Splits widen in May’s cabinet and party as Varadakar comes closer to backing Hammond’s version of a soft Brexit

Brexit politics is hotting up amid the snows of Davos. The Brexiteer house paper the Daily Telegraph reports remarks from Taoiseach Leo Varadkar taking a soft Brexit line close to Chancellor Philip Hammond’s in the Swiss resort.  Hammond is the key figure here. He has  lit the blue touch paper to ignite the Tory right and  earned himself a rebuke from a No 10 which is trying to damp down the first flickers of new surge against Theresa May’s weak leadership. Of this more in a moment,

It would easy to miss the significance of how the taoiseach’s  remarks are being set up in an EU as well as a British context. According to the DT,  Vardakar  has placed himself at some distance from  the  would- be champion of the EU, French President Emmanuel Macron and his finance minister Bruno LeMaire.

While France instantly shot down fresh demands from Chancellor Philip Hammond for a bespoke accord that includes financial services, Ireland floated the option of a “Norway Plus” arrangement that better reflects the unique nature of Britain’s relations with Europe.

Bruno Le Maire, the French finance minister, said Britain’s insistence on a final accord with favoured status for the City of London is a complete illusion. “It is a dead end. I told Philip Hammond very clearly that Britain cannot have a pick and choose model,” he told the Daily Telegraph.

Mr Le Maire said the UK cannot retain access to the single market while refusing to accept the authority of the European Court (ECJ) and free movement of workers. “It is not possible. The European Union is a comprehensive (indivisible) framework,” he said, speaking on the sidelines of the World Economic Forum.

Until now the French view has been the formal position of the EU’s chief Brexit negotiator Michel Barnier, who insists that the UK must face hard facts and choose between two established options: either a ‘Norway’ deal that includes a high degree of free movement, ECJ influence, and budget payments; or a looser ‘Canada’ deal that covers free trade in goods but leaves services out in the cold.

Yet a few hundred yards away, Irish Taoiseach Leo Varadkar proposed the exact opposite. “Ireland would like Britain’s relationship with the EU to be closer than that of non-member Norway. It will have to be a specific agreement as there is no precedent. Of course as Ireland we want that to be as close as possible – we would have it ‘Norway-plus’ but I think we have to get into the detail now of what that means,” he told Bloomberg News.

While EU politicians do not always sing from the same hymn-sheet, the clash on this core issue is unusual. It opens a window into emerging divisions that are usually obscured.

Mr Varadkar’s comments will be music to the ears of Mr Hammond, who told a forum in Davos that Britain cannot accept a deal that gives the EU full access for goods trade – where it has a big advantage – while denying free trade in services, where the UK has some compensating strengths. It would be seriously one-sided.

As predicted, Varadkar has now begun more obviously trying to ride both the EU and British horses, while hoping to avoid being torn apart in the middle. He makes his usual appeal to the UK to “flesh out” what he sees as an increasingly hopeful Brexit stance in Ireland’s interests which would ideally need some form of customs alignment with the UK.  His interview with Bloomberg is remarkable mainly when set alongside  Phillip  Hammond’s measured challenge to the hard Brexiteers in his own cabinet and party. The Irish Times quotes Varadakar:

While Britain has repeatedly said it will not remain in the EU customs union or single market, “perhaps we can negotiate something that isn’t very different to that,” Mr Varadkar said.

Such a deal would, however, require the UK to realise that it cannot cherry pick benefits of EU membership without the corresponding responsibilities.

Philip Hammond would be unlikely to dissent although he has so far avoided specifics on  his ideal  customs arrangements.

“Instead of doing what we’re normally doing in the trade negotiations – taking two divergent economies with low levels of trade and trying to bring them closer together to enhance that trade, we are taking two completely interconnected and aligned economies with high levels of trade between them, and selectively moving them, hopefully very modestly, apart,” Hammond said.

I predict those words will  survive when the history of Brexit comes to be written.

After pro-Brexit MPs in Westminster reacted furiously, and some ministers privately made their disquiet known to Downing Street, No 10 moved to distance the prime minister from her chancellor’s remarks.

A source said: “Whilst we want a deep and special economic partnership with the EU after we leave, these could not be described as very modest changes.”

Hammond sought to clarify his comments on Twitter. He wrote: “I said in Davos that gov wants to minimise any reduction in access to EU market post Brexit. And it’s a fact our economies are integrated, that’s the baseline from which we leave the single market and customs union – which clearly represents change.

“For anyone concerned – I was clear earlier in same speech at Davos UK will cease to be member of EU on 29 March 2019, and after we will be outside customs union and the single market.”

Some pro-EU Tory MPs were disturbed by May’s willingness to cave in to pro-Brexit backbenchers. One said: “Hammond was spot on and the prime minister should be supporting her chancellor not giving in to an unrepresentative ideologically driven minority.”

Meanwhile, Eurosceptic backbencher Jacob Rees-Mogg used a speech in Hampshire on Thursday to accuse the government of being “cowed” by Brussels in the Brexit talks.

“For too long our negotiators seemed to have been cowed by the EU. Their approach seems to be that we must accept what the EU will allow us to do and build from there. This is no way to negotiate and it is no way for this country to behave,” he said.

He warned May and her cabinet colleagues against allowing Brexit to become “only a damage limitation exercise”. He argued: “The British people did not vote for that. They did not vote for the management of decline. They voted for hope and opportunity and politicians must now deliver it.”

His strident tone followed a clash with Davis at the House of Commons Brexit committee on Wednesday. It underlines the fact that Eurosceptic MPs have become increasingly concerned about the government’s direction and are determined to press their point home publicly.

In particular, Rees-Mogg, who drew large crowds at last year’s party conference and topped a recent poll of Conservative members for who should be party’s next leader, stressed that Britain must leave the customs union: an issue on which Brexiters fear there has been backsliding inside government.

“The negotiations that are about to begin sound as if they aim to keep us in a similar system to the single market and the customs union,” Rees-Mogg said. “‘Close alignment’ means, de facto, the single market; it would make the UK a rule taker like Norway, divested of even the limited influence we currently have.

“Close alignment” is precisely   what Ireland believes it has secured even in default, as a result of the joint Report by the EU and UK  last month, which allowed  the next phase of the Brexit negotiations to proceed.

And the political fallout? See The Sun “exclusive.”

Our revelation that Sir Graham Brady had almost reached the critical 15 per cent threshold to call a formal vote in the PM’s future electrified Westminster yesterday.

Former BBC journalist and manager in Belfast, Manchester and London, Editor Spolight; Political Editor BBC NI; Current Affairs Commissioning editor BBC Radio 4; Editor Political and Parliamentary Programmes, BBC Westminster; former London Editor Belfast Telegraph. Hon Senior Research Fellow, The Constitution Unit, Univ Coll. London