Davos 2018: Chancellor Philip Hammond slammed over “grave error” for saying he wants “modest” change after Brexit
Philip Hammond prompted a major backlash from Tory backbenchers today, after he told Britain’s biggest business group that Brexit would involve “very modest” changes to the status quo.
The Remain-leaning chancellor told a CBI lunch at Davos that we could maintain “highly aligned regulatory systems” and “the closest possible future relationship between the EU and the UK, post Brexit”.
“We are taking two completely interconnected and aligned economies with high levels of trade between them, and selectively, moving them, hopefully very modestly, apart,” Hammond added. “And so we should be confident of reaching something much more ambitious than any free trade agreement has ever achieved.”
Although Hammond also stressed the UK would be leaving the customs union and Single Market, his comments were seized upon by Leave advocates as a sign he was once again pushing a soft Brexit agenda.
Senior backbencher Jacob Rees-Mogg, who heads up the pro-Leave European Research Group, told City A.M. it was “a grave error”, adding he had a “fundamental disagreement” with Hammond’s position.
“I think it misses all the opportunities of Brexit… and I don’t think it’s government policy either,” he said.
“I don’t think it’s in line with the Prime Minister’s Lancaster House speech or the Conservative manifesto [which] call for us to take back control of our laws, our borders and our money and have the ability to make deals with the rest of the world. If we have a high level of regulatory alignment with the EU that makes deals pointless because we won’t have the flexibility to do anything differently.”
“Everyone knows the chancellor does not believe in leaving the European Union,” he added, noting the Treasury was “rather thrashing around” since its economic forecasts had been revealed to be “shamefully inaccurate”.
Bernard Jenkin, chair of the influential Public Administration and Constitutional Affairs, agreed.
“The chancellor has been playing blow football with Prime Minister’s policy for some months, and it would be a good idea if he supported her,” he said.
“The PM has been very clear about her distinction, has been very clear in her language: that there is no such thing as soft or hard Brexit, that she wants us to take back control of our laws and borders, and she wants to take back control of our ability to do deals with other countries.
Jenkin added: “The position is very clear and the chancellor should be supporting that position otherwise the uncertainty to the British economy is going to be interminably extended and that is not in the national interest.”
Henry Newman from think tank Open Europe said Hammond’s comments “risk opening a severe public row over Brexit. It would be better to avoid such a row but we do need an answer to the question of where we want to end after Brexit – it’s just that Hammond has got it wrong.”
Meanwhile former work and pensions minister Iain Duncan Smith said he was “puzzled” by the chancellor’s intervention, saying it marked a “substantial change” from the government’s position during the election, and noting that Rees-Mogg’s stance was “much closer to where the government was… and needs to be.”
One MP Conservative MP,who asked not to be named, said Hammond’s commitment to leaving the customs union was “a weasly distinction” in the face of the new cross-border taxation bill, which makes provision for joining “a customs union”.
The MP added: “To what extent is the Prime Minister over all the detail of all this? I think this is the problem – she has officials and others ministers, with parallel policies in place, and there are tensions between the two.”