The UK will hold back money it owes the EU if no deal can be reached with Brussels, Brexit Secretary Dominic Raab has confirmed.
Speaking before a Lords Committee on Wednesday afternoon, Raab said the government would reassess how much money would go to the EU from the UK, and also when that cash would be handed over.
The UK has agreed to pay a ‘divorce bill’ to Brussels as part of the Brexit negotiations, with a figure of around £39bn set aside to honour budget obligations made by Britain when it was a full member of the EU.
The money also takes into account pension contributions for EU workers and other on-going projects.
Raab ruled out not paying any money to Brussels, even if talks break down, insisting: “Her Majesty’s government of the United Kingdom always pays it dues.”
But he went on to warn the EU that the UK would re-examine how much it owed, and would also consider delaying when the vast sums would be paid.
He said: “The financial settlement as its calibrated in the withdrawal agreement reflects a whole range of considerations, not just the strict legal obligations, and if we left with no deal then not only would there be a question around quite what the shape of those financial obligations were as a matter of strict law, but secondly on the timing.
“Remember that the timing of payments is actually, we overlook it on our side, rather important on the EU side because of the way money is distributed.
“It could not be safely assumed that the financial settlement that has been agreed as part of the withdrawal agreement would then just be paid in precisely the same shape, or speed or rate if there was no deal That would be a peculiar position for the UK to take, because we view the package as a whole.”
Analysis of the divorce bill by the Office for Budget Responsibility estimates that £16.4bn will be paid to the EU during the transition period that ends in December 2020. Money would continue to be handed over in decreasing amounts until 2045.
Raab’s evidence session came two days before he is due to meet with the EU’s chief negotiator, Michel Barnier, in Brussels. The pair vowed at a press conference last week to step up the pace of the negotiations, with time running out to secure a deal.
Both sides had planned to have the terms of an agreement secured by the next European Council summit, scheduled for October 18 and 19, but it now appears likely the talks will go on into November.
Raab told peers there is “some measure of leeway” when it comes to timetabling.
The Brexit Secretary was grilled on the UK’s negotiating position, which was agreed by the cabinet at the Prime Minister’s Chequers country retreat in July.
The Chequers agreement prompted the resignation of David Davis as Brexit Secretary, something alluded to by Raab as he talked up the flexibility the UK has shown in its negotiating position with the EU.
“We’ve made proposals which clearly involve political compromises and pragmatism. That’s why you’re hearing from me, not my predecessor,” he said.
The key tenet of the Chequers agreement is for the UK to follow the EU’s single market rules on goods and agri-foods, in order to minimise disruption at borders and maintain frictionless customs procedures.
On services, the UK would be free to diverge and there would no longer be freedom of movement of workers from the EU.
Raab was bullish in the generosity of this offer, telling the committee: “Can you name me a single non-EU country that has ever come to free trade agreement negotiations and offered to be bound by a common rulebook on goods and agri-foods in the way that we have? I think they would be cock-a-hoop in Brussels if during the Canadian or South Korean negotiations or whatever others, there would have been an offer made like that by a non-EU country.”
Labour peer Lord Liddle replied: “We’re doing it to make sure our car industry isn’t destroyed. That’s the real reason isn’t it, or one of the real reasons. We are begging for this because without it we know that we will suffer grave industrial consequences.”
Raab hit back: “Lord Liddle, that is hyperbole. We don’t beg and I certainly don’t beg.”
The Brexit Secretary’s suggestion that Brussels should be “cock-a-hoop” with the offer is not shared by Barnier.
The Frenchman told reporters in Berlin that while the EU is “prepared to offer Britain a partnership such as there never has been with any other third country”, Brussles would not see the single market split in the manner suggested in the Chequers agreement.
“Single market means single market ... Tthere is no single market a la carte,” said Barnier, according to Reuters.