Theresa May is set to lay out her vision for the future relationship with the EU next Friday where she is expected to say she wants “ambitious managed economic divergence” from the Brussels bloc after Britain leaves.
It means that an attempt by the Treasury to keep Britain tied to EU rules has failed after senior ministers thrashed out the government’s vision in an eight hour summit at the Prime Minister’ official country residence Chequers.
The Cabinet Brexit sub-committee agreed on a policy which will see Britain matching EU rules in certain industries while having “the right to choose to diverge” from them in others, health secretary Jeremy Hunt revealed.
Mr Hunt, who did not attend Thursday’s meeting of the Brexit “war cabinet” at Chequers, said he had been told it was “a very positive discussion and I think we have made good progress.”
He went on: “I think the central understanding – you have divergent views on a big issue like Brexit as you would expect – but the central common understanding is that there will be areas and sectors of industry where we agree to align our regulations with European regulations. The automotive industry is perhaps an obvious example because of supply chains that are integrated.
“But it will be on a voluntary basis, we will as a sovereign power have the right to choose to diverge and what we won’t be doing is accepting changes in rules because the EU unilaterally chooses to make those changes.”
Mr Hunt also made it clear that calls to remain in a customs union with the EU had been rejected and insisted “frictionless” trade was still possible without one.
“If we were a part of the customs union we wouldn’t be able to negotiate trade deals independently with other countries and we wouldn’t have full sovereign control of our destiny as a nation.
“But what we want is frictionless trade and we want to find a different way – customs union is one way of getting frictionless trade but it’s not the only way – and what we’re saying is we want to achieve frictionless trade by agreement between two sovereign bodies – the United Kingdom and European Union,” he said
It is understood that remainers in the cabinet led by Chancellor Philip Hammond had hoped to get the Government to agree stick to EU rules to make a free trade deal easier to agree.
And in the weeks leading to the meeting, civil servants appeared to intervene with the leak of a now discredited impact assessment which suggested Britain would be economically better off staying in the customs union and single market under Brussels rule.
It was later revealed that the assessment had been reached after the wrong data had been inputted into it and government policy had been ignored.
The Government position is a move from the divorce agreement which had suggested Britain may shadow EU regulations instead of being free to make its own to solve the Northern Ireland/ Ireland border controversy.
But in recent days Mrs May has pointed to a plan put forward by the Government last year using digital technology which could keep the border open.
The conclusion appears to be a victory for the leading Brexiteers in the cabinet Boris Johnson, Liam Fox and Michael Gove who have insisted that Britain needs reap the full benefits of Leaving the EU by creating new trade deals.
Jacob Rees-Mogg, who chairs the European Research Group of backbench Tory Eurosceptics, warned Theresa May against allowing EU citizens arriving in Britain during the post-Brexit transition period to remain in the country under current free movement rules, arguing it would be “unconscionable”.
He said: “Mrs May said when she was in China that she wasn’t going to do that and that people who came after we’d left would be subject to different conditions, which seems absolutely right.
“You’ve got to remember we are leaving the European Union on March 29 (2019), we will be out of the treaties on that day, we will not have any say in the rules that are made and, therefore, people who come after that day ought not to be allowed to have the full and permanent free movement rights.
“That would be quite wrong and they will know the conditions on which they come, which is important, so it’s fair to people who come after that date.
“I’d be astonished if Mrs May would make a u-turn of that kind, she is a lady of great backbone and for her to kowtow to the European Union is, I think, unconscionable.”