefully to the points that the hon. Lady and all hon. Members make, regardless of their views on Brexit, but I just said that the Government have been working on 300 no deal plans for almost two years. Planning has not just started. However, we are going to start increasing the pace of the preparations—

Wera Hobhouse (Liberal Democrat, Bath)

Will the Secretary of State give way?

Steven Baker (Conservative, Wycombe)

Will my right hon. Friend give way?

Dominic Raab (Conservative, Esher and Walton)

May I make some progress? As a result of the further measures that we will be taking, more of the preparations will become public facing. It is important that we talk about that in order to reassure the public that it is the responsible thing to do.

Steven Baker (Conservative, Wycombe)

I congratulate my right hon. Friend on taking up his new post. As he knows, I am well familiar with the work that has been done. He may have heard my question at PMQs earlier, but may I put to him what I put to the Prime Minister? When technical notices or any communications related to no deal are released, will he please ensure that they are shaped to ensure that they support the credibility and feasibility of our plans, not only to give comfort and reassurance to business, but to strengthen our negotiating position?

Dominic Raab (Conservative, Esher and Walton)

This is an opportune moment to pay tribute to my hon. Friend for all his work in the Department, particularly on no deal planning. He makes an excellent point that will be at the forefront of my mind as we continue to step up our preparations.

Owen Smith (Labour, Pontypridd)

Will the Secretary of State give way before he moves on?

Dominic Raab (Conservative, Esher and Walton)

I will not. Other people want to speak and I have already given way to the right hon. Gentleman.

We will strive in the spirit of optimism to strike the very best deal with our European friends but, whatever the outcome of our negotiations, we stand ready to make a success of Brexit.

Keir Starmer (Labour, Holborn and St Pancras)

She may have left the Chamber, but I begin by paying tribute to my hon. Friend the Member for Bridgend (Mrs Moon) for her moving speech in support of her Access to Welfare (Terminal Illness Definition) Bill. I also listened to some of the debate on the Domestic Gas and Electricity (Tariff Cap) Bill, on which unity broke out—in fact, there was a celebration of unity. I am not sure we can maintain that unity in this debate, but we can remain civil in our disagreements. In order to do that, apart from one reference, I had best avoid mentioning the right hon. Member for Uxbridge and South Ruislip (Boris Johnson).

The Prime Minister insists that her Brexit plan will deliver a “smooth and orderly” exit from the EU. Anyone looking in over these past few weeks will be bound to conclude that nothing could be further from the truth. The Chequers agreement took two years to reach and two days to unravel and, even in the past hour and a half, the Secretary of State for Exiting the European Union has said that we should get behind it. The right hon. Member for Uxbridge and South Ruislip called it the

“miserable permanent limbo of Chequers”

to great cheering from that part of the Chamber.

A White Paper that should have been published before article 50 was invoked arrived late for the statement last week and, after this week’s votes, lies in tatters. There have been daily resignations and knife-edge votes, and we see a Government clinging on literally vote by vote by using, as I understand from last night, threats of no-confidence votes and of a general election to achieve a result and, it seems, by breaking pairing arrangements with an MP on maternity leave. I listened carefully to what the Prime Minister said about that earlier, but I ask the Secretary of State to explain how the Tory party chairman, the right hon. Member for Great Yarmouth (Brandon Lewis), accidentally voted on two crucial votes and yet managed, presumably deliberately, to abstain on the others as agreed.

Now the Secretary of State is trying to sell a White Paper that he had not seen until last week and in which, in many respects, it is hard to believe he really believes. It is already dead in the water. That is before he has even had the chance to meet Michel Barnier.

Although some Brexiteers predicted that the negotiations with the EU would be the easiest in history—that was the Secretary of State for International Trade—and that new trade agreements would be signed by March 2019 with countries totalling 10 times the geographical size of the EU, which was the corker from the former Secretary of State for Exiting the European Union, most of us recognised that, in honesty, the Brexit process would be very complicated and very difficult. I have always accepted that negotiating Brexit would be a challenge for any Government.

What we have seen in the past few weeks is not just a weak Government struggling with the inevitable complexities of Brexit; this is simply the latest battle of a political party at war with itself. A war once contained in the Conservative party now threatens to engulf the country. For 30 years or more the Conservative party has been engaged in a civil war over Europe, and the national interest has been the collateral.

The European question has brought down the Conservative party’s last three Prime Ministers, and it could well bring down this one. Margaret Thatcher was completely at odds with her Cabinet on the exchange rate mechanism, and it eventually led to her downfall. John Major grappled with his Maastricht rebels, and we know how he referred to them. Indeed, that accidental recording of John Major’s comments has resonance today:

“The real problem is one of a tiny majority…a party that is still harking back to a golden age that never was, and is now invented.”

Then we had David Cameron, the man who told his party to stop “banging on about Europe” before calling a referendum, losing it and then riding off into the sunset.

While the Tory party fights with itself over Europe, as we have seen in the past couple of days, inequality continues to grow, the housing crisis spirals out of control, our NHS and public services groan under the cuts to their budgets, and any principle to guide our foreign policy has fallen by the wayside.

Nicholas Boles (Conservative, Grantham and Stamford)

Will the right hon. and learned Gentleman give way?

Keir Starmer (Labour, Holborn and St Pancras)

I will in just a moment.

Frankly, most people are sick and tired of this Tory war. Whether they voted to leave or remain, most people look on aghast at the mess the Government are making of Brexit; we have all had those comments made to us in the past few days.

Keir Starmer (Labour, Holborn and St Pancras)

I will give way in a moment. People are aghast at the threat that that approach poses to jobs, the economy, peace in Northern Ireland and our place in the world. So I have a simple message to the Prime Minister and to the Government: this has got to stop. The Tory party has no right to risk the wellbeing of our country in this way or to plunge our politics, our Parliament and the wider country into the kind of chaos we have seen in recent weeks.

Simon Hoare (Conservative, North Dorset)

I am listening with great attention to what the right hon. and learned Gentleman has to say. I take the point that we are talking about the future of our nation. Is it not time, therefore, to build on this issue, as this House sculpts how this country looks as and when we leave the EU, and time for us to pull together, at the pragmatic centre ground of this House, to shape and sculpt the sort of Brexit that we want to see—one that works for our country and our economy, both now and in the future? We should not play party politics, but instead work together with common sense and pragmatism.

Keir Starmer (Labour, Holborn and St Pancras)

I am grateful for that intervention. Anybody who has looked in on the past two days and seen the infighting on the Conservative Benches would question whether that process cannot start with the Tory party. I have laid out the history because this is a deep divide, which has been at the heart of the Conservative party for decades. It has been waiting to break out since the referendum result. It has been contained time and again, but now it has broken out. Now it more than risks the Conservative party; it risks the future of our country, and that is why it has got to stop.

Nicholas Boles (Conservative, Grantham and Stamford)

The right hon. and learned Gentleman is a distinguished lawyer, so he would never say anything without appropriate evidence. He should therefore withdraw his comment that inequality is rising, because he will know as well as everyone else that the Office for National Statistics and the Institute for Fiscal Studies have confirmed that inequality has not risen at any point in the past 10 years.

Keir Starmer (Labour, Holborn and St Pancras)

I simply disagree, on so many fronts, but that is a whole discussion in its own right. I invite the hon. Gentleman to walk around my constituency on any day of his choosing to see the obvious inequality there.

Keir Starmer (Labour, Holborn and St Pancras)

I will make some progress and then I will give way again.

The flaws in this White Paper and the mess the Government find themselves in do not just stem from the history of Conservative party splits over Europe—there are mistakes of this Government, too. After the referendum, we needed decisive leadership to bring a divided country together—to honour the result, but also to speak for those who voted remain. We needed a vision where everybody could see their future, and we needed to ensure that the social and economic causes of the referendum were addressed. Instead the Prime Minister set out, in October 2016, impossible and extreme red lines: no customs union; no single market; having nothing to do with a European Court; having no common EU agencies. She also had no plan to avoid a hard border in Northern Ireland. In addition, she pushed away Parliament. There was a moment when she could have sought its backing, but she pushed it away and avoided scrutiny. None of the speeches she has ever made on Brexit—the “House speeches”—have been put to a vote in this Parliament to see whether they would be approved. She has rejected sensible amendments and proposals from across the House to make Brexit work. What is the result? It has taken two years to produce this White Paper and it has lasted less than a week.

Mark Pritchard (Conservative, The Wrekin)

The right hon. and learned Gentleman is a fair-minded individual and he is doing a great job of bringing the Government to account over the Chequers plan, but of course he and his party agree with parts of that plan. Would he like to say what parts he agrees with, rather than just those he disagrees with?

Keir Starmer (Labour, Holborn and St Pancras)

I am grateful for that intervention. I will come to that, because I am coming to the detail now and I will go through it.

I turn to the facilitated customs union arrangement, because it demonstrates how unworkable the White Paper is. It is based on the idea that traders can reliably distinguish at the border between goods intended for the UK and goods intended for the EU. Paragraph 16a of the White Paper says that

“where a good reaches the UK border, and the destination can be robustly demonstrated by a trusted trader, it will pay the UK tariff if it is destined for the UK and the EU tariff if it is destined for the EU.”

The idea is that, at the border, someone can safely distinguish between goods that are going on to the EU and those that are not and then apply different tariffs and different regimes to them. Whatever “robustly demonstrated” means is not set out, but it is a complicated two-tier system, which is why business has been so concerned about it. It involves the idea that we will account to the EU for the tariffs that are collected. If the destination of goods is not known, the higher tariff is paid at the border and recouped at some later stage. That is a hugely complicated two-tier system, with a third system overlaid for goods the destiny of which is not known.

I have heard it said that, happily, for 96% of goods, the destiny will be known on the border. The reference for that is footnote 6 on page 17 of the White Paper. I do not know whether the Secretary of State has chased that footnote, but I have. I challenge him to explain on some occasion—now, if he can—how that 96% figure is arrived at, because it is not at all clear from that footnote. However, the important point is this: whether it is 96%, or some lesser percentage, there will need to be checks to ensure the integrity of the system and to avoid abuse.

The solution that the Government have put forward is the tracking mechanism that was floated last summer. It is an interesting idea; it is a shame that it does not yet exist. It is no good Ministers on the Front Bench shaking their head. If the position is that there will be no checking at all after the event to see whether the right tariff was indeed paid, to avoid abuse or to protect the integrity of the scheme, I will let the Secretary of State intervene on me to say that the proposal is that, as goods pass the border, that is it—no check. If that is not the case, he must accept that, as with any system, whatever the percentage, rightly designated or not at the border, there will have to be tracking systems to check that the correct tariff was paid; otherwise, it is very obviously open to gross abuse.

Vicky Ford (Conservative, Chelmsford)

This time last week I met Members of the European Parliament, including one from the Socialist group who explained to me that a senior member of the Labour party had addressed their group and, in the words of that parliamentarian, effectively they had been discouraged from giving the UK too good a deal because it would encourage other countries to Brexit themselves. Can the right hon. and learned Gentleman confirm whether he or any other Members of the Opposition Front Bench have indeed addressed the Socialist parliamentary group of the European Parliament, and can he confirm that if and when negotiations are concluded along the lines of the White Paper, he will encourage people to vote for it in the best interests of our country?

Keir Starmer (Labour, Holborn and St Pancras)

I am grateful for that intervention. I have made many, many trips to Brussels. I have had many discussions with political parties across all of the EU27 countries, and I have never, on any occasion, sought to undermine the Government in any of those discussions. I made that commitment to the former Secretary of State when he started his role and when I started my role. Therefore, there is absolutely nothing in what the hon. Lady has said.

Alex Chalk (Conservative, Cheltenham)

The right hon. and learned Gentleman is giving, as one would expect, a forensic and detailed scrutiny of these proposals, but the end point of his argument must be that there should be a customs union. I understand the point, but has he made any assessment of the extent to which, in the country, there would be a sense of betrayal, which would place the disquiet that has taken place in this House into a cocked hat? Does he have any assessment of that?

Keir Starmer (Labour, Holborn and St Pancras)

The referendum answered the question, “Do you want to stay in or leave the EU?” We are now grappling with the question of what the future arrangements should be. We have to safeguard the manufacturing sector and we have to keep to the solemn commitment that there will be no hard border in Northern Ireland. Anybody who has looked at the issue has accepted that the only way to keep to that solemn commitment on Northern Ireland is to have a customs union with the EU.

Marcus Fysh (Conservative, Yeovil)

rose—

Keir Starmer (Labour, Holborn and St Pancras)

Let me complete my point.

The second half of the intervention by the hon. Member for Cheltenham (Alex Chalk) implied that anybody who voted leave would not countenance a common rulebook on goods; well, that is in the White Paper, because we have all had to work through the practical consequences of the referendum. It is no good to take such an extreme interpretation of Brexit that we wreck the manufacturing sector, abandon the service sector and abandon the solemn commitment to Northern Ireland. We have all been grappling with those issues for two years and we have to stop this suggestion that to put forward any practical arrangement for moving forward and safeguarding our country is somehow to frustrate or betray the referendum.

I see that the former Secretary of State, the right hon. Member for Haltemprice and Howden (Mr Davis), has walked in. Earlier, there was a suggestion that in my discussions in Brussels or elsewhere in the European Union I had somehow been trying to undermine what he has done. He and I know that that has never been the case, so I invite him to intervene, if he would.

David Davis (Conservative, Haltemprice and Howden)

The right hon. and learned Gentleman has had many discussions with me, on Privy Council terms, over the past two years, and I have to say to the House that he has always been supportive of the country’s interests in those discussions and, indeed—at least in my understanding —in his conversations in the European Union.

Keir Starmer (Labour, Holborn and St Pancras)

I am grateful for that intervention; I hope it deals with the suggestion made earlier.

Let me go back to the facilitated customs arrangement. It is a complicated, two-tier arrangement that involves different tariffs being charged at the border and, if it is not known what tariff should be taken, it involves the tariff being reimbursed later if it was wrong.

Dominic Raab (Conservative, Esher and Walton)

indicated dissent.

Keir Starmer (Labour, Holborn and St Pancras)

It is no good the Secretary of State shaking his head, because that is what it says in paragraph 16 of the White Paper. It is complicated. It is no wonder that businesses have said that they are sceptical about it and it is no wonder that the EU has said that it does not think it can operate such a system. It is no doubt for that reason that paragraph 17(a) says, after a description of the arrangement:

“However, the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

There is no reading of that other than, “This is so complicated and bureaucratic that we know the EU will not be prepared to do it and we are not going to ask it to.” There is no other reading of that sentence.

Enter Monday’s European Research Group new clause 36, which says:

“Subject to subsection (2), it shall be unlawful for HMRC to account for any duty of customs or VAT or excise duty collected by HMRC to the Government of a country or territory outside the United Kingdom”,

unless

“arrangements have been entered into by Her Majesty’s Government and that government under which that government will account to HMRC for those duties and taxes collected in that country on a reciprocal basis.”

In other words, it will be unlawful for us to collect and account for taxes at our borders unless other countries and territories—the EU27—collect tariffs and account for them for us. It will be unlawful. The White Paper says that we are not going to ask the EU to do it, but new clause 36 says it will be unlawful if the EU does not.

Dominic Raab (Conservative, Esher and Walton)

indicated dissent.

Keir Starmer (Labour, Holborn and St Pancras)

I invite the Secretary of State to intervene if he wants to quibble with that analysis. By that amendment, the Government have cut across their White Paper and inevitably made it more difficult for the Secretary of State to negotiate with the EU when he goes there tomorrow, because the EU has said, “This is not attractive to us and we don’t want to do this.” The White Paper says that we will not ask the EU to— presumably, as part of that discussion, that makes sense as the logical next move—but Monday’s new clause, which was a wrecking amendment, has now made it unlawful for a sensible way to be found through.

Marcus Fysh (Conservative, Yeovil)

rose—

Keir Starmer (Labour, Holborn and St Pancras)

I shall make further progress, then give way.

This is not just a forensic challenge to the White Paper; it is fundamental. Absent a workable customs arrangement, the Government have no answer to the question of how they would protect the manufacturing sector. Absent a workable customs arrangement—

Dominic Raab (Conservative, Esher and Walton)

The right hon. and learned Gentleman’s analysis is not that forensic, because—inadvertently rather than deliberately, I suspect—he omits the key words from the White Paper:

“The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue. On the basis that this is likely to be the most robust approach, the UK proposes a tariff revenue formula”.

That, of course, will be agreed as well; that is what the negotiations are for. It is set out plainly and squarely in the White Paper, and I think he knows that.

Keir Starmer (Labour, Holborn and St Pancras)

I anticipated that challenge, and I anticipated that sentence. Let us read the sentence:

“The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue.”

Will it be reciprocal, or not? If it is not reciprocal, it will be unlawful; that is the difficulty. If it is intended to be reciprocal, what is the point of the sentence reassuring the EU that

“the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK”?

Whatever the arrangement is, we know one thing about it: it will not involve the EU applying UK tariffs and trade policy at its border. Otherwise, what is the point of that qualification?

Dominic Raab (Conservative, Esher and Walton)

I am afraid that the right hon. and learned Gentleman is making a false distinction. The key line in the paragraph is that

“the UK proposes a tariff revenue formula, taking account of goods destined for the UK entering via the EU and goods destined for the EU entering via the UK.”

That is the most explicit statement of reciprocity. What more could he expect?

Keir Starmer (Labour, Holborn and St Pancras)

I invite the Secretary of State to intervene just one more time. What is the point of the sentence that follows the one that he has just read out?

Dominic Raab (Conservative, Esher and Walton)

It is the exception to those arrangements, which is that we are not requiring the EU to levy the tariffs.

Keir Starmer (Labour, Holborn and St Pancras)

This must be my failure to comprehend. There is an arrangement whereby tariffs are applied at the border and accounted for. The UK is not proposing that the EU applies the UK tariffs and trade policy at its border for goods intended for the UK, so how is it going to account for them?

Wera Hobhouse (Liberal Democrat, Bath)

Does the right hon. and learned Gentleman share my suspicion that the proposals are designed to be so complicated and difficult that the EU will find it very hard to engage with them, so that time will go by and we will end up crashing out without a deal, as has always been the Government’s intention?

Keir Starmer (Labour, Holborn and St Pancras)

I am grateful for that intervention, because it demonstrates why this is so important. Unless there is a customs arrangement that works for manufacturing, there is not an arrangement that works for manufacturing. The Government last night voted down an amendment to say, “If we cannot make something else work, we will have a customs union.” So if this does not work, there is nothing for manufacturing. Equally, if this does not work, there is nothing for Northern Ireland.

Dominic Raab (Conservative, Esher and Walton)

indicated dissent.

Keir Starmer (Labour, Holborn and St Pancras)

The Secretary of State shakes his head, but if this does not work, what is the plan? If he wants to intervene, that is fine. If this plan does not work—if this facilitated customs arrangement is not acceptable—the default, according to the Government, is not a customs union. What is the plan?

Dominic Raab (Conservative, Esher and Walton)

This model will work. I gently say this to the right hon. and learned Gentleman: if he cared about it that much, why did the Labour party go into the last election committed to having an independent trade policy, which can only mean leaving the customs union?

Keir Starmer (Labour, Holborn and St Pancras)

I really do not like the Secretary of State saying, “if he cared about it that much”. The suggestion that we are not both engaging in a difficult analysis of the White Paper with the interests of our country at heart is not fair. I care about this greatly, because without the right arrangement, I genuinely believe that manufacturing in this country will be at risk. Having worked in Northern Ireland for five years, I genuinely believe that, without a working arrangement, the solemn commitment to no hard border in Northern Ireland may not be kept. It is really serious, and point scoring about whether one is serious about it or not does not help; doing so demeans the Secretary of State in his role. It is not the way to conduct such debates.

It is not just the manufacturing sector; the White Paper’s proposals on services reveal a huge black hole. Likewise, the proposals on rights and protections are simply inadequate. On social rights, employment rights and environmental rights, there is a non-regression approach: we will not necessarily keep up and we will not necessarily improve, but things will not necessarily get worse.

There is no clarity on the role of the European Court of Justice. [Interruption.] The Secretary of State says, “It ends”, but it clearly does not end. The European Court has two different primary jurisdictions: first, dispute settlement; and secondly, reference. That is the jurisdiction that it has had, as he very well knows, with his experience. The second of those is being preserved for everything in the common rulebook. That is why it has caused such difficulty within his own party. The jurisdiction of the Court would exist on reference procedure for that wide range of issues, and he well knows it. It will operate, I should imagine, in precisely the same way that it operates now. That is, there will be a reference to the Court, the Court will decide the question before it, it will give a ruling and an interpretation, and that interpretation will be binding, because if it is not, there is no point in that reference procedure, as he knows.

Dominic Raab (Conservative, Esher and Walton)

indicated dissent.

Keir Starmer (Labour, Holborn and St Pancras)

Well, if the Secretary of State is going to suggest that the reference to the Court is for a ruling that is not binding, I will be very interested to hear about it, because there is not much point in referring something to a court for a ruling and then saying, “Well, it’s very nice but we’re not going to apply it.” The whole thing only works if the ruling of the European Court can be binding.

The proposal for the labour mobility framework says things about business trips and tourism, but is completely silent on the terms under which EU citizens will be able to live and work in the UK and UK citizens in the EU.

The grim reality is this: it has taken two years to get to this point, yet, on analysis, there is nothing there—or, more accurately, there is nothing that the warring Conservative party can agree on. The Prime Minister’s plan is exposed as unworkable and unacceptable to her own party, but she cannot move forward, as Monday night showed, and she cannot move backwards, as last night showed. That is not taking back control; it is no control—stalemate. But the country cannot keep paying the price for these divisions in the Conservative party. We need a Brexit plan that can unite the country and protect jobs and the economy, and I am sorry to say that this White Paper is not it.

Steven Baker (Conservative, Wycombe)

A little over a week ago, I appeared on TV and invited colleagues to take stock, so I hope that in this speech I will make some attempt to do that.

The first thing I should like to say is that I believe we should develop

“a special relationship with”

the European Union,

“aiming to establish an area of prosperity and good neighbourliness, founded on the values”

which we share

“and characterised by close and peaceful relations based on cooperation.”

Informed Members of the House will have spotted that in saying that I have transposed article 8 of the Treaty on European Union. That should be our common goal.

What kind of character should this co-operation have? I do not want us to build a wall; I want us to remain the closest of friends and partners. In that spirit, I propose, first, that

“as we are confronted with similar security threats…the EU and the UK continue our common fight against terrorism and international crime.”

Secondly, I propose that the UK should

“participate in EU programmes in the fields of research and innovation, as well as in education and culture. This is key to maintain mutually beneficial and enriching personal networks in these…areas, and for our shared common community of values to prosper…in future.”

Thirdly, I would like to

“avoid that particularly absurd consequence of Brexit that is the disruption of flights between the UK and the EU.”

I would also like to make sure that there is no disruption on data, the channel tunnel or roll-on/roll-off ferries. Finally, I

“propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods. Like other free trade agreements, it should address services. And in fisheries, reciprocal access to fishing waters and resources should be maintained.”

In saying that, I have just stuck very closely, with some variations, to quoting President Donald Tusk’s statement on the draft guidelines on the framework for the future relationship with the UK, issued on 7 March 2018.

I have been astonished recently to learn just how many colleagues had not noticed that offer which was placed before us—a wide-ranging offer including free trade and no tariffs in all sectors, including services. We have to ask why we have not taken this path. I have concluded from my experience that it is first and foremost because the establishment, the governing class of this country, does not believe in Brexit. The governing class believes in EU membership and is trying to deliver something as close as possible to the EU—not the EEA and the customs union because it is known that such an arrangement would not be accepted as leaving, but something like the customs union and EEA-lite, if I might call it that. That is what is before us in the Chequers White Paper.

Peter Grant (Scottish National Party, Glenrothes)

Will the hon. Gentleman explain who and what is the governing class? If it is not the former Foreign Secretary, what on earth is it?

Steven Baker (Conservative, Wycombe)

As you know, Mr Speaker, I have been asked to keep to a time, and that term is sufficiently familiar to people in this House and across the country so I will not spend minutes defining it. It is the great class of people who govern our country, whether in politics, the civil service or the media, and those who govern our large companies.

Owen Smith (Labour, Pontypridd)

Will the hon. Gentleman give way?

Steven Baker (Conservative, Wycombe)

No. I am making my points gently and trying to do so in a spirit of co-operation. I heard the hon. Gentleman accuse me from a sedentary position of Trumpism, and I am not willing to go down that path with him.

Stephen Gethins (Scottish National Party, North East Fife)

Will the hon. Gentleman give way to me?

Steven Baker (Conservative, Wycombe)

I will not; I will go on.

I will say this, because it is important that it is said—[Interruption.]

John Bercow (Speaker, Buckingham)

Order. There is a rather discordant atmosphere in the House. This is a matter upon which there are passionately held and differing points of view, but Members are entitled to be heard with courtesy. I simply reference the fact that the hon. Gentleman is an immediate-past Minister and he must be heard, and heard with courtesy.

Steven Baker (Conservative, Wycombe)

Thank you, Mr Speaker. I will try most sincerely not to be too indiscreet, but before Christmas—I believe it was September or October but my detailed, copious notes are at home and so not available to me—I was asked by a very senior person what the political consequences would be of choosing an EEA-lite deal. I explained that it would be a political cataclysm for the Conservative party and there would be a great political explosion if such a thing were chosen. We discussed it at some length.

Shortly after Christmas, after the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Fareham (Suella Braverman), joined the Department, I will reveal that we had a ministerial meeting at which all the Ministers looked at the proposals in advice, and we all agreed we should build from a free trade agreement Canada-style rather than take an EEA-lite deal. Yet, despite proceeding on that collective basis in our Department, here we are with a proposal before the House that requires a mandatory degree of high alignment to EU rules. It is an EEA-lite proposal, not a Canada-plus proposal, if I may put it in those terms, despite a long history of Ministers rejecting that.

I have to conclude that it has long been the intention of those providing advice that we should arrive at such a relationship. Those proposing this category of close relationship, with the up-front choice of mandatory alignment, have two profound problems. First, the project of the European Union is in real difficulty. I take no pleasure in that, and no one need take my word for it—Jean-Claude Juncker said on 14 September 2016:

“Our European Union is, at least in part, in an existential crisis.”

Monsieur Macron said in Strasbourg on 17 April this year:

“There is a fascination with the illiberal, and that is growing all the time…Month after month we are seeing views and sensibilities emerge which call into question certain fundamentals. There seems to be a sort of European civil war.”

That is the most of extraordinary thing to have been said, yet it was said by a man who supports the European project. George Soros, who famously supports the project, has said:

“The European Union is mired in an existential crisis. For the past decade, everything that could go wrong has gone wrong.”

Andrew Lewer (Conservative, Northampton South)

I thank my hon. Friend not only for his words today but for the hard work he put into trying to get us to the right place. Does he recall that it was my view as an MEP at the time, and that of the British people, that the EU’s very direction of travel and the concept of it not as a static, safe, solid entity with which we are entering some sort of new relationship but an organisation moving in a particular, disturbing direction that led the British public to make the decision they did, and it is our responsibility to fulfil that?

Steven Baker (Conservative, Wycombe)

I agree with my hon. Friend, but I would extend his remarks by saying that it is clear, across the European Union, that the project is running into the problem, as its proponents have said, that it lacks democratic consent for what is being done. This is a profound problem that should alarm all of us.

If we look at Hungary, we see that almost 70% of the vote share is for parties that could be considered populist. In Germany, Alternative für Deutschland has risen from obscurity to be the third largest party, forcing Frau Merkel into a coalition—an unwanted coalition—to keep it out. In the Netherlands, the major parties have announced that they would do everything they could to keep the so-called Freedom party out of power, refusing to form coalitions with it despite the Freedom party getting the second largest share of the vote. I am very grateful to those in the Italian Parliament for passing a helpful motion, but I hope they will not be offended if I say that their parties are not necessarily considered mainstream. The rejection of the status quo in Italy is indicative of a trend right across Europe where, politically, the project is being rejected.

On the economy, I would just say that, according to the House of Commons Library, the European Central Bank has, in total to date, purchased €2.5 trillion of assets, which includes €2 trillion of Government debt. By the end of 2018, the figure is scheduled to be €2.6 trillion. That is equivalent to about 23% of annual eurozone GDP. This is the most extraordinary economic and monetary period in history. I personally believe that the distortions sown by quantitative easing on such a scale will unwind, and will do so in a very harmful way. That is the first problem faced by those who propose a high-alignment scenario such as this one. It seeks to cling on to institutions and a kind of political economy that are running out of public consent and have economic difficulties.

Stephen Gethins (Scottish National Party, North East Fife)

I thank the hon. Gentleman for the speech he is delivering. I am glad that he is using statistics from the House of Commons Library that he clearly believes. As a former Minister, will he reflect on the statistics that the UK Government put together showing just how disastrous every form of Brexit would be?

Steven Baker (Conservative, Wycombe)

I am grateful to the hon. Gentleman, but I am afraid that I will just refer him to the answer to the relevant urgent question, which I will stand by for a very long time.

The second point—I have received some private communications reinforcing my view—is that, unfortunately, the establishment believes that any deal will be voted through by this House and is working on that basis. I have to say it is with some horror that I face the possibility that that consideration is being borne in mind by negotiators, because I do not believe for a moment that it is true. I believe that Scottish National party Members will always vote in a way that reinforces their hopes of secession from the UK, which is bound to mean voting against any agreement. I believe that the Labour party, for all the good faith of the shadow Secretary of State, will in the end vote against any agreement—any agreement. That therefore means that people—whether or not they like it, and however impartial they may be—must bring forward a deal that can be voted through by the Conservative party.

The number 40 has been bandied around in this House in the past few days. I am sorry to say it—it gives me no pleasure to say it, but I must do so—“and the rest”. People who have said 40 are not out by a fraction: when they come to consider the number of Members on the Conservative Benches who do not like this deal and are willing to vote in line with that dislike, they are out by a factor, not by a fraction. That means people must face up to the difficult truth that a high alignment—a Brexit that requires a high degree of permanent alignment to the European Union—will not go through this House of Commons; it will fail. Those are the two difficulties that officials—officials—must face up to.

Stephen Kinnock (Labour, Aberavon)

Will the hon. Gentleman give way?

Steven Baker (Conservative, Wycombe)

I will give way briefly, and I then want to try to move to a conclusion.

Stephen Kinnock (Labour, Aberavon)

The hon. Gentleman is being very generous in giving way. Will he confirm that he is in effect saying that Chequers is absolutely dead in the water? The implications of that are enormous for the Secretary of State, who is about to go to Brussels to meet Monsieur Barnier. How is he supposed to do that, and on what basis is he conducting those negotiations? If the hon. Gentleman could also say what his alternative plan is, that would be very useful for the House.

Steven Baker (Conservative, Wycombe)

I am about to come on to my alternative, but I will not have words put in my mouth. I said when I appeared on the television last Monday that this was a time for reflection and taking stock, because the choices before this country are grave. Every Member of this House, on whichever Bench they sit, needs to think extremely carefully about how we go forward. I will not have words put in my mouth. What I have said, I have said from my knowledge and I believe it. No one should plan on a high-alignment deal—an EEA-lite style deal—going through this House.

Three key steps should be taken as we go forward. The first is that those in the UK who I would call the establishment, the governing class—those who create the climate of opinion—must accept the referendum result and its consequences. I encourage them to look at President Tusk’s March statement on the guidelines. The red lines that the British public expect us to fulfil imply that the common landing ground of our relationship with the EU, which I spelled out, taking words from his statement, is partnership on security, some participation in research, innovation, culture and education, dealing with the absurd consequences that would otherwise arise, and having a free trade agreement in the style of a normal FTA, not EEA-lite. That must be embraced.

Secondly, I refer the House to the question asked of the Prime Minister by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) today. The Government should table a legal text that should include a solution for the border in Ireland. We should stand ready, open, to negotiate this common ground set out in March.

Edward Leigh (Conservative, Gainsborough)

The Prime Minister appears to be saying that President Tusk’s suggestion of a Canada deal is not acceptable because it would result in some kind of hard border. That is not something I accept, but perhaps my hon. Friend can comment on it. If we have the facilitated customs arrangement, will we not need some tracking device and, if we have a tracking device, could that not be used to alleviate any hard border in Northern Ireland?

Steven Baker (Conservative, Wycombe)

Mr Speaker, I am conscious that I am going beyond the guidance that you gave us, and I am very grateful to you for allowing that.

What I would say to my hon. Friend the Member for Gainsborough (Sir Edward Leigh) is that I believe that the problems of the Irish border are first and foremost to do with political and administrative will. A great deal has been said about technology, which is in fact a distraction from the reality that there is already a border, particularly in relation to excise. It is necessary to have an element of political and administrative fudge on the border, if I may say so, but to do it in a way that works for both sides. I believe that it really is political and administrative will that stands in the way, and that there are no insurmountable problems on the border. I also believe that there are no insurmountable problems with customs declarations or rules of origin. I very much hope that my hon. Friend the Member for Yeovil (Mr Fysh) might touch on that, as I know that he is an expert on the subject.

The second point is to table legal text to stand ready in good faith to negotiate the landing zone set out by the President and Council and to be ready to deliver in the spirit of article 8.

The third thing we must do is that thing which the Cabinet resolved collectively at Chequers. We must accelerate the delivery of our plans to leave the European Union in the unwanted eventuality that nothing can be agreed. We must be ready. We cannot allow ourselves to be in a position where complacency means that the Government machine goes forward thinking that any deal will go through Parliament, when I feel confident that deals that are for want of a better term too soft will be rejected by this House. We cannot allow ourselves to be put in a position in which we are perhaps not as ready as we should be and a deal is unexpectedly voted down.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

Will the hon. Gentleman give way?

Steven Baker (Conservative, Wycombe)

I want to wrap up. The right hon. Gentleman intervened on me so many times when I was in another role that I hope that he will forgive me for not giving way now.

I am sure that our country is on the cusp of delivering a catalysing transformation both of global free trade and corresponding political institutions in delivering democratic self-government that can deliver on the aspirations of the British people. There is a greater future ahead for the UK, Europe and the world if we do it, but if those who set the climate of opinion and decide what we shall do persist in turning their face against accepting the democratic decision and the red lines that people expect us to fulfil, and thus rejecting President Tusk’s vision of where we should land together, it will be their fault if we end up exiting this European Union with nothing agreed.

Peter Grant (Scottish National Party, Glenrothes)

Follow that! I gently say to the hon. Member for Wycombe (Mr Baker) that he might not be able to explain briefly who and what the governing class is, but I can, because I am looking at them right now. For him to suggest that if Brexit all goes wrong, it is somebody else’s fault is typical of the approach that we have seen from his colleagues from day one. There was a mass evacuation, when Farage and Co. left, or prepared to leave, the country as soon as the dirty deed had been done. We had the former Foreign Secretary bailing out, trying to avoid becoming a Minister. We saw it again last week when Ministers and Parliamentary Private Secretaries could not get off the sinking ship quick enough, so we will not have anybody, either now or in future, trying to point over to the Opposition Benches and say that it was our fault that their ridiculous, reckless escapade all went horribly wrong.

While we are talking about the United Kingdom’s relationship with the European Union, this debate and the last few days have shown that there is a massive problem with the United Kingdom’s relationship with itself. The hon. Gentleman referred to the right problem, but in completely the wrong way. We have been lectured to since June 2016 that we must respect the will of the people. These are the people that the leave campaign lied to, cheated and campaigned on illegally, with dodgy money from who knows where. People were conned into a vote. They were deliberately targeted. The strategy was to identify people who were susceptible to racist propaganda and to bombard them with it until they voted leave. Now we are being told that we are supposed to respect these people, who were treated as mindless, meaningless lobby fodder by the leave campaign for so long, so I will have no lectures in respecting the people from anyone who has been in any way associated with what has to have been the dirtiest and most unprincipled, dishonest, unlawful campaign in recent history—and possibly the worst ever.

I saw a Minister trying to defend that yesterday by basically saying, “Yeah, but everybody knows that folk break the rules in elections.” What is that, coming from a Minister in the Government of what is supposed to be mother democracy to all others? “Yeah, we know that people cheat, lie and break the rules during elections, but just let them get on with it. As long as we get a result, it doesn’t matter if the result has been achieved by fraud. As long as we get a result, things can carry on regardless.” No, things can no longer be allowed to carry on regardless, if it means that elections and referendums in these islands can be bought and sold by dodgy money from who knows what unspeakable sources.

Stephen Gethins (Scottish National Party, North East Fife)

Like me, does my hon. Friend find it absolutely astonishing that those who have had a political lifetime to prepare for Brexit—two years in the most senior positions in Government—are trying to blame everybody else but themselves as the wheels come off the Brexit bus?

Peter Grant (Scottish National Party, Glenrothes)

I would find that astonishing, but I am sorry to say that I am getting used to it, because that is exactly what the hard Brexit campaign have been doing since the referendum was run. In fact, we have still not had a proper debate in this place about what exactly was the reason for Nigel Farage, even before the result was declared, conceding defeat and then changing his mind when the result was announced. It is possibly the only time in history that he has deliberately talked down his own chances of success. I wonder what that could have been about. We are not allowed to discuss that yet, but I sincerely hope that one day, we will be allowed to.

Let us get back to the question in hand: the relationship that the United Kingdom will have with the European Union. I say first that I want us to have a relationship, because after listening to the attitude expressed by many who have spoken from the Tory Benches over the last weeks and months, I wonder whether some of them want to have any kind of relationship at all. I wonder whether some of them still think that the relationship is the one that applied between the United Kingdom and some parts of Europe in the 1930s and 1940s, and whether some of them think that somehow Europe is a colony of the United Kingdom, just waiting to be brought back into the mother-fold. I do not want any part of that kind of relationship with Europe or anywhere else. I want to be part of a nation that regards all other nations on Earth as equally respected partners, that will stand up for its own rights alongside all of them, and that respects the rights of nations throughout the world to govern themselves.

Luke Graham (Conservative, Ochil and South Perthshire)

The hon. Gentleman is talking a lot about respecting other nations, but does he not find it slightly ironic that someone from a party that is based on dividing itself from the country that it currently exists in is then talking about respect for other nations?

Peter Grant (Scottish National Party, Glenrothes)

The House agreed unanimously two weeks ago that the people of Scotland were sovereign. It has unanimously and irrevocably abandoned any claim it ever had to the right to usurp the sovereign will of the people of Scotland. It would be bad enough hearing that kind of nonsense from a Member of Parliament with no understanding of Scotland, but to hear it from somebody who claims to represent part of Scotland is utterly ridiculous.

I will explain once again. I cannot do it in words of one syllable, though, so I am afraid that the hon. Gentleman might need somebody to explain it to him. I respect the results of the referendum in all four nations of these islands. I respect the result of the referendum in England and Wales, but that respect is conditional on it being established that the result was not rigged. I respect the decision of the people of Scotland and demand that each and every MP in this Chamber respect it likewise. I also respect the decision of the people of Northern Ireland—they get left out of this far too often. Their decision was not for a soft border to be introduced, or for the border to be magically moved a few miles inland to avoid any infrastructure at the border. The people of Northern Ireland have voted overwhelmingly on two occasions now for no border controls or infrastructure between them and their southern neighbours, and no solution that the Government put forward that breaks that decision of the people of Northern Ireland can be tolerated or should ever even be contemplated.

In respecting the results of the referendum in our four nations, I want to see the Government put forward proposals that recognise that the biggest partner in this Union voted to leave but that two of the four equal partners voted to remain. Scotland voted to remain by a majority of 24 percentage points. That was the size of the gap. It was not a close-run thing; it was overwhelming. There was a remain majority in every count declaration area in the country.

None the less, we are told that the way in which we are to be dragged out of the EU will be dictated not by proper discussions, on equal terms, between Scotland’s Government and the UK Government and will be determined not by listening to the views of the MPs and MSPs elected to represent Scotland but by a minority of Members of a minority governing party who think that because they can shout the loudest they have the right to tell the Prime Minister what to do. I was disappointed that she caved in to the minority, instead of seeking to find consensus across Parliament.

Luke Graham (Conservative, Ochil and South Perthshire)

Will the hon. Gentleman give way?

Peter Grant (Scottish National Party, Glenrothes)

I will try once again, but I have my doubts.

Luke Graham (Conservative, Ochil and South Perthshire)

The hon. Gentleman is talking about minorities. The SNP is in a minority Administration in Edinburgh. It does not own Scotland and it cannot speak for all of Scotland. We are here—Liberal Democrat, Labour and Conservative MPs—speaking for our constituencies in Scotland. We want to remain part of the United Kingdom and my constituents will respect the votes of the United Kingdom.

Peter Grant (Scottish National Party, Glenrothes)

I would expect everyone in Scotland to respect the result of the Scottish general election in 2016, which returned a majority of MSPs who supported independence and a Government with a mandate that said that if Westminster did to Scotland exactly as it is doing now, it would be grounds to give the people of Scotland a chance to control their own fate.

Hugo Swire (Conservative, East Devon)

On a point of order, Madam Deputy Speaker. We have very little time for this important debate, and I suspect that at any stage you might limit our speeches, yet the debate seems to be turning into an internal, navel-gazing exercise by the SNP about what it has and has not achieved at Holyrood. Can we get back to the subject of the debate, which is the future relationship between the UK and the EU?

Eleanor Laing (Conservative, Epping Forest)

I understand the right hon. Gentleman’s point, but the hon. Member for Glenrothes (Peter Grant) is setting out the context of his remarks. What he says is, of course, not a matter for me, but if he exceeds the parameters of the debate, I will stop him and insist that he stay within them. At the moment, I think that he is erring a little but will soon come back to the main purpose of the debate. I am also certain that he, appreciating that a lot of people wish to speak and that his speech is not time limited, will not take an awful lot longer.

Peter Grant (Scottish National Party, Glenrothes)

Thank you, Madam Deputy Speaker. It goes without saying that I will at all times respect any judgments made by you and by any other occupant of the Chair.

I have said all along that I think that the people of England have made a catastrophic mistake, but sometimes democracy means that people must be allowed to make mistakes and then to sort them out. I rather think that the Government could have made a better fist of sorting out the mistake than they have over the last two years, but we shall see how that pans out.

Simon Hoare (Conservative, North Dorset)

Will the hon. Gentleman give way?

Peter Grant (Scottish National Party, Glenrothes)

No, I really cannot, given that one of the hon. Gentleman’s own colleagues has complained that I am going on for too long. I am sorry, but other Members want to speak.

In return for that, it is not at all unreasonable to ask that the Government who lead the negotiations should have proper regard to the fact that two of the four nations in this partnership of equals voted for a different result. Clearly we cannot have an arrangement whereby some parts of the United Kingdom are in the EU and some parts are not, but—with political will, with a willingness to be flexible, with a willingness to do the unprecedented because these are unprecedented times—there are ways in which the Government could present proposals to the EU that would come much closer to respecting the will of the people of Scotland and the will of the people of Northern Ireland than anything that they have been prepared to put forward in the past.

I do not accept the analysis of the hon. Member for Wycombe (Mr Baker), who is trying to tell us that there is a huge and building majority for a hard Brexit, or a Brexit that respects the European Research Group’s eight red lines. These are the people who do not want us to tie the Prime Minister’s hands. They have put down eight red lines, and if she violates any one of them, she would face of vote of no confidence.

Steven Baker (Conservative, Wycombe)

Will the hon. Gentleman give way on that point?

Peter Grant (Scottish National Party, Glenrothes)

No. The hon. Gentleman spoke for long enough.

Steven Baker (Conservative, Wycombe)

Will he give way?

Peter Grant (Scottish National Party, Glenrothes)

No.

I accept that there are Members here who have a great love for their country, however they describe it, and who want their country to go in a different direction from the direction in which I want my country to go. However, I remind Members once again that this House no longer claims the right to dictate to the people of Scotland the direction in which our country will be taken. This House unanimously accepted a proposal. The Secretary of State for Scotland spoke in favour of it. No one spoke against it. The United Kingdom Parliament has never had the constitutional right to rule over the will and against the consent of the people of Scotland. What has changed in the last few weeks is that the United Kingdom Parliament has finally recognised that. What I am asking the Secretary of State to do, what I am asking the Minister to do, what I am asking the Government to do—

Luke Graham (Conservative, Ochil and South Perthshire)

On a point of order, Madam Deputy Speaker. The hon. Gentleman is misinterpreting the British constitution. There are Scottish Members of Parliament here, representing our constituencies and representing Scotland. The hon. Gentleman is suggesting that there is no sovereignty of this place over Scotland. While we still have MPs in this place, this place is sovereign. The hon. Gentleman is out of order, and he is not telling the truth to all the people who are in the Public Gallery today.

Eleanor Laing (Conservative, Epping Forest)

Order.

Luke Graham (Conservative, Ochil and South Perthshire)

I believe that the hon. Gentleman is misinterpreting the constitution in his oration.

Eleanor Laing (Conservative, Epping Forest)

I am grateful to the hon. Gentleman for correcting his language. “Misinterpretation” I can allow. Of course, the matter of sovereignty is subject to many interpretations—indeed, volumes have been written about it—and it is not for me to judge whose interpretation of the meaning of sovereignty is correct, but the hon. Member for Glenrothes (Peter Grant) is not out of order in what he is saying.

Peter Grant (Scottish National Party, Glenrothes)

Thank you, Madam Deputy Speaker. I am happy to refer the hon. Gentleman to the good reporters of Hansard, who, as we know, never make any mistakes when they record the decisions of this Parliament.

It was disappointing that the exchanges between the two main Front Benches tended to go into the nitty-gritty of customs and trade. It may be understandable, because that is where the battle lines have been drawn recently, but our relationship with the European Union is fundamentally about people.

Once again, the Front Benchers have not spoken enough about the millions of people who are currently living in one another’s countries as a matter of right, and who are seriously concerned about what their future will be. They have not yet spoken about the fact that in a few weeks, many of our great universities will welcome further waves of ambitious, talented young people from Europe and from other parts of the world who will feel that they are coming to a place that is less welcoming than it was a few years ago. The Government can deny it, and the Minister can shake his head, but people from other European countries who live here believe that they are less welcome now than they were before. Racism has been emboldened since the referendum in a way that it was not before.

I accept—I have accepted it for a while—that there is very little that is likely to happen that will prevent Brexit from happening. I am still hopeful that it can happen in a way that respects the will of the peoples of the four nations. I want to live in a country that sees itself as an equal of all others. I want to live in a country that is not only attractive to workers, students and visitors from all around the globe, but that welcomes them all with open arms and open doors. I will continue to live in such a country. At some point in the not too distant future, a decision will be taken as to whether that country remains part of the Union represented in this Parliament.

John Bercow (Speaker, Buckingham)

Order. It will be obvious to the House that a great many people wish to speak and we have limited time. We will start with a time limit of 10 minutes.

Andrew Mitchell (Conservative, Sutton Coldfield)

I draw the attention of the House to my entry in the Register of Members’ Financial Interests.

I want to extend the warmest possible congratulations to the new Secretary of State on joining the Cabinet—I know he has had to pop out for a short while—and I want to salute the speech by my hon. Friend the Member for Wycombe (Mr Baker). Whether one agrees or disagrees with him, he is clearly a man of integrity and principle. He worked incredibly hard in his Department.

This is the first contribution that I have made to any of the Brexit debates. It was 25 years ago that I was a Government Whip engaged in securing support for the Maastricht treaty, with Britain’s two opt-outs, so brilliantly negotiated by John Major. I learned from that experience the deep and fierce passions on Europe that are held by so many of my friends and colleagues across the House, and in particular on the Conservative Benches.

I have to say, in all honesty, that the position today is far worse in terms of internal conflict and disagreement than ever it was during the Maastricht era. Of course the divisions are not just within this side of the House; they run throughout our constituencies—mine was divided almost exactly 50:50—and between friends and family. They have led to a breakdown in collective responsibility in the Cabinet, with the consequent breakdown in normal party discipline far worse than anything we remotely saw during the parliamentary stages of Maastricht. This breakdown in relationships, these deep divisions in this place and outside, are going to be very difficult indeed to heal.

I come now to the White Paper. I was dismayed, although not surprised, that my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) resigned; dismayed because, despite some of the ludicrous, and at times mischievous, briefings he was subjected to, he was so clearly the right negotiator for Britain, with his business and European experience making him uniquely qualified for the task.

I have always felt throughout this process, as a Back-Bench Member of Parliament, that the best interests of my constituents are served by supporting the Executive in these very difficult negotiations: that the Legislature—that is us—should give the Executive some leeway and the benefit of the doubt. That is not an enormously dissimilar approach to the way the 27 other stakeholders in the EU are more or less rowing in behind Monsieur Barnier. But in the end, particularly in a Parliament where there is no majority, and where therefore power has so self-evidently passed from the Cabinet room to the Floor of the House of Commons, it is we, the Legislature, who will decide, and the House of Commons that will reach its verdict on the deal that the Executive negotiates. It is for that reason that the arguments for a meaningful vote are so essential and have had to prevail, as they have done, in the House.

Alex Chalk (Conservative, Cheltenham)

My right hon. Friend makes an excellent point. Does he agree with the maxim of the former President of the United States, Lyndon Baines Johnson, that the first rule of politics is that its practitioners must be able to count? That is so important when we come to consider our debates over the coming weeks.

Andrew Mitchell (Conservative, Sutton Coldfield)

That is a very true maxim, and one that is engraved on the walls of the Government Whips Office.

It seems to me that there are now really only two possible outcomes. The first is a deal based very largely on the Chequers settlement. Both my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) and my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve) have honourably and eloquently voiced reservations and no one is going to be entirely satisfied with what has been produced, but the current Administration have basically bet the farm on the Chequers formula and will now have to repel all boarders, if I may mix my metaphors, whether from Brussels or from Somerset.

Many of us regret the Government’s decision to give in at the first whiff of grapeshot emanating from the west country earlier this week, precisely because giving in will make it more difficult to resist counter-pressure from other directions to change. It is extraordinarily unlikely that we will do better than the plan set out in the White Paper, but there ought to be enough in the broad Chequers outline for people of good will to work with and coalesce around.

Bob Neill (Conservative, Bromley and Chislehurst)

I entirely agree with what my right hon. Friend says. Does he recognise that that is also the sentiment of businesses in this country, from manufacturing through to the key financial services sector? Does he also agree that ultimately the Conservative party is a pragmatic party rather than a rigid one, and imperfect though any deal or proposal may be, it is worth going for?

Andrew Mitchell (Conservative, Sutton Coldfield)

My hon. Friend makes a wise and sensible point.

I have just set out the first option. The alternative option, I believe, is no deal, and I fear it is as simple as that. If there is no deal, I am sure we will survive and all will be fine in 10 years’ time, but it will not be fine at the outset. No deal—at least at first—will threaten our levels of growth and risk the living standards and prospects of those we are sent here to represent. It risks endangering the opportunities we want to see for our constituents, not least the younger ones leaving education and entering the world of work. And it will be this Administration who will be blamed: whether people voted leave or remain, the Conservative party owns this process and will be held to account for no deal. In any event, the Government need now to increase massively their planning for this eventuality and, in my submission, to report to Parliament in detail on it when we return in the autumn.

I have one final point to make. There are those who, with great eloquence, advance the case for a second referendum, but I have come to the conclusion that while it is just possible that Parliament might wish to seek public endorsement of the deal itself, it is most unlikely. That is because if we held another referendum with a different result, why not have the best of three? We see ourselves as a serious country, we have settled the matter in a significant referendum, and for better or worse we are leaving.

Hugo Swire (Conservative, East Devon)

Could not my right hon. Friend cite as an example what happened over the Lisbon treaty and the Republic of Ireland, when its voters were invited to have a second referendum, but not until the EU had made it worth their while to vote in a different way? Does my right hon. Friend fear that that could happen here if we had a second referendum, and be very divisive?

Andrew Mitchell (Conservative, Sutton Coldfield)

For the reasons I have set out, I think another referendum would be profoundly divisive, and actually it might not advance agreement in our country and bring people back together again.

The Government must now use the summer to advance the case that they all agreed at Chequers and move towards some specific agreement with the EU. It will then be for the Government to propose, but for this House to dispose.

Hilary Benn (Labour, Leeds Central)

May I begin by apologising to you, Madam Deputy Speaker, to the Secretary of State and to the shadow Secretary of State for not being present at the start of the debate? As Mr Speaker was aware, I was questioning the Prime Minister as a member of the Liaison Committee on the subject we are debating here now.

I listened to the speech by the hon. Member for Wycombe (Mr Baker) and respect the passion with which he advocates his position, although I profoundly disagree with it. I do, however, gently say to him that I think it is unfair to seek to blame civil servants for the situation in which we find ourselves as a nation when for two years they have had to watch the spectacle of Ministers and Cabinet Ministers openly arguing among themselves about the right course of action, and it was not until Chequers that the Prime Minister tried to bring them together.

Steven Baker (Conservative, Wycombe)

I did not mean to blame civil servants. I mean to blame the broadest governing class, the establishment, which is well represented in here and which clearly does not believe in leaving the European Union. I have paid tribute to civil servants over and over again. The people I have worked with have been the most outstanding professionals and I am proud to have worked with them.

Hilary Benn (Labour, Leeds Central)

I am sure that those with whom the hon. Gentleman worked will appreciate that, but there are particular civil servants who appear to have been singled out for his criticism, which I think is unfair. When we hold elected office as Ministers—there are many in this Chamber who have had that experience—it is our responsibility to take decisions and to lead. If things go wrong, we cannot blame the people who support us in our work. That responsibility falls on our own head.

I also say to the hon. Gentleman, although this is a debate for another day, that the European Union is by no means perfect, and that we need to find a new balance in our relations between self-government and international co-operation rather than destroying it, because the challenges that we face as a world will absolutely require co-operation between nation states in order to solve them. This is about balance; it is not about destruction.

We have certainly arrived at a particular moment in the Brexit process. It would be churlish not to acknowledge what the Prime Minister did at Chequers to bring most of her Cabinet together, but whether we are any further forward in practice is debatable. The truth about the White Paper is that it is a political construct as much as it is an economic one. Just as the Prime Minister is hemmed in by the disagreements within her own party, so is her proposal hemmed in by the red lines that the Government have laid down. The question that arises is: if the proposal does not fly, were on earth is the Prime Minister to go? There are two great questions, in the light of the White Paper. First, is the EU going to agree to what has been put forward? Secondly, is there a majority for it in the House of Commons?

The first question arises particularly in relation to the facilitated customs arrangement. Bluntly, will the European Union agree to let a third country—because that is what we will be when we have left—collect tariff revenues on its behalf? I have yet to be persuaded that it will agree to that. My right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) talked about bureaucracy, and about whether any such arrangement would be ready in time for the end of the transition period. There are many of us in the House who think that remaining in the customs union would be a much better way of achieving the frictionless trade that many of us want to see.

When I questioned the Prime Minister earlier, she indicated that the Government were hoping to get most of the arrangements for the facilitated customs arrangement in place in time for the end of the transition period, but the Minister will be aware that previous Ministers, when talking about its antecedents—its parents, if you like: the customs partnership and max fac—openly acknowledged that they would not be ready until some time after the transition period had come to an end. This is very novel, and it is untried, untested and not yet agreed, but if that proved to be the case, will the Minister tell us what would fill the gap?

Paul Masterton (Conservative, East Renfrewshire)

I understand the right hon. Gentleman’s concerns about the White Paper, and I share some of them, but I think that it is a deal worth fighting for. If the Prime Minister succeeds in getting the European Union to agree to this, is he seriously saying that the Labour party would vote down a deal that was good but not perfect, and walk through the Lobby with some of my hard-line Eurosceptic colleagues so that we would end up with no deal at all, given that we both know the economic consequences that that would have for this country? Will he accept the deal or not?

Hilary Benn (Labour, Leeds Central)

I will be delighted to answer the hon. Gentleman’s question when we have a deal—[Interruption.] We do not have a deal. We have a proposal. It is an opening bid. The time for the House of Commons to make that judgment, as the right hon. Member for Sutton Coldfield (Mr Mitchell) said, will be when the House takes the final decision. At that time, the hon. Member for East Renfrewshire (Paul Masterton) will see what stance each individual Member takes.

Vicky Ford (Conservative, Chelmsford)

Does not the right hon. Gentleman agree that in order to move the negotiations along it would be helpful if those on the other side of the negotiating table understood whether Labour Members were prepared to vote for a deal along the lines of the White Paper? By not answering the question posed by my hon. Friend the Member for East Renfrewshire (Paul Masterton), the right hon. Gentleman creates greater uncertainty for the negotiators.

Hilary Benn (Labour, Leeds Central)

I will not allow the hon. Lady to get away with putting the responsibility for the difficulties that the Government and the governing party are in, which are of their own making, on those of us on the other side of the House.

Owen Smith (Labour, Pontypridd)

Or are we the governing classes now?

Hilary Benn (Labour, Leeds Central)

I am not going to enter into that debate, either. The fundamental truth is that those in Brussels look at the chaos on the Government Benches, created by the efforts of Conservative Members of Parliament, and that weakens our ability to get a deal that is in the national interest. I do not know whether the hon. Member for Chelmsford (Vicky Ford) voted in favour of the customs union amendment yesterday.

Guy Opperman (Conservative, Hexham)

She asked you a question.

Hilary Benn (Labour, Leeds Central)

I answered it. I do not know how the hon. Lady voted yesterday, but the customs union amendment would have been a way of providing much greater certainty to those with whom we are negotiating.

On Northern Ireland, the White Paper basically says nothing more about the backstop, and the reason why we do not yet have a withdrawal agreement is that there is no backstop proposal. All the discussion about the facilitated customs arrangement and the political declaration is for later, because if we do not get a withdrawal agreement, we will not get on to that, and we will not get a withdrawal agreement until we have a backstop proposal from the Government. They produced one in June and said, “There’s a bit missing,” which related to the rules on regulation, so will the Minister say whether, now that the Government have embraced a common rulebook, they plan to apply that to the backstop? It would be helpful if we could understand that.

On services, I echo what my right hon. and learned Friend the Member for Holborn and St Pancras said. Free movement apart—I accept that issue—I do not really understand why the Government have turned their back on a common rulebook for services, especially given what the Prime Minister said in her Mansion House speech about trying to maintain the same approach. On the free movement of people, we will obviously have to wait for the White Paper, but that is one of the single most important issues raised with the Exiting the European Union Committee by those who have given evidence.

The question of sovereignty goes to the heart of all of this, because the objection is that we are somehow going to enter into a state of vassalage—a word that I was not familiar with before it was uttered by the hon. Member for North East Somerset (Mr Rees-Mogg). However, the truth is that this country, which has never ceased to be sovereign, chooses to enter into agreements with other countries in which we agree to abide by the rules of the relevant organisation. That is true of the United Nations, it is true of the European convention on human rights, and it will be true of the WTO if we end up retaking our seat as an independent country. Are we really going to impale the future prospects of the British economy on red lines that arise from an utter state of dispute about the question of our sovereignty and how we need to exercise it?

The Prime Minister now needs to build a consensus, but she will not do so by giving in at the first rustle of incoming letters to the chair of the 1922 committee. I believe that there is a natural majority in the House for a sensible Brexit that ensures frictionless trade, protects the economy, keeps an open border in Northern Ireland and maintains sensible co-operation on defence, foreign policy, security, the fight against terrorism, consumer safety, scientific research, the exchange of data and broadcasting. Our task now is to enable that majority—there is no majority for no deal—to give expression to itself. The sooner the Government seek that out, the better it will be for the country’s future.

Eleanor Laing (Conservative, Epping Forest)

Order. I must reduce the time limit to seven minutes.

Bill Cash (Conservative, Stone)

I am glad to follow the right hon. Member for Leeds Central (Hilary Benn) because he talked about sovereignty, although he rather distorted the focus of it, to put it bluntly, and I will explain why in a moment.

Brexit is ultimately about our democracy, our sovereignty and our self-government. All the other issues, including our right to free trade with the rest of the world, are subsidiary to the questions of sovereignty, self-government and democracy because they flow from them. This is the ultimate test. To get our sovereignty and our democracy, and to get it right, we must govern ourselves. I am deeply concerned about the White Paper and the Chequers settlement for that reason, and I will set out what I believe will be the practical outcome.

We have managed to achieve something quite remarkable, which is to turn the gold of democracy into the base metal of subservience—a new kind of alchemy. In other words, we have effectively turned leaving into not leaving in a whole range of areas, despite the repeal of the European Communities Act 1972 and despite the EU (Withdrawal) Act itself, the promises made in the Conservative party manifesto and, of course, the result of the 2016 referendum.

The European Scrutiny Committee, of which I have the honour to be Chairman, unanimously criticised the Government a few months ago. We argued that they are supplicating themselves to the EU and accepting its guidelines, contrary to our lawful departure under article 50, which gives us the legal authority to leave under the treaties. That is a massive strategic mistake. We have summoned Mr Olly Robbins to appear before our Committee and, although the Prime Minister originally was not prepared to allow him to come, he will be appearing before the Committee—that was resolved this morning.

Simon Hoare (Conservative, North Dorset)

I hear what my hon. Friend says, but is it not the case that, whenever we enter into a free trade agreement with another country, we will abide by the rules and regulations that it seeks to apply to imported goods? The fact that we choose to do so is our choice, as made either by the Executive or by Parliament. Whether we do a free trade agreement with the EU, New Zealand or Japan is immaterial. We will always have to follow the third party’s guidelines and meet its requirements in order to export to that country.

Bill Cash (Conservative, Stone)

My hon. Friend is slightly missing the point. I am talking about the legal framework of the EU itself, which imposes on us a requirement, through the 1972 Act, to accept the rules. I will come on to that in a moment, because I believe that what is happening under the Chequers proposal and under the White Paper will, in many respects, make it worse than it is already.

The big picture is about why we had to leave the EU to regain our democracy. The decisions imposed on us through the 1972 Act—those decisions are imposed through the Council of Ministers—as my Committee exposed a few years ago, will in practice be continued under the common rulebook and will continue to be taken by a majority vote of the 27 without our being there. The Prime Minister even wrote a pamphlet about that in 2007 in which she said

“Parliament is supposed to be Sovereign but in practice it is not.”

That will be made even worse under the White Paper. We will have no voting rights, no blocking minority and a mere useless consultation.

The White Paper mirrors the EEA arrangements, which slavishly follow the decisions of the EU Council of Ministers. Furthermore, given that the Government will already have agreed to the international obligations it will have entered into, it is absurd to suggest that under the “threat of consequences” during the scrutiny process, the MPs appointed to a Committee run by the Whips would ever overturn the Government’s agreed rules. The manner in which the common rulebook will absorb European rules and European jurisdiction through the creation by the UK Government of international obligations binding of itself, with the deliberate connivance of the Government and the Whips, will predetermine the outcome of the parliamentary scrutiny when it reaches the Committee. In other words, it will fictionalise real sovereignty. This White Paper is a sovereignty car crash.

As for the European Court of Justice, the former president of the EFTA court—I have just put this to the Prime Minister in the Liaison Committee—clearly stated only a few days ago:

“the UK would recognise that the European Court of Justice is supreme on the interpretation of EU law.”

He went on to say that under the independent arbitration we would agree

“to refer questions to the ECJ”.

The White Paper itself concedes that the UK makes an

“upfront choice to commit to ongoing harmonisation with the relevant EU rules and requirements”.

Thus, the ECJ will determine not only the interpretation, but the outcome of any disputes, so it will be calling the shots.

I wish briefly to turn to the issues of foreign policy and of Germany, which has been very much underplayed for many, many years in this context. Of course we want to work with other neighbours in Europe—I have no problem with that. However, this problem, which has been with us for so many generations—over the past 20 or 30 years—has simply been ignored to far too great an extent. It is clear that Germany calls the shots, and everybody knows it. To see that we have only to look at what has been going on in Greece; what went on in Ireland when it had the crash; and what happened to Italy, whose EU Affairs Minister recently described the euro as “a German prison”.

The reality is that Germany tore up the Dublin regulation, which led to this incredible surge or refugees, some of which were justified and some of which certainly were not. We have seen how Germany broke the stability and growth pact with impunity, but ensured the manner in which it is applied to other European member states. The result has been that the people of Europe are voting with their feet, and it has also led to the rise of the far right, not only in Germany, but elsewhere. That is one of the things I have argued against ever since I first wrote about this in early 1990. Anyone who believes we could remain in the present EU, from which we have escaped in the nick of time, is simply living in cloud cuckoo land.

I wish to add something about those who would want to reverse this process, although I am not pointing the finger at anybody or any group of people in particular. I have heard of rats leaving a sinking ship but never of rats trying to sink a leaving ship. We really must leave this EU, above all else. We need to regain our democracy and our self-government, and not be dictated to by qualified majority vote, which we have mistakenly accepted for 40-odd years. We live in a world of massive change. We now have the opportunity to decide our own history, our own future, our own economy and our own destiny. People have fought and died for this over generations. We wish to co-operate, but not to be subservient.

Richard Burden (Labour, Birmingham, Northfield)

I am grateful for the opportunity to say a few words in this debate, Mr Speaker. I wish to start by declaring an interest: I chair the all-party parliamentary motor group, which receives secretarial support from the Society of Motor Manufacturers and Traders, the Motorsports Industry Association and the RAC Foundation.

I want to say a few words about why the stakes are so high for that industry and sector in terms of getting our approach to Brexit right. That is not a narrow parliamentary debating point. It is not about which faction is on the up or on the way down in the Conservative party—or indeed in any other organisation. We are talking about the future of that sector in this country. It is a sector that brings in £77.5 billion every year in revenue and which makes up almost 10% of manufacturing output. It is an industry on which literally hundreds of thousands of jobs up and down the country depend. This is about the livelihoods of people in the west midlands and in other parts of the UK. It is about reality. I want to focus my remarks on why, despite the vote earlier this week, I really think that continued customs union membership has to be a negotiating objective of our future relationship with Europe and why the so-called facilitated customs arrangement—whether it be max fac, quite fac, relatively fac or not very fac at all—just really will not cut it.

Every day, trucks deliver £35 million-worth of parts to the UK. Most of those are then shipped back to the European Union. The whole industry relies on a delicate system of just-in-time delivery, with the ability to move parts and goods within the European Union quickly and efficiently and with costs kept to a minimum. Any barrier to that frictionless movement will result in delays at the border, additional customs bureaucracy and extra costs to business.

Just think about Operation Stack and about how quickly the roads to the channel ports got gridlocked when industrial action in France caused delays three years ago. It cost the freight industry £750,000 every single day. Just think about how quickly customs checks at our ports would cause the same kind of snarl-ups and about the millions that it would cost the automotive sector. I say to Members: do not just take that from me; listen to what the industry itself is saying. The Society of Motor Manufacturers and Traders issued this warning:

“Any customs model that fails to replicate the benefits of UK automotive’s current trading relationship with the EU is likely to create delays, disrupt highly efficient “just-in-time” manufacturing and undermine competitiveness.”

As its chief executive Mike Hawes said in May:

“Continuation of customs union membership is a minimum for the car industry. ”

Just listen to the warning from Jaguar Land Rover, which said:

“a hard Brexit would cost £1.2 billion a year in trade tariffs and make it unprofitable to remain in the UK”.

Earlier this year, the Business, Energy and Industrial Strategy Committee warned:

“There are no advantages to be gained from Brexit for the automotive industry for the foreseeable future”.

Its warning must be taken seriously. It said that the most that we can hope for is

“an exercise in damage limitation”

Unfortunately, on current form, the Government are even falling short of that objective.

Matt Western (Labour, Warwick and Leamington)

My hon. Friend makes a very important point. Specifically, does he share my frustration that there was not greater support from the Conservative Benches for new clause 18, which would give that default—the customs union—at the end of January 2019 to give that reassurance and safeguard to the industry?

Richard Burden (Labour, Birmingham, Northfield)

My hon. Friend is absolutely right. If there is one thing that business says time and again it is that it wants certainty. It is the idea that, even if one’s objectives do not go quite right, one has something else there that can provide that certainty for the future. That “backstop” of customs union membership would have provided that much needed certainty.

How can we describe the Government’s approach in the long-awaited White Paper? Well, “courageous” is the term that Sir Humphrey Appleby probably would have used. Others may describe it as fantasy. Nowhere else is that more obvious than in relation to what it describes as the facilitated customs arrangement. If we read through it, we see gobbledegook explanations that are so opaque that they could have been written by Sir Humphrey himself.

Just look at how the White Paper suggests we deal with imports from third countries arriving in the EU for onward transfer to the UK and vice versa. The Government say that the EU’s customs approach will be “mirrored” at the same time as we will be imposing our own tariffs and customs arrangements elsewhere. As far as I can see, this is entirely reliant on a non-existent track and trace system to verify origin and tariff application, but until that technology exists, we will need to check everything meticulously at the border to apply different tariffs and different rules to different things. Put together, that means that the UK is taking on a huge bureaucratic and systematic burden for every single item imported to, or transferring through, our ports and slowing down the movement of goods in the process and causing the very friction that we always say that we want to avoid. But now, after the last couple of days in this Chamber, the Government have managed to twist themselves into even more knots by kowtowing to the Brexit fanatics on their own Back Benches. Doing so has made the White Paper’s proposals, problematic as they were, even more unworkable.

Of course, we know that the motivation of at least some Conservative Members is to create a proposal so chaotic and so unreasonable that we crash out with no deal and fulfil some sort of long-held Eurosceptic fantasy project. That is why I do not believe that the Government’s suggested approach will work. Far better and far simpler to remain in a customs union with the European Union so that trade between the EU and the UK can be truly frictionless; so that there really is simplicity and maximum facilitation of goods arriving from third countries, with one easily understood set of external tariffs; so that there is no hard border on the island of Ireland; and so that we can continue to benefit from the trade deals that the EU has with 68 other countries, without having to renegotiate them.

We could have made the resolution of this whole thing a lot simpler if the Prime Minister had not said that single market membership was a red line in the first place. Were it not for the chaos and the confusion that the Government have created, we could, by now, be an awful lot further on than we are. That is why I urge the Government, even at this late stage, to listen to the voices of industry when they say that the only reliable way to achieve the frictionless trade that we need is to remain in a customs union with the European Union.

John Baron (Conservative, Basildon and Billericay)

I want to address my remarks to the two core tenets of the EU: the customs union and the single market. I think there is a danger in this place, and perhaps in certain sections of the community outside, of taking the view that people did not know what they voted for when they voted to leave. Not only is that incorrect, but it can come across as very patronising and condescending.

I think we know what people voted for. The twin tenets of the EU are the single market and the customs union. If that point needs to be reinforced, we have only to look at the two manifestos of the two main political parties at the last general election. They confirmed that we would be leaving the customs union and the single market, and 80% of the electorate voted knowing that to be the case. I take exception to the view that somehow the British electorate did not know what they were voting for. It is particularly important to say that, because I believe that if this Parliament does not accept the will of the British people, we risk pushing the mainstream to the edges of the political spectrum. That would not be a healthy development for democracy in this country.

Peter Grant (Scottish National Party, Glenrothes)

Does the hon. Gentleman not accept that the information that the Government sent out before the referendum was that even in the event of a leave vote, their intention was to remain in the single market? Is it not also the case that the Government won a majority on a manifesto that said they would stay in the single market, and then lost that majority on a manifesto that said they would leave it?

John Baron (Conservative, Basildon and Billericay)

I think it is quite straightforward. We had a referendum on the question of whether people wanted to stay or leave. The decision was to leave, and the political parties woke up to that fact and put that decision at the heart of their manifestos, on which we then went to the country. I remind the House that it is there in black and white in both manifestos: we will leave the customs union, and we will leave the single market. My concern about the Chequers agreement is that having gone to the country on that basis, there seems to be a bit of a fudge that needs explaining by the Government.

Let us take the common rulebook and the customs union. It is no accident that the EU has had a problem negotiating free trade deals with countries outside the EU. It does not have a free trade deal with the US, with Australia or with New Zealand. It struggles on emerging markets—big economies like Brazil, India and China. The reason for that, in large part, is that it has protectionist non-tariff barriers that a lot of countries cannot abide. If we incorporate those protectionist non-tariff barriers into our own regulations, that will make our task of negotiating trade deals that much more difficult. It will therefore take away from us one of the key upsides of Brexit, which is to negotiate our own trade deals.

We all have our own views of President Trump, but one thing that he was very direct about, stating the blindingly obvious, was that if one incorporates protectionist non-tariff barriers as part of one’s own regulations, it will—surprise, surprise—be more difficult to negotiate trade deals. That is why there is concern among Conservative Members about the common rulebook. If we incorporate those rules, it makes trade deals more difficult.

Wera Hobhouse (Liberal Democrat, Bath)

Is that not exactly what President Trump is currently doing—building trade barriers, because he is putting up tariffs?

John Baron (Conservative, Basildon and Billericay)

There are pluses and minuses with President Trump, perhaps, but I think he is trying to be a very good friend of the UK. Unlike President Obama, who said that the UK would be at the back of the queue, it is quite clear that President Trump does want to do some form of trade deal with the UK. He is stating the obvious when he says that incorporating protectionist non-tariff barriers is going to make trade deals much more difficult.

Let me move on to freedom of movement. The SNP spokesman said that racism is on the rise in this country. There is a sort of implication that if somebody voted to leave, they were somehow anti-immigration. That is completely wrong. Under the current immigration policy, because we are members of the EU we discriminate against people wishing to come to this country from outside the EU. We cannot say no to immigrants from Europe or from the EU, but we have to say no to immigrants coming in from outside the EU. That, in any language, is discriminatory. One of the main benefits of Brexit will be that we will be able to forge an immigration policy that will be not only controlled but fair—it will not discriminate on the basis of nationality as the current policy does.

On the second big idea, we are being told that with a mobility framework, freedom of movement will end. However, I worry slightly that it is not being clearly explained how a mobility framework will be any different from freedom of movement. That needs fleshing out by the Government. If I know anything about my constituents and constituents across the country who voted for Brexit, we want a controlled but fair immigration system, and the Government need to better explain how the mobility framework is going to deliver that. Without that explanation, I think they are going to struggle in selling this package to the country, because we no longer want an immigration system that discriminates against the rest of the world.

I want to make a final point about leaving on WTO terms. There has been a little bit of nonsense spoken about this issue. There have been too many lawyers in this debate and not enough businesspeople. Whoever has been exposed to business will know that one can have frictionless supply chains crossing customs arrangements. It happens right across the globe, particularly in the far east.

Wera Hobhouse (Liberal Democrat, Bath)

rose—

John Baron (Conservative, Basildon and Billericay)

No, I have taken one intervention from the hon. Lady and I am not going to take another. I have taken my two.

There are these arrangements right across the globe, and they are not a hindrance to trade. We trade profitably with many countries outside the EU on such terms, and that trade is prospering. Those countries are often faster growing than the EU.

The idea that we must protect the supply chains and that leaving on WTO terms would disrupt them is utter nonsense. Look around the world and at the far east in particular, where a number of complex supply chains cross customs arrangements without any friction. A particular example of that is Japan, which has outsourced much of its manufacturing capability to countries such as China because of the strength of its yen. The bottom line is that that has made for good trade and actually it has helped to lower costs.

If we ignore the wishes of the British electorate as expressed at the referendum, I really do worry that we will push the mainstream in this country towards the extremes of the political spectrum, because people will have lost faith in this place to deliver what they clearly believe they voted for, which is to leave the EU, and that meant leaving the customs union and the single market. Anything less than that will be seen as a betrayal by the British electorate.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I welcome the Secretary of State to his new role—we wish him the best of British. He will know that my views and his diverge as much as is possible on this subject. Although I could point out that my views are closer to those of his constituents than his are, but perhaps he can point out that his views are slightly closer to those of my constituents than mine are, such is the way things are working on Brexit.

I am confused by the contribution of the hon. Member for Basildon and Billericay (Mr Baron). There are clearly constituencies where every single person who spoke to him was raising the single market and customs union in the run-up to the EU referendum, whereas in my constituency every single person talking to me was talking about immigration. I cannot recall someone saying during the referendum campaign, “I want to be out of the single market and customs union.” May I point out, that if the European Union does not currently have a trade deal with India, that is because of our then Home Secretary—now our Prime Minister—rejecting the trade deal because it would have required issuing visas to Indians? He needs to look more carefully at some of the reasons why such things have not happened.

The hon. Gentleman will be aware that the number of migrants to the UK went up in 2017 compared with 2016 because there was growth in non-EU migration, which is something he omitted to point out in his comments.

John Baron (Conservative, Basildon and Billericay)

Does the right hon. Gentleman accept that the practical effect of the immigration policy we are pursuing is to discriminate against countries outside the EU?

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I agree that there is clearly a difference between the treatment of EU citizens and migrants from outside the European Union, but the number of non-EU migrants has gone up, which has more than compensated for the numbers of EU citizens coming to the United Kingdom. I assume he welcomes that.

I see the hon. Member for Bromley and Chislehurst (Robert Neill) is back in his place. The Conservative party was a pragmatic party, but I am afraid to say it is clearly no longer such. It is now very much a party driven by ideology. I suspect that is why he is as uncomfortable with it as he is.

Bob Neill (Conservative, Bromley and Chislehurst)

Perhaps the right hon. Gentleman would like to consider this: at least virtually the totality of the Conservative party was here to take part in the debate, which cannot be said about other parties. Will he also bear in mind that what matters to both his constituents and mine, in areas heavily dependent on the City and financial services, is that we ensure security of access to the best available talent and, above all, a form of regulatory alignment that goes beyond the proposals in the White Paper? They are a starting point, and I support the White Paper, but we need to go further to give the City the ability to bring in the billions of pounds of tax revenue that subsidise the public services of everyone in this country, including leave voters as well as remain voters.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

I am very happy to say that I agree entirely with the point the hon. Gentleman has made. We need to make sure that the City can continue to operate and that we are able to attract the skills we need.

The subject of this debate is the future relationship between the UK and the EU. I am very clear, and this will not be a surprise to anybody, that I would like us to stay in the European Union. I believe that that is still going to be possible, but for it to happen people will clearly have to vote for it in a final say on the deal. How do we get to a final say on the deal?

The first thing we need is for article 50 to be extended. I know the Prime Minister has said on a couple of occasions that that is not going to happen, but the likelihood of securing any sort of deal before March 2019 is for the birds. It is simply not going to happen, so an extension will be required. An extension would be needed to enable the legislation required for a final say on the deal to be passed, as well as to enable such a campaign and the votes at the end of it. I think it is perfectly possible that the EU may be about to offer to extend article 50, or the UK could of course seek to do it.

The other thing that is clearly required if there is to be a final say on the deal and a people’s vote is to take place is that a majority—I would say a clear majority—of people have to vote to stay in the European Union. At the point that such an election campaign took place, there would in reality be only two options: either voting for whatever deal the Government had secured, which I suspect would probably be no deal at all; or voting to stay in the European Union.

Why would people vote to stay in the EU? First, there is Trump. Frankly, if Trump is our friend, then who needs enemies? Trump has made the world a more dangerous place. In my view, he cannot be counted on to provide security. We and, yes, others in the European Union will have to step up to the plate to do that, but I do not think he can be counted on to do so.

We need to develop an offer that appeals not just to remainers, but to those who voted to leave. That will require some movement on the question of freedom of movement. I am sure that Members are aware that the issue of migration within the EU is a really big challenge for its members. At the European Council a couple of weeks ago, that was what they were worried about. Frankly, they were worried not about Brexit, but about migration within the European Union. They are very focused on that, and progress on it might be possible.

We also need to be able to demonstrate that the UK would be an active member of the EU and fighting to reform it, so that it would not simply be the EU carrying on as it was, but an EU subject to change. Of course, we would need to sell much more effectively than we have ever done before the advantages of EU membership. The Government sometimes try to claim the credit for things that the EU have done. Most recently, for instance, they have done so in relation to strengthening the rights of millions of British citizens who take package holidays or book linked travel. Our Government have claimed credit for something that the European Union had actually done. When the EU does things that are positive, we need to make sure that we talk about them.

The other thing we need to do is to set out the impact of voting for the Government’s deal. I am afraid that what the Government are offering as a result of the Chequers statement is no deal. Notwithstanding the point made by the hon. Member for Wycombe (Mr Baker), I am afraid that it is very clear that the purpose and objective of ERG members is to leave us in a position where we have no deal. That is what they are trying to achieve, and that was the purpose of their amendments, which comprehensively trashed the Chequers statement. I am afraid to say that the Prime Minister is so weak that she had no alternative but to walk into their trap.

What does no deal mean? Some Members seem to think that no deal would be a temporary aberration that would cause us a few problems for a couple of weeks, but that is clearly not the view of the port of Dover and Airbus or, for instance, of people concerned about medicines coming into the UK, their availability and how quickly they come to market. No deal will not cause problems just for a few weeks or so. I suspect that it will mean five years of difficulties for the United Kingdom.

One thing we will not do is allow the Brexiters to say that this is the European Union’s fault—the hon. Member for Wycombe made this very clear. The Brexiters claimed that this would be a straightforward process that would all be over and done with overnight. They said that it should be very simple, and that trade deals would be struck with a landmass 10 times the size of the European Union, which would, of course, probably need to include a few planets as well, as that is not physically possible. They made that claim. They pretended that it was going to be straightforward. If we end up in a no deal scenario, a catastrophe for the United Kingdom, that is their fault and we will not let them get away with it.

To adapt the words of the outgoing Foreign Secretary, it is not too late in my view to save the United Kingdom. We can provide the people with a way out of this ideological folly. I am not too scared to test the will of the people and I am not too scared to be bound by the result. Why are Ministers?

John Bercow (Speaker, Buckingham)

Order. I would like to accommodate a further two speakers, but that will require a generosity of spirit on the part of the right hon. Member for East Devon (Sir Hugo Swire), who I shall call next, and that is up to him.

Hugo Swire (Conservative, East Devon)

We can all quibble about how this whole process has been handled, from the perhaps premature triggering of article 50 through the backstop arrangements and how much we will pay the EU. Indeed, some of us have continuing concerns about the continuing reach of the European Court of Justice—

John Bercow (Speaker, Buckingham)

Order. My apologies, I should have formally announced the five-minute limit.

Hugo Swire (Conservative, East Devon)

Thank you, Mr Speaker.

We are where we are, and this White Paper is the first time, in all fairness, that those with whom we seek to negotiate will have some idea of what we seek to negotiate. That is important in itself. We need to learn the art of compromise. We did not get a clear indication one way or the other either in this House or in the country, and we should now compromise and do what is it the best interests of the British people. It seems to me that this is the best we have so far.

The most important thing to me is business certainty. This country has had an extraordinary record of inward investment, and that is a climate that we have unfortunately begun to damage through all these deliberations over where we are now heading. We have heard perhaps too much from the big businesses and multinationals, all of whom employ huge organisations or have people to represent them, such as the CBI. We heard very little from small businesses. Those are the businesses of our constituents. This is often forgotten, but there are only 2,000 plcs in this country; 0.3% of UK business, employing 2.6 million people and providing 8% of the workforce. There are 4.8 million family-run businesses in this country, and they make up 87% of all UK private sector businesses —5% are manufacturing firms, and 19% are construction firms. They employ 12.2 million people, 38% of the 32.2 million UK workers. That is 46.5 % of UK private sector employment in these smaller, often family-run companies. They generated £149 billion in tax in 2016. These are the companies that we seek to protect. These are the companies that need to grow. These are the companies we need to enshrine in a framework with the EU that ensures they can continue to prosper. They are the lifeline of the economy and the lifeblood of our constituencies.

I shall end soon, Mr Speaker, but let me just say that those who seek a second referendum basically want to introduce a new range of questions and to overturn what the British people decided the first time. We saw second referendums in Denmark on Maastricht and in Ireland on the Nice treaty. In 2008, the first time that Ireland was invited to reflect on the Lisbon treaty, 53.4 % rejected it, versus 46.6%. Lo and behold, a year later, after negotiations with the EU, the Irish people were invited to vote again and voted in favour. You know what? They were told at the time that they did not understand the question. They were told that it was too complicated for the people—the same accusations that people make in a very condescending way against those people who voted to leave. I voted to remain, but the difference is that I abide by the wishes of the British people—I do not question them, as the right hon. Member for Carshalton and Wallington (Tom Brake) did—and that is what the rest of the House should now do.

Owen Smith (Labour, Pontypridd)

For the avoidance of doubt, let me start by saying that I am absolutely campaigning for a second referendum. I am doing so because I want to give the people of this country an opportunity to turn away from Brexit, which I think will be damaging to their prosperity and to the security of all of us in this country. I will continue to make that argument in all sincerity.

Today’s debate and the events of the past 10 days have been edifying and terrifying in equal measure. They have exposed the full horror of the Tory civil war and, more importantly, the gravity of the risks that all the people in this country are now being exposed to as a result of the potential outcomes of that Tory civil war. We have seen resignations and revelations, and even the sinister, though softly spoken, speech by the hon. Member for Wycombe (Mr Baker), who is now not in his place, threatening in effect his Front Benchers—the governing classes, as he put it, by which I think he was coyly referring to the Prime Minister, the Chancellor and other people advising the Conservative party.

Those threats have been heard in the country and they have revealed, as other speeches have today, that some of the Brexiteers have always wanted sovereignty to absolutely trump security or prosperity. They have always wanted an isolated, independent Britain. They have wanted to row back to a fantastical past that cannot deliver in the modern era. We in the Opposition have to acknowledge that, and that the scale of risk that the country faces is grave. The Prime Minister’s White Paper was a brave attempt to try to recognise that, and to at last acknowledge that an integrated, involved relationship with the European Union is not only necessary but inevitable. There are over 100 references in the White Paper to common rules, common partnerships, common objectives, the common rulebook—just about every page is littered with such examples, which is precisely why it sparked the neuralgia on the European Research Group Benches, and precisely why we have effectively seen the coup of the last week and the capitulation of the Front Benchers to the ERG.

We must realise how grave the risks are, because we are now blithely talking about an exit on World Trade Organisation terms, as though that is something that we can countenance in this House. We cannot. The risks are enormous. Calculate what it would cost our country in extra borrowing, which is something that the Tories used to bang on about endlessly when I first came into the House. “You are hanging debt around the neck of future generations,” is what we used to hear from George Osborne and David Cameron. The reality is that the hit that the country will take—the extra borrowing that we will require as a result of the hole in our public finances—if we pursue the Chequers model is around £40 billion per annum in the long run, at 15 years out. We will not, unfortunately, get to a good place in 10 years, as one hon. Member said. The Government’s own analysis says that we will be £40 billion worse off.

What happens if we pursue WTO terms—if we take the no deal option that is now being openly, terrifyingly advocated by so many on the Tory Benches? We heard earlier that there is ostensibly now a majority among the ERG group for that, and much more than the 40 that we heard from the hon. Member for Wycombe would vote for it. According to the Government’s analysis, the impact would be a 7.7% reduction in our GDP. That equates to about £150 billion less per year. It is more than we spend on the NHS. We are talking as though we are about to throw away the entire annual expenditure of the NHS to satisfy the fantasies of the hon. Member for Stone (Sir William Cash) and others, who have been banging on about this not just in the past few years, but for 30 years.

Luke Graham (Conservative, Ochil and South Perthshire)

The hon. Gentleman is making a lot of criticism of the Conservative party, but does he accept that there have been over 100 resignations on the Labour side of the House, and that the customs union amendment failed because Labour Members voted with the Government? It is fine to criticise, but he is wrong to say that this is just a Conservative problem; it is right across the House.

Owen Smith (Labour, Pontypridd)

I am criticising, in large measure, a small part of the Conservative party that is currently holding the Treasury Bench to ransom, but I would absolutely condemn the actions of Labour Members who failed to support the amendments this week and so allowed the Tories not to put in place some of the backstops that would mitigate the gravest risks we face—the risks of capital flight, job losses and massive borrowing being hung around the necks of our children; the risk to our manufacturing industry; the risk that our pharmaceutical industry, in which I worked for many years, will be unable to supply medicines; the risk of losing prosperity and security; and the risks in Northern Ireland. How can we countenance allowing any return to violence, which the Chief Constable of the Police Service of Northern Ireland warned would be the consequence of a hard Brexit? How can we countenance being so reckless as to allow that to happen?

We have to fight this at every turn. I hope that my right hon. and hon. Friends on the Front Bench will listen and understand that there is no such thing as a good Brexit or a “jobs first” Brexit. We have to acknowledge that there is just the hard Brexit now being proposed by Members opposite. We have to stand up for the only way in which we can reconsider this—a people’s vote. Trust democracy, trust the people, and ask them to choose between this sovereignty fantasy and the reality and prosperity we need.

Paul Blomfield (Labour, Sheffield Central)

After the last couple of days, today’s debate has something of the feel of the morning after the night before. Indeed, it has been a sobering debate, reflecting the depth of the crisis that we are in. Two years on from the referendum, the Government are still unable to speak on behalf of the British people. The most important negotiations the country has faced since the second world war are being led by the most dysfunctional Government in living memory.

It does not have to be like this. The Prime Minister was right at Mansion House to say we had to face up to hard facts, but that meant facing down those in her party who put their ideological hostility to the EU before the interests of the country. If she had faced up to the facts two years ago—if she had said then that the country had voted to leave the EU but by a painfully close margin, and that it was a decision to depart but not to destroy our economy, and if she had said that we would leave the EU but remain in a customs union and close to the single market and the members of the agencies and partnerships we had built together—she could have secured a clear majority in this House and built a consensus in the country, which had been so bitterly divided by the referendum.

But she did not. Instead, she handed a veto to the European Research Group—the people who have sought to undermine not just herself at every step but every one of her predecessors. They are, as John Major commented recently, even more hard-line than those he faced. They are less than 10% of this House but are calling the shots. The tail is wagging the dog. They are demanding the red lines that have held us back—no single market, no customs union, no European Court of Justice, no agencies. To be fair to the Prime Minister, she put that proposition to the British people in last June’s general election. She sought a mandate for an extreme Brexit, but she did not get it. She went into that election with a majority and came out without one.

I remind the hon. Member for Basildon and Billericay (Mr Baron), who sought to misquote our manifesto, as others have done, that at that election we said:

“We will scrap the Conservatives’ Brexit White Paper”—

as we would this one—

“and replace it with fresh negotiating priorities that have a strong emphasis on retaining the benefits of the Single Market and the Customs Union – which are essential for maintaining industries, jobs and businesses”.

John Baron (Conservative, Basildon and Billericay)

Will the hon. Gentleman give way?

Paul Blomfield (Labour, Sheffield Central)

I will not, because I have answered the hon. Gentleman’s points and we cannot get into a detailed exchange.

The result of the Prime Minister’s approach has been paralysis, not simply on Brexit but on the other crises facing our country. The Government have neither the authority to deal with Brexit nor the ability to tackle the issues that led to it. There has been a dawning realisation from the Prime Minister that those early red lines were a mistake, but each time she tries to step over them, she has been hauled back by the extremists within her party.

At Chequers, it did seem that the Prime Minister was beginning to face up to the hard facts—to break free from the icy grip of the European Research Group. Not far enough, not soon enough, but tentative steps towards reality, towards a customs settlement and a regulatory alignment demanded by business—a point made by my hon. Friend the Member for Birmingham, Northfield (Richard Burden)—and also necessary to resolve the issue of the Northern Ireland border.

Of course, the former Brexit Secretary was right when he endorsed Donald Trump's view that the plan would “kill” the prospect of a US-UK deal; and of course, it was just a starting point, not the end point of negotiations. It would inevitably involve further movement by the Government. Knowing that, the ERG tore it to shreds, and Monday night’s debacle was the last nail in the coffin. Rather than defeat the amendments—as they could have, overwhelmingly—the Government rolled over and accepted wrecking amendments that left their White Paper dead in the water. The Minister shakes his head, but if there was any doubt about its death, the hon. Member for Wycombe (Mr Baker) laid it to rest today in what was, frankly, a chilling contribution.

While the Prime Minister turns on those in her own party who would welcome the Chequers plan, threatening them, she embraces those who would destroy her, and she continues to bring them into Government. Having resigned, the hon. Member for Wycombe was succeeded as a Brexit Minister by his predecessor as chair of the ERG, the hon. Member for Daventry (Chris Heaton-Harris) —who, of course, joins another former chair, the hon. Member for Fareham (Suella Braverman). It is beginning to look as if there is a secondment scheme going on between the ERG and the Brexit ministerial team.

Bill Cash (Conservative, Stone)

Will the hon. Gentleman give way?

Paul Blomfield (Labour, Sheffield Central)

No, I will not; I have not the time. I would love to, but I have not the time.

As I say, it is beginning to look as if there is a secondment scheme. So we may yet see the hon. Member for North East Somerset (Mr Rees-Mogg) make his way down to the Front Bench—or perhaps he thinks he has more power where he is.

Sixteen months into the negotiations, the White Paper says that the Government will now

“charge the UK’s negotiating team to engage with the EU’s at pace”.

The time for “pace” was long ago, but better late than never. It is 16 months since the House set the clock ticking, and in three months we need to resolve the deal. Whatever the polls say now, the public will not thank politicians who deliver a damaging Brexit based on false promises.

Without the threats and bullying that Members faced last night, there was a majority across the House in favour of a sensible approach—one that respects the referendum result, one that protects our constituents’ jobs and livelihoods. If the Government are not willing or are not able to deliver that sensible result, in the months ahead it will be the duty of this House to step in.

The rest of the debate is in Hansard.