Philip Hammond on leaving EU: 'We can't have our cake and eat it'

Britain accepts it cannot have its cake and eat it when negotiating a Brexit deal with the EU, Philip Hammond, the chancellor, has said before a historic cabinet meeting on the day Theresa May triggers article 50.

The chancellor struck a note of compromise on paying an EU divorce bill and dismissed the idea of using Wednesday as a cut-off date for guaranteeing the rights of EU citizens, as cabinet members gathered in Downing Street to discuss their approach to negotiating exit from the European Union.

May set out her plans, and revealed the letter being sent to the EU, at the specially convened meeting. Ministers loudly banged the table after the prime minister finished speaking and closed the session.

The clock starts ticking on two years of talks from the moment the prime minister’s six-page letter outlining her requirements is delivered by Sir Tim Barrow, the UK ambassador to the EU, to Donald Tusk, president of the European council, at 12.30pm.

At the same time, May will stand up in the House of Commons to expand on the government’s strategy to MPs, confirming that the UK will seek to come out of the single market and achieve full control over immigration. Later, she will be interviewed about her plan by the broadcaster Andrew Neil, to be shown at 7pm on BBC1.

Hammond said the government knew its decision on Brexit would have “some consequences” but he disavowed his previous warning from before the referendum, when campaigning to remain, that Brexit was a “leap on the dark”.

The chancellor said accepting the UK would leave the single market and customs union had “sent a clear signal that we understand we can’t cherry pick, we can’t have our cake and eat it”.

His language is in contrast with that of Boris Johnson, the pro-Brexit foreign secretary, who said in October: “Our policy is having our cake and eating it. We are pro-secco but by no means anti-pasto.”

Hammond also played down the idea that the UK could could crash out of the EU with no deal, which Johnson has said would be “perfectly OK” and May claimed would be better than a bad deal.

“Of course, we have plans for day one after leaving the EU with a huge variety of different outcomes,” he told BBC Radio 4’s Today programme. “But we are very clear what we are seeking to do is negotiate a deep and special relationship with the EU.

“I am absolutely confident we will negotiate a deal. I don’t think anybody has any doubt about that. The question is about getting the very best possible deal and making sure our PM has the maximum flexibility, the maximum negotiating muscle.”

On the issue of paying a divorce bill of up to £50bn, as demanded by some EU officials, Hammond said he thought this was simply a “very aggressive starting line” for the discussions but accepted the UK would have to “settle the rights and obligations we have as a departing member”.

The chancellor also insisted he had not been marginalised by the prime minister during the process of drafting the letter, after having been forced into performing a U-turn on a tax rise for the self-employed in his budget.

On Monday night, May pitched the triggering of article 50 as the moment when the British people must finally unite, as people should no longer be defined by whether they voted to leave or remain at the referendum.

“When I sit around the negotiating table in the months ahead, I will represent every person in the whole United Kingdom – young and old, rich and poor, city, town, country and all the villages and hamlets in between. And yes, those EU nationals who have made this country their home,” she said.

“It is my fierce determination to get the right deal for every single person in this country. For, as we face the opportunities ahead of us on this momentous journey, our shared values, interests and ambitions can – and must – bring us together.”

Labour said it respected the decision of the British public but vowed to hold the government to account every step of the way.

Jeremy Corbyn, the Labour leader, said: “Britain is going to change as a result. The question is how. The Conservatives want to use Brexit to turn our country into a low-wage tax haven. Labour is determined to ensure we can rebuild and transform Britain, so no one and no community is left behind.

“It will be a national failure of historic proportions if the prime minister comes back from Brussels without having secured protection for jobs and living standards.”

The action triggering Brexit, which cost David Cameron his job as prime minister and fractured Labour’s decades-old electoral coalition, continues to pitch senior political figures against each other as the ferocity of the debate shows no sign of reducing.

Michael Heseltine, the former deputy prime minister, told the Guardian the move represented the “worst peacetime decision taken by any modern postwar government”, in contrast to his former cabinet colleague, Michael Howard, who called it the start of an “exciting chapter in the history of the United Kingdom” while acknowledging the road ahead could be bumpy.

Gus O’Donnell, the former head of the civil service, warned of difficult talks ahead, saying it was “like jumping out of a plane flown by EU leaders in a parachute designed by them to discourage others taking the same risk”.

Tim Farron, the Lib Dem leader, issued a separate warning, saying May’s strategy would be dangerous to the economy and fail to reduce immigration.

“Theresa May’s tactic is clear: to accuse anyone who dares question her headlong, blindfold charge towards hard Brexit of being democracy deniers,” he wrote in the Guardian. “This is despite it looking increasingly likely that the result of her reckless, divisive Brexit will be to leave the single market and not reduce immigration – the very opposite of what Brexiteers pitched to the people.”