Hammond and Rudd isolated as Cabinet favours EU divergence
PHILIP HAMMOND and Amber Rudd have been left isolated as the only senior Cabinet ministers holding out against diverging from Europe after Brexit.
The Chancellor and the Home Secretary were the sole members of the 10-strong Cabinet Brexit sub-committee to argue the case for maintaining EU alignment, saying the status quo would be better for existing businesses.
Boris Johnson and Michael Gove rallied other ministers around their vision of Britain gradually breaking from EU rules and regulations so that it can quickly take advantage of future business opportunities, rather than being shackled to a slow-moving, protectionist EU.
It was the first time ministers had formally discussed the “end state” of Britain’s post-withdrawal relationship with the EU, which will also be debated at a full Cabinet meeting today.
Mr Johnson and Mr Gove emerged from the meeting smiling, and believe they have won the battle for a “divergent” withdrawal from the EU. They were joined by Liam Fox and Gavin Williamson in calling for Britain to retain the right to diverge from EU rules.
A Cabinet source claimed that the “majority” of those present, who included Damian Green, David Davis and Greg Clark, were sympathetic to the idea of “gradual divergence” from the EU at the end of the Brexit transition period, rather than a sudden break or a close alignment model.
Arch-remainers Mr Hammond and Ms Rudd struck a more “cautious” tone, saying close alignment with the EU would be better for businesses. Any divergence could also have implications for Northern Ireland, which has been promised there will be no return of a hard border with the Republic.
A Cabinet source said: “There was a feeling ... that the majority of those present were leaning towards the divergence that Boris Johnson, Michael Gove and Liam Fox flew the flag for.”
Mrs May told the meeting that the Government must “aim high” by bargaining hard for the best possible deal rather than accepting what the EU is currently prepared to offer.
The EU working time directive, which limits the working week to 48 hours, is unlikely to be an area of divergence after Mrs May made it clear she intends to mirror it in UK law.
In an apparent victory for Mr Gove, the Prime Minister also hinted that the UK could leave the Common Fisheries Policy (CFP) and reclaim British waters for British fishermen before the end of the transition period.
Mr Gove has been a strong advocate of leaving the CFP, and Mrs May told MPS that Britain’s membership would be part of the negotiations.
Last night, the Government was dealt a blow after Michel Barnier, the EU’S chief negotiator, told The Guardian that the City of London cannot have a bespoke trade agreement with the bloc after leaving the single market.
He said: “There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn’t exist.”
Theresa May’s statement to the House of Commons yesterday told us a good deal about what has happened already but not much about what happens next. Since the negotiations on the future relationship between the UK and the EU are yet to begin that is hardly surprising. After a meeting of the Cabinet subcommittee to begin mapping out the so-called end-state, a few clues might have been forthcoming but were not vouchsafed.
The Prime Minister reaffirmed that the UK is leaving the EU on March 29, 2019, but that has been true since the Commons agreed to trigger Article 50 and begin the two-year timetable to departure. The question now to be resolved is not whether we are leaving but on what basis.
Mrs May confirmed that during the transition period, the UK will be subject to single market and customs union rules and to the jurisdiction of the European Court unless a dispute mechanism can be agreed. Tory MPS who were most pleased with her statement were those keenest to keep a close relationship with the EU. Those who want to see greater divergence were less impressed, with Jacob Rees-mogg repeating his concern that the UK will become a “vassal state” – subject to EU rules but with no say over them.
The full Cabinet will meet today to continue the discussion. Mrs May is aiming for a “bespoke and ambitious” trade deal which she insisted could be pursued even during the transition, though this has been questioned in Brussels. None the less, after appearing to be in serious political difficulty just a few weeks ago she has given the majority in the Tory party hope that, with perseverance and dogged commitment, a final agreement can be reached that is in the interests of the EU and UK.
The way in which the Brexit discussion has become almost entirely consumed by the trade issue means we risk losing sight of other factors. The UK’S decision to leave is sometimes caricatured on the Continent as a populist and insular move when it is about opening up to the rest of the world and leaving the over-regulated EU. Furthermore, when we see a far-right party sworn in as part of the new Austrian government we need no lecturing about political intolerance. What is important is to make Brexit work and ensure a far-left party does not take office here. Jeremy Corbyn has told an interviewer he will probably be prime minister within a year. We need to disappoint him.