The UK will not become a tax haven that undercuts its European rivals post-Brexit, said the Chancellor Philip Hammond as rumours surfaced of Cabinet fighting and chaos.
In an interview with French newspaper Le Monde published over the weekend, Hammond (pictured left) insisted that Britain will not be a “Singapore-style corporate tax haven” that attracts business by cutting company tax and cutting through swathes of regulation.
In comments that are sure to infuriate colleagues pursuing a “hard Brexit agenda”, such as international trade secretary Liam Fox, foreign secretary Boris Johnson, Brexit secretary David Davis and environment, food and rural affairs secretary Michael Gove, Hammond told the newspaper:”I would expect us to remain a country with a social, economic and cultural model that is recognisably European.”
He added: “I often hear it said that the UK is considering participating in unfair competition in regulation and tax. That is neither our plan nor our vision for the future.
“The amount of tax we raise as a percentage of our GDP puts us right in the middle of the pack. We don’t want to change even after we’ve left the EU.”
Softening the UK’s position on Brexit
In an interview for German Newspaper Welt am Sonntag in January, he said that with the UK would like to remain a European style economy but added: “If we are forced to become something different then we will have to become something different.”
He clarified: “We could be forced to change our economic model, and we will have to change our model to regain competitiveness.”
At the time, EU negotiators complained that Hammond’s comments were “unhelpful”, but his latest comments will be seen as a further softening of the Government’s position.
Cabinet chaos and in-fighting
It comes at a time of in-fighting within the Cabinet and with mixed messages coming from different factions.
Last week, immigration minister Brandon Lewis claimed there would be no freedom of movement after March 2019, giving succour to those in favour of a “hard Brexit” derided by critics as a “cliff-edge Brexit”, only to be flatly contradicted by his boss home secretary Amber Rudd, who called for a “period of transition” after that date. Hammond went further, signalling the UK’s desire for an extended post-Brexit transition period under which free movement would continue for a further three years.
Fox waded into the argument, saying that unregulated free movement of labour after Brexit would “not keep faith” with the EU referendum result and insisted that the Cabinet had not agreed a stance on immigration. admitted he had not been involved in any discussions on migrant transitional arrangements, which caused former Brexit minister David Jones to claim that Fox and (foreign secretary Boris) Johnson, who were both out of the country when Mr Hammond announced the transition plans, were “clearly being kept out of the loop”.
And yesterday newly elected Lib Dem leader Vince Cable went public about rumours that Johnson was on the verge of quitting, a move that caused Johnson to deny that there was any truth to such stories.