Britain and the EU are on Monday beginning a new round of Brexit negotiations in Brussels. But in London the headlines are dominated by UK cabinet ministers squabbling among themselves about the direction of Brexit.
Over the weekend, unnamed ministers issued anonymous briefings against Philip Hammond, the chancellor, revealing that at a recent cabinet meeting he had said that Britain’s public sector workers were “overpaid”. The leaks were embarrassing for Mr Hammond because they are bound to infuriate those workers whose pay rises are capped at 1 per cent a year for the next five years.
Mr Hammond is normally the most careful and controlled of politicians. But on Sunday, he hit back at the ministers briefing against him, suggesting that the leaks were aimed at undermining him personally. He told the BBC:
“Some of the noise is generated by people who are not happy with the agenda that I have, over the last weeks, tried to advance of ensuring that we achieve a Brexit which is focused on protecting our economy, protecting our jobs and making sure that we can have continued rising living standards in the future.”
Mr Hammond’s words suggest this is more than just a row fuelled by warm prosecco at summer parties. Instead, the cabinet seems split over two Brexit issues.
The chancellor believes that Britain’s departure from the EU should be followed by a transition period lasting at least two years to give stability to companies trading with Europe. However, Liam Fox, the trade secretary, leads those wanting a cleaner break, insisting that the transition should be “very time-limited”, lasting just “a few months”.
Mr Hammond is also advocating that Britain should remain in something akin to the current customs union, at least during the transitional period, to reduce bureaucracy for businesses trading with the EU. But Mr Fox fears this would delay Britain’s ability to sign trade deals with non-EU states like the US and Australia.
Asked on Sunday whether he would want to sign trade agreements in a transitional period, Mr Fox said: “It’s certainly something that I would want to see because otherwise it makes it much more difficult for us to take advantage of the opportunities that Brexit itself would produce.”
Mr Hammond is not giving ground in this debate. One of the interesting revelations to have emerged in recent days is how he is using the Treasury and civil service to produce technical papers that support his position.
According to Charles Grant of the Centre for European Reform, the Treasury has written an unpublished analysis that shows that the economic benefits of Mr Fox’s future trade agreements with non-EU states would be significantly less than the economic cost of leaving the customs union. Such a document, if leaked or published, could be a blow to Mr Fox’s position.
On Sunday, Mr Hammond revealed that the civil service is also working on another technical paper, this time on the need for a transitional period. He said Brexit means the UK needs to put in place new customs and migration systems that cannot be created overnight: “There is a piece of work going on inside government now to look at how long it will take to build the infrastructure, hire the people, put in place the IT systems and so on.”
How will the split between Mr Hammond and Mr Fox be resolved? Theresa May is now so weak as prime minister that it is hard to see her imposing a resolution quickly. But, come the autumn, the cabinet will need to agree on what kind of post-Brexit transition it seeks and what its nature should be.
At that point, one of these two men will have to back down.
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The Brexit 18
The FT’s Sarah Gordon writes: Eighteen Brexit working groups have sprung up across different ministries, although there is no clear indication who will co-ordinate the responses. One business lobby group said the structure was confusing.
Five business groups — the CBI, the Institute of Directors, the EEF Manufacturers’ Organisation, the FSB and the British Chambers of Commerce — meet weekly or fortnightly with Greg Clark, the secretary of state for business, energy and industrial strategy. But there are also groups at the Department for Exiting the EU and the Department for International Trade.
“Which group has the main leadership and the say?” asked another attendee at the Chevening meeting.
Here is a list of the 18 Brexit working groups:
Department for Business, Energy & Industrial Strategy
1. Advanced manufacturing — Aerospace, automotive, electronics, machinery, marine, space
2. Consumer Goods and Retail
3. Energy — Nuclear, oil and gas, gas markets, electricity (including renewables)
4. Higher Education
5. Infrastructure, Construction & Housing (with Department for Communities and Local Government) — Construction, housing, airports, infrastructure construction (rail, airport, road, port)
6. Life Sciences (with Department for Health) — Pharma and medical devices
7. Materials — Chemicals, composites, mining, steel and other metals
8. Professional and Business Services — Advertising, marketing, recruitment, management consulting, HR, Law, accountancy, engineering, actuaries, architecture
Department for Environment, Food & Rural Affairs
9. Agriculture, Food & Drink — Farming, animal health, forestry, agri-tech
10. Environmental Services — Water and sewerage, waste
Department for Transport
11. Aviation — Air freight, air passenger services
12. Sea, Road and Rail Transport — Maritime and ports, road haulage and logistics, rail
Department for Digital, Culture, Media & Sport
13. Creative industries — Advertising and marketing, architecture, crafts, design, film, TV, video, radio and photography, IT, software, museums, galleries, music, performing and visual arts, publishing and newspapers, video gaming.
14. Media and Broadcasting — TV, radio, film production
15. Digital, Tech and Telecoms
16. Tourism — Accommodation and hotels, heritage
Ministry of Defence
18. Financial Services — Banking, market infrastructure, asset management, insurance, payment schemes, fintech