Hammond confirms further Brexit analysis after DExEU reports row

Chancellor refuses to rule out the UK remaining in a customs union with the EU after leaving the bloc


By Richard Johnstone

05 Jan 2018

Philip Hammond has told MPs that the government is undertaking “a programme of rigorous and comprehensive analysis that will contribute to the exit negotiations” from the European Union but said details would not be published.

The chancellor confirmed the government was working to create “an ambitious and comprehensive economic partnership with the European Union that is of far greater scope and ambition than any existing free trade agreements” but said this would not be published.

“Parliament has voted not to disclose material, such as this analysis, that would reveal the United Kingdom’s position in the negations. We have however committed to keep parliament informed, provided that doing so wouldn’t risk exposing our negating position,” he said in a letter to Treasury Select Committee chair Nicky Morgan.


The correspondence comes after the Department for Exiting the European Union published a series of sector analysis documents last month following a long-running battle with Whitehall.

MPs voted to demand the government make public the outcome of studies it has carried out into Brexit's possible impact on the UK economy but Brexit secretary David Davis came under fire from MPs on the Committee for Exiting the European Union because the 850 pages of analysis that the documents comprise were not the “impact assessments” they had initially requested.

Despite having previously suggested that Whitehall was awash with impact assessments on leaving the EU, Davis subsequently claimed that no impact assessments existed.

DExEU perm sec Philip Rycroft subsequently told the Brexit committee the sector report documents released to MPs had been offered up to them to meet the spirit of their request.

The documents published, called “sectoral reports”, are essentially overviews of UK industrial sectors that refer to location and global markets. While they recognise current trading arrangements and regulation, they generally do not take views on the impact of the UK’s decision to leave the European Union. The documents as delivered to MPs and members of the House of Lords contained sector views on Brexit and details of stakeholder engagement in the process triggered by June 2016’s referendum result.

The acting chair of the Lords’ EU Committee, former Foreign Office permanent secretary Lord Michael Jay of Ewelme said panel members had reviewed the documents and found them to be “variable in length and inconsistent in approach, and in the use of statistics” and called on the reports to be published in full by Davis.

Jay, who was permanent under-secretary at the FCO from 2002-2006, said he and his colleagues felt that the representation of stakeholder views in the so-far unpublished versions of the reports was “patchy” and in some cases had been drawn from evidence submitted to select committee inquiries.

“There is little over-arching analysis by the government: no conclusions are drawn with regard to the UK’s future relationship with the EU,” he said.

“We have not identified any material in the sectoral analyses that could be regarded as ‘negotiation sensitive’. In light of these findings, we can see no reason why the sectoral analyses should not be published in full.”

In the latest correspondence, Hammond also refused to take the opportunity to rule out the UK remaining in a possible customs union with the European Union after leaving in 2019. In her letter, Morgan asked Hammond to clarify whether his comments to the committee that the UK would leave the European Union’s formal customs union as part of Brexit also meant that the country would not be in “a customs union with the EU as part of its end-state relationship”.

In response, Hammond said that the UK will not be part of the EU’s customs union, adding that the UK will “therefore need to seek a new customs arrangement with the EU that facilities the freest and most frictionless trade with the EU and allows us to forge new trade relationships with our partners in Europe and around the world”. He said the government would be guided by what delivers the greatest economic advantage to the UK, as well as ensuring trade is a frictionless as possible, avoiding a hard border between Ireland and Northern Ireland, and establishing an independent international trade policy.

Commenting on the correspondence, Morgan said that it was widely thought that being in a long-term customs union with the EU had been ruled out “but the chancellor’s letter confirms that this is not the case.

“It is vital that the Cabinet reach agreement on these central questions about the UK’s future relationship with the EU, as a matter of urgency,” she added.

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