31/07/2017 07:41 BST | Updated 31/07/2017 11:00 BST

Brexit: Philip Hammond Suggests UK Won't Cut Taxes Or Regulations

'On manoeuvres'.

The UK won’t reduce taxes or cut red tape in an effort to compete with European rivals after BrexitPhilip Hammond has suggested.

The Chancellor told French newspaper Le Monde that tax raised in Britain “puts us right in the middle” of EU nations.

“We don’t want that to change, even after we’ve left the EU,” he said.

But Hammond, who supported Remain, previously said the opposite to a German newspaper, the BBC reported.

“We could be forced to change our economic model and we will have to change our model to regain competitiveness,” he said of a ‘hard’ Brexit scenario.

The apparent turnaround came after a Cabinet split opened up on how quickly the UK would transition from the EU after Brexit.

International Trade Secretary Liam Fox insisted on Sunday that ministers had not agreed a deal on immigration after withdrawal from the EU.

But Hammond signalled there was “broad acceptance” in Cabinet of a wide-ranging post-Brexit transitional period lasting up to three years.

The row prompted accusations the Chancellor was “on manoeuvres” while Prime Minister Theresa May holidays in Switzerland, and raised questions over the Government’s ability to negotiate in Brussels.

Fox told The Sunday Times: “We made it clear that control of our own borders was one of the elements we wanted in the referendum, and unregulated free movement would seem to me not to keep faith with that decision.”

He said he had not been involved in any Cabinet talks on extending free movement for up to three years after Brexit.

“If there have been discussions on that I have not been party to them,” he added.

“I have not been involved in any discussions on that, nor have I signified my agreement to anything like that.”

In remarks that are likely to be seen as directed at the Chancellor, Fox said: “I am very happy to discuss whatever transitional arrangements and whatever implementation agreement we might want, but that has to be an agreement by the Cabinet.

“It can’t just be made by an individual or any group within the Cabinet.”

Transitional period

Hammond said on Friday a transitional period up to 2022 would mean “many arrangements remaining very similar to how they were the day before we exited the European Union”.

He said there would be a registration system in place for people coming to work in the UK after Brexit, during the transitional period.

A Government source told the Press Association that freedom of movement will end when Brexit occurs in March 2019, and a time-limited implementation period would then follow.

The source said that the idea of mass, uncontrolled migration is “not a vision of Brexit that we will undertake”.

However, the EU has made it clear continued access to the single market is dependent on free movement of labour.

Former Brexit minister David Jones branded Mr Hammond’s transition initiative “deeply dangerous” as he accused the Chancellor of “going on manoeuvres” while May was abroad on holiday.

Meanwhile commentators questioned whether the split would impact negotiations in Brussels.

“It’s clear that Brexit negotiations have scarcely begun... within the Cabinet,” BBC Radio 4 presenter Nick Robinson wrote on Twitter. “Forget finding agreement in Brussels when none in London”.