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The Guardian - UK
The Guardian - UK
Politics
Andrew Sparrow

May rules out extending Brexit deadline after PMQs clash with Corbyn – as it happened

Jeremy Corbyn and Theresa May at PMQs today.
Jeremy Corbyn and Theresa May at PMQs today. Photograph: Sky News

Afternoon summary

  • Grenfell Tower fire survivors whose immigration status was uncertain are to be given the chance to become permanent residents of Britain, the government has announced. As the Press Association reports, a one-year immigration amnesty was initially granted for foreign national survivors of the June 14 inferno and they have now been given a route to permanent residence. Immigration minister Brandon Lewis said in a written ministerial statement that the 12 months’ limited leave, granted to eligible individuals who come forward by November 30, will now be extendable and lead to a permanent right to remain in the UK after five years, subject to meeting security, criminality and fraud checks.

That’s all from me for today.

Thanks for the comments.

Updated

According to the BBC’s Laura Kuenssberg, Philip Hammond’s Times’s article about not spending money now preparing for a “no deal” Brexit, and Theresa May’s apparent rebuke to him at PMQs (see 2.22pm), originated with a row at cabinet yesterday. In an interesting blog she says:

Two different cabinet sources say [Hammond’s] comments today come on top of a row at cabinet yesterday over precisely this issue, an exchange described as “robust”.

Number 10 acknowledges that there was a brief discussion of the preparation for the “no deal” scenario, although they deny (as they would) that there was anything like a ding-dong.

But one of the cabinet sources suggests Mr Hammond’s behaviour is either “deliberate and divisive or politically stupid”.

But it led today to what Brexiteers are claiming was a “deliberate slapdown” of the chancellor by Theresa May at Prime Minister’s Questions, when she made plain that money would be forthcoming for “no deal” planning as and when it was necessary, striking a rather different tone to the chancellor’s “very last moment”, comments.

In an interview with Emma Barnett on Radio 5 Live Nick Clegg, the former Lib Dem leader and former deputy prime minister, said he was surprised by Theresa May’s refusal on LBC last night to answer the question about how she would vote in an EU referendum now. Clegg said:

I was a bit surprised. I thought she was going to say, ‘Yes, I voted remain then, but now I’m wholeheartedly for - ’, so on and so forth … That’s what I would have expected her to do ...

If you’re negotiating with someone, it’s very important that you negotiate with people who you think in their heart of hearts really believe what they’re doing.

It’s not a very good way of negotiating for a team, if the captain of the team doesn’t seem to be particularly persuaded that they want to stick the ball in the other net.

In the comments BTL BareNakedSciolist points out that the @CLPNominations Twitter account has some interesting figures on nominations for the Scottish Labour leadership contest.

A hard border could be created around Northern Ireland after Brexit even if the UK initially agrees a soft border with the EU, MPs have been told. As the Press Association reports, Paul Mac Flynn, a senior economist for the Nevin Economic Research Institute, gave the assessment during a hearing of expert witnesses by a committee in Westminster about the impact of Brexit on the Irish border.

Mac Flynn raised concerns about proposals previously outlined by the UK that only large businesses rather than small or medium ones could be required to register their imports and exports along a post-Brexit border, saying people could find ways to get around such rules. He told MPs:

I think the danger is, we could start out with a soft border and end up with a hard border. Like the exemption for small and medium sized enterprises.

The idea was first that they were going to say that for 6% to 8% of heavy goods vehicles.

If you’re somebody who is going to want to get around a tariff border, all that says to you is – right, don’t use trucks, use vans. Then we start checking vans, so we say we’ll start using estate cars. Before you know it, we’re checking everyone.

I think it has to come down to this - if you’re leaving the customs union, that has an implication for what the border in Northern Ireland is going to look like. Say that one is being sacrificed to the other, but at least be honest about it.

Updated

This is from the BBC’s Adam Fleming.

The Scottish government has today published a 32-page report (pdf) setting out what business thinks about Brexit. It seems a relatively thin document, but in its press release the Scottish government says it shows that “business leaders across Scotland believe Brexit may hinder recruitment, hit the bottom line, and curtail future growth prospects”.

Updated

Lunchtime summary

  • May has dismissed suggestions that the government is not willing to spend money preparing for the possibility of a “no deal” Brexit, which seemed like a mild rebuke to Philip Hammond, the chancellor. In a Times article Hammond, the chancellor and the leading figure in the cabinet seeking to soften Brexit, said the Treasury would only spend money preparing for this “when it’s responsible to do so”. His intervention was intended as a slapdown to Tories saying the government should start spending money preparing for a hard Brexit now (see 9.12am), but in evidence to the Treasury committee this morning he claimed that his words had been over-interpreted by journalists. (See 9.56am.) At PMQs Iain Duncan Smith, a leading Tory Brexiter, asked May to confirm that money would be allocated “as and when required” to prepare for a “no deal” Brexit. In response May said:

I’m very happy to give my right honourable friend that confirmation. We are preparing for every eventuality. We are committing money to prepare for Brexit, including a no-deal scenario.

May also said the Treasury had already committed to giving more than £250m of new money to government departments in this financial year to help them prepare for Brexit. This was welcomed by Suella Fernandes, chair of the European Research Group, the Tory faction pushing for a hard Brexit (or “clean” Brexit, as they prefer to call it.)

  • May has ruled out trying to extend the Brexit talks. In response to a question from the Conservative MP Peter Bone, she confirmed that the article 50 rules did allow the two-year Brexit timetable to be extended. But she went on:

I’ve been very clear. We want those negotiations to end - not just the negotiations to end, we want to have an agreement on the future relationship, and our withdrawal – by March 2019, and we will leave the EU on March 2019.

  • May has hinted that the UK could continue to participate in the common fisheries policy during the Brexit transition. In response to a question at PMQs from the Lib Dem MP Alistair Carmichael about whether the UK would remain in the CFP during the transition, she said:

When we have left the European Union, we will be leaving the common fisheries policy. As part of the agreement that we need to enter into for the implementation period, obviously this and other issues will be part of that agreement. But when we leave the European Union, we will leave the common fisheries policy.

This is similar to the language May uses about the single market; she says that although the UK will technically leave in March 2019, she envisages a transition period during which the UK will continue to participate in the single market on much the same terms as now.

  • Liz Truss, the chief secretary to the Treasury, has claimed that she has changed her mind about Brexit and would now vote to leave the EU. Theresa May yesterday refused to say how she would vote in a new referendum. But when Truss was asked the same question on the Daily Politics, she replied:

All of us had to make a judgment on what we thought the future would look like. I made a judgment thinking it would be bad for the economy. Since we have left, it has been more positive, so the facts have changed and I have changed my mind.

Jeremy Hunt, the health secretary, also recently said he had changed from backing remain to backing leave because the gloomy economic predictions about Brexit had failed to materialise.

  • Hammond has said the government will not “automatically step in” to help out councils, which say they are struggling to fund fire safety measures on tower blocks. Addressing the Treasury committee, he said protected funding in local authority budgets could be freed up to allow the work to be paid for instead. As the Press Association reports, only in the “last resort” would Whitehall hand over cash to pay for the work, Hammond said. He told MPs:

Any safety-critical work that is required needs to be carried out. We will not allow a situation to arise where a housing authority or a social landlord, due to lack of financial resource, cannot carry out safety-critical work. That does not mean the government will automatically step in and provide funding for that safety-critical work.

Updated

PMQs - Verdict from the Twitter commentariat

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

Generally Corbyn is seen as the winner, although that’s not the universal view.

From the Daily Mirror’s Jason Beattie

From ITV’s Paul Brand

From Politico’s Tom McTague

From the BBC’s Laura Kuenssberg

From the New Statesman’s George Eaton

From Sky’s Beth Rigby

From HuffPost’s Owen Bennett

From the Independent’s John Rentoul

From Sky’s Faisal Islam

From the Sun’s Tom Newton Dunn

From the Evening Standard’s Kate Proctor

From the Mail on Sunday’s Dan Hodges

Jeremy Corbyn’s spokesman won’t answer the question about how he would vote in an EU referendum now, the FT’s Jim Pickard reports.

Jeremy Corbyn’s best question at PMQs was about the 55p-a-minute call for the universal credit helpline – although, having asked once and not got a reply, he did not pursue it, which limited the effectiveness of the question. On the Daily Politics Andrew Neil has just shown what could have been achieved by pursuing this. He asked Liz Truss, the chief secretary to the Treasury, a series of questions about this, and left her squirming. The 55p-a-minute charge applies to mobile calls. Truss said she would advise people to go to a jobcentre if they had a query about universal credit. But when Neil put it to her that many people had to ring because they did not have time for a personal visit, and that increasingly people have to use mobiles because they don’t have landlines, Truss had no answer.

Updated

As usual, I missed the questions from the SNP leader at Westminster, Ian Blackford, because I was writing up the snap verdict. So here they are.

Blackford started by asking May why she could not say whether she would vote leave or remain in an EU referendum now in her LBC phone-in yesterday. He asked:

Why hasn’t the prime minister been straightforward about how she would vote?

May said there was no second referendum.

There is no second referendum. The people of the UK voted and we will be leaving the EU in March 2019.

Blackford asked again about Brexit.

She’s hamstrung by the parliamentary majority and a divided party of rightwing Brexiteers ...

This morning Philip Hammond admitted a ‘cloud of uncertainty’ is hanging over the British economy ... Will the prime minister come off the fence and recognise if we’re to save this economy we need to stay in the single market and the customs union.

May said the SNP should recognise that to save jobs in Scotland, it should stay in the UK.

I’ve taken the quotes from PoliticsHome.

Updated

Hywel Williams, the Plaid Cymru MP, asks about the NHS in Wales. He quotes someone moving to England to get the care he needed.

May says people are moving to England because care is better there than in Labour-run Wales.

And that’s it.

May say free schools have contributed a great deal to education generally. But they have done more than that. In her constituency there is a free school for children with autism. That was not available before, she says.

Labour’s Vicky Foxcroft says a woman came to her office fleeing domestic violence. She could not find a place in a refuge because of cuts. What advice would May offer?

May says she does not want to see any woman not being able to get support. More money has been put into the refuge system.

Updated

Antoinette Sandbach, a Conservative, asks about support for parents who have lost a baby.

May says there was a debate on this in the Commons. She pays tribute to those who spoke movingly on this.

Labour’s Jim McMahon asks about a six-year-old from his constituency who died from meningitis. Will May meet with campaigners to discuss extending the vaccination programme?

May says the government does need to raise awareness of this. This is not just an issue for parents; it is for healthcare professions too. She will ask the health secretary to meet the campaigners.

May rules out extending Brexit deadline

Peter Bone, a Conservative, says article 50 allows the Brexit talks to be extended. Will the government rule this out?

May says Bone is right about article 50 allowing the talks to be extended. But the government wants a deal by March 2019. The UK will leave then, she says.

  • May rules out extending the Brexit deadline.

The Lib Dem Alistair Carmichael asks if the UK will stay in the common fisheries policy during the Brexit transition.

May says the UK will leave the CFP when it leaves the EU. But what happens to fishing during the transition needs to be negotiated.

Wendy Morton, a Conservative, says she was shocked to hear the shadow chancellor predicting a run on the pound. Wouldn’t letting him into the Treasury be the biggest risk for this country?

May agrees. A run on the pound would make Britain poorer.

Corbyn asked what planet she was on. We all know what planet his is on, May says: planet Venezuela.

Updated

Labour’s Kerry McCarthy asks about the deaths of students from meningitis. Will the government do more to extend awareness about this and to encourage more vaccination of teenagers.

May says McCarthy has raised an important point.

Gary Streeter, a Conservative, says the Royal Marines have served the country with distinction for many years. Plans to downsize it are concerning, he says.

May says the government is looking at how threats are changing. She says the claims Streeter is referring to are “pure speculation”.

Labour’s Heidi Alexander says May has been ramping up the no- deal rhetoric on Brexit. That is because she is afraid of the most rightwing, rabid elements in her party. When businesses are considering moving jobs, don’t the British people deserve better “than a prime minister running scared”.

May shakes her head during this.

Then she says Alexander “could not be more wrong”.

She says the government is planning for a deal. She set out her ideas in the Florence speech.

After Brexit, the UK will no longer be members of the single market and the customs union, she says.

Updated

Iain Duncan Smith, the Conservative former cabinet minister, asks for an assurance that all money necessary will be committed to planning for the possibility of a “no deal” Brexit.

May says, where money has to be spent, it will be spent. She says £250m has already been given to departments to help them prepare for Brexit.

May says she wants EU citizens to stay in the UK. If there is no deal with the EU, the government will have to make arrangements with other countries, not just about their citizens here, but about Britons in their countries.

She says the UK and the EU are “very close” to a deal on this point.

PMQs - Snap verdict

PMQs - Snap verdict: More often than not these days PMQs feels like a draw, and today was no exception. Corbyn chose a topic on which the government is exceptionally vulnerable, and his questions were good and emotive, but he never asked anything specific enough to unsettle May, and she did a reasonably competent job of brushing it all aside with a broad-brush defence of welfare reform. (Although this did prompt one of the best retorts from Corbyn; not for the first time, he was effective defending the record of the last Labour government.) Both leaders saved their TV soundbites until the end, and at this point Corbyn threw in a rather casual call for May to stand down. (If the leader of the opposition is saying the PM should resign, you would normally expect them to make a bigger deal of this.). May responded with a pre-cooked but better-than-usual generalised broadside about the Labour conference.

Updated

Corbyn says the last Labour government lifted 1 million children out of poverty. Absurdly the UC helpline cost claimants 55p a minute. Will May at least make the helpline free?

May says she will continue to look at this. She wants people to be able to find jobs. That is why the government is helping firms create jobs.

Corbyn says UC is only one of a string of failures of this government. “Everywhere you look, it is a government in chaos.” He mentions Brexit, Bombardier, young people and social care. The government is more interested in fighting among itself than in solving these problems. If a prime minister can’t lead, shouldn’t she leave?

May says the deficit is down by two-thirds, 3 million more people are in jobs, more people are getting education, record levels of funding are going into schools and health. What did we see from Labour at their conference? Shelter said Labour’s housing policy would end up harming people on low incomes. Labour’s Haringey council rejected another Labour policy. The Equalities and Human Rights Commission said Labour had to prove its commitment to equality. And the Labour leader of Brighton council said the party might not be welcome back unless it showed its commitment to tackling antisemitism.

Updated

Corbyn quotes the experience of one housing association. John Major said the way it operated was unfair and unforgiving. If Major can understand that, why can’t May?

May says some research shows that, after four months, the number of people in rent arrears on UC has fallen by a third. More people on UC are getting jobs than under jobseeker’s allowance.

According to Corbyn, the IPPR and the Child Poverty Action Group say it will put more children into poverty. Tory MPs have called for the roll-out to be delayed. He quotes from “Georgina”, who was left all summer with no money. She relied on her family. He tells May to pause UC, because it drives up debt, poverty and homelessness.

May offers to look at this case. It is possible for those in need to get advance payments. The number of people getting them has gone up from 30% to 50%. Under Labour 1.4 million people spent most of the last decade trapped on out-of-work benefits. The number of households where no one had worked more than doubled. The welfare bill went up by 60% in real terms. That was a failing system.

Updated

Jeremy Corbyn starts by paying tribute to Rodney Bickerstaffe, the former Nupe leader, who died last week. He did more than anything to introduce the minimum wage.

He asks about universal credit.

May says it is worth remembering why it was introduced. We want a welfare system that provides a safety net and helps people into work. Labour’s system did not do that. It was too complicated. Some people were better off on benefits. UC is simpler, and makes sure work always pays.

Corbyn says he wonders what planet May is on. Citizens Advice describes UC as “a disaster waiting to happen”. Housing associations says evictions from non-payment of rent are up 50% as a result of UC.

May says the government has been listening to concerns that have been raised. Changes have been made. Now more than 80% of people are getting their first payments on time. The department continues to monitor this. But we need a system that ensures work pays.

Updated

Bob Neill, a Conservative, says financial services firms warmly support May’s pragmatic approach to Brexit. Will May consider publishing a white paper on this?

May says that is what she set out in her Florence speech. More papers may be published, she says.

Labour’s Ian Mearns says yesterday was world mental health day. But only £1 of every £8 spent by clinical commissioning groups goes on mental health.

Theresa May says the government has given mental health parity of esteem. More money is being spent on this. But more must be done. For example, the government is ensuring there is more training on this in schools.

PMQs

PMQs is about to start.

Philip Hammond's evidence to the Treasury committee - Summary

Philip Hammond has finished. After that hearing, you can see why the government were so keen to delay the establishment of select committees. Here are the main points from his evidence.

  • Hammond said the UK had to prepare for the possibility of a “bad-tempered breakdown” in relations with the EU. A “no deal” Brexit could be relatively friendly, he said, or it could involve acting in a very damaging way. He told MP:

If it is a WTO regime with no deal, there are then two further potential levels that you have to consider. One is no deal, WTO, but a friendly agreement that we are not going to reach a deal but we will work together to cooperate to make things run as smoothly as possible.

But, bluntly, we also have to consider the possibility of a bad-tempered breakdown in negotiations where we have non-cooperation, and, worst-case scenario, even a situation where people are not necessarily acting in their own economic self-interest. So we need to prepare for a wide range of scenarios.

Hammond said that the very worst case scenario could involve the EU not even being able to share customs data with the UK. (See 11.05am.)

  • He said the government was preparing for all eventualities. But he stressed that, if in the worst case scenario, the procedures in place at the border would not be ideal. Referring to this possibility he said:

The commitment that we have made is that we will be ready with necessary minimum structures to operate the system on day one. Will everything we ever need be in place on day one? Definitely it won’t.

  • He said there was a theoretical possibility that a “no deal” Brexit could lead to planes not being able to fly from the UK to the EU. But nobody seriously expected that to happen, he said. (See 9.59am.)
  • He claimed that his Times article today (see 9.12am) had been misunderstood. He was not ruling out spending money on preparing for a “no deal” Brexit; he was just saying he did not think it was necessary to spend money now.

We do have planning for all scenarios, including a ‘no deal’ scenario. I’m clear that we have to be prepared for a ‘no deal’ scenario unless and until we have clear evidence that that is not where we will end up.

At the moment, although of course we hope for a different outcome, we cannot be certain of that different outcome. What I am not proposing to do is allocate funds to departments in advance of the need to spend ...

Every pound we spend on contingent preparations for a hard customs border is a pound we can’t spend on the NHS, social care, education or deficit reduction.

  • He said there was no need to spend money now preparing for a “no deal” Brexit just to show the EU that the UK is serious about this being an option because EU leaders already knew “we mean business”. (See 10.32am.)
  • He said any money that did have to be spent on planning for a “no deal” Brexit would come from the reserves, not from departmental budgets.
  • He said the government had no plans to publish Treasury assessments of the costs and benefits of various Brexit outcomes.
  • He criticised the EU for not being willing to start negotiating the Brexit transition with the UK.

We have set out I think a fair and generous proposal to the European Union. What we want to do now, we don’t want them to immediately jump up and say ‘We agree with everything you are proposing’. We simply want them to say, ‘Yes, let’s sit around the table and let’s look at the issues that we will need to debate in order to get into a future partnership agreement via a transitional or interim period.’

And in many areas, like future financial services frameworks, the only work that has been done so far has come from the UK. And We need our European partners to engage with us, look at our proposals,

By all means challenge them and kick the tyres, but this is a shared problem and if we don’t talk about it, we are not going to get to a solution in a timescale that allows the future partnership that I do believe the vast majority of our European partners want to achieve.

  • He claimed Michel Barnier, the EU’s chief Brexit negotiator, and his team now accepted that the current framework for the talks - which prevents the transition and the future trade relationship being discussed until there has been progress on Ireland, EU citizens’ rights and money - was flawed. He said:

We believe, and I think it is the case, that the EU 27 negotiating team also now believes, that the only way we will settle the so-called phase one issues is to set them in a broader context of the UK’s future relationship with the European Union.

He said there should be “at least exploratory discussions” on transition arrangements and the future relationship now.

  • He said delaying an agreement on a transition would be harmful. A transition was “a wasting asset”, he said.

It has a value today, it will still have a very high value at Christmas and early in the New Year, but as we move through 2018 its value to everybody will diminish significantly.

I think our European partners need to think very carefully about the need for speed in order to protect the potential value to all of us of having an interim period that protects our businesses and citizens and allows investment and normal business activity - contracting and so on - to carry on.

  • He said uncertainty generated by Brexit was damaging the economy.

I think it reflects the sense that, while the UK’s economy is fundamentally strong and in good shape, we are being affected by uncertainty around the negotiation process that we are engaged in.

There is plenty of anecdotal evidence that businesses and consumers are waiting to see what the outcome is, or what the direction of travel is, before firming up investment decisions and consumption decisions.

My general view is that our economy is fundamentally robust, we have some very positive things going for us, so a strong outlook for the future.

But the cloud of uncertainty is acting as a temporary damper and we need to remove it as soon as possible by making progress with the negotiation process.

Turning away from the Hammond hearing for a moment, John Bruton, the former Irish prime minister, has said a “no-deal” Brexit would be “devastating” for the peace process in Northern Ireland. He told Sky’s All Out Politcs:

The effects in Ireland [of a “no deal” Brexit] would be devastating for the peace process.

I spent a lot of my life building a reconciliation that enabled a peace process in Northern Ireland to be put in place. That’s going to be utterly disrupted by the barriers that will have to be imposed along the border if Britain leaves the European Union without a satisfactory deal.

Hammond says the best-case assumption for what customs arrangements will be like after Brexit is what the government described as a “highly streamlined” customs arrangement in its position paper on this.

This would give business much of the benefit of being in the customs union, he says.

These are from the Times’ Sam Coates.

Hammond says one possibility is 'no deal' Brexit could leave EU and UK unable to share data

Q: Could the UK not just carry on as now?

Hammond says one option that the UK must prepare for is the possibility of the UK not being able to share data with the EU after Brexit.

  • Hammond says one possibility is that a “no deal” Brexit could leave the EU and the UK unable to share data.

Hammond says the UK cannot just allow truck to role through Dover containing dangerous goods or illegal immigrants.

Hammond says government must consider possibility of 'bad-tempered breakdown' of relations with EU

Hammond says the UK also has to consider the possibility of a bad-tempered breakdown, where the EU does not cooperate with the UK. It is possible that the people could act against their own interests.

That is why the UK has to prepare for all eventualities.

He says, if that were to happen, not everything would be ready on day one.

He says the government can only know what it needs to put in place when it has a good idea of what the outcome will be.

  • Hammond says government must consider possibility of a “bad-tempered breakdown” of relations with the EU.

Hammond corrects what he says about 29 March 2019 being the first day of the transition. He meant 30 March 2019, he says.

Perhaps someone pointed out this tweet from the Sun’s Tom Newton Dunn in response to what he said earlier. (See 10.32am.)

Alison McGovern comes in on Ireland.

Q: The government wants no physical structures at the border. But it also wants migration checks. Won’t they have to be at the border?

Hammond says those controls won’t necessarily have to be at the border.

Q: Won’t customs checks have to be at the border?

Not necessarily, says Hammond. He says Ireland and the UK have different excise rules for items like tobacco. But they are no physical controls at the border.

Q: So why have we not been able to resolve this issue?

Hammond says we cannot get to a conclusion until we know what the context will be. If goods can move freely, through a streamlined customs process, that will give us our answer.

According to the BBC’s Norman Smith, David Jones, the former Brexit minister, has said Philip Hammond should set aside billions in the budget for “no deal” Brexit contingency planning.

Updated

Alister Jack, a Conservative, goes next. He asks about Ireland.

Hammond says using numberplate recognition as part of the new customs regime would involve cameras. They would not necessarily have to be at the border. But people opposed to a border would object to them.

(He is alluding to the prospect of Republican terrorists pulling them down, or blowing them up.)

UPDATE: This is from Sky’s Beth Rigby.

Updated

Labour’s Alison McGovern goes next.

Q: Can you explain how financial services will be better off after Brexit?

Hammond says you cannot say at this point without knowing what Brexit will look like.

Q: Has the Treasury conducted an analysis of the costs and benefits of Brexit?

Hammond says the Treasury had conducted many analyses. It depends what you mean by Brexit.

Q: Do you disagree with the current structure of the Brexit talks.

Hammond says this was imposed by the EU. The UK never thought it was ideal.

He says the negotiators (he implies the EU negotiators) now recognise that we cannot reach an agreement on Ireland and the financial settlement until we know what the final deal will be like.

Here is the start of the Press Association’s story about the opening of Philip Hammond’s evidence session.

A “cloud of uncertainty” caused by Brexit is acting as a damper on the UK economy, the chancellor has said.

Philip Hammond told the House of Commons Treasury committee that businesses and consumers were holding back on spending decisions until they see the outcome of Brexit talks in Brussels.

Progress in negotiations needs to come “as soon as possible” to remove the drag on growth, he said.

The chancellor’s comments came after the UK was the only major economy not to see its growth forecast upgraded in an International Monetary Fund (IMF) report, which predicted it would slow from 1.8% in 2016 to 1.7% this year and 1.5% in 2018.

Giving evidence to the committee, Hammond confirmed that he was not ready to spend billions of pounds of taxpayers’ money now on preparing for a “no deal” departure from the EU.

He said the IMF forecasts for the UK were unchanged since its last report in July, while many other economies saw their prospects improve.

“I think it reflects the sense that, while the UK’s economy is fundamentally strong and in good shape, we are being affected by uncertainty around the negotiation process that we are engaged in,” said Hammond.

“There is plenty of anecdotal evidence that businesses and consumers are waiting to see what the outcome is, or what the direction of travel is, before firming up investment decisions and consumption decisions.

“My general view is that our economy is fundamentally robust, we have some very positive things going for us, so a strong outlook for the future.

“But the cloud of uncertainty is acting as a temporary damper and we need to remove it as soon as possible by making progress with the negotiation process.”

Philip Hammond.
Philip Hammond. Photograph: Parliament TV

The Conservative Stephen Hammond goes next.

Q: Would we do better to align ourselves with America or the EU on financial regulation?

Hammond says there is a debate going on in the US at the moment about financial deregulation.

If the US gets out of alignment with the EU, that will make things more difficult.

He says the UK taxpayer learnt a hard lesson in 2008-09. The government is not going to expose the taxpayer to those risks again.

Hammond says EU leaders already know UK is serious about willing to leave with no deal

The Conservative MP Charlie Elphicke goes next.

Q: When will the transition start and end?

Hammond says it will start on 29 March 2019. The prime minister said it would last around two years. But this will be a subject for negotiation. And the UK will need to carry out further analysis, he says.

Q: And what will the end state look like?

Hammond says that is for the negotiations, “which we have not yet been able to begin”. He says “astonishingly” the EU has not opened talks on this aspect yet.

We have made the running on this. We really need our European partners to engage ... We are simply asking them to start talking to us, because we are friends and we hope to remain friends.

He says people in the UK are finding it “increasingly hard to understand” why the EU will not open trade talks.

Q: And what did you mean by the Times article?

Hammond says some people want the government to start spending money now on preparing for a “no deal” Brexit “simply to show that we mean business”. This is unnecessary, he says. He says in the EU “they know we mean business”.

  • Hammond says EU leaders already know UK is serious about willing to leave EU without a deal.

Q: Why don’t we just invest in improving customs anyway?

Hammond says this is not investment we need anyway. “It is not generic, it is specific to the outcome.”

Q: How will the UK be better off after Brexit?

Hammond says the UK will not have to comply with EU law. “We will be free to make our own decisions.”

But no country, other than North Korea, is immune from what happens around it.

The UK will be free to act. But decisions have consequences. He hopes the UK will exercise that freedom in a way that protects jobs and prosperity.

UPDATE: This is from my Observer colleague Michael Savage.

Updated

Hammond says he expects EU partners would be “flexible around pragmatic issues” during a transition. For example, he thinks they should allow the UK to negotiate new trade deals with other countries during the transition.

The British Airline Passengers Association (BALPA) agrees with what Philip Hammond said about the theoretical possibility of a “no deal” Brexit stopping flights to the continent. This is what its general secretary Brian Strutton said in a statement yesterday.

The entire UK aviation sector which employs nearly a million people and carries more than 250 million passengers per annum would be devastated by a Brexit ‘no deal’.

Unlike most other sectors there are no World Trade Organisation or any other rules to fall back on for aviation if there is no deal.

UK airlines could find they have to stop flying – it’s that serious. And this would impact passengers long before March 2019 because airlines couldn’t sell advance tickets and, frankly, would passengers risk buying them?

It is utter madness for anyone to think that a Brexit ‘no deal’ would be anything but a total disaster for our world leading UK aviation sector and beyond. After all, without air cargo we will not be able to export or import freely. The entire industry has said that we have to see evidence of the post-Brexit plan for aviation now if we are to avert a catastrophic crisis of confidence.

Hammond says EU needs to engage more with UK on planning for transition deal

Labour’s Wes Streeting goes next.

Q: Business leaders want certainty over Brexit, and certainty during the transition. When will we know what the transition will involve.

Hammond says he agrees with Streeting. Business want certainty. That is probably more important than getting the perfect outcome.

Exporting companies have one set of concerns. Firms in the service sector have another set of concerns. But they all want certainty.

He says in many sectors supply chain contracts operate on a three-year basis. As contracts come up for renewal, firms need to know what is happening.

He says this is well understood in government.

The government wants to avoid firms having to make “worst case assumptions”.

He says an interim deal is in everyone’s interests.

What chances does he think there will be a deal on an interim agreement, he asks himself. He says he talks with EU counterparts have shown there is a “high degree of consensus” about the need for a transition deal.

He says Theresa May set out a fair offer.

In many areas the only work that has been done so far has come from the UK.

We need our European partners to engage with us ... This is a shared problem and if we don’t talk about it we are not going to get a solution [on an appropriate timescale]

  • Hammond says EU needs to engage more with UK on planning for transition deal.

He says the EU should “break out” from the current talks structure and start exploratory talks on a transition, and on a future trade relationship.

He says a transition deal is a “wasting asset”. As we move through 2018, its value will diminish, he says.

Here is the Ukip MP Patrick O’Flynn what Philip Hammond said earlier about Brexit generating uncertainty.

Here’s the Sun’s Steve Hawkes with the reaction of one Tory MP to Philip Hammond’s Times article.

The SNP’s Stewart Hosie is now asking the questions. He asks about the Bank of England’s financial policy committee.

Hammond says the FPC is an important part of the financial architecture in place. But it is the case that people end up putting structures in place to deal with the last crisis, not the next one, he says.

Q: Why has an external seat on the FPC been vacant for almost a year?

Hammond says the original appointment process did not throw up a good enough candidate.

Candidates must have no outside interests. That limits the field, he says.

It also pays a public sector wage. And it is looking for someone of international standing. But he is optimistic that they will be able to find someone.

Hosie says the salary is £93,000 for 23 days’ work. That is equivalent to an annual salary of around £400,000.

Hammond says that they cannot appoint someone with outside interests that would allow them to earn that much.

Nicky Morgan, the chairman, is now asking about economic crime.

Hammond says he is attending a meeting on this subject this afternoon.

Hammond says “no deal” Brexit could theoretically lead to suspension of air travel between EU and UK

Hammond says any money that has to be spent on a “no deal” scenario will come from the reserve.

Q: How much will the government have to spend?

Hammond says it is difficult to say.

It is “theoretically possible” that a “no deal” scenario could lead to there being no air traffic between the UK and the EU on the day after Brexit.

But no one expects that, he says.

He makes the point that there is a wide range of contingencies to plan for.

  • Hammond says “no deal” Brexit could theoretically lead to suspension of air travel between EU and UK.

UPDATE: Here is the quote in full.

Updated

Q: How is the Treasury preparing for a “no deal” Brexit.

Hammond says he wrote his article to make the point that the Treasury is willing to spend on preparing for a “no deal” Brexit if necessary. He says he was “rather surprised” to see it written up as if he was saying the opposite. (See 9.12pm.)

  • Hammond claims his Times article about “no deal” Brexit planning has been misunderstood.

But he says he will not allocate funds to departments in advance of the need to spend.

We will be ready, he says. But we won’t spend it earlier than necessary “just to make some demonstration point”.

Hammond says UK’s “staggering disparity” in regional productivity is drag on economy

Hammond says there is an underlying problem with productivity in the UK.

Our public sector infrastructure is not as good as it could be, he says.

He says there is a skills gap in the UK. The government is tackling that, he says.

And regional disaparity is an issue, he says. He says the “staggering disparity” between regional productivity is a drag on the UK as a whole. And this is a social issue too, he says.

He says no other advanced country has such a big gap between its best-performing city and the others.

  • Hammond says the UK’s “staggering disparity” in regional productivity is a drag on the economy.

Hammond's evidence to Treasury committee

Philip Hammond is giving evidence to the Treasury committee now.

You can watch the hearing here.

Asked about the latest IMF growth figures, he says the UK is “affected by the uncertainty” around Brexit. There is anecdotal evidence that business is putting off investment decisions.

The cloud of uncertainty is acting as a temporary dampener.

  • Hammond says uncertainty generated by Brexit is damaging the economy.

David Owen, the former Labour foreign secretary and SDP founder, gave Jeremy Corbhn an endorsement of sorts on the Today programme this morning. In a wide-ranging interview, asked if he could see Corbyn becoming prime minister, Owen said:

I think it’s certainly a possibility. I believe he is different person from the old Trotskyist that people thought he was. Thirteenth law of British politics, you can’t be a Trot and an allotment holder. They share things; they share their seeds and their spades and they have this narrow strip of land. And I think he has shown a likeability.

The real problem with him is, does he understand the economy. If he doesn’t, he will not carry conviction unless he has on that platform some experienced people in the market economy.

Owen also said that Corbyn was better at accommodating dissent in the Labour party than Michael Foot was.

In many ways Corbyn has been a more rational person in dealing with dissent in his own party than ever Michael Foot. He met his dissenters over the nuclear deterrent, and dropped his own commitment. He also agreed to campaign for Europe in the referendum even though most people knew he was against staying inside the European Union.

So it is a hard thing for many people to realise, but Corbyn has been more understanding of dissent in his own party than Michael Foot was in 1981 when he flatly refused to make any compromises whatever with Shirley Williams, myself and Bill Rodgers.

Here is the BBC’s Laura Kuenssberg on Philip Hammond’s Times article.

And here is the Spectator’s James Forsyth (a commentator who has repeatedly argued for the need for Britain to be serious about being willing to leave the EU with no deal if it wants to get proper concessions from Brussels) is saying about the article.

Updated

Philip Hammond rejects calls to start spending on preparing for 'no deal' Brexit

Since the general election the House of Commons news factory has not been producing at quite the volume it normally does because select committees were not sitting. The government seemed to drag its feet in setting them up. But now they are all fully functional, and today we have a plethora of hearings, with three featuring cabinet ministers.

The most interesting will probably be the Treasury committee session with the chancellor, Philip Hammond. Yesterday the Sun reported that two pro-leave cabinet ministers want Hammond to spend billions on preparing for a “no deal” Brexit, so that Brussels knows the UK is serious about being willing to leave the EU if necessary without a deal. It said:

Two of the PM’s most senior ministers spoke to The Sun to vent their growing anger with the government’s failure to be ready to call the EU’s bluff if exit deal talks fail.

Levelling much of the blame on Philip Hammond and Treasury mandarins, the powerful pair insisted the chancellor publicly sets aside jumbo sums in his annual financial blueprint next month ...

One of the two Leave-backing cabinet ministers, who is closely connected to the Brexit process, still put odds of there being no deal at “50%”.

One of the powerful duo: “Since the election, the system has fallen into inertia.

“No proper leadership means departments have stopped preparing for no deal, and they are using our lack of a majority as an excuse.

“It is killing our negotiating hand, as the EU is watching us very carefully and they can see just how little we’re doing too.”

The cabinet minister added: “It’s straightforward – Hammond simply has to show them the colour of our money in the Budget so they know we’re for real”.

In an otherwise unremarkable article (paywall) about Brexit in the Times, Hammond has hit back, saying he won’t authorising contingency spending on this scale. He writes:

I also need to ensure that we are prepared for all outcomes, including a no-deal scenario. The government and the Treasury are prepared. We are planning for every outcome and we will find any necessary funding and we will only spend it when it’s responsible to do so.

The Times has splashed on the story (paywall).

I will be covering the Hammond hearing in full.

Here is the agenda for the day.

9.45am: Philip Hammond, the chancellor, gives evidence to the Treasury committee.

10am: Matthew Taylor gives evidence to a joint meeting of the Commons business committee and the Commons work and pensions committee about his review of employment legislation.

10.30am: Nick Gibb, the schools minister, and Anne Milton, the minister for women, give evidence to the Commons women and equalities commtitee on sexual violence and sexual harassment in schools.

12pm: Theresa May faces Jeremy Corbyn at PMQs.

2pm: May meets Mark Carney, the governor of the Bank of England.

2.30pm: Karen Bradley, the culture secretary, gives evidence to the Commons culture committee.

4pm: Sajid Javid, the communities secretary, gives evidence to the Commons communities committee.

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 after PMQs 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’s Playbook. 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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