Leaving the EU: Scotland

2. What discussions he has had with the Secretary of State for Scotland on the economic effect on Scotland of the UK leaving the EU.

I regularly discuss EU exit with the Secretary of State for Scotland and other members of the Cabinet. The Government remain committed to securing a deal that works for the entire United Kingdom.

There might be two people competing to be Prime Minister, but I think there are at least five who think they will be the next Chancellor, so perhaps the right hon. Gentleman should just get to stay in post and then they will all be equally disappointed. He seems to be concerned that they are somehow going to ruin his deal dividend, but is not the truth that there is no real dividend from any Brexit, that the best possible deal for Scotland and the rest of the UK is the one we already have, which is membership, and that that is the case that he and other sensible Government Members should have the courage to be making?

I have consistently made the case and explained to this House that there is fiscal headroom within the current fiscal rules. If we have a smooth exit from the European Union through a transition that will remove the economic uncertainty that is hanging over our economy, it will then be safe to release that headroom and make it available for additional public spending or, at the choice of the next Government, to reduce taxation. Either way, we have the headroom available once we have removed the Brexit uncertainty.

Is it not the case that Scotland, like everybody else, will know the plans for future public spending, for fiscal headroom and for the economic effects overall if the comprehensive spending review were to be started sooner rather than later? Is the Chancellor able to tell the people of Scotland, the people in this House and the people beyond when the comprehensive spending review will be starting?

I announced at the spring statement that it is the Government’s intention to conduct a three-year spending review concluding this autumn, subject to a deal with the EU being completed. Departments are already commissioned to carry out the work necessary for such a spending review, but it will be for the new Government to decide whether the circumstances make it appropriate to conduct a full three-year spending review or a single-year exercise.

22. Mark Carney has warned that Brexit has already cost households up to £900, with the Fraser of Allander Institute suggesting that it could cost Scotland 100,000 jobs by 2030. Given that the Chancellor was a remainer himself, will he, as a Back Bencher—I wish him well in that, incidentally—vote against any deal removing us from the single market and customs union?

As I have consistently said in this House, I do not believe that a no-deal exit would be in the interests of this country, and I will do everything I can to ensure that we avoid it, but an exit based on a negotiated deal that allows us to continue a close trading relationship with the European Union can work for Britain, and that is what I will be arguing for.

Is the Chancellor aware that only 18% of Scottish exports go to the rest of the European Union but 61% go to the rest of the United Kingdom? Is not the Union that really matters to Scotland the Union of the United Kingdom?

Yes, my hon. Friend is exactly right. The Scottish economy would be far more adversely affected by a breach of trading relationships with the rest of the United Kingdom than it will by a breach in trading relationships with the European Union.