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The Guardian - UK
The Guardian - UK
Politics
Andrew Sparrow

HMRC says 'max fac' customs system preferred by Brexiters could cost business up to £20bn per year – as it happened

Jon Thompson, chief executive and permanent secretary at HMRC
Jon Thompson, chief executive and permanent secretary at HMRC Photograph: Parliament TV

Afternoon summary

There are flights available for ministers when they need them. The Voyager has been used on occasions when ministers have been carrying out business on behalf of the prime minister.

Mike Russell, the Scottish government Brexit minister, was more blunt. He posted this on Twitter.

  • Labour’s attempt to force the government to slash the pay of transport secretary Chris Grayling has failed after being voted down by MPs. As the Press Association reports, the motion to cut Grayling’s pay by £2,400 - the cost of a season ticket to London from his Epsom and Ewell constituency - was tabled after Labour deemed that his handling of the East Coast Main Line franchise agreement had “fallen desperately short” of a minister. In a scathing attack, shadow transport secretary Andy McDonald accused Grayling of being “asleep at the wheel” and said he was “incapable of being direct with members of parliament and the public alike”. He said:

Stagecoach knew they wouldn’t meet their revenue targets weeks after taking over the East Coast in March 2015; the company was in constant dialogue with the department about it. The secretary of state has been in post since July 2016 and must have known about this for that period of time. Why did he do nothing? Hasn’t this transport secretary been asleep at the wheel?

The motion to slash Grayling’s pay was voted down by 304 votes to 271

That’s all from me for today.

Thanks for the comments.

Updated

At a press conference in Chile Boris Johnson, the Brexiter foreign secretary, was asked about the Brexit minister Suella Braverman’s comment to a committee this morning that MPs will have to vote on a financial payments to the EU before a legally-binding agreement has been reached on the future trade relationship. (See 9.57am.) He played down the signifcance of this, telling journalists:

Article 50 makes it absolutely clear that the terms of the withdrawal have to be seen in the context of the future relationship. I just remind you of the basic fact of negotiations, which is that nothing is agreed until everything is agreed.

Boris Johnson (left) after holding a press conference with Chilean foreign minister Roberto Ampuero at the Ministry of Foreign Affairs in Santiago, Chile.
Boris Johnson (left) after holding a press conference with Chilean foreign minister Roberto Ampuero at the Ministry of Foreign Affairs in Santiago, Chile. Photograph: Stefan Rousseau/PA

Here is some reaction to the HMRC evidence to the Treasury committee.

From George Parker, political editor of the Financial Times

From George Osborne, the Evening Standard editor and former Conservative chancellor

From the FT’s Jim Pickard

From Hugh Bennett, deputy editor of BrexitCentral

Why HMRC thinks customs partnership could cost business nothing once set up

And Jon Thompson, the HMRC boss, also explained why he thought the new customs partnership (NCP) proposal could cost business nothing once it was up and running.

The NCP would involve the UK collecting tariffs on imports at the EU rate on behalf of the EU and then reimbursing firms if the goods were only sold in the UK and if the UK tariff on said goods was lower than the EU one.

Thompson said that setting up the system would cost around £700m.

After that, he said, “you could argue that the NCP has a net cost of zero or less, depending on the tariffs.” He explained:

In a sense it is self-regulating. So if you assume that businesses are economically rational, and that they will only try to get their tariff differential back if it is worth their while, you could argue that it [the cost] must be zero or less. But that’s probably an unrealistic thing to say.

Thompson said that, if the UK were to cut all tariffs on goods to zero, the maximum amount that British firms would have to pay would be £3.4bn. That would be the amount they would be paying because they were paying EU import tariffs on goods zero-rated by the UK.

But the firms would be able to claim that money back, he said.

No 10 dismisses HMRC figures on cost of 'max fac' customs plan as 'speculation'

Downing Street has dismissed the HMRC figures about the cost of “max fac” as “speculation. These are from the Telegraph’s Jack Maidment.

Why HMRC thinks 'max fac' would cost business up to £20bn per year

This is what Jon Thompson, chief executive and permanent secretary at HMRC, told the Treasury committee about the costs of “max fac” for business.

“Max fac”, or maximum facilitation, is the term currently popular in Whitehall to describe the highly streamlined customs arrangement - one of the two post-Brexit customs options being considered by the government. “Max fac” would involve using technology and trusted trader arrangements to keep customs checks to a minimum. It is strongly supported by Brexiters like Boris Johnson, Michael Gove and Jacob Rees-Mogg because they think the alternative, the new customs partnership (NCP) would be overly complicated and would keep the UK in the customs union, at least effectively or perhaps even for real.

Asked how much “max fac” (which he referred to as the highly streamlined customs arrangement) would cost business, Thompson told MPs:

We know that there were in 2016 almost 200m intra-EU consignments. So that is the base number. That has been audited by the NAO and is in a report on the customs declaration service.

The question is, how much does it cost to complete a customs declaration? We’ve done some work ourselves. There have been at least two independent reports, one by the University of Nottingham business school and one by KPMG earlier in the year. The answer to that question is it’s between £20 and £55. You can’t average it out because of weighting but for ministers we’ve settled on £32.50 per customs declaration.

So you’ve got 200m customs declarations at £32.50. That’s £6.5bn.

[That’s on the UK side. There are declarations required on the EU side too] so you double that number, probably. That takes you then to £13bn.

You’ve then got the question about what might be the requirements from the European Union on rules of origin. Is this cheese from Cheddar? It’s quite difficult to estimate that, but it would be reasonable to think that it is several billions pounds more.

So you need to think about the highly streamlined customs arrangement costing businesses somewhere in the late teens of billions of pounds, somewhere between £17bn and £20bn. And the primary driver here is the fact that there are customs declarations.

How Nicky Mogan summed up HMRC evidence on customs and Brexit

This is what Nicky Morgan said when she was summing up.

I want to summarise where I think we are at the end of this session ... We are going to have a functioning but sub-optimal border on January 2021 where there will be a trade off between friction, revenue and security. It will take three to five years [to get new customs arrangements in place] depending on which of the two options [is chosen], but that can’t even start until a political decision has been made.

HMRS is recruiting about 5,000 people to make this happen, leaving aside people at the border.

The highly streamlined option is going to cost businesses £32.50, approximately, per customs declaration. That’s a cost of between £17bn and £20bn a year. The NCP (new customs partnership) will have set up costs of about £700m but could be ultimately net neutral [in terms of costs for business] if tariffs are reclaimed.

Just in this current financial year [HMRC is spending £260m implementing Brexit]. And there are 39 other HMRC projects which have either had to be stopped or significantly slowed down in order to get Brexit through.

I’m going to ask you an unfair question now which I strongly suspect you will not want to, or not be able to, answer. But wouldn’t it be a relief if parliament just voted for a customs union?

Nicky Morgan
Nicky Morgan Photograph: Dominic Lipinski/PA

Nicky Morgan says HMRC evidence suggests staying in customs union best option.

Nicky Morgan, the committee chair, is now summing up the situation.

She says the “max fac” customs system would involve firms having to pay £32.50 per customs declaration. This would cost them up between £17bn and £20bn a year, she says.

The customs partnership model could end up being cost neutral, she says.

She says the government has given HMRC £260m this year to spend on preparing for Brexit.

And around 39 other HMRC projects have been postponed or delayed because of this work, she says.

She ends with a question.

Q: Wouldn’t it be a relief if parliament just voted for customs union?

Thompson says that is for parliamentarians to decide.

  • Nicky Morgan says HMRC evidence suggests staying in customs union best option. The HMRC chief executive says it is a matter for parliament.

And that’s it. The hearing is over.

I will post a summary soon.

Updated

Q: Have you been given permission to discuss this with your European partners?

Harra says that is not happening. All the discussions are with the European commission. But HMRC is having talks with foreign ports.

He says it would be useful to have technical discussions with foreign customs authorities.

This is from the BBC’s business editor Simon Jack.

Joe Owen from the Institute for Government thinktank has posted this about the HMRC revelation about the cost of “max fac”.

Thompson confirms that HMRC has asked firms to sign non-disclosure agreements before it discusses with them how customs arrangements might work after Brexit. He says firms have not complained about this. They are glad to have been consulted, he says.

Harra says that the non-disclosure agreements apply both ways. HMRC has been discussing policy options that go well beyond government policy, he says.

Thompson says setting up the NCP (new customs partnership) system would cost HMRC about £180m. The alternative highly streamlined customs arrangment (“max fac”) would cost it about £250m to set up, he says.

HMRC says “max fac” customs system preferred by Brexiters could cost business up to £20bn

Thompson says the “max fac” system could cost business between £17bn and £20bn.

(The “max fac” is the model preferred by cabinet Brexiters.)

The customs partnership model would avoid those costs, he says. He says the maximum amount it would cost would be £3.4bn.

But you could argue that the NCP (the new customs partnership) would cost business zero, he says, because firms would get a refund.

He says the set-up cost for the NCP would be about £700m.

  • HMRC says “max fac” customs system preferred by Brexiters could cost business up to £20bn.

Harra says, if the UK opts for the customs partnership model, companies would need to invest in systems in order to apply twin tariffs (the EU ones the UK would be collecting, and the UK ones). He says they will not want to make that investment until they know that the tariff differentials will be, which will determine whether it is worth applying the new system.

Nicky Morgan, the committee chair, goes next.

Q: When do you need a decision in order to be able to hit the deadline of having a functioning border in 2021?

Thompson says HMRC expects to have a functional border in 2021. But it might not be fully optimal from the start.

The sooner there is a decision the better, he says.

Jim Harra, the HMRC deputy chief executive, who is giving evidence alongside Thompson, says that they are also dependent on third parties. They will only start to implement changes when it is in their economic interest, he says.

Updated

Q: You have said the “maximum facilitation” model could take up to three years to implement and the new customs partnership one up to five years. Is that still your view?

Broadly yes, says Thompson.

But he says he thinks they could have a functioning border by January 2021.

But foreign ports might not be ready, he says.

He says one problem is that repayment mechanisms might not be in place. That is because businesses would want to wait for a while to see whether reclaiming money (under the customs partnership proposal) would be worth it.

Back in the committee Thompson says HMRC has 1,100 staff working on Brexit.

In response to a question about whether HMRC is looking at just the government’s two preferred customs options, or whether it is looking at others as well, he says two is enough.

Updated

UK will respect ECJ remit in relation to participating in EU science programmes after Brexit

The Brexit department has today published two papers covering plans for the future UK-EU relationship - one covering science, research and innovation (pdf) and the other covering data protection (pdf).

As the BBC’s Adam Fleming points out, the government is promising to respect the remit of the European court of justice in relation to participating in EU programmes.

Here is the letter Thompson sent to the Brexit committee. There is a link here (pdf).

The highly streamlined customs arrangement (HSCA) is the “maximum facilitation” option.

Updated

Thompson tells MPs that HMRC does not have a view as to whether the “maximum facilitation” option or the alternative one, the customs partnership, would be best.

Updated

HMRC gives evidence to Commons Treasury committee about Brexit

Jon Thompson, chief executive and permanent secretary at HM Revenue and Customs, is giving evidence to the Commons Treasury committee about Brexit.

At the Brexit committee hearing this morning Hilary Benn, the chair, said Thompson had written to his committee saying that the “maximum facilitation” customs plan - one of the two proposals being considered by the government for customs after Brexit - could take three years to put in place, which could mean it would not be ready at the end of the transition in December 2020.

Updated

Minister says it may be 'sensible' to repeal parts of 2012 Health and Social Care Act

Yesterday the BBC reported that ministers are considering repealing some aspects of the 2012 Health and Social Care Act - the hugely controversial legislation passed by the coalition government that reorganised the NHS and further entrenched marketisation in the service.

In an interview on the World at One George Eustice, an environment minister, appeared to confirm the story. When asked if bits of the 2012 Act would be abandoned, he replied:

I think what everybody recognises, and I see this myself in Cornwall, is that there are some instances where you need to effectively have more integrated approaches to different wings of the NHS. And in some areas there’s a little bit of fragmentation that needs to be addressed.

Asked to give an example, Eustice replied:

If you want to join up better your adult social care provision with A&E and other hospital provision as well, you probably need a single piece of oversight over that, and one organisation doing that. So in Cornwall - and this is happening with a number of care plans right across the country - you are getting the NHS working out how they can improve efficiencies by removing some of the duplication. And that’s a positive thing.

Asked why that might requires changes to the 2012 legislation, he said:

There are some elements were it requires them to go to tender when it might be sensible not to go to tender.

George Eustice.
George Eustice. Photograph: Will Bunce/UCf / Rex Features

Updated

The long-awaited report of the SNP’s Growth Commission is due to be published this Friday. More than 18 months in the making, the report was commissioned back in September 2016 to produce a persuasive economic case for independence, after flabby arguments around currency and business were deemed to have contributed substantially to the loss of the last independence referendum in 2014.

n a flurry of pre-publication trails, SNP leader and first minister Nicola Sturgeon has said the report “heralds the start of a debate based on hope and ambition about the future of the country, rather than on the despair of Brexit”.

The party plans to hold a series of ‘national assemblies’ this summer to debate the finding with members. SNP-watchers may recall that a similar exercise, branded a ‘national conversation’ was launched in September 2016 to gather views of those unpersuaded about independence, and which had the added strategic bonus of keeping restless members busy whilst the post-Brexit holding pattern continued. It remains to be seen what purpose these latest events will ultimately serve.

Ken Clarke backs John Bercow over 'stupid woman' row

In a point of order after PMQs Ken Clarke, the Conservative MP and father of the Commons, defended John Bercow, the speaker, over complaints that Bercow called Andrea Leadsom, the leader of the Commons, a “stupid woman” in muttered remarks from the chair last week. Clarke said:

Would you agree, Mr Speaker, if every time a member of this House has felt moved to say under his breath something rather abusive about another member, and action was taken, the chamber would be deserted for considerable quantities of time?

Would you not agree it’s best to leave this to the body that is now investigating it and perhaps hope that some common sense will be applied to this rather overheated subject?

PMQs - Verdict from the Twitter commentariat

This is what political journalists and commentators are saying about PMQs on Twitter.

Generally, neither May nor Corbyn seem to have made a particularly good impression.

From the Daily Mirror’s Jason Beattie

From the BBC’s Laura Kuenssberg

From the Spectator’s James Forsyth

From the Guardian’s Jessica Elgot

From the Sun’s Tom Newton Dunn

From the Guardian’s Dan Sabbagh

From the Sun’s Harry Cole

From the BBC’s Iain Watson

From the Independent’s Tom Peck

From Business Insider’s Adam Bienkov

From Reaction’s Iain Martin

Ian Blackford, the SNP leader at Westminster, used his two questions to ask about immigration. He said immigration rules were hitting young people who could not afford to pay for visas. He called for fees to be scrapped, as they were being abolished for Windrush-era migrants.

May said a minor with indefinite leave to remain in the UK should be ineligible for fees.

Blackford said some young people were having to pay up to £10,000 to stay in the UK. But May said she did not recognise that number.

(I’ve taken the details from PoliticsHome.)

May says the government is keeping the issue of tier two visas to doctors under review.

Luke Graham, a Conservative, accuses the SNP government of bullying M&S over the use of the word “British” in their stores.

May says it is “appalling” the SNP did not want to see the word British on M&S products.

Labour’s Luciana Berger asks about mental health treatment for young people.

May says the government is investing more money in this areas. She says she wants to ensure young people with mental health problems get the help they need. It is rising up the list of people’s concerns. She says she thinks that is partly because awareness of the issue has increased.

Peter Bone, a Conservative, asks May how the Brexit talks are going.

May says they are going with purpose and good intent on both sides. She is determined to get a good deal, she says.

Sir Vince Cable, the Lib Dem leader, invites May to thank Labour for their support in helping make Brexit happen.

May says she is not sure about that. They are talking about a second referendum, she says.

Philip Davies, a Conservative, says he believes in the free market and individual responsibility and is opposed to the nanny state. Is he still a Conservative?

May comes out with another one word reply. “Yes,” she says.

The SNP’s Deidre Brock asks May to admit that she does not have a clue how here Brexit backstop arrangement might work.

“No,” replies May.

Jeremy Lefroy, a Conservative, asks May to congratulate staff at the hospital in Stafford. They are meeting the 95% target (for patients seen within four hours at A&E) on a weekly basis.

May congratulates them for what they have done.

Justin Madders, the Labour MP, asks about plans to sell Wembley. Does May agree there is no need to sell it off?

May says that is not a matter for the government.

Priti Patel, a Conservative, asks about stem cell transplants. There are not enough donors from an Asian background, she says. Will May back a campaign to encourage more people to become donors.

May says she is aware of the need to get more people from BAME backgrounds to become donors.

Labour’s Jo Platt says NHS workers are on strike in her constituency. Why is the PM allowing backdoor privatisation in the NHS.

May says she addressed this when replying to Corbyn. The government is committed to the NHS, she says.

May says leaving the EU will allow the UK to become a great trading nation. But the government needs to provide certainty too, she says. She says it wants to keep trade as frictionless as possible.

PMQs - Snap verdict

PMQs - Snap verdict: Asking about the NHS at PMQs is a home game for a Labour leader (it’s a “Labour issue” as much today as ever) and today Corbyn notched up a creditable performance, but not quite the decisive win he had last week, or the week before. His questions had May on the back foot, particularly at the start when he was was pressing her on the detail of outsourcing. But towards the end his questions started to lose focus, and it felt very much as if he was attacking the record of the last eight years, rather than anything the government has done on health since May became prime minister. And, with the BBC reporting this week that May is poised to rip up parts of the 2012 Health and Social Care Act, it was hard to see why Corbyn failed to challenge her to defend it, or to signal at PMQs (by refusing to defend it) that a U-turn is on the cards. May is uncomfortable on this territory, but she had a half-decent comeback on outsourcing (it is not increasing in England, but it is in Wales), and she was beginning to open up quite effectively a divide between Corbyn (who instinctively dislikes any mention of profit in relation to NHS) and more centrist figures in his party, like Jon Ashworth, who are more comfortable acknowledging some role for the private sector in health. May received very loud cheers from Tory MP at the end as she concluded with an (over-long) peroration. It sounded more like consolation applause rather than a recognition that she had won, but overall it wasn’t a great outing by either of them.

Updated

Corbyn says Ashworth has a good sense of the needs of patients. He will put their interests first. GPs are the bedrock of the service. We need more of them, he says. He quotes from someone who wrote to him about the care provided to her mother in a nursing home. What is the government doing about the sub-standard care provided by the private sector?

May says she wants people to be satisfied that they are getting good care. She says Corbyn said Ashworth recognised the needs of patients; that is why is backs the use of the private sector in some circumstances.

Corbyn says Ashworth is dedicated to the NHS, not to handing it over to private contractors. This year is the 70th anniversary of the NHS. Yet is has the worst waiting lists on records, the worst cancer referrals and falling numbers of GPs. Yet the government is opening up the door to more profiteering.

May says she pays tribute to the NHS. The government wants a bright future for it. That is why she will come forward with a long-term plan. More people are being treated. There are people alive today who would not have been alive in the past. And yet you can only do this with a good economy. This week we learnt Labour wants to overthrow capitalism. That would mean more people in debt, fewer people in jobs and lasting damage to the NHS.

Corbyn says outsourcing to Capita has put patients at harm. Outsourcing of GP services has led to records being mislaid. Isn’t the government tearing up the founding principles of the NHS and putting private profit before care?

May says Labour has made claims about privatisation at every election. But after every election the Conservative government has protected the NHS.

Corbyn says that is a bit rich from the party that voted against the NHS. He says the Royal College of GPs says the long list of failures by Capita has been incredibly frustrating for GPs. They are leaving the profession in despair. One in 10 has left in the last five years. How many more GPs are there than there were in 2015.

May says there are over 14,000 more doctors than there were in 2010. Corbyn talks about the private sector. Why not ask Jonathan Ashworth, the shadow health secretary. He says Labour would still buy from the private sector.

Jeremy Corbyn says it is a year since the Grenfell Tower fire and still justice has not been done.

He says in 2010 £4bn of NHS services were outsourced to private services. How much is it today?

May starts by agreeing with Corbyn, and saying terrorists will not divide the country.

May says spending on the private sector nearly doubled in the last four years of the Labour government.

Corbyn says May did not answer the question. It is now almost £9bn. And Surrey NHS has just paid Virgin Healthcare £1.5m because their bid was not chosen. He says a report on outsourcing says NHS England’s handling of this has put patients at harm.

May says the NAO report said no one was put at harm, and it said the savings helped to fund more operations. She says last year the spending on outsourcing in England did not go up. But it went up in Wales.

Nigel Huddleston, a Conservative, asks May to confirm that the government will ban inflammable cladding.

May says the deeply moving testimonies at the inquiry show the government must do all it can to stop this happening again. The Hackitt review did not recommend a ban. But the government is minded to go further and ban it.

Labour’s Kerry McCarthy says the UK has more children classed obese at the age of 11 than the US. Yesterday’s report showed the voluntary approach to getting manufacturers to reducing sugar in products is not working.

May says this is one of the great health challenges. Nowhere in the world is setting more stringent health targets, she says. It is not just about sugar reduction. But the government is making good progress on sugar reduction. An updated plan is being worked on.

Theresa May starts by referring to the start of the Grenfell Tower inquiry. Justice must be done, she says.

She says yesterday also allowed the nation to come together and remember the victims of the Manchester terror attack. That night saw the worst of humanity, but also the best, she says.

From Labour’s Emma Hardy

PMQs

PMQs is about to start.

Q: Recently officers were sent to an incident where someone had a huge pickaxe. He attacked them in their car. The nearest backup was miles away. It was a miracle the officers were not harmed. One of those officers was my wife. Do you agree that every officer who want a taser should be able to have one?

Javid thanks the questioner for sharing the story. He says “thank goodness” those officers are okay. It sounds like a miracle.

But they cannot rely on miracles, he says.

He says he wants to look at the issue of providing officers with tasers more carefully.

He says he is committed to ensuring officers have the equipment they need.

Javid's Q&A

Javid is now taking questions.

Q: Your predecessor, Amber Rudd, said she had not seen a Home Office report saying there is a link between police cuts and rising crime. Have you?

Javid says he has not seen that. He says there are complex reasons for the rise in crime. But there is no doubt that violent crime is rising. That is “completely unacceptable”. As to why it is happening, he wants to consider that carefully.

Q: What are your instincts?

Javid says about 10 years ago there was also a big increase in violent crime. But at the time resources were not an issue.

He wants to listen to officer, and the Police Federation, on this.

Javid lavishes praise on police in first major speech as home secretary

Sajid Javid, the new home secretary, is addressing the Police Federation conference. This is his first major speech in his new job outside the House of Commons.

He has been lavishing praise on the police. These are from the Police Federation, the Guardian’s Jamie Grierson and the BBC’s Danny Shaw.

Q: What is the government’s position on the European Medicines Agency?

Walker says Theresa May has said the government wants a strong association with it after Brexit. The government will set out more on this in its Brexit white paper.

Labour’s Seema Malhotra goes next.

Q: When parliament votes on the withdrawal agreement in the autumn, will there be a reference to conditionality?

Braverman says she cannot say what the wording of the motion will be.

Walker says MPs will by then have access to the full text of the agreement.

Q: What happens if the motion is not passed?

Braverman says the government hopes it will be passed.

Q: But what happens if it isn’t?

The deal will fall, she says, and the UK will leave with no deal.

Q: Has the government had legal advice saying whether or not the UK can leave with no deal with no vote in parliament?

Braverman says she has not had legal advice on this.

She says article 50 still stands.

Updated

John Whittingdale intervenes. He quotes David Davis saying there will be conditionalities in the legal text, but saying he does not know what they are.

Braverman says that is correct.

Hilary Benn goes next. He says the committee is “struggling to understand” what Braverman is saying. Is she saying it is government policy to make payment of the financial contribution conditional on a future trade treaty?

Braverman says the joint report said the financial contribution was conditional.

Q: So the answer is yes.

Braverman says that is not in the text at the moment.

MPs will know what they are getting for that money, she says.

The Labour MP Stephen Timms is coming back to the issue of conditionality in the withdrawal agreement.

Q: What do you want the financial payments to be conditional on?

Braverman says they should be conditional on the future agreement.

Q: So would payments be conditional on there being a future legal text.

Braverman says the government will pass legislation for those payments to be made.

Running alongside that will be the talks on the future trade relationship.

Those two exercises will be going along in parallel.

Q: Will the international agreement say the UK meeting those financial obligations will be conditional on a future trade deal?

Braverman says the draft text at the moment does not say that.

Q: Do you want the text to say that?

Braverman says the joint report published in December made a connection between the two issues.

Q: But in October MPs won’t have a legal text for the future trade relationship. Will those payments be conditional on such a legal text?

Braverman says the legal text will come later.

Q: This is a legally binding international agreement. Will it say our financial obligations will be subject to the future legal text.

Braverman says it is not there are the moment.

Q: Is it your intention to put it in there?

Braverman says David Davis has spoken about this. It (conditionality) may be in the final agreement. But it may not.

Q: So we will have to sign up to financial obligations when we have a declaration, which may be quite detailed, but no legal text. So do you want financial payments to be conditonal?

Braverman says the government wants what is in the joint report to be reflected in the final text.

Q: Is is credible that the UK could sign up to a future agreement, and then change its mind a year later.

Braverman says it is always open to the government to re-open a negotiation.

Q: But the UK does not renege on agreements it has signed.

Braverman says she accepts that.

Q: But you just said the UK could re-open this matter?

Braverman says the UK could start a new renegotiation?

Q: I can’t understand whether you are saying the UK would not be bound by the treaty.

Braverman says there would have to be a re-negotiation of the treaty.

Q: The EU would say no.

Braverman says it is hard to make predictions about what might happen.

Q: Let’s assume my view of the Irish government is right - that they are determined to do the work of the EU. Would the withdrawal agreement then have to be reconsidered, so the UK as a whole had to maintain regulatory alignment with the EU?

Walker says the UK and the EU have not yet reached agreement on this point.

But the government is committed to ensuring there are no barriers between Northern Ireland and the rest of the UK.

Sammy Wilson, the DUP Brexit spokesman, goes next.

Q: How will the “duty of good faith” in the withdrawal agreement be enforced in relation to the financial settlement?

Braverman says the withdrawal agreement and the political declaration covering the future trade relationship come together. They cannot be divorced, she says.

Wilsons says the EU are demanding firm assurances. British taxpayers should demand assurances too. He says, so far, the EU has acted in “bad faith”.

Braverman says there are about 800 statutory instruments that will have to be passed under the EU withdrawal bill.

The Conservative Jeremy Lefroy goes next.

Q: Once the EU withdrawal bill is passed, will parliament have enough time to pass all the secondary legislation needed to put EU law into domestic law?

Braverman says that is a matter for government business managers.

Q: Don’t we have to pass all this legislation by the end of March? Is that still the case?

Yes, says Braverman.

Labour’s Stephen Kinnock goes next.

Q: David Davis says he thinks substantial progress can be made on the future trade relationship talks between October, when the withdrawal agreement is concluded, and March 2019, when the UK leaves? How will that be possible if the European parliament won’t ratify the withdrawal agreement until February 2019.

Walker says real progress can be made.

Q: But there are European elections in 2019, and a new commission will be coming in. So isn’t it the case that no progress will be made on the future relationship until the new commission is in place in October 2019?

Walker says he sees it differently. He thinks the current commission will want to make good progress on this before it stands won. And MEPs will want to be able to go into the elections able to explain that the EU will have a good trading relationship with the UK.

Q: Has the government made any plans for the fact that, after the UK has agreed to pay the £39bn, the EU will treat us as a third country, and our leverage will diminish?

Walker says the UK expects to reach an agreement on withdrawal and the future agreement.

Q: Do you accept that, once the £39bn has been signed off, the UK’s leverage will be diminished?

Walker says that money will only be signed off having regard to the future relationship.

Robin Walker
Robin Walker Photograph: Parliament TV

The Conservative MP Jonathan Djanogly goes next.

Q: Coming back to Douglas Hogg’s amendment to the EU withdrawal bill, what do you say to the charge that government delays have let to a scenario where parliament feels the need to step in to take charge of the Brexit process to avoid national embarrassment?

Braverman says she does not accept that. But the government does take scrutiny by parliament seriously. There is a clear role for parliament. It will approve or reject the final withdrawal agreement. That will be a binding vote.

Walker says there is a difference between parliament having a say, and parliament directing the negotiations. He says the government feels the Hogg amendment crosses the line.

He says in the Commons proposals similar to the Hogg amendment were firmly rejected.

Richard Graham, a Conservative, goes next.

Q: The EU seems to be trying to push the UK out of the Galileo project? Do you think that is accidental or deliberate?

Walker says the UK was “surprised” that the EU is trying to exclude the UK from the military aspects of Galileo (the EU’s global positioning satellite network) when so much has been said about the importance of security cooperation. He says he hopes the EU will think again.

Andrea Jenkyns, a Conservative, goes next.

Q: Does amendment 49 (the Douglas Hogg amendment) to the withdrawal bill really pose a risk to the bill?

Yes, says Braverman. It could be described as a no Brexit amendment.

Jenkyns says she agrees. Could this amendment keep the UK in the customs union?

Braverman says the government is clear it is leaving the customs union.

MLex’s Matthew Holehouse suggests Suella Braverman may be aptly named. He is referring to the exchanges at 9.50am and 9.57am.

The SNP’s Peter Grant goes next.

Q: Steve Baker said that some of the Lords amendments to the EU withdrawal bill would undermine Brexit. What was he referring to?

Braverman says amendment 49 was effectively a no Brexit amendement.

Grant does not accept that. He says in other countries parliaments have a role in ratifying treaties.

Q: Are you satisfied that clause 11 is compatible with the devolution settlement?

Walker says clause 11, and the amendments to it, are compatible with devolution.

He says there is a difference between “consent” and a “consent decision”. A consent decision could go either way, he says.

That is a reference to this clause in one of the government amendments to clause 11 (pdf), relating to the conditions that have to apply for the UK government to be able to legislate in areas that are normally devolved to Scotland. In a remarkable piece of legal drafting, it says a decision by the Scottish parliament not to consent actually counts as consent.

Amendment to clause 11 of EU withdrawal bill
Amendment to clause 11 of EU withdrawal bill Photograph: DExEU

McFadden says the ‘nothing is agreed until everything is agreed’ principle does not apply to the financial settlement. It will be agreed before the future framework is agreed.

Braverman says she does not accept that. If there is no agreement on a future framework, there will be a renegotiation.

McFadden says by then parliament will have agreed to pay the money.

Braverman does not accept that. She says there is a “duty of good faith” in the withdrawal agreement.

She says the withdrawal agreement, and the political declaration coming alongside it covering the UK’s future relationship with the EU, will survive or fall together.

  • Brexit minister Suella Braverman accepts that MPs will have to vote on a financial payments to the EU before a legally-binding agreement has been reached on the future trade relationship. But she plays down the significance of this, saying MPs will have a political declaration on the future relationship and that the EU will be bound by a duty of good faith.
Suella Braverman
Suella Braverman Photograph: Parliament TV

Updated

Labour’s Pat McFadden goes next.

Walker says he does not accept that the agreement on future trade relationship cannot be agreed until the UK has left. It cannot be ratified until the UK has left, he says.

Q: But it is correct to say the withdrawal treaty will not cover the future relationship.

That is correct, says Walker.

Q: So parliament will be agreeing to pay the EU money before it has an agreement on the UK’s future relationship with the EU.

Braverman says there will be a political declaration.

Q: Will the UK be agreeing to pay a financial settlement before it has a legal text on the future relationship?

Braverman says the legal text will be worked on.

She says the PM has been clear that the financial offer is tied up with the future relationship.

Q: Is it the case MPs will be asked to vote on a financial settlement before they have a legal treaty on the future relationship.

Yes, says Braverman.

Q: So will the government insert into that agreement conditionality on financial payments?

Braverman says, as drafted, the withdrawal agreement does not contain conditionality clauses.

Q: So you have confirmed there is no conditionality at the moment in the withdrawal agreement. Is it government policy to insert conditionality?

Braverman says those clauses are not in the “green” passages of the document (the bits that have been agreed).

John Whittingdale, a Conservative, goes next.

Q: The EU says ‘nothing is agreed until everything is agreed’. Does that apply to the future relationship? What conditions might be contained in the withdrawal agreement?

Braverman says that principle applies to the withdrawal agreement.

Q: When MPs vote on the withdrawal agreement, at best they will have a political declaration covering the future relationship. MPs won’t know exactly what that future relationship will be like. Will the withdrawal agreement and implementation bill say the UK will only pay money to the EU conditional on certain things happening?

Braverman says the government wants to give MPs as much detail as possible about the future framework. The white paper coming out next month will address this. It will be a political declaration, she says. It can be and hopefully will be “very detailed”. She says the Canada-EU free trade deal started with a political declaration setting out in detail what the deal would cover.

Q: David Davis told the Lords it would depend what “conditionalities” were in the final text. But he said he did not know what they would be. Is that still the case?

Braverman says that agreement has still not been reached.

The bill will explain how payments will be paid.

If those payments were to be stopped, there would have to be a renegotiation.

Q: Has the government raised with the EU the possibility that the final agreement will be conditional?

Braverman says that has been raised in the talks. But she is not involved, and does not know the details, she says.

Hilary Benn goes next.

Q: How is it satisfactory that, nearly two years after the referendum, the cabinet is still trying to work out what customs arrangements it wants?

Braverman says the UK has been involved with the EU for more than 40 years. It takes time to undo those relationships, she says. She says it is important to take time to get it right.

The Conservative Stephen Crabb is asking questions now.

Q: What would you say to people who think the government is not doing enough to prepare for a no deal Brexit?

Braverman says she would challenge that. Work is going on, she says.

Brexit ministers give evidence to MPs on withdrawal talks

The Brexit ministers, Suella Braverman and Robin Walker, have just started giving evidence to the Commons Brexit committee.

Asked to confirm that the government’s proposed customs options could be ready by the end of the transition period, Walker was unable to give that assurance.

Hilary Benn, the chair of the committee, told Walker that HMRC had told the committee that it would take at least three years to introduce the “max fac” option.

Asked if it was government policy for the “backstop” proposal to be time limited, Walker said it was.

As the Independent’s Rob Merrick points out, the EU has rejected that idea.

Walker also said he hoped the EU withdrawal bill would return to the Commons “as soon as possible”. He said there would be a business statement in the Commons tomorrow.

Tory ministers accused of 'putting country in jeopardy' through cabinet infighting

Cabinet ministers are supposed to have their arguments in private but, once they have agreed a policy, unite behind it in public. This government - partly because it is led by a weak prime minister, whose job security depends on maintaining a balance between rival factions in her party, and partly because it does not actually have agreed policy in key areas (the two factors are connected) - operates on a rather different basis, and frequently we see internal arguments conducted through the media.

And there is a great example today. After publishing plans for a relatively toothless post-Brexit environmental watchdog, which were criticised and which triggered a defeat in the Lords as peers voted for something tougher, Michael Gove, the environment secretary, has written a letter to cabinet colleagues saying it was all the fault of the chancellor, Philip Hammond. Gove wrote:

As I explained at cabinet on Tuesday, the short-sightedness of the Treasury has now led to an entirely predictable and avoidable defeat on the EU withdrawal bill and inflicted a damaging blow to the government’s environmental credentials ...

Defra argued that if we were to deliver the government’s promises our proposals must at the very least replicate the status quo - specifically the enforcement powers of the European Commission and maintenance of the principles in legislation.

More than that, we argued that the reality of the parliamentary arithmetic meant we would be defeated if we chose to publish a weak consultation. Defra’s arguments were not accepted as a result of Treasury opposition.

It was a private letter. But, amazingly, it has ended up on the front page of today’s Daily Telegraph. The Telegraph says it was handed the document by a source from outside Defra and the Treasury. Perhaps Gove is really mortified it has all been published. But if you can find anyone in Westminster who genuinely believes that, I would be surprised, to put it mildly. It does read like a letter intended to be leaked.

Of course, it is also important to remember that Gove and Hammond are on opposite sides of the cabinet’s Brexit divide; Gove is a leading Brexiter, and Hammond is pushing for a softer Brexit.

The Green MP Caroline Lucas says cabinet infighting is damaging the country.

And here is the Sun’s Steve Hawkes on the state of affairs.

9am: Jeremy Wright, the attorney general, gives a speech on cyber threats.

9.15am: Brexit ministers Suella Braverman and Robin Walker give evidence to the Commons Brexit committee about the Brexit talks.

9.30am: Iain Duncan Smith, the former work and pensions secretary, gives evidence to the Commons work and pensions committee about universal credit.

9.30am: Inflation figures are released.

Morning: Sajid Javid, the home secretary, gives a speech to the Police Federation.

12pm: Theresa May faces Jeremy Corbyn at PMQs.

2.15pm: Jon Thompson, chief executive and permanent secretary at HM Revenue & Customs, gives evidence to the Commons Treasury committee about Brexit.

3pm: May meets the Belgian prime minister Charles Michel in Downing Street.

As usual, I will be covering breaking political news as it happens, as well as bringing you the best reaction, comment and analysis from the web. I plan to post a summary at lunchtime and another in the afternoon.

You can read all today’s Guardian politics stories here.

Here is the Politico Europe round-up of this morning’s political news from Jack Blanchard. And here is the PoliticsHome list of today’ top 10 must reads.

If you want to follow me or contact me on Twitter, I’m on @AndrewSparrow.

I try to monitor the comments BTL but normally I find it impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer direct questions, although sometimes I miss them or don’t have time.

If you want to attract my attention quickly, it is probably better to use Twitter.

Updated

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