The UK government has been told that extending the transition period after Brexit would expose Britain to £5bn of new EU contributions without any say about how the money is spent.



MPs on the European scrutiny committee sounded the alarm on Thursday after the UK proposed that the length of transition should be determined simply by how long it would take.

Anything beyond the 21-month period preferred by the EU would take Britain into the next seven-year budget cycle and would almost certainly require the country to top up its recently agreed divorce settlement of between £35bn and £39bn.

Crucially, the new money would be spent in ways over which Britain would have no influence because it would have ceased to be a formal member of the EU before the budgeting process concluded, the committee said.

“This is rather like Roald Dahl’s Tales of the Unexpected,” said the committee chairman, Bill Cash, who estimated the extra cost at between £4bn and £5bn. “It begins to look like this is as long as a piece of string.”

Robin Walker, a Brexit minister, and Sir Tim Barrow, the ambassador to the EU, both insisted that a long extension was unlikely and said the detail of any new payments would be a matter for negotiation.

Quick Guide What are Brexit options now? Four scenarios Show Staying in the single market and customs union The UK could sign up to all the EU’s rules and regulations, staying in the single market – which provides free movement of goods, services and people – and the customs union, in which EU members agree tariffs on external states. Freedom of movement would continue and the UK would keep paying into the Brussels pot. We would continue to have unfettered access to EU trade, but the pledge to “take back control” of laws, borders and money would not have been fulfilled. This is an unlikely outcome and one that may be possible only by reversing the Brexit decision, after a second referendum or election. The Norway model Britain could follow Norway, which is in the single market, is subject to freedom of movement rules and pays a fee to Brussels – but is outside the customs union. That combination would tie Britain to EU regulations but allow it to sign trade deals of its own. A “Norway-minus” deal is more likely. That would see the UK leave the single market and customs union and end free movement of people. But Britain would align its rules and regulations with Brussels, hoping this would allow a greater degree of market access. The UK would still be subject to EU rules. The Canada deal A comprehensive trade deal like the one handed to Canada would help British traders, as it would lower or eliminate tariffs. But there would be little on offer for the UK services industry. It is a bad outcome for financial services. Such a deal would leave Britain free to diverge from EU rules and regulations but that in turn would lead to border checks and the rise of other “non-tariff barriers” to trade. It would leave Britain free to forge new trade deals with other nations. Many in Brussels see this as a likely outcome, based on Theresa May’s direction so far. No deal Britain leaves with no trade deal, meaning that all trade is governed by World Trade Organization rules. Tariffs would be high, queues at the border long and the Irish border issue severe. In the short term, British aircraft might be unable to fly to some European destinations. The UK would quickly need to establish bilateral agreements to deal with the consequences, but the country would be free to take whatever future direction it wishes. It may need to deregulate to attract international business – a very different future and a lot of disruption.

“We believe the length of implementation should be determined by what is practical,” Walker told the committee. “At the moment we think that is around two years, which is different but not that much different from the EU proposal.”

Immediately after the hearing, however, the committee issued a letter calling on the Treasury for urgent clarification. “The longer the transition, the more the UK would have to contribute to EU spending commitments which it cannot block or influence once it ceases to be a member state,” it wrote.

In a reversal of usual parliamentary proceedings, Walker and Barrow were attacked fiercely by leave-supporting MPs on the committee who said the transition also exposed the UK to new EU law without any say on how it was formed either.

David Jones, a former minister at the Department for Exiting the EU, accused the government of hiding behind sketchy assurances that a new joint committee would provide oversight during transition.

“That’s nonsense,” he told Barrow. “This is the sort of stuff conveyancers put into documents to obfuscate. Believe me I have done a fair amount of obfuscation in my time. That’s obfuscation.”

“I don’t think the public think there is much momentum,” the Labour Brexiter Kate Hoey said. “There is an awful lot of dragging of feet. Some people might feel we are giving the EU too much respect and they are giving us very little.”