Such is the disarray within the cabinet over the Brexit negotiations that the prime minister and chancellor are now fighting over whether to make a futile gesture.
Theresa May, egged on by hard Brexiters, wants to spend public money preparing for a “no deal” scenario. She appears, rather like the character from the old BBC satire Beyond The Fringe, to think that it will raise the whole tone of the war with Brussels. Philip Hammond warns it would be wrong to spend money now “just to make some demonstration point”.
The chancellor is correct. While Brexiters are right to say that Britain needs a credible “outside option” as an alternative to a negotiated deal with the EU27, spending billions ramping up the UK’s customs operation in the hope that disruption could be avoided on March 30 2019 is not the answer.
The reasons are simple. Britain could concrete over hectares of Kent building customs posts and lorry parks; the government could invest billions in new customs IT; it could train thousands of staff so they were ready to ensure imported goods comply with new UK regulations and charge value added tax, tariffs and duties; but it would be futile.
The system would still collapse on the first day because customs operations require co-operation between two countries. In an antagonistic “no deal” outcome, where Britain has walked away from our European partners, co-operation is exactly what would be missing.
However much money was spent on the UK side of the Channel, in Wales and on the Northern Irish side of the land border, goods would flow relatively smoothly only if the same systems were in place in France, Belgium and Ireland. If lorries faced delays in Calais, ferries would not be able to unload. The flow of goods would soon stop. So, spending money or walking away does not put Britain in control. Rather, it cedes control to the EU27 authorities in deciding how much infrastructure they want to build.
When playing such a weak hand, bravado convinces nobody. There is zero chance that spending billions would persuade the EU27 to be more flexible in the negotiations. So what would be a more sensible fallback option?
The government does not have far to look. It has already played the only joker Britain has. The UK would need to ask to retain all the existing rights and responsibilities of membership of the single market and the customs union after Brexit. Given the UK’s net contributions and the joint interest in avoiding chaos, that is likely to be acceptable.
It would mean leaving the EU, so it meets the requirements of the EU referendum and, naturally, puts the UK in a worse position than retaining membership, but the losses to all sides are smaller and so it is likely to be more acceptable - not just for a two-year period after 2019, but for much longer than that. The cliff edge that looms in 2019 will soon loom again in 2021 under the government’s current plan for a two-year transition.
The problem of goods flow is solved only if Britain effectively remains a member of the single market and customs union. The biggest domestic benefit of continuing to enjoy the rights and meet the obligations of the EU is that it would be more popular than the alternative. Opinion polls show a majority would like the government to prioritise staying in the single market to an end to free movement of people.
So when Mrs May says “what we are seeking is not just the best possible deal for us - but I believe that will also be the best possible deal for our European friends too”, there is only one possible deal that satisfies her test.
Britain leaves the EU, the single market and the customs union, but agrees to uphold all the rights and responsibilities that go with membership for an indefinite period.
