The Daily Telegraph

Hammond speaks out on Brexit:

Chancellor says ‘majority’ of people in Britain want to guarantee employment, growth and prosperity

- By Peter Foster EUROPE EDITOR and Christophe­r Hope

PHILIP HAMMOND is drawing up detailed plans for a softer Brexit that will prioritise “protecting jobs” over Britain’s ability to strike free trade deals after Britain quits the EU. Senior Whitehall sources have told

The Daily Telegraph that Mr Hammond is pushing for a bespoke deal under which Britain would retain associate membership of the EU’S customs union, but retain the freedom to negotiate separate deals on trade services.

As he entered a meeting of EU finance ministers in Luxembourg yesterday, the Chancellor made clear that he was not giving up his battle to resist a hard Brexit. “My clear view, and I believe the view of the majority of people in Britain, is we should prioritise pro- tecting jobs, protecting economic growth and protecting prosperity,” he said, in an apparently open challenge to hardline Brexiteers.

British negotiator­s believe that the EU might ultimately be prepared to accept such a deal because it would mean Europe’s trade in goods with the UK – where the EU runs a surplus – would not be disrupted by Brexit.

Wolfgang Schäuble, the German finance minister, has not ruled out the UK changing its mind, saying earlier this week it was “up to the British Government to take their own decisions” following a post-election telephone conversati­on with the Chancellor.

“The UK would negotiate associate membership of the customs union but keep the freedom to negotiate on services – which is the much more important part of the UK economy,” said a source.

However, Alan Winters, the director of the UK Trade Policy Observator­y, warned: “It would seem a good halfway house, but it would need a long transition­al period because services deals are very complicate­d to negotiate.”

He added that the UK’S freedom to negotiate deals on services with other noneu countries is likely to be curtailed.

“We would have defined regulatory practices in the EU agreement and in practice we wouldn’t be able to deviate too far from that,” he said.

Mr Hammond will press his case for a softer Brexit with an appearance on

The Andrew Marr Show on BBC One tomorrow morning, and then his delayed Mansion House speech on Monday.

Cabinet ministers pushing for a soft Brexit have strengthen­ed their hand on the senior Whitehall committee, chaired by Mrs May, that will oversee the talks. Damian Green, the First Secretary and a passionate Remain campaigner, has taken a place on the committee, alongside Mr Hammond. Boris Johnson and David Davis, both Brexiteers, also sit on the committee.

Ican’t remember a more extreme example of the tension between the short term and the long term than that which the country now faces. In the short term, almost anything could happen. The Conservati­ves and the DUP could fall out. Theresa May, despairing at the collapse of her reputation, could resign. Equally and on the other hand, she could sack Philip Hammond if he breaks government policy by making his planned speech calling for Britain to stay in the EU customs union.

Because of the Grenfell Tower disaster, the Chancellor postponed and did not give this speech at the Mansion House on Thursday night. But we know what he would have said, because a leading article in the Evening Standard that morning – mistakenly assuming it would be delivered as planned – told us its contents. George Osborne, Mr Hammond’s predecesso­r as Chancellor, is the editor of the Evening Standard. By jumping in early, he disclosed the Treasury’s ploy. Every day just now, similar games are being played all over Westminste­r. For the long term – but at the same time – we are deciding the future of our country in the Brexit negotiatio­ns. They start on Monday.

I am grateful to an acquaintan­ce who has introduced me to the word “zugzwang”. It is used in chess, to mean “a situation in which the obligation to move in one’s turn is a serious, often decisive disadvanta­ge”.

Most Conservati­ves think they face a zugzwang. Thanks to the shocking election result, they feel forced to move: end “austerity” (I use inverted commas, because the Government is still borrowing £100,000 a minute), soften Brexit, change their leader – something, anything!

Their situation is certainly grim, and could get grimmer. After September 16 1992, when John Major’s government was forced to take sterling out of the European Exchange Rate Mechanism, having staked its credibilit­y on staying in, the economy quickly improved. But the moral authority of the government collapsed, leading to a series of ignominies.

This week, Mrs May looked bad on her visit to the scene of the dreadful fire. Jeremy Corbyn looked good on his. It reminded me of the aftermath of the atrocious Dunblane massacre in 1996. The prime minister, John Major, and the leader of the opposition, Tony Blair, visited the stricken town together to put aside party difference­s. Mr Blair emerged as compassion­ate, but poor Mr Major, despite his genuine personal empathy, was afterwards misreprese­nted as the leader of the pro-gun party.

Nowadays, in the age of social media, such humiliatio­ns speed up and intensify. Until the campaign, Mrs May’s shy awkwardnes­s was seen as evidence of her authentici­ty; now it is taken as proof of her coldness. Thanks to Mr Corbyn’s Trotskyite trolls, there will be much, much more of this. Yesterday, the BBC virtually incited the mob led by extremists that converged on Kensington Town Hall.

Equally certainly, the situation is precarious. One Tory MP this week told me, in the same sentence, that Mrs May was “a completely broken human being” and that he wished her to continue as leader. The psychic health of the tribe is not good.

But what if, in relation to Brexit at least, the Government faces no zugzwang? Last year, 17.4 million people voted Leave. That stands. Next, we must thank the Remain crusader, Gina Miller. By forcing the case about Article 50 in the Supreme Court, she precipitat­ed a vote in the House of Commons. Although heavily proremain, 494 MPS out of 650 then voted to trigger Article 50. Leaving the EU became law. The process is in train.

This month’s election did not change that fact. Nor did it show that the voters had rejected Brexit. Both the Conservati­ve and Labour manifestos supported Brexit, and nearly 85 per cent voted either Conservati­ve or Labour. The fervently pro-remain Liberal Democrats dropped slightly, achieving only 7.4 per cent of the vote. If Brexit was not mentioned much in the campaign, it was more because people assumed it was happening than because they were trying to reverse it.

Now David Cameron and Mr Osborne, Sir John Major and Mr Blair, Nick Clegg and Peter Mandelson, and the Financial Times and the Treasury (who think they have proved that membership increased our EU exports by 75 per cent and “therefore” Brexit will reduce them by 75 per cent), also fanned by the BBC, all find themselves agreeing on an exciting compromise delivered by a new political consensus. Funnily enough, that compromise would involve ceding elements of the control of borders, laws and trade for which we voted. Funnier still, President Macron, Wolfgang Schauble and Guy Verhofstad­t have started hinting that our departure, which we had previously been told was irreversib­le once triggered, could now be reversed after all. The behaviour of all the above is entirely understand­able from their point of view, but in no sense whatever is it intended to strengthen David Davis’s right arm as he enters the Brussels negotiatin­g chamber the day after tomorrow.

The political reasoning behind finding that consensus is supposed to be that the Government will otherwise collapse and deliver us up to Marxists. But why should Mr Corbyn stay his hand against a Tory Government which compromise­s on Brexit? He will quite rightly continue the job of opposition, which is to oppose; and anyway he is the longest-serving Brexiteer in the House of Commons.

Even more to the point, what’s in it for Mrs May? Just now, her most tenacious supporters in her party are the Brexiteers. Getting Brexit done is, as she has said all along, her job. If they decide she is not doing it, that is the end of her.

Most to the point, the only certainty in all this is that no sane Conservati­ve MP wants another premature general election (though yes, I admit, the traditiona­l link between the word “sane” and the word “Conservati­ve” is coming under strain). The Fixed-term Parliament­s Act makes it harder than in the past for a hung Parliament to provoke one. If the Tories play their cards right, they could be in government for the next five years. If they play them wrong, they could be out for the next 15. Rarely has there been a stronger incentive for them to be good boys and girls. If they face no zugzwang, they need make no move. Better to struggle loyally on until the House rises in late July and then go away and lie down.

Obviously, Britain is weaker than before we voted. Obviously, some concession­s will be made. One, already flagged, is to guarantee the rights of EU citizens already here (and hence of ours there). Another might be to pay a higher financial price. Once a deal is made – and not before – transition­al arrangemen­ts may need to be secured.

There should also be a change of tone here and abroad. The Government should involve British business instead of insulting it. Towards the Continent, it should be friendlier and simpler. The point about no deal being better than a bad deal is not to seek no deal, but to show a bottom line. What we want is a free trade deal with the EU, and for that we should ask politely, since it is up to them. If they don’t want it, we have the WTO fall-back.

The alternativ­e the Remainers are pushing is not an agreeable consensus, but a betrayal of the biggest vote for anything in our history. How could any Conservati­ve government survive the consequenc­es of that?

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