The UK Government will keep spending money on contingency plans for a “no-deal” Brexit until shortly before the planned withdrawal date of March 29 2019, in case a proposed transition deal falls through, David Davis has said.
Even if political agreement on the transition is reached at this month’s European Council summit, Mr Davis said that preparations for a no-deal outcome must continue until the plan is formally ratified – probably in the final weeks of this year.
His comment appears to put him at odds with Chancellor Philip Hammond, who told the Commons European Scrutiny Committee on Monday he expected to be able to “stand down” preparations for a no-deal Brexit once the transition deal is agreed.
With £700 million already spent on Brexit contingency planning, Mr Hammond told MPs he wanted to “make sure that we are not spending money on outcomes that have been effectively ruled out at any stage”.
Crashing out without a deal in March 2019 would probably require significant investment, whether on additional customs officials or lorry parks at ports.
A transition deal would ease the pressure by giving businesses and authorities about two years to prepare for an orderly departure.
Any transition arrangement agreed at the March 22-23 summit would first have to be put into its final legal form before being sent in October to the UK and European parliaments for ratification.
But Mr Davis told the European Scrutiny Committee that the Government could not take for granted that a deal reached with the other 27 EU member-states in Brussels would come into effect as planned.
It would not be possible to “stand down” contingency preparations “until we have got to the point of agreement later in the year,” he said.
“It’s highly improbable, but always possible, that the deal will come apart at the end for some wholly unpredictable reason.”
“A responsible Government has to be ready for that outcome, just as a matter of good practice.”
Mr Davis played down differences with the European Commission over arrangements for the Irish border, insisting that issues raised by Brussels were “largely resolvable” as part of a “pragmatic” agreement allowing tariff-free trade and mutual recognition of standards.
By publishing its fallback option of harmonising customs rules between Northern Ireland and the Republic before discussing the UK’s proposals in depth, Brussels was “putting the cart before the horse”, said Mr Davis, adding: “We’ve done quite a lot of building the cart.”