Philip Hammond has made clear that the Brexit transitional deal that the government is seeking will “look a lot like the status quo” as ministers attempt to minimise the impact on British business.
Speaking to a House of Lords committee, the chancellor was categorical that he did not want to see companies forced to deal with more than one shift in the relationship between the UK and the EU.
“There is general agreement that it would not make sense to ask business to face two sets of changes and that implies that a transition or interim period would need to look a lot like the status quo,” he said. “Otherwise businesses will be making one set of changes at the beginning of the interim period and another set towards the end of it.”
The comments came in response to the former Labour chancellor, Lord Darling of Roulanish, who said he believed that would be a sensible step.
Hammond reiterated the government’s position that Britain would have to leave the single market and customs union in spring 2019. However, he made clear that the aim was to negotiate an arrangement that would allow trade in goods and services to flow across borders as they do currently.
In order to strike such a deal, the government is likely to concede that while free movement will technically stop, there will be some time before the government can introduce immigration controls beyond a proposed registration system.
On customs, Hammond added that the government wanted to be able to negotiate trade deals but accepted they would not be enacted during transition. “The obvious impediment to such an arrangement is the desire to conclude third-party trade agreements with other countries,” he added. “We have been clear during such a period we would want to be able negotiate with third countries but we would not expect to be able to implement them. That clears the way to have a harmonised customs agreement.”
The comments are the clearest indication yet of Hammond’s desire for the transitional period to be almost identical to the current situation.
The position is not that different to the Labour party’s although the shadow Brexit secretary, Keir Starmer, has argued that the status quo means remaining within the single market and keeping a customs agreement during transition. The Conservative response was to accuse the opposition of “a weak attempt to kick the can down the road”.
Hammond also faced questions from another former chancellor and Brexit supporter, Lord Lamont of Lerwick, who asked if customs arrangements would cope if there was no deal secured with the EU.
“Anyone who’s visited Dover will know that Dover operates as a flow-through port and volumes of trade at Dover could not be accommodated if goods had to be held for inspection. Even, I suspect, if they were held for minutes it would still impede the operation of the port,” he replied, saying the port had “Ryanair style turnaround times” for roll-on, roll-off traffic.
“Anything that caused delay in vehicles exiting the port, delay in vehicles offloading, would cause significant disruption to patterns of movement.”
Charlie Elphicke, the Dover MP who sits on the backbench Tory group pushing for a decisive Brexit, has called on the government to provide the infrastructure to prepare the ports – including for the possibility of no deal.
He told the Guardian that the government had been clear that any implementation period “should end before the next election” arguing that this position contrasted with Labour. Elphicke added: “The way Brussels is carrying on, no deal is a serious risk. It’s vital to be ready on day one at Dover and the Channel ports. The clock is ticking and there are now [fewer] than 600 days to go to Brexit.”
Speaking to the Lords’ economic affairs committee Hammond also addressed the question of student fees, arguing that the wide expectation of ministers had been that universities would charge different amounts depending on the quality of different courses.
“I do think there’s a significant difference between a graduate who leaves university with a, perhaps, quite significant level of debt and a well-recognised degree in an area [that] is known to provide strong employment opportunities; and a graduate on the other hand who perhaps has a very similar level of debt but who may not have a degree that is going to enhance his or her employment opportunities in the same way,” he said.
Hammond admitted ministers were reviewing parts of the system including nominal interest rates on loans rising to 6.1%, arguing there was a responsibility to look at how the system was working compared to original expectations.
He made his appearance after it emerged that May will face several rebellions over her EU withdrawal bill next month, as Tory MPs tabled amendments that aim to soften the Brexit plan.
Tory MPs will challenge the use of Henry VIII powers, call for a vote on the final terms of Brexit and demand the retention of the charter of fundamental rights.
Nine Conservative MPs, including Nicky Morgan, Dominic Grieve and Anna Soubry, are backing a series of changes, raising the possibility of defeats for the prime minister.
In a challenge to their leader’s Brexit plan, the rebel MPs want to ensure the UK retains the EU’s charter of fundamental rights and require that a final deal with the EU be approved by parliament.