PARLIAMENTARY DEBATE
Government Negotiations - 7 September 2017 (Commons/Commons Chamber)

8. What steps his Department is taking to ensure a flexible approach in the Government’s negotiations on the UK leaving the EU.

Both sides in the negotiation are clear about the fact that we want to achieve the best possible outcome and the strongest possible partnership. We have said repeatedly that, to achieve that end, both sides must demonstrate a dynamic and flexible approach to negotiations. In papers published by the Government, for instance, we have made it clear that we stand ready to protect the voting rights of EU nationals living in the UK. There will be give and take as the negotiations progress, but the destination is clear: a deep and special partnership that sees both parties emerge strong and prosperous, capable of projecting our shared values, leading in the world and demonstrating our resolve to protect the security of our citizens.

Given that a transitional arrangement is likely to be required, and if the Government are to be flexible, a simple solution to consider is an off-the-shelf arrangement with some modifications. Would the Government be willing to consider rejoining the European Free Trade Association and then the European economic area, with suitable and appropriate amendments and modifications?

As my hon. Friend will understand—he heard me say this earlier—we considered that in some detail before the Lancaster House speech. We concluded that it did not meet the requirements for which the British people voted and that it would not be as easy to negotiate as an alternative bespoke transitional arrangement might be.

Now that the Secretary of State has accepted that there will need to be transitional arrangements, is it the Government’s policy that the UK will continue to make payments into the EU budget for that period, however long it lasts?

I think this must be the 20th time I have said to the right hon. Gentleman that I am not going to negotiate from this Dispatch Box, and he should know that. What I will say to him is that the transitional arrangements as we have described are an implementation period—or phase, or any of all the other different words used for it—and are there for one purpose: to ensure, in his words, that we avoid a cliff edge. That is not just true of us: it is not just the UK that has come to this conclusion—some time ago as it turns out—but so have the other members of the European Union, and one of the things we have been doing in the past six to nine months is ensuring that they understand from their point of view precisely how valuable to them a transitional arrangement will be.

It is right that we meet our financial obligations when we leave the European Union, but past contributions we have made have funded vital infrastructure across Europe, including eastern Europe, which will have a long-term financial benefit for the EU. Has this been discussed in negotiations and used to mitigate our final bill when those negotiations conclude?

We have made that very plain: the words used are that we expect to respect our international obligations but also to have our rights respected. That point has been made very clear. One of the reasons why the last negotiating round was perhaps a little tenser than the previous one is that we were making it very plain what we judged the legal basis to be, and that was not always comfortable.

What assurances can the right hon. Gentleman give to financial services companies and other firms that are seriously concerned that they now face the cost and uncertainty of three successive rule books: the single market, the post-single market transition and the post-transition agreement?

As ever, the right hon. Gentleman makes a good point, and that does mean that we will want to ensure there is a single transition, not two different transitions in and out of the transition period. That is why, as the right hon. and learned Member for Holborn and St Pancras (Keir Starmer) quoted me as saying, I said we want the transition arrangement to be as close as possible to the current circumstance. It will be remembered, too, that when I responded to the right hon. and learned Gentleman I said there are three effective sets of criteria: one, time for the Government to accommodate; two, time for other Governments to accommodate; but, importantly too in his context, time after the decisions for financial services and other industries to do their own accommodations.

Last week, Michel Barnier said it was not fair that EU taxpayers should continue to pay for Britain’s obligations, but is it fair that British taxpayers should continue to pay for the EU’s obligations in circumstances where we may not be benefiting from subsidy schemes post-withdrawal?

My hon. Friend raises a point that we have already raised with Michel and the remainder of the team. At the moment, the Union’s negotiating team are taking the approach of stressing what they term legal responsibilities, and we are challenging them. When we get to the end of that, we will make some decisions about political and moral responsibilities, and also negotiating outcomes, and that is where the decision will, I suppose, be made.

The Government took flexibility to new heights over the summer, taking just under three weeks to jettison one of only two proposals set out in their customs arrangement paper on the basis that they represented “blue sky thinking”. Can the Secretary of State tell us how many of the other proposals set out in the various future partnership papers are effectively just creative ideas that are unlikely to survive contact with reality?

I do not think the hon. Gentleman was paying attention the day before yesterday: I said to him then that blue sky thinking, talking to an American audience, is a description of an imaginative approach.

May I gently say to my right hon. Friend that I would have thought that what everybody is trying to do is to form some kind of consensus? I think we all agree that we have a very, very short period to negotiate all manner of highly complex agreements, including a transitional period agreement. So may I suggest to him that, rather than keep ruling things out, we put everything back on the table and look at what we call “Norway for now”, which we would simply adopt as a transitional period until such time as we come to a final arrangement with the EU?

Well, my right hon. Friend can be as gentle with me as she likes. The simple truth is that, before the Lancaster House speech, we went through a process of considering what the best negotiating strategy would be, in some detail. We looked at who would have to negotiate with, where the compromises would have to be made and what the gains would be. We came to the conclusion that the route we are now taking, involving discussions with the member states initially and now with the Union and a transition based on maintaining the important components of what we currently have, is the best way to do it.