Philip Hammond has stressed the urgency of securing an implementation deal between Britain and the EU by the end of this month, warning that without it airlines will not know if they can safely schedule flights for spring 2019.

The chancellor told a parliamentary committee that it was in the interests of both sides to agree to the terms of the transition period at the March EU council meeting. He acknowledged that the clock was ticking – with the summit beginning in just over a fortnight’s time – but pointed to the need for business certainty and a range of other “immediate pressing issues”.

“Airlines will need to know on 1 April whether they can safely schedule flights in April 2019. There are lots of practical issues that are going to become very problematic across the continent of Europe unless we agree this implementation deal,” Hammond told the EU scrutiny committee. He then warned that politicians in the UK and European parliaments had a “big responsibility” to back the agreement put forward.

“I hope we will see support in the UK parliament and the European parliament that will reassure businesses that an implementation deal agreed in the March council will be ratified.”

Stephen Kinnock, a Labour MP who sits on the EU scrutiny committee, said there was still a “mountain to climb” before the terms of the transition period could possibly be finalised. “Will the UK have to adopt new EU laws that are made during transition? What will be the dispute resolution mechanism? How will the reciprocal rights of EU citizens in the UK and UK citizens in the EU be protected? It would be little short of a miracle if these complex issues were to be ironed out before the 23 March EU summit,” he said.

Hammond told the committee that £700m had been spent so far by the government on Brexit planning, of £3bn planned for 2018/19 and 2019/20. He said some of the money had been used to plan for the possibility of “no deal” by March 2019, but said a successful negotiation of a transition agreement would allow officials to stop considering such a scenario. “Once we reach an implementation period deal – I would expect that we would then be able to stand down planning for a no-deal exit in 2019,” he said, although he claimed the government may still “have to continue planning for a no-deal exit at the end of the implementation period as a contingency”.

The chancellor also addressed the question of the withdrawal agreement that focuses on Britain’s divorce from the EU, with a focus on citizens’ rights, the divorce bill and the thorny question of the Irish border.

Theresa May had reacted with anger to a clause contained in a legal text of the withdrawal agreement drawn up by the European Commission, which suggested Northern Ireland could remain in the customs union, while the rest of the UK could leave it.

The chancellor admitted that the UK was not planning to draw up its own version of the text before the March summit, suggesting that instead it would try to alter what the commission had produced.

Hammond’s comments came after it was reported that the transatlantic rights of firms such as British Airways, Virgin and Gatwick-based Norwegian could be hit after talks broke down between the UK and the US over a post-Brexit “open skies” deal.

The FT reported that American and British negotiators had met but their discussions were curtailed after the US offered only a bilateral agreement that would affect British carriers with large foreign shareholdings. However, the government insisted that a deal would be maintained, with the Department of Transport insisting there had been “positive discussions and significant progress”.

“All parties have a shared interest in ensuring that existing rights will continue under the new bilateral arrangements, allowing airlines on both sides of the Atlantic to continue to operate existing services as well as to seek to develop new ones,” a spokesman said.

The International Airlines Group – which owns British Airways – also said it had “every confidence” that the UK and US would sign a deal in everyone’s interest.



It comes as the centrist Labour pressure group, Progress, proposed introducing identity cards for public services as a means of keeping Britain inside the single market.

The idea is one of 10 sweeping reforms to free movement suggested by the group that could both retain economic closeness to the European bloc while addressing British concerns about immigration. Another idea is an employment system that asks EU visitors to register with the authorities within 10 days of entry, and to leave after three months – a system used in Belgium and so acceptable under EU law.

Richard Angell, the director of Progress, argued that such moves could address concerns while “rejecting the dog-whistle politics of the right”. He said that it would “show that Labour, and parliament, is listening to those who voted leave while not chucking out the economic baby with the fiscal bath water”.

