PARLIAMENTARY DEBATE
EU Exit Negotiations - 5 September 2017 (Commons/Commons Chamber)

I will now update the House on the two rounds of negotiations with the European Union which took place in July and August. While at times the negotiations have been tough, it is clear that we have made concrete progress on many important issues. [Laughter.] I rather wondered whether Opposition Members would fall for that. I wonder how they are going to explain to their constituents that they do not care about the pensions and healthcare of 4 million people. I would like to thank all the officials who are working hard, both at home and in Brussels, to make this happen.

Colleagues will have received my letter following the July negotiation round, dated 9 August, which set out the dynamics of that round in some detail. These rounds are not at this stage about establishing jointly agreed legal text; they are about reaching a detailed understanding of each other’s position, understanding where there might be room for compromise and beginning to drill down into technical detail on a number of issues. During both rounds, discussions took place on all four areas, including specific issues relating to: the rights of citizens on both sides; Northern Ireland; the question of a financial settlement; and a number of technical separation issues. I will speak briefly about each in turn.

Making progress on citizens’ rights has been an area of focus for both negotiation rounds and we took significant steps forward in both July and August. We have published the joint technical paper, which sets out our respective positions in more detail, and this has been updated following the August round. It underlines both a significant alignment between our positions and provides clarity on areas where we have not, as yet, reached agreement. In July, we reached a high degree of convergence on: the scope of our proposals on residents and social security; the eligibility criteria for those who will benefit from residents rights under the scope of the withdrawal agreement; and a shared commitment to make the citizens’ application process as streamlined and efficient as possible. In August, we agreed: to protect the rights of frontier workers; to cover future social security contributions for those citizens covered by the withdrawal agreement; to maintain the rights of British citizens in the EU27 to set up and manage a business within their member state of residence, and vice versa; and that we should protect existing healthcare rights and arrangements for EU27 citizens in the UK and UK nationals in the EU. These are the European health insurance or “EHIC” arrangements.

These areas of agreement are good news. They may sound technical, but they matter enormously to individuals —something Opposition Members might remember when thinking about their own constituents. The agreement on healthcare rights, for example, will mean British pensioners living in the EU will continue to have their healthcare arrangements protected both where they live and when they travel to another member state, where they will still be able to use an EHIC card. On mutual recognition of qualifications, we have made progress in protecting the recognition of qualifications for British citizens resident in the EU27, and EU27 citizens resident in the UK. In fact, each one of those areas of agreement is reciprocal, and they will work for Brits in the EU and EU27 citizens in the UK. They help to provide certainty and clarity for EU27 citizens in the UK and UK citizens in the EU27. They will make a tangible difference to those people’s lives. I hope everyone recognises the importance of that.

The outcomes of the discussions demonstrate that we have delivered on our commitment to put citizens first, and to give them as much certainty as possible as early as possible in the process. Of course there are still areas of difference, on which we continue to work. For example, we will need to have further discussions on the specified cut-off date, on future family reunion, and on the broader issue of compliance on enforcement. Progress in those areas will require flexibility and pragmatism from both sides.

During the summer negotiating rounds, a number of issues emerged in the EU offer that will need further consideration. For example, the European Union does not plan to maintain the existing voting rights for UK nationals living in the EU. We have made it clear that we will protect the rights of EU nationals living in the UK to stand and vote in municipal elections. Similarly, the EU proposals would not allow UK citizens currently resident in the EU to retain their rights if they moved within the EU.

Even in areas in which there has been progress, more is needed. While the EU has agreed to recognise the qualifications of UK citizens resident in the EU, and vice versa, we believe that that should go much further. The recognition must extend to students who are currently studying for a qualification, it must apply to onward movement by UK citizens in the EU, and it should extend more broadly to protect the livelihoods of thousands of people which depend on qualifications that will be gained before we exit the EU. In those areas, the EU’s proposals fall short of ensuring that UK citizens in the EU and EU citizens in the UK can continue to lead their lives broadly as they do now.

On separation issues—a very technical area—we established a number of sub-groups. They made progress in a number of specific areas, and drew on papers that the UK published ahead of both rounds. I am pleased to say that we are close to agreement on our approach to post-exit privileges and immunities—on which we have published a position paper—which it will benefit both the UK and the EU to maintain after we leave. We have agreed on our mutual approach to confidentiality requirements on shared information post-exit. With respect to nuclear materials, we held discussions on the need to resolve issues relating to the ownership of special fissile material, and the responsibility for radioactive waste and spent fuel held both here and there. We reiterated—this is important—a strong mutual interest in ensuring that the UK and the European Atomic Energy Community, or Euratom, continue to work closely together in the future as part of a comprehensive new partnership.

With respect to legal cases pending before the European Court of Justice, the parties discussed and made progress on the cut-off points for cases being defined as “pending”. There was also progress in discussions concerning the UK’s role before the Court while those pending cases are being heard. With respect to judicial co-operation in civil and commercial matters, and ongoing judicial co-operation in criminal matters, we made good progress on the principles of approach and the joint aim of providing legal certainty and avoiding unnecessary disruption to courts, businesses and families. With respect to goods on the market, both parties reiterated the importance of providing legal certainty for businesses and consumers across the EU and the UK at the point of departure. In that area, in particular, we emphasised that the broader principles outlined in the UK’s position paper seek to minimise the type of uncertainty and disruption for business that we are all working to avoid.

We remain committed to making as much progress as possible on the issues that are solely related to our withdrawal, but our discussions this week have demonstrated and exposed yet again that the UK’s approach is substantially more flexible and pragmatic than that of the EU, as it avoids unnecessary disruption for British businesses and consumers. I have urged the EU to be more imaginative and flexible in its approach to withdrawal on that point.

I am pleased to report that there has been significant, concrete progress in the vital area of Northern Ireland and Ireland. The negotiation co-ordinators explored a number of issues, including both the Belfast or Good Friday agreement and the common travel area. In August, the group also held detailed discussions on the basis of the UK position paper. As both Michel Barnier and I said at last week's press conference, there is a high degree of convergence on those key issues, and we agreed to work up shared principles on the common travel area. That is a major change.

We also agreed to carry out further technical work on cross-border co-operation under the Belfast agreement. Of course, as I said all along, the key issues in relation to cross-border economic co-operation and energy will need to form an integral part of discussions on the UK’s future relationship with the EU.

Finally, on the financial settlement, we have been clear that the UK and the EU will have financial obligations to each other that will survive our exit from the European Union. In July, the Commission set out the European Union position. We have a duty to our taxpayers to interrogate that position rigorously, and that is what we did, line by line—it might have been a little bit of a shock to the Commission, but that is what we did. At the August round, we set out our analysis of the EU’s position. We also had in-depth discussions on the European Investment Bank and other off-budget issues.

It is clear that the two sides have very different legal stances. But, as we said in the article 50 letter, the settlement should be in accordance with law and in the spirit of the UK’s continuing partnership with the EU. Michel Barnier and I agreed that we do not anticipate making incremental progress on the final shape of a financial deal in every round. Generally, we should not underestimate the usefulness of the process so far, but it is also clear that there are significant differences to be bridged in this sector.

Initial discussions were also held on governance and dispute resolution. These provided an opportunity to build a better, shared understanding of the need for a reliable means of enforcing the withdrawal agreement and resolving any disputes that might arise under it.

Alongside the negotiations, we have also published a number of papers which set out our thinking regarding our future special partnership with the EU. These future partnership papers are different from our papers that set out the position for the negotiations under our withdrawal agreement. Our future partnership papers are part of a concerted effort to pragmatically drive the progress we all want to see. All along, we have argued that talks around our withdrawal cannot be treated in isolation from the future partnership that we want. We can only resolve some of these issues with an eye on how the new partnership will work in the future. For example, on Northern Ireland it would be helpful to our shared objectives on avoiding a hard border to be able to begin discussions on how future customs arrangements will work. Furthermore, if we agree the comprehensive free trade agreement we are seeking as part of our future partnership, solutions in Northern Ireland are, of course, easier to deliver.

A second example is on financial matters. As I have said, the days of making vast yearly contributions to the EU budget will end when we leave. But there may be programmes that the UK wants to consider participating in as part of the new partnership that we seek. Naturally, we need to work out which of those we want to pursue; we need to discuss them as part of our talks on withdrawal from the EU and our future as its long-standing friend and closest neighbour.

A third example is on wider separation issues. While we are happy to negotiate and make progress on the separation issues, it is our long-term aim that ultimately many of these arrangements will not be necessary. With the clock ticking—to quote Mr Barnier—it would not be in either of our interests to run aspects of the negotiations twice. Last week, we turned our consideration to the next round of talks, and my message to the Commission was: let us continue to work together constructively, but put people above process.

To that end, my team will publish further papers in the coming weeks, continuing to set out our ambition for these negotiations, and the new deep and special partnership the UK wants to build with the EU. Ultimately, businesses and citizens on both sides want us to move swiftly on to discussing our future partnership, and we want that to happen after the European Council in October if possible.

As colleagues know, at the start of these negotiations both sides agreed that the aim was to make progress on four key areas: citizens’ rights, the financial settlement, Northern Ireland and Ireland, and broader separation issues. We have been doing just that, and I have always said—[Interruption.] Nobody has ever pretended that this will be easy; I have always said that this negotiation will be tough, complex and, at times, confrontational. So it has proved, but we must not lose sight of our overarching aim: to build a deep and special new partnership with our closest neighbours and allies, while also building a truly global Britain that can forge new relationships with the fastest growing economies around the world.

I thank the Secretary of State for giving me notice of his statement. I also thank him for what I hope will be his agreement to update the House in this fashion after every round of the talks. I think that he has agreed to do that, and I am grateful.

We accept that the negotiations are complex and difficult, and I understand the Secretary of State’s frustration at points with the process and sympathise with the view that some phase 1 issues cannot fully be resolved until we get to phase 2. Northern Ireland is a classic example of that. Although he will not say it, I am sure he is equally frustrated by the deeply unhelpful “go whistle” and “blackmail” comments from some of his own colleagues. I am sure that colleagues and officials in his Department are working hard in these difficult negotiations and I pay tribute to what they are doing behind the scenes. However, the current state of affairs and the slow progress are a real cause for concern. The parties appear to be getting further apart, rather than closer together. Round 3 of the five in phase 1 is gone, and we would now expect agreement to be emerging on the key issues. The last round is in October, and that should involve formal agreement. There is now huge pressure on the negotiating round in September. If phase 2 is pushed back, there will be very serious consequences for Britain, and the concept of no deal, which I hoped had died a death since the election, could yet rise from the ashes—[Interruption.] Great? The second cause for concern is that it is becoming increasingly clear that the Prime Minister’s flawed red lines on issues such as the role of the European Court of Justice or any similar body are at the heart of the problem, as is the matter of progress on EU citizens here and abroad. The Secretary of State, the Prime Minister and the Government need to be much more flexible on that issue. I fear that these examples will crop up not only in phase 1, and that these flawed red lines will bedevil the rest of the negotiations. It is a fantasy to think that we can have a deep and comprehensive trade deal without shared institutions, and the sooner we face up to that, the better.

That brings me to my third concern. We are obviously reaching the stage of the negotiations where fantasy meets brutal reality. The truth is that too many promises have been made about Brexit that cannot be kept. The Secretary of State has just said that no one pretended this would be easy, but the Government were pretending it would be easy. The International Trade Secretary promised that a deal with the EU would be

“one of the easiest in human history”

to negotiate. A year ago, in the heady early days of his job, the Secretary of State himself wrote that

“within two years, before the negotiation with the EU is likely to be complete…we can negotiate a free trade area massively larger than the EU.”

He went on to say that

“the new trade agreements will come into force at the point of exit from the EU, but they will be fully negotiated and therefore understood in detail well before then.”

Even this summer, the Government published position papers riddled with further fantasies. The “track and trace” customs idea was put forward on 15 August as an apparently serious proposition, only to be effectively removed on 1 September by the Secretary of State himself, with the admission that it was merely “blue sky thinking”.

The time for floating fantastical ideas is over. There must be no more promises that cannot be met. This is the brutal reality. We need to know how the Secretary of State intends to ensure that real progress is made in the September round. Is he intending to intensify the talks? Does he accept that it is now time to drop some of the Prime Minister’s deeply flawed red lines, in order to create the flexibility that he says is necessary? When will we see position papers that actually set out the Government’s considered position on the key issues?

I thank the right hon. and learned Gentleman for his comments at the beginning and for recognising that not only on Northern Ireland in particular, but on many other issues, the future relationship is indistinguishable from the ongoing negotiations. That is one of the problems in this negotiating exercise and it arises directly because the Commission is seeking to use keeping the first part of the negotiations going as a pressure point against Britain in the future, and I will return to that in a moment because I have a point to make.

On citizens’ rights, which the right hon. and learned Gentleman holds up as being—I have forgotten what his phrase was, but it involved something about red lines. Anyway, citizens’ rights is not the issue that is vexing the Commission. In fact, internal progress has been remarkably effective. He is quite right about the European Court of Justice, but everything else has been going pretty well. I expect that we will conclude most of those issues—in outline, not in text—quite soon. However, what does the right hon. and learned Gentleman actually want the Government to do? The Commission is saying, “Unless we give approval that sufficient progress has been made, we will not go on to the main substance of negotiation: the ongoing rights.” What is it seeking to get from that? It is seeking to obtain money. That is what this is about. Do members of the Labour party want to pay €100 billion in order to get progress in the next month? Is that what they are about? That is what they were saying. I hope that the answer is no, but what we heard from the shadow Brexit Secretary was a beautiful piece of lawyerly argument that ignored the simple fact that this is a pressure tactic to make us pay. We are going to do this the proper way. We are going to represent the interests of the British taxpayer and that means rigorously interrogating every line of the argument on funding line by line. That is the way that we are going to go.

As for the other elements that the right hon. and learned Gentleman talked about, I do not resile at all from the intention to negotiate a first-rate free trade agreement with the European Union in the course of the next two years. That is why we published all the position papers. He tried to rubbish one or two of them, but let me cite one to him: the customs paper. By the way, saying that something is blue-sky thinking is not to rubbish it; it is to say that it is imaginative and forward-thinking. The position papers were designed to make points to our European partners so that they could see what the future might look like under our vision. Let me give him the response of Xavier Bertrand, the president of Hauts-de-France, which includes Calais and Dunkirk—our nearest ports in France. He said:

“We welcome with great interest the initiatives announced by the British government…as they are likely to preserve trade between the UK and France”.

France is supposedly the country most resistant to our arguments and to free trade, but the man responsible for Calais and Dunkirk said that that is the way that we should go and that is the way that we will go.

The Secretary of State will recall that during the referendum campaign the prominent leaders of the leave campaign who dominated the media refuted any suggestion that our future trading relationships with Europe would be affected in any way. The present Foreign Secretary put great weight on the fact that the Germans need to sell us their Mercedes and that the Italians need to sell us their prosecco. Now that we are modifying our trade agreement, does the Secretary of State accept that in the modern world any trade agreement with the EU, the US, Japan or anybody else involves some pooling of sovereignty, some mutual recognition or harmonisation of regulations, some defining and easing of customs barriers and some easing of tariffs, and that they always take years to negotiate or to modify?

Will the Secretary of State therefore demonstrate the imagination and flexibility that he has been demonstrating so far and actually accept that we should remain members of the existing single market and the customs union during the interim transitional period, which will be necessary before we have our new relationship? That will greatly ease his progress in opening up the hundreds of other issues that he will have to start negotiating in a moment and will certainly ease the great uncertainty in British business that is threatening to cause so much damage to our economy at the moment.

As ever, my right hon. and learned Friend—

We’re over here.

The microphone is there, and the speaker is there.

My right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) has touched on some important points. No. 1, on the ability to do this deal, we start from a position of exact identity on product regulations and other social regulation—such regulation is what worries the European Union—so we are in the same place. The issue is not one of bringing together massively different economies but of maintaining a reasonable relationship between the regulatory structures of our country and of that organisation.

My right hon. and learned Friend is quite right in one respect, which is that whenever a trade agreement is forged, it will have within it agreements on standards—the Canadian one did, for example—and not just on product standards but on, say, labour law standards. The Canadian deal has labour law commitments to stay above International Labour Organisation standards. In that respect, we are in the same place.

In terms of the implementation or transitionary period—call it what you will—there is now widespread agreement across Europe that it will be beneficial to have an implementation period. How long it will be and how it will work will be decided straightforwardly on practicalities. Three things will drive an implementation period: No. 1 is this Government’s ability to put in place regulations, new customs arrangements, and so on; No. 2 is the ability of companies, corporations and sometimes people to accommodate it, which is principally the issue with financial services, for example; and No. 3 is the ability of other countries to accommodate it. That is why the quote from Xavier Bertrand is important, because it shows a clear intent on the part of major French politicians to bring about the sort of frictionless trade that we want. I find myself largely agreeing with my right hon. and learned Friend, but this is why it is entirely possible to deliver a first-class Brexit for Britain.

I am grateful to the Secretary of State for his statement, and for giving us an advance copy.

The Secretary of State is looking for imagination and flexibility from the European Union, but I do not think there is anyone in the European Union with the fevered imagination needed to think that the NHS would be £357 million a week better off if we left the European Union. Will he clarify exactly what flexibility the UK Government have shown? They were inflexible to the point of obstinacy in trying to avoid any parliamentary oversight on the article 50 process. They set their own inflexible deadline for triggering article 50, and they set their own inflexible red lines before the negotiations had even started, including an inflexible determination to leave the single market without any idea at all as to where we would go instead.

All this has been done over the heads of the devolved national Governments and, to a large extent, over the heads of Members of this Parliament. I welcome the fact that the Secretary of State has updated the House today, but he has not updated the Joint Ministerial Committee since six weeks before article 50 was triggered, despite a joint request from both the Welsh and Scottish Governments for such a meeting.

Can the Secretary of State confirm whether the Government will now be flexible in having proper, meaningful and constructive dialogue with the devolved nations? Will he now accept that this Government’s continued obsession with immigration is forcing him into a dangerously inflexible position on the single market, threatening 80,000 jobs in Scotland and hundreds of thousands of jobs throughout the UK? Or will the Government continue on their present course, charging blindfold towards a cliff edge and relying on the Daily Mail to make us believe that it was all the foreigners’ fault when it all goes wrong?

First, on flexibility, I have just mentioned areas that matter to individuals, such as guaranteeing their pensions, guaranteeing their healthcare and so on, and those areas did involve some flexibility on the part of the British negotiating team, which did a very good job.

On notification, I chaired a number of JMC meetings—I do not do it anymore, as the JMC is now chaired by the First Secretary of State—to keep the devolved Administrations up to speed. Indeed, yesterday I briefed in detail Mike Russell of the Scottish Government and Mark Drakeford of the Welsh Administration. Obviously, at the moment I have a bit of difficulty briefing the Northern Ireland Executive, because they do not exist yet. But the hon. Gentleman can take it as read that the concerns of the devolved Administrations have been taken on board very squarely and will continue to be so in the course of the ongoing negotiation.

I urge my right hon. Friend not to accept the advice of the Opposition party, which only six weeks ago was in favour of leaving the customs union and the single market, only to reverse that position today; he should stay steady on the course of the Government. On transition and implementation deals, over which the Opposition have got very excited, may I remind him of one simple fact: you cannot have any discussion about transition or implementation until you know what you are transitioning to? Thus the agreement over what we get with the European Union comes before any discussion about transition deals.

I take my right hon. Friend’s point about the Labour party. I was being quite kindly to my opposite number, the shadow Brexit Secretary—after all, I only have to negotiate with Brussels, whereas he has to negotiate with his entire Front Bench! My right hon. Friend is right to say that we have to know where the endgame will be—where the end position will be—in order to get an accurate description of the implementation and transition period. I will differ from him on one point: that does not mean that we should not make it clear up front that we intend to have some sort of implementation period, where it is necessary—only where it is necessary.

Leaving without a deal would be disastrous, and the Government must now realise that it will not be possible to negotiate the bespoke deal that they have spoken about at great length by the time set out under the article 50 process, because there will not be sufficient time, given the rate of progress. In order for the Secretary of State to talk about an implementation period, he has to have something to implement. Why does he not recognise, therefore, that the only way now to give business the stability and certainty it requires is to say that we will remain within the current trade and market access arrangements for a transitional period in order to allow a final deal to be negotiated and agreed?

Let us start with the right hon. Gentleman’s original presumption that we cannot achieve a negotiated deal in the period. As he should know, given his role as past and current Chairman of the Brexit Committee, the previous Trade Commissioner, Karel De Gucht, who is no friend of Brexit and does not approve of what we are doing, has said in terms that it is not technically difficult to achieve a trade outcome—all it requires is political will. What it requires is the political will on the European side to do it. What will give that political will is the fact that it sells roughly €300 billion of product to us every year and will want to continue doing so.

Does my right hon. Friend accept that not only have the official Opposition been totally contradictory on the single market, customs union and the European Court, but they are now even defying their own manifesto and their vote on the article 50 Act, let alone the democratic outcome of the referendum itself? In other words, they have now moved from being remainers to reversers.

On the day the shadow Brexit Secretary was on “The Andrew Marr Show” saying, if I remember his words correctly, that he was glad to have a unified party behind his current policy—policy No. 10, by the way—on that very same programme the right hon. Member for Don Valley (Caroline Flint) was saying exactly that: that the right hon. Gentleman was betraying Labour’s own voters. That is what the Labour party has to come to terms with. Its voters, more than anybody else, want us to leave. They voted for it and they want us to leave, and Labour had better deliver on it.

Last year, UK agencies initiated 3,000 Europol investigations, yet with just 18 months until we are due to lose our Europol membership, our European arrest warrant and our security co-operation underpinnings we still have no idea what the Government want—is it to replace this, to extend it or to include it in a transition? There have been no announcements and there was not even any mention of it in the Secretary of State’s statement today. When are we going to get some substance on this serious issue about public safety and national security? When is he going to realise that this waffle is letting the country down?

In my statement I discussed civil judicial co-operation and criminal judicial co-operation, which relate to the right hon. Lady’s question—or criminal judicial co-operation does, at least. The European Union will only negotiate on the ongoing relationship once it has decided there has been sufficient progress. At that point—I have said this in terms, and it was in the article 50 letter, the Lancaster House speech and the White Paper—we intend to negotiate a parallel arrangement, similar to what we have now, based on the structures we currently have, and we intend to maintain exactly what she says: the high level of co-operation on intelligence, counter-terrorism and anti-criminal work that we have had in the past.

I congratulate the Secretary of State on explaining that we have no legal liability to pay money above our contributions up to the date of departure. We want to get on and spend that on our priorities. Does he agree that the EU has a simple choice to make, which I hope it will make sooner but which it will probably make later: it can either trade with us with no new tariffs or barriers, because we have made a very generous offer, or it can trade with us under World Trade Organisation rules, which we know works fine for us because that is what we do with the rest of the world?

My right hon. Friend is exactly right, and one of the things I have picked up going around the European Union countries is that most of those nations also understand that fact very plainly. That is particularly true of those on the North sea littoral—Holland, Belgium and France, which I have mentioned, and Denmark—which all know that the impact of no deal on their economies would be dramatic, and more dramatic than for us.

Petulant references to the EU blackmailing the UK do not help our negotiating stance; in fact, they increase the risk of our crashing out of the EU. In those circumstances, does the Secretary of State still agree with himself on the need for a decision referendum, which would allow people to vote on the terms of the deal or to stay in the EU?

The right hon. Gentleman has had great difficulty understanding the distinction between mandate referendums and decision referendums down the years. I suggest he goes back and reads the speech properly, because he is just wrong and he does not understand it—

I have read it.

If he has read it, I fear he has some other problem.

I thank my right hon. Friend for his statement. I do not know whether he heard me, but I was cheering the contribution by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), because I agree that we should have a transition period that includes our remaining a member of the single market and the customs union. [Hon. Members: “Hear, hear!”] Ah, yet again we hear cheers in support of that notion from right hon. and hon. Members on the Opposition Benches, but does my right hon. Friend the Secretary of State agree that that is not the policy of the Labour party? In a radio interview yesterday, the hon. Member for Brent North (Barry Gardiner) explained that Labour’s policy would be to negotiate a customs union with the EU by way of a transitional period. Will my right hon. Friend confirm that that is exactly the Government’s policy?

My right hon. Friend makes a good point, and she is right that the Labour party is incredibly confused about what its policy is. The approach we are taking is simple: we want a customs agreement that goes with a free trade agreement. Those two things together are designed to deliver frictionless free trade. We want not only to protect jobs and the economy, about which she is quite right to be concerned, but to be able to trade with the rest of the world, which is where the maximum growth is.

I hope there is a deal, and that it is good both for Europe and for us. However, to implement such a deal, with clause 9 of the European Union (Withdrawal) Bill the Government are seeking to allow Ministers to introduce regulations that

“may make any provision that could be made by an Act of Parliament”—

any provision—

“(including modifying this Act).”

In the whole history of this Parliament, no Government have ever come to Parliament to ask for that. That is not a Henry VIII clause; it is an Alice in Wonderland clause! Surely the Secretary of State, as the parliamentarian who has stood up so many times at the Dispatch Box to call for Parliament to have powers, should amend that provision before it comes to Committee stage.

I will deal with that in more detail on Thursday, but I am not the one in fantasy land. This is a Bill that will work and will deliver the best deal for Britain.

Has my right hon. Friend raised the thought with Monsieur Barnier that if a member state that is a net beneficiary were leaving, would he expect to pay it a large dowry? When he realises that the answer to that question is obvious, does it follow that the European Commission’s demand for money with menaces is ridiculous?

I did raise that point in a rather jocular way about three or four months ago and all I got was laughter. The important point is this: the European Union has based its argument on legal necessity—we have to pay because that is what the law says. Our approach to that was not to make some sort of counter bid as it wanted us to do, but to go back and say, “Okay, let’s test that law.” Last week, it was given a two-and-a-half hour briefing on why we think the legal basis is flawed. To some extent, that is why the end of that negotiating round was tetchier than the one before.

On the financial settlement, can the Secretary of State confirm that the Government will bring forward a separate and distinct vote in Parliament to authorise any billions of pounds of divorce bill from the European Union? I ask him because next Monday he is expecting the House—hon. Members will see this on the Order Paper—to vote for a money resolution, which authorises, in advance, any expenditure, and, worse, for a Ways and Means resolution, which authorises any tax. I do not think that he would accept that Parliament should be giving such a blank cheque in advance without knowing what the settlement is.

I think the hon. Gentleman has got that wrong. The Bill does not cover separation payments. I ask him to bear in mind one other thing that we have said, which is that there will be a vote of this House on the final settlement. My expectation is that the money argument will go on for the full duration of the negotiation. The famous European line that nothing is agreed until everything is agreed will apply here as it will everywhere else, but there will be a vote in which the House can reflect its view on the whole deal, including on money.

I thank the Secretary of State not only for this update, but for all his work over the summer. I spent a bit of the summer in Ireland and Northern Ireland with businesses trading across the border, looking at the papers and suggestions on customs and on Ireland and Northern Ireland. May I congratulate him on trying to find creative solutions to make that border crossing, and indeed crossing the channel, easier? There is interest from both sides of the border on working on those. Given the complexity, can he update us on whether we can move to continuous rather than monthly negotiations to progress discussions?

First, on customs borders and frictionless trade, there was a lot of attention on my visit to Washington last week, but I went straight from there to Detroit to look at the American-Canadian border. That has always been a very open border. I have traded across it myself, so I know it well. The average clearance time for a vehicle going through that border—there is a choke point—is 53 seconds. When we clear containers from outside the European Union area, we can clear 98% of them in four to five seconds. Technology can accelerate these things enormously well, and that is what we are aiming to do.

With respect to the negotiating round, we stand ready to do anything to accelerate the process. This process was asked for by the Commission. We must bear in mind that it has a very stiff, rigid, structured mandate process: it draws up its lines, negotiates, goes back to report to the other 27, and starts the cycle again. I do not know whether it is possible to get continuous negotiation that way. If it is, we would be happy to go along with it.

On the financial settlement, does the Secretary of State believe that the European Union is blackmailing the UK?

With the best will in the world, I choose my own words. In a negotiation there are pressure points, but that is to be expected. Anyone who imagines that 28 nations effectively negotiating together will not come to a point of pressure is living in another world—a fantasy world, someone said.

May I ask my right hon. Friend to confirm that it was Michel Barnier who described the idea of a transition period without a clear agreement at the end as a bridge to nowhere, so will he dismiss some of the advice that he has received on transition periods? May I also invite him to dismiss the idea that September will be the great progress point against which the Government should be tested? Should we not wait until after the German elections when the German Chancellor will be much more fully involved in the discussions before we become really impatient for progress?

I would not be harsh on Michel Barnier or others. The view of what a transition period is has gone through an enormous metamorphosis in the past six months. When we began talking about this—us and the European 27—the Europeans had in mind using the entire two years to negotiate a withdrawal agreement, then a sort of infinite transition period in which we negotiated our departure. That is clearly something that was massively against our interest in negotiating terms.

What was my hon. Friend’s second question? [Interruption.] Germany—yes. There are other issues that play against the timetable; there is no doubt about that. The German election takes place in three weeks or so, and the formation of the German Government will take at least another couple of months—probably three months. That will have an impact, because Germany—it is no secret—is the most powerful and important nation in Europe, as well as the paymaster, and it will have a big say in the outcome. So yes, there are other things to consider. My hon. Friend is absolutely right: we should not pin ourselves to September, October or whatever, because in doing so we would be doing the job of the people negotiating against us, and we are precisely not going to do that.

A record number of EU citizens resident in the United Kingdom applied for British citizenship this summer. We have 3 million EU citizens living here. Given that there is still no certainty about their status, is the right hon. Gentleman’s advice to them immediately to apply for leave to remain in this country? If so, what additional resources does he propose to give to the Home Office?

My advice is almost the opposite. The simple truth is that if 3 million people applied for leave to remain the Home Office might have the odd glitch along the way. That is part of the point of saying that there will be a two-year grace period after departure in 2019 in which people can make that application. Between now and then a great deal of resource will be put in to ensure that that process is streamlined. The right hon. Gentleman will remember because of his previous eminent role that the original application document was something like 85 pages long. We got it down to 16 and now six. It will be streamlined to a very, very simple process by the time that we get to that two-year grace period.

Article 50 provides in terms that the negotiations in which my right hon. Friend is engaged should take into account the framework for the future relationship between the departing member state and the European Union, but, as we have heard, the EU refuses to address that question. When he next sits down with Michel Barnier, would my right hon. Friend draw to his attention the fact that he is in dereliction of his duties under the treaty and that his stubborn refusal to discuss that future relationship is as contrary to the interests of the European Union as it is to those of the United Kingdom?

My right hon. and dear Friend, who used to be in my Department not very long ago, knows full well that I have made those points more than once to Michel and other members of the Union negotiating team. This is not within the normal perspective as laid out by article 50, but we have gone along with it simply to get citizens’ rights under way. That is what we have done, but now we are getting to the point at which we will think very hard about what the next stage is.

I welcome the Secretary of State’s paper on Northern Ireland, particularly the assurances to Unionists that the border will not be drawn along the Irish sea, and equally to nationalists that there will be no hard border between Northern Ireland and the Irish Republic. I especially welcome the fact that those goals are achievable because of the practical measures suggested in the paper. Is he therefore disappointed by the Irish Government’s negative response to his paper, especially since they have so much to lose from an EU punishment beating of the UK? Has he had any assurances from the Irish Government that they will not act on the spiteful advice of Gerry Adams that they should block any agreement between the EU and the UK?

The hon. Gentleman knows that I fight very shy of getting entangled in Irish politics, but I am confident that we can get a non-visible border operational between Northern Ireland and Ireland using the most up-to-date technology. That was one reason why I went to Detroit. It was not so we could replicate what is in Detroit and Buffalo, but so we could use some of the same techniques, such as authorised economic operators, pre-notification and electronic tagging of containers. All those things will make it possible for the border to be as light-touch as it is today.

Does my right hon. Friend agree that a failure to pass the European Union (Withdrawal) Bill, transferring European law into British law, would plunge this country into chaos when we leave the European Union? Does he find it extraordinary that any party claiming to respect the decision of the British people should contemplate voting against it?

My right hon. Friend is exactly right. It is one of the reasons that there is tension within the Labour party now—[Interruption.] There is very visible tension on the television screen, let alone anywhere else. My right hon. Friend is dead right that the point of the repeal Bill—now the withdrawal Bill—is to ensure that the laws we have the day before we leave the European Union are the same laws as the ones we have the day after we leave, except where there has been another piece of primary legislation to replace it, whether on immigration or whatever else. That is simply a practical matter. It should not actually be a matter of politics; it is a simple matter of national interest.

As the Secretary of State just said, the European Union (Withdrawal) Bill is a crucial piece of legislation for us to leave the EU. Would he therefore agree that, although people might have difficulties with parts of it that can be discussed in Committee, anyone who votes against the principle on Second Reading is betraying the will of the British people?

The hon. Lady is exactly right. Such people will have to face their own constituents because those constituents voted to leave. This is a practical Bill designed to protect the interests of British business and British citizens. That is what it is there for—nothing else.

In the Secretary of State’s closing remarks at the most recent round of negotiation, he said that the UK has shown

“a willingness to discuss creative solutions”

on the governance of citizens’ rights. Will he outline in more detail the governance proposals?

This is the area where the European Union’s start position was to have European Court of Justice direct effect in the United Kingdom. We have said that we are a country that obeys the rule of law and its international treaties, that the treaty would be passed through into the law—we would repeat it there—and that we may set up some ombudsman arrangement with a reference to it. Those are the sort of ideas that we have in play.

The Secretary of State cautioned us to think about our constituents in response to his statement, so I am thinking about the nearly 30 million British people—I believe that is the figure—who went to Europe this summer, mainly on holiday. Will he confirm for them today that they will be able to book their European holiday when they come to do so next year, or is he thinking about blue skies, but delivering empty ones at this point?

One duty we do owe our constituents is not to start scare stories.

During the last three or four years, there have been very high levels of migration into the EU, particularly from north Africa and the middle east. If there is to be an implementation period, existing EU citizens will no doubt have freedom of movement into our country during that period. For that reason, will my right hon. Friend ensure, first, that the implementation period is over well before the date of the scheduled next election and, secondly, that if existing EU citizens do have a right of entry during the implementation period, that right refers to people who are already citizens of the EU at the end of March 2019?

My hon. Friend is introducing a whole load of hypotheticals. As I said earlier, the transition or implementation period might be an homogenous extension of what we have now, or it might be a piece-by-piece extension. We do not know at the moment; we have not yet even got into that negotiation. But the simple fact is that there are a number of things limiting how long that period can go on for. One of them is, frankly, that the Government have to deliver on departure from the European Union promptly—that is really what the British people expect. But there are also other issues, such as negotiability; if this period ran for too long, some of the Parliaments in Europe might think, “Actually, that’s a new treaty, and therefore we need to have a mixed-agreement procedure.” So there is a variety of things that will limit the extent it will go on for, and I am pretty clear it will be over before the next election.

Now that the Brexit negotiations are going so well that the Secretary of State has taken to calling his counterpart silly, will he publish the impact assessments his Department has overseen in relation to 50 sectors of the economy, or is he afraid that if he were to publish them, that might just make him look a bit silly, particularly if the leak is true from the Department of Health, which foresees a potential shortfall of 40,000 nurses by 2026?

Let us start with a correction. I am sure the hon. Lady is not intending to mislead the House, but on television yesterday I corrected Mr Andrew Marr twice when he tried to say I had called Michel Barnier silly. I hope she will understand that that is not true. It does not help the negotiation to throw those bits of fiction into play.

The second thing I would say is that we are being as open as it is possible to be in terms of the information on this negotiation, subject to one thing, which is that we do not undermine the negotiation or give ammunition to the other side that is useful to them in the negotiation. That is the principle we will continue with.

Does the Secretary of State agree that the progress of the negotiations is entirely unsurprising, given the framework within which Michel Barnier is having to operate, as laid down by the European Council? It is only when we get to October, and it takes a decision to consider what the Opposition spokesman called phase 1 and phase 2 together, that we can begin to make real and serious progress.

My hon. Friend is right that the mandate structure is rigid; it does make it difficult for Mr Barnier and his team to be as flexible as they might want to be. It will be the point at which the Council starts to take a steering role in this that indicates a change in speed. That may well be October, but it may well be dictated by other events—as my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) said earlier, the German election will have an impact, and other political issues in Europe will have an impact. And the process will go at varying speeds. As I have said from the beginning, this is going to be a turbulent process: there will be times when there are ripples, there will be times when it is smooth and there will be times when it is very stormy. We must be ready for that, because this is going to be a negotiation about big issues between major states, and these things are never serene.

The Secretary of State will have noted that the United Kingdom registered the lowest rate of economic growth in the entire European Union in the first quarter of this year. Does he think that the chaotic and shambolic way these negotiations are going may have contributed to that level of growth?

I am lost for words as to where to start on the logical impossibilities. First, I do not recognise the hon. Gentleman’s economic numbers. We have a country that has had sharp increases in exports and sharp increases in manufacturing. Vast numbers of good things are happening on the economic front, including the highest employment ever and the lowest unemployment for 42 years, so I simply do not recognise his rather interesting barb.

Have not the exchanges this afternoon shown once again that the Opposition’s position is that any agreement at all, no matter how bad for Britain and no matter how extortionate, is better than a clean break in 2019 if a good deal for Britain is not then on offer? Does it remain Government policy that a clean break in 2019 is better than a bad deal, as it may lead to more fruitful negotiations further down the line after we have actually left the European Union?

The answer is yes, because the Prime Minister reiterated that just the other day.

Will the Secretary of State confirm that if we leave the European Union without a deal the car plant up the road from my constituency in Ellesmere Port, which currently provides 2,000 full-time jobs and a much wider supply chain, will struggle, because if we leave the customs union and the single market, that adds £125 million a year, and its supply chains are very mixed up all over Europe? Having no deal puts those jobs at risk, and it will be a disaster for my constituents in the automotive industry.

I referred earlier to my visit to Detroit. One of the things I looked at in Detroit was the Ford factory. It is the original Ford factory—very historic and very big—at Dearborn. It makes the most sold car—the most popular car—in the world. The engine for that car is made in Canada, 10 miles across the border. If that border were such a problem, that factory would not be in Canada; it would be in America. That is a single demonstration—there are thousands of such demonstrations—of how borders can be made frictionless, and that is what we would do.

I was grateful to the Secretary of State for referring specifically to the progress made on civil and commercial law co-operation. Does he agree, however, that it is imperative that there is early clarity on one specific area—whatever the final outcome of negotiations, there should be early clarity on reciprocal recognition and enforcement of judgments and court orders? Unless that happens, firms will not be willing to enter into contracts for any period that runs over either the date of leaving or any of the likely transition periods that have been posited so far. It would be in both sides’ interests to have that.

My hon. Friend is right—that is very high on the priority list.

I should declare that my husband is a dual Irish-British national, which gives me a particular interest in the relationship we have after Brexit with our largest trading partner in the EU. The Secretary of State talked about “significant, concrete progress” in this vital area. Yet when I was in Ireland this summer, commentators universally were saying what Fintan O’Toole from The Irish Times said:

“behind all of these delightful reassurances, there is sweet”—

here I paraphrase—“nothing”. Will the Secretary of State please detail what that “significant, concrete progress” is, or are his descriptions of this magic border just a whim?

The biggest single issue that came up at the previous negotiating round in July was concern by the European Union that our intention to continue with the common travel area would impinge on the rights of European citizens. We managed to achieve an understanding on its part that that was not the case and that the CTA was therefore well worth preserving. We currently have technical work ongoing on north-south arrangements. We will, of course, have to wait on the outcome elsewhere for things like the Irish energy market and so on, but they are all very much front and centre in our negotiation. The Northern Ireland-Ireland border is very important, but the other very important thing in respect of Ireland is, as the hon. Lady says, its sales and trade with us—a billion a week. But there are also its sales to the continent which tend to come through Britain and require a common transport area too. We are working on all those things.

People in Middlesbrough South and East Cleveland will be appalled to hear the shadow Front-Bench team opening the prospect of Britain’s continuing in the single market and under the jurisdiction of the ECJ in perpetuity, which is, in my eyes, the very worst outcome that we could get. Does the Secretary of State agree that that would represent a comprehensive betrayal of my voters, and of very many Opposition voters?

Yes. The Labour party gleaned a lot of votes in the last election because of a belief that it was willing to support the will of the people in Brexit. It plainly no longer is.

Businesses that are thinking about whether to invest here in the UK or overseas in the EU will be horrified to hear the Secretary of State glibly agreeing with the Prime Minister by saying that leaving on WTO terms would be fine. Will the Secretary of State take this opportunity to state that if we were to leave on WTO terms, the consequences for the car factory that my hon. Friend the Member for Wallasey (Ms Eagle) just referred to would be catastrophic; and doing so would be bad for us and for the EU?

Let us be clear. The aim of the Government is to get a free trade agreement and associated customs agreement. That is the aim, and that is the expectation. If that does not happen, it is not a catastrophe, but I would much, much prefer a free trade area and a customs agreement. That is what all the efforts of the Government in negotiation are going into.

Does my right hon. Friend agree that given that the majority of the public voted for two parties that held Brexit as part of their manifesto commitment, it would be helpful if the Labour party came to a settled view and made constructive input into the talks that he is having?

Yes. One can reasonably expect some Labour Members to have different views, but for the deputy leader of the party to have a different view is really rather dramatic. The Labour party should do as my hon. Friend suggests.

When will the Joint Ministerial Committee on EU Negotiations next meet?

That is strictly a matter for the First Secretary. It has partly been delayed by the non-formation of a Northern Ireland Executive, and we will have to find other methods. My intention before the election had been to go, in the absence of the Northern Ireland Executive, to a series of bilateral arrangements in the meantime. That is why yesterday I called up the Scottish Government and the Welsh Government to brief them on the detail of the negotiation.

As a taxpayer, I welcome the Secretary of State’s practical and cautious approach to the matter of money. May I therefore urge him to continue to press the EU for detailed and, preferably, independently audited numbers before he comes to any financial settlement?

We have been pressing the EU, but it has been more of the nature of going through the legal basis for each of the claims. They are all set on various claims about what voting in certain budgets and certain financial proposals binds us to—how much of that is binding. I think, frankly, the outcome will be that we will not agree on the legal basis. As for audited numbers, I used to be the Public Accounts Committee Chairman, and my hon. Friend will remember the number of times we actually got a clear set of accounts from the European Union; I think it was nought.

Does the Secretary of State agree that it is entirely possible to love Europe—a subcontinent of wonderful peoples of great culture—but at the same time to oppose totally the European Union on democratic and economic grounds?

The hon. Gentleman makes, if I may say so, a very civilised point, and he is exactly right.

Following on from that, it seems to me that it is the European elite’s desire to protect the institution of the European Union and not to worry about the peoples of Europe, and therefore they will delay and delay, hoping that this country will somehow change its view. Will the Secretary of State give this House an absolute undertaking that on 31 March 2019 we will leave the EU, whether a deal has been reached or not, and that there will be no case whatsoever of considering an extension to the negotiations?

One point that I think is sometimes confused is the idea that a transitional or implementation period means an extension of the negotiations. We need, essentially, to have arrived at a decision by the end of March 2019, but the simple truth is that the article 50 process stops it there. That is it; that is where it goes to. So even if I did not give the promise, it would happen.

The Secretary of State did not answer the question from my hon. Friend the Member for Nottingham East (Mr Leslie) regarding the money resolution and the Ways and Means motion that he is expecting the House to vote on next Monday. Will he confirm categorically that the motions will give him and other Ministers the power to cut whatever deal they like on the divorce bill without any further reference to this House in a separate, distinguishable vote?

I have to say to the hon. Gentleman, first, that that is not in the Bill—I have taken advice, and I am correct on that—and secondly, that there is, because the Government have agreed it, a decision to allow a vote in both Houses on the whole deal.

When the European Union says Britain is not taking the talks seriously, it in effect means that it is not happy that Britain is not accepting everything it is putting on the negotiating table. May I congratulate my right hon. Friend on not conceding, and on standing up for the British people? May I also remind him that Britain’s position is not as weak as some people would believe? It is not simply one country versus 27 countries; Britain’s population alone is significantly more than those of 15 EU countries combined, and we are also the fifth strongest economy in the world. This has to be a two-way negotiation, and the EU needs to understand that.

Yes, my hon. Friend is exactly right. Sometimes, those involved have to remember that they are negotiators, not arbiters. The simple truth—[Hon. Members: “Turn around.”] There is clearly an outbreak of deafness on the other side of the House. The simple truth is that the interests of the other countries is as much engaged in having a deal as our interests are, and that is what will drive it in the end.

Liverpool’s success owes a great deal to the European Union through its investment in business and support for high-level university research. Will the Government show some urgency in addressing these issues, in contrast to the complacency exhibited in his answer to the question posed by my hon. Friend the Member for Wallasey (Ms Eagle)?

First, any funding that Liverpool gets from the European Union comes, at the end of the day, from the British taxpayer, because we pay in more than we get out. That is the first thing to remember. The second point, on universities, is that we have done a great deal in encouraging universities to continue with their research applications and with bringing in students from abroad, and we have put in place various guarantees to ensure that, so I do not really see what she is driving at.

Order. May I just gently point out to the House that colleagues who beetled into the Chamber after the statement started should not now be standing and expecting to be called? To put it mildly, that is bad form, and I would have thought that the person guilty of it would know it and desist.

May I thank my right hon. Friend for his statement, and for the opportunity he gave Members of this House to spend many pleasurable hours during the recess reading position papers? The position paper on customs largely fails to mention financial services in any way. Given that the sector is our biggest tax raiser and represents 45% of our exports, will my right hon. Friend confirm to the House the Government’s ambitions for customs arrangements in financial services? Have they yet been raised in the negotiations, and does he intend to publish a position paper on those arrangements?

The answer to the last part of the question is: not immediately. The financial services sector is clearly an important part of the free trade agreement we want to achieve. Customs primarily apply, of course, to physical goods. We are very clear in our minds that financial services are a massively important part of the negotiation. My hon. Friend should be in absolutely no doubt about that.

Has the Secretary of State informed his EU counterpart that he has told this House and promised the people of Britain that he will deliver the “exact same benefits” outside the EU as we currently enjoy inside it, and what was the reaction?

Every time this hoary old argument is brought up by Opposition Members I say the same thing to them: I make no apologies for being ambitious on behalf of our country.

Are the negotiations any more convivial than the press conferences that follow them, which serve only as a powerful corrective to any illusion that we ought possibly to have remained part of that institution?

All my meetings with everybody are always convivial.

The European Investment Bank is the EU’s not-for-profit, long-term lending institution, and it is symbolic of our commitment to each other’s progress. EIB funding in the UK for infrastructure spending, entrepreneurship and development has been worth €35 billion in the past six years. What specific discussions has the Secretary of State had on the EIB? Is he committed to doing all he can in seeking for the UK to remain a member of the EIB after we leave the EU, or are the Government planning for us to leave the EIB? Can he guarantee that withdrawing from it will not have a negative impact on investment in the UK and on our economy?

What the hon. Lady fails to say is that the British economy has actually been more successful than most others in obtaining investment from that source. So far, the negotiations have only been about the departure arrangements—what would happen in the event of a rift—but when we get to the point of talking about the ongoing relationship, I think we will be looking to maintain that ongoing relationship.

Does the Secretary of State agree that the British people are right to expect any divorce settlement to be determined only within the context of our ongoing relationship with the EU, and that any expectation that we will agree to a figure before knowing what our future relationship will be is completely unrealistic?

Politically, my hon. Friend is quite right: that is the case. It is a point of view that is resisted heavily by the Commission, but he is right.

The Secretary of State knows perfectly well that to keep the lights on in this country, we need the electricity interconnectors with the continent to operate—

He is nodding, so he does know. The Secretary of State also knows that the legal base for the energy market is separate from that for the single market, so when he says in his statement that “the key issues in relation to cross-border economic co-operation and energy will need to form an integral part of discussions on the UK’s future relationship”, is he softening up his colleagues sitting behind him for the reality that we will have to stay in the European energy market?

No, but a country does not have to be a member of that to sell and buy from it, just as many other countries do.

Has it not become depressingly clear this afternoon that, with some honourable exceptions, most Opposition MPs have swallowed the EU negotiating line hook, line and sinker? They want us to transition to staying in the single market and the customs union, and if possible to staying in the whole EU, thus preventing us from regaining control of our borders, and they are displaying a catastrophic loss of nerve at the first whiff of grapeshot from the European Commission. May I commend my right hon. Friend for his cool head and his steady nerve, and may I urge him to hold the line and not to listen to the remoaners who have become reversers who would sell our country short?

I thank my hon. Friend for the compliment, but all I will say is that I do not think the grapeshot has started yet.

Yesterday, with Members from both sides of the House, I was in Calais visiting some of the refugees who have been sleeping rough around the port since the demolition of the Jungle camp. About 200 of them are minors, some of whom have the right to come to the UK under the Dublin III regulations. If we leave the EU—if—the Dublin III regulations will fall away. Will the Secretary of State guarantee to replicate them in immigration rules, and will they then apply just to EU countries or more widely?

The hon. Gentleman will forgive me if I do not make an instantaneous promise on what will be in the immigration Bill, but this is precisely the sort of thing that that Bill should address. A more general point I made to the European Commission negotiators last week is that a legal requirement is not the only reason for doing things. We are a country with a strong tradition of tolerance and generosity, and if anything, I expect that to grow after we leave, not diminish.

If it is deemed desirable to have a transition or implementation period for a fixed length of time after we leave, what reassurances can my right hon. Friend give me that during that period this country will be able to start formally conducting trade negotiations with other countries outside the EU?

The basis of the limitation at the moment is the duty of sincere co-operation. That arises from membership of the European Union, and we will not be a member. I would, however, give my hon. Friend one word of caution. In the event that we have an open customs border for the duration—if there is some sort of short-term customs agreement—there will be limitations on what can be done, so the entry into force of such an agreement is unlikely unless it is parallel to the ones between, let us say, Japan and the European Union or South Korea and the European Union. There will be limitations, but he has made the point: we should be able to negotiate during that time.

The Foreign Secretary has publicly proclaimed that the EU can “whistle” for a divorce payment and the Secretary of State for International Trade has accused the EU of blackmailing the UK. How helpful has the Secretary of State for Exiting the European Union found those comments in underlining the UK’s commitment to a “flexible and imaginative” approach, which he claims to be the basis of our approach?

That just goes to show how lucky it is that I am such an amiable person.

Michel Barnier has said that his

“state of mind…is to reach an agreement”

with the United Kingdom. In the Secretary of State’s experience, is the good will that is required to reach a negotiated settlement present?

Of course it is. The simple fact is that all the negotiators on the other side want to reach a deal, not just out of generosity and altruism to us, but because it is in their own interest to do so. The second thing to say is that, as other people have pointed out, these are simply the negotiators. At the end of the day, they are not the final decision makers. That falls to the Council and it very much has every reason to do a deal.

The Secretary of State mentioned that one reason the Joint Ministerial Committee has not met is the political situation in Northern Ireland. I appreciate that he does not want to go into hypotheticals, but if that situation is not resolved in the next few months, when will the JMC next meet?

That is a question the hon. Gentleman should put to the First Secretary, who is the decision maker on that. If the situation is not resolved very soon, we will have to find another mechanism. He is exactly right.

The vice-president of the German Mechanical Engineering Industry Association recently said that German manufacturers were concerned for the future of their businesses and that the economic price of failing to strike a trade deal with the UK

“will be bad for all of us”.

Given that the implication is that businesses on both sides of the channel would benefit from a quick agreement on both the long-term future arrangements and the transition, does my right hon. Friend agree that it would be helpful if the EU started discussing what future EU programmes we might want to participate in and what might be the nature of a free trade agreement, in order to speed up everything for the benefit of all businesses across the continent?

Yes, my hon. Friend is exactly right. The reason that is not happening, as I have intimated before, is that the EU sees it as a tactical advantage at the moment. The simple truth is that it is not just German mechanical engineers, but the head of the Bavarian state, the head of Flanders, the head of Hauts-de-France, as I described earlier—it is many, many people—who see their own interest at risk. That is what will help us out in the end.

Will the Secretary of State acknowledge that the delayed process of the negotiations means that universities and other educational institutions are left on tenterhooks in respect of long-term research programmes and exchange programmes? They do not know whether we will still be part of Horizon 2020 or the Erasmus Plus programme and bids have to be in for the next round at the end of this month. Will the Secretary of State give a commitment that the universities sector will be one of our top priorities and that it will get full access to Horizon 2020 and Erasmus Plus?

I will say two things to the hon. Gentleman. First, the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Worcester (Mr Walker) spends a great deal of time on this issue with research institutes and universities. Within a few days, we will publish another position paper on science and the future that we see in that area. I think that the hon. Gentleman will be pleased with its contents.

What assessment has my right hon. Friend made of the figures from the International Monetary Fund that show that the EU’s share of global GDP will fall to just 13% after Brexit and of the significant opportunity that that provides for this country in terms of forging international deals not just with, but beyond, Europe?

We do not even have to look as far as the IMF. The European Commission itself has said that 90% of the growth in world trade will come from outside Europe. That is where the growth markets and the big markets are. We have the fabulous advantages of the English language, English law and all our historic contacts. The simple truth is that we can make a great future outside the European Union.

May I press the Secretary of State on the Irish question? In particular, what detailed talks are happening between his Department and the Welsh Government on trade from Welsh ports to Irish ports? My constituents are concerned and they care about what leaving the customs union will mean in terms of barriers, customs and jobs. It seems that the Irish Government and the Welsh Government are concerned—they seem to get it—but that the UK Government do not. Will he assure me that talks are taking place? Will he or one of his Ministers meet me to assure me that that problem is being looked at, as is that of the north-south border in Ireland?

If the hon. Gentleman was listening earlier when I answered—

I was, but I didn’t get an answer.

If I can finish the sentence, perhaps he will get an answer. When I answered the question on the north-south border, I said that we were also concerned that Ireland’s access to its major market—ourselves—and to the European market through the Welsh ports would be at risk in a bad outcome, so we are absolutely dealing with that issue.

My hon. Friend the Member for Gloucester (Richard Graham) has rather stolen my thunder, because I was going to ask a very similar question about business. What feedback is the Secretary of State getting from businesses across Europe that they want to continue trading with us? It seems to me that the bureaucrats do not and want to punish us, but the business community I speak to wants to do business and does not want tariffs. Is that the feedback he is receiving?

Yes, that is it exactly. Most businesses understand the real virtues of free trade and large markets, and they understand that a frictionless arrangement is best not just for us but for them.

Was the Secretary of State as horrified as I was by the comment from a senior Labour party grandee that there will be open “trench warfare” to block Brexit? I do not know whether that grandee was speaking about the conflict between colleagues on the Labour Front Bench, given the disputes over leaving or not leaving the single market, leaving or not leaving the customs union, leaving or not leaving the European Court of Justice and supporting or not supporting freedom of movement, but will the Secretary of State give a strong assurance to my constituents, who voted overwhelmingly to leave the European Union, that the United Kingdom is leaving with or without the help of Her Majesty’s Opposition?

I think the answer is that we will be leaving without the help of Her Majesty’s Opposition, and there is nothing new in that.

The Prime Minister has done that. She spoke to the previous Taoiseach a number of times and, indeed, went to see him. It was her first visit abroad immediately after she became Prime Minister. She has had numerous conversations since. There are some telephone conversations that I am aware of. Last week, I think on Thursday, the Chancellor was in Dublin with the same mission. We take this issue very seriously. There is no doubt about that. I do not think that the Irish Government are in any doubt about the fact that we take it seriously. Indeed, I met the Irish Foreign Secretary within days of his appointment. We are on this problem and we will get it right.

The Secretary of State said in his statement that he respects the need for safeguards on nuclear materials, but he went on to comment that he looks forward to a “comprehensive new partnership”. Does he envisage Euratom continuing and us being a part of it, or will we have a new Euratom-type agreement?

One problem with not being able to get on to the ongoing arrangements is that we do not have a definitive answer to that, but we do know that we are capable of creating a parallel arrangement if need be. That is not technically difficult, but we would prefer to have a closer association than that, and that is what we will play for.

I call Matt Western.

Thank you, Mr Speaker. I have just experienced what it is like to be the last Member called and to realise that nearly all the questions have already been asked. I will try to make this one slightly fresh.

Does the right hon. Gentleman agree that exchange rates are seen across the world as the measure of confidence in a country and reinforce the decisions of businesses and others to invest there? Since the negotiations started, our currency has fallen against the euro and the dollar. What does that say about how well the negotiations are going?

I will start by helping the hon. Gentleman with his view of the House of Commons: the motto of this place is, “Everything has been said, but it has not yet been said by everyone”, so he is in a good position.

I thought the hon. Gentleman’s view of currencies had gone out with Harold Wilson—“the pound in your pocket” and all that. The simple truth that is a currency lands at the level that works best for the country, and that is what is happening here. We are seeing a significant increase in manufacturing and in exports and an increase in our competitiveness, so I would not worry about that. We do have to worry about inflationary effects, but so far they have been relatively minimal.