U.K.'s Hammond at Odds With Trade Chief on Brexit Transition

(Bloomberg) -- Chancellor of the Exchequer Philip Hammond said transitional arrangements for Britain leaving the European Union are likely to last a couple of years, rather than the couple of months suggested by his cabinet colleague, Trade Secretary Liam Fox.

“It depends how long we need to put in place new customs systems, new migration systems; these things can’t be magicked up overnight,” Hammond said on BBC Television’s “Andrew Marr Show” Sunday. “We’re not going to be talking a couple of months, we are going to be talking a couple of years.”

Hammond is a leading advocate in U.K. Prime Minister Theresa May’s cabinet for a so-called soft Brexit, in contrast to campaigners for a clean break such as Fox. Britain has until March 2019 to negotiate its divorce from the EU. The trade secretary said in a Bloomberg TV interview Thursday he would be “very happy” with a transition period of just “a few months.”

Hammond’s comments underscore the continued splits over Brexit and other policies in May’s government, which has been weakened since it lost its majority in June’s general election. A Sunday Times newspaper story on the divisions amid positioning to eventually succeed May was illustrated by an image of Hammond and two leading Brexit advocates -- Foreign Secretary Boris Johnson and Brexit Secretary David Davis -- aiming pistols at each other.

The lead story in the Times cited five separate unidentified sources as saying Hammond had described public-sector workers as “overpaid” during the cabinet meeting last week and was criticized by Johnson for the statement. Johnson is among ministers who’ve suggested the Treasury’s cap on public-sector pay should be eased. Saturday’s Sun newspaper reported that Hammond had made a sexist comment about women driving trains during a cabinet discussion on rail strikes.

Asked on the BBC about the reports, Hammond said that “some of the noise is generated by people who are not happy with the agenda that I have, over the last weeks, tried to advance of ensuring that we achieve a Brexit which is focused on protecting our economy.”

May’s deputy, First Secretary of State Damian Green, told BBC Radio 5 that the reports of splits are “characteristic July froth,” adding that, “everyone is desperate to get on their sun loungers and go on holiday, and frankly the sooner they do the better.” The main opposition Labour Party’s finance spokesman, John McDonnell, said though that “the Conservative cabinet are fighting like cats in a sack.”

Even so, Hammond said ministers are “coming much closer together on issues like transition,” ahead of the next round of talks with the EU starting Monday in Brussels.

‘Best Possible’

“I think you’ll find the cabinet rallying around a position that maximizes our negotiating leverage and gets the best possible decision,” he said on the BBC. “We’ve got to do this in a way that meets the concerns and requirements of both people who want a softer version of Brexit and those who campaigned hard to leave the European Union.”

Speaking on BBC TV’s “Sunday Politics” show, Fox sought to play down differences with the chancellor. “As long as we leave in March 2019, then I’m happy, as long as we’ve got a very time-limited transitional period to make it work for business,” he said, though he declined to discuss the length of time. Britain must be able to negotiate new trade deals as part of the transition, Fox said.

The trade secretary denied he was among those seeking to undercut Hammond. He said his views and the chancellor’s on transitional arrangements are very similar. “I absolutely deplore leaks from the cabinet,” Fox said, also rejecting calls for May to be replaced.

Former Tory leader Iain Duncan Smith said on the BBC that “there is no mood in the Conservative Party in Parliament for a leadership election.” May, who’s already said she’ll step down at some point, should “keep going,” Duncan Smith said, and those agitating for a leadership election should “shut up.”

Public-Sector Premium

In his BBC interview, Hammond refused to say whether he’d told the cabinet that public-sector workers are overpaid, though he argued that with benefits such as employers’ pension contributions, they’re on average about 10 percent better off than those in the private sector.

Still, Hammond said, “I don’t for a moment deny that there are areas in the public service where recruitment and retention is becoming an issue.” The pay cap has been under increased discussion in recent weeks with police officers and firefighters frequently in the public’s eye amid terrorist attacks in London and Manchester and the deadly blaze in a high-rise apartment block in the capital.

To contact the reporter on this story: Eddie Buckle in London at ebuckle@bloomberg.net.

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Steve Geimann, James Amott