ANY QUOTES USED MUST BE ATTRIBUTED TO SKY NEWS, SOPHY RIDGE ON SUNDAY

SOPHY RIDGE: Theresa May we’re told is in Chequers this weekend trying to build support for her Brexit deal – nothing to see here – and this morning on Sophy Ridge on Sunday we are joined by a man who we hope can steer us through the contradictory reports and tell us what’s really happening. Joining us now is the Chancellor of the Exchequer, Philip Hammond. Thank you very much for being with us this morning. So Chancellor, what is going on?

PHILIP HAMMOND: Well look, in just over two weeks’ time we run the risk of facing a very stark choice between leaving the EU with no deal or not leaving the EU at all. It is essential that we get a deal done and I’ve always believed that the deal the Prime Minister has negotiated is a perfectly sensible way for us to proceed to leave the EU. It’s not perfect, she’s acknowledged that, but it’s a perfectly sensible way forward but …

SR: But if we can’t get that deal through with her?

PHILIP HAMMOND: Well if we can’t build a majority behind that deal then the House of Commons has to decide how it does want to go forward, what it can agree to and it’s clear that there is going to be an opportunity over the next few days for the House of Commons, if it doesn’t approve the Prime Minister’s deal, to try to find a majority behind another proposition that it can take forward.

SR: Now I am very pleased to talk about Brexit for a large proportion of the interview of course but I just want to address some of these reports that are in the Sunday newspapers that are effectively saying that we’re in the middle of a coup. Has the Prime Minister run out of road?

PHILIP HAMMOND: No, I don't think that’s the case at all. This is not about the Prime Minister or any other individual, this is about the future of our country and changing Prime Minister wouldn’t help us, changing party in government wouldn’t help us. We’ve got to address the question of what kind of Brexit is acceptable to Parliament, what type of way forward Parliament can agree on so that we can avoid what would be an economic catastrophe of a no deal exit and also what would be a very big challenge to confidence in our political system if we didn’t exit at all, so we have to avoid both of those alternatives and find a way through the middle with a deal that works for Britain and guarantees our future prosperity.

SR: Because according to reports today, your way through the middle is to try and see if David Lidington, the de facto Deputy Prime Minister, could actually become some kind of caretaker leader and steer Parliament through a deal, is that false?

PHILIP HAMMOND: No, that’s not right at all. My position is that this isn’t about individuals, this is about how we move forward. The Prime Minister’s deal is my preferred way forward but I’m realistic that we may not be able to get a majority for the Prime Minister’s deal and if that is the case then Parliament would have to decide not just what it’s against but what it’s for. Parliament will have to come together around a proposition that can gather a majority and what I’m hearing in Parliament at the moment is lots of different ideas from different factions but that won’t solve the problem. Those backbench leaders of different groups have got to get themselves together in a room and decide what they can compromise on because if Parliament won’t compromise we’ll end up at the end of this process no further forward than we were at the beginning of it.

SR: Some people say though that it’s the Prime Minister that’s the road block to getting that kind of deal that you quite clearly say that you want. I want to just show you the quote that one Cabinet Minister gave to the Sunday Times today, a Cabinet Minister telling the Sunday Times ‘The end is nigh, she won’t be Prime Minister in ten days’ time.’ I mean there is a reason I have to ask these questions, we’d be very concerned about where we’d at.

PHILIP HAMMOND: The world watching will see that we have just over two weeks to complete this process before we get to the 12th April, the new deadline that the Council has set last week. To be talking about changing the players on the board frankly is self-indulgent at this time, we have to decide how we want to proceed. Is it a no deal Brexit, which I think will be a catastrophe? Is it no Brexit at all which I think would massively undermine confidence in our political system? Or is it the Prime Minister’s deal and if not the Prime Minister’s deal, some variant on it that Parliament can agree to? Parliament has to come together and make a decision over the coming days and the government has been clear that it will allow Parliament the time and the space to do that, if it can’t agree the Prime Minister’s deal to say what it can agree.

SR: I know you are very keen to draw things back to the votes on Brexit in the House of Commons next week of course but at the same time I just want to focus for a moment, we have a Prime Minister where members of her own Cabinet are saying the end is nigh, the Chair of the 1922 Committee of backbenchers, Graham Brady, has gone into Downing Street to say MPs want you to, members of her Whips office are telling her to her face that she needs to go – how can she actually carry on in those circumstances?

PHILIP HAMMOND: Look, I don't think that would solve the problem. Everybody is very frustrated, the Prime Minister herself has acknowledged that she was expressing her frustrations on Wednesday evening when she spoke to the nation. She has expressed that she was setting out her frustrations and she’s acknowledged that many people across Parliament are also very frustrated by this process but changing the players doesn’t solve the problem, changing the party in government wouldn’t solve the problem, the problem is that we as a nation have to decide how to deliver Brexit.

SR: Have you approached anyone to make an intervention to the Prime Minister?

PHILIP HAMMOND: I speak to all sorts of colleagues and I’m not going to divulge the content of those conversations but I will be absolutely upfront, people are very frustrated and people are desperate to find a way forward in the just over two weeks that we’ve got to resolve this issue.

SR: Do you think that part of the frustration comes from people struggle to really know what the Prime Minister is thinking? Do you know what she’s thinking?

PHILIP HAMMOND: Look, I know that the Prime Minister believes that getting the deal done is the only way to go forward with our country intact and be able to rebuild and ensure that Britain does that, a brighter future. If we crash out with no deal we will face all sorts of economic problems and if we don’t leave the EU at all we will face huge problems of confidence in our democracy so we have a solution which is a deal and the Prime Minister’s deal is on the table but if people cannot accept the Prime Minister’s deal then they have to come together around a variant of it and it has to be a variant that’s deliverable not some unicorn. The government has been clear that we will make time, we will make sure that Parliament has time over the next few days to be able to do that.

SR: Is the Brexit deal, the true blue Brexit deal, is it dead?

PHILIP HAMMOND: Well I personally think that it’s the best way forward, I think it’s a perfectly sensible and coherent deal, we have spent a lot of time …

SR: It can be a good deal but you can still acknowledge when it is dead.

PHILIP HAMMOND: I acknowledge that it’s looking very difficult to bring together a majority for it but that isn’t enough for Parliament to say we won’t vote for the Prime Minister’s deal. Parliament is now going to be confronted with the time and the space to make its own decision about how we should change that deal, how we should adjust that deal in order to be able to go forward. It has to be something that the EU can agree to so it has to accept the Withdrawal Agreement that we’ve negotiated at its centre but if Parliament has a clear majority view about what we need to do to the deal package to make it acceptable to Parliament, then let’s hear about it this week and then we can move forward.

SR: Okay, so let’s be clear, are you saying then that there will be what’s called indicative votes, where MPs effectively are given a range of Brexit options to vote on, to work out what there might be a majority for? Is that happening this week?

PHILIP HAMMOND: Well the government said the week before last if it didn’t get the deal done we would make space available for Parliament in the two weeks following the Council, so this week, next week, for Parliament to try to come to a consensus view around the single proposition. We’ve also got on the order paper for tomorrow an amendment in the name of Oliver Letwin which would create Parliamentary space to do the same thing. So one way or another, Parliament is going to have the opportunity this week to decide what it is in favour of and I hope it will take that opportunity, if it can’t get behind the Prime Minister’s deal, to say clearly and unambiguously what it can get behind.

SR: So would you actually back the Oliver Letwin amendment then, the government?

PHILIP HAMMOND: No, the government has set out its own process but the Oliver Letwin amendment is on the order paper and candidly there is a significant chance that it may carry.

SR: So would it be a free vote?

PHILIP HAMMOND: That is something we haven’t decided yet, that will depend on the process and …

SR: But you can’t really ask Parliament to have its say in an open way and not have free votes can you?

PHILIP HAMMOND: Well we will decide when we see what the propositions are, what is being put forward, how the government will respond to those but the purpose of this exercise is to see if we can get to a view, a proposition, that is acceptable across Parliament and if our deal is not acceptable to Parliament then of course we have to engage with Parliament to look for a version of it that will be acceptable.

SR: Okay, well let’s have a look – I know it’s early days to know exactly what is going to be on the paper but this is what Sky News has been told some of these options could be. Now in the spirit of compromise, I now you feel Theresa May’s deal is the best way forward, are there any other scenarios that you could potentially back, the Prime Minister’s deal plus a customs union for example, is there any other compromises that you would be happy with?

PHILIP HAMMOND: Look, my number one priority is to ensure that we leave the EU and that we leave with a deal so I would remove the top one and the bottom one from the list because both of those would have very serious and negative consequences for our country. Beyond that, I want to see a compromise and the essence of compromise is that nobody gets everything they want and what I want to hear from senior figures across Parliament is that they recognise that if this process is going to be successful there are going to have to be compromises all round. What I’m hearing at the moment are protagonists for individual options here staking out their corner and arguing their case but what we need to hear is people saying I prefer X but I am perfectly content to live with Y …

SR: Come on then, you can lead the way.

PHILIP HAMMOND: … we have to have a way forward. I am going to argue for the Prime Minister’s deal but the most important thing for me is that we have a way forward which means we leave the European Union with a negotiated settlement, with the Withdrawal Agreement and then we can move on as a nation and then I do believe we have a bright future in front of us but only if we do this in a smooth and orderly way.

SR: I notice that you didn’t take the second referendum off the paper, is it something that you could accept, for example if the Prime Minister’s deal goes through Parliament on the guarantee that it would then be put to a public vote?

PHILIP HAMMOND: So I’m not sure there is a majority in Parliament in support of a second referendum but it is a perfectly coherent proposition, many people will be strongly opposed to it but it is a coherent proposition and it deserves to be considered along with the other proposals that you’ve got on the list.

SR: Now of course not everyone is happy with the idea of the so-called indicative votes. We can have a look now at something Steve Baker has said, a former Minister, a Brexit supporter, he has said that there would be ‘National humiliation is imminent with the indicative votes, the wrong Conservatives have the levers of power.’ Are you one of the wrong Conservatives with the levers of power?

PHILIP HAMMOND: By which I take it Steve Baker means Conservatives who don’t agree with his very hard line view of what Brexit should look like.

SR: Are you one of the wrong Conservatives with the levers of power do you think?

PHILIP HAMMOND: I’m sure if you asked Steve Baker I would definitely be one of those wrong Conservatives.

SR: And he wouldn’t be very happy, would he, to be reading the papers that according to the Sunday Times and the Mail on Sunday you are trying to get David Lidington into the top job.

PHILIP HAMMOND: Well that’s not the case, what I’m trying to do is find a way forward. I’d prefer it to be the Prime Minister’s deal but if it can’t be the Prime Minister’s deal then it has to be a deal and Parliament has to come together quickly around a deal that it can support.

SR: But this is all going to take time isn’t it? Are we realistically looking at a long extension and fighting the European elections?

PHILIP HAMMOND: No, I don't think it has to at all. If Parliament passes the Prime Minister’s deal this week, next week or comes together around an alternative proposition that is deliverable, that the European Union could agree to, then there is no reason why we could not leave on May 22nd in line with the decision of the Council last week.

SR: The other alternative of course is leaving with no deal. You know the Prime Minister better than most, do you think that is something that she could stomach?

PHILIP HAMMOND: I’m sure that the Prime Minister will act always in what she sees as the best national interest and I am very clear that it would not be in our national interest to leave with no deal. It would cause catastrophic economic dislocation in the short term and in the longer term it would leave us with a smaller economy, poorer as a nation relative to our neighbours in the European Union. That is not the future for Britain that I came into politics to deliver, I want to see Britain leading from the front, I want to see Britain as a more prosperous nation and not a less prosperous nation.

SR: So would you resign in order to stop no deal?

PHILIP HAMMOND: Well I said this wasn’t about individuals, this about getting the process right and making sure we have the right outcome but I have always been clear that no deal would be a catastrophically bad outcome for our country and I will always do everything I can for exiting with a negotiated deal and a smooth path to a new future relationship with the EU.

SR: The last time we spoke, just before the budget, you said if there was no deal there would need to be a new approach to the economy and a new budget so do you have an emergency budget in your top drawer just in case?

PHILIP HAMMOND: No, because we don’t know exactly what the circumstances would be but I’ve said many times and I said again in the Spring Statement the week before last, both the Bank of England running monetary policy and the Treasury running fiscal policy, have a clear set of tools available and if we did find ourselves leaving with no deal, we’ve done a huge amount of preparation work across the economy, we’ve spent £4.5 billion on contingency for a no deal exit and we will have tools available to us to help support the economy in the short term, including the £26 billion fiscal buffer that I described at the Spring Statement but that will only help us to smooth our path, it will not avoid the long term costs of a no deal exit, it will not avoid our economy being smaller and the British people being poorer over the longer term.

SR: And just finally, Chancellor, we’re in a situation where this was supposed to be the week when we were leaving the EU, instead the newspapers are absolutely full of talk about leadership chaos, we’re facing potentially the biggest crisis politically and economically for a generation, if the Conservative party get it wrong would you ever be forgiven?

PHILIP HAMMOND: Well clearly the stakes are very high, both for our nation and for us as a party of government, that’s why it is so important that we come together to deliver an orderly Brexit. That is what the Conservative party is about, managing the country, managing our government and we have to demonstrate that we can do this. I know it’s been a difficult process but even now we have it in our grasp to agree the Prime Minister’s deal and if we can’t do that, to agree another deal in Parliament, to implement it for 22nd May, to leave the EU with an implementation period to the end of 2020 as agreed in the negotiated deal so that we have a smooth path and we are able to negotiate a future post-trading relationship with the European Union after we’ve ceased to be a member.

SR: Okay, Chancellor Philip Hammond, thank you very much.