Ministers from the Department for Exiting The European Union appeared before the Committee to answer questions about the progress of UK-EU negotiations, including the Government’s customs union proposals on customs arrangements.

2019 will be a year of huge political and institutional ‘churn’ in Brussels, with European Parliament elections in May and a new Commission taking office in autumn. Substantial talks on the future (post-transition) relationship will therefore only start in earnest in autumn 2019. I asked how the government is planning to respond to the dramatically squeezed time frame and severely reduced leverage that this will cause?

Stephen Kinnock: Good morning. I just want to focus on the period between Parliament approving the withdrawal Bill—assuming we do—in October, and when we leave the European Union in March 2019. The Secretary of State has said that he thinks very substantial progress can be made on the future relationship negotiations during that period. Is that really realistic, given that the European Parliament will not be voting on the withdrawal agreement until February 2019?

Mr Walker: Yes, it is realistic, because it is in the interests of all parties, of businesses and citizens in both the UK and the EU, to have the clearest possible definition of that future relationship by the time we enter into the implementation period. From my conversations with both European parliamentarians and member states, there is a growing awareness of the importance for businesses and citizens in their countries of knowing what the arrangements will be for trade and market access to what will be Europe’s No. 1 export market. There is a real mutual interest in making progress on this. That is part of the case we will be making in our White Paper.

Stephen Kinnock: The institutional reality is that the European Commission will be changing in 2019 and there will be European parliamentary elections. Neither the Commission nor the Parliament will be interested in engaging in discussions with the United Kingdom and potentially tying the hands of the newly created institutions following the rotation. Is the political and institutional reality not that, in essence, no progress on the future relationship will be made at all until probably October 2019, when there is a new Commission?

Mr Walker: I would rather turn that around to say the current Commission is highly ambitious with regard to resolving as many issues on this as possible. As part of its legacy and its record, it will want a healthy agreement with the UK. For the European parliamentarians I meet, this is also an issue they want to see real progress on in this Parliament. Elections will give them an added focus.

This has always been the issue. Right from the start of this process, we have seen the clear understanding that, now the UK has triggered article 50, the European institutions want to ensure that we are out in time, so as not to complicate the European elections for 2019 by having seats that need to be available for UK MEPs, which then go away. That is something we are all agreed on. When people have to go to their electorates, they will want to explain that the EU will have a successful future trading relationship with one of its closest allies and biggest trading partners. We should look to the opportunities in that institutional change you talk about, rather than assuming it will be a problem.

Stephen Kinnock: Once the vote has gone through here in Parliament, in effect, as my colleague Pat McFadden has said, we have signed off on the £35 billion to £39 billion, so that piece of leverage has gone. What contingency plans are the Government putting in place for the fact that, once that has happened, the European Union will really start to transfer us into the status of a third country and therefore reduce our leverage massively in the negotiation process?

Mr Walker: Clearly there is contingency planning, and there continues to be contingency planning going on across Government for all outcomes of this process. But our central scenario, which we see becoming more likely as we progress the negotiations, is one where we reach an agreement, not only on the withdrawal agreement but on the future relationship, which we believe is in the interests of the UK and the EU.

Stephen Kinnock: Do you accept that, once the withdrawal agreement, particularly the budgetary elements of it, is signed off, our leverage in negotiating the future relationship is massively reduced, along with new institutions coming in?

Mr Walker: As we have discussed at great length already, the process of signing off the withdrawal agreement, having a meaningful vote in Parliament and then writing into legislation the withdrawal agreement and implementation Bill will have regard to the framework for the future relationship. We want to get into as much detail on that framework as possible. We also believe, as the Secretary of State has said, that more work can be progressed on the future relationship between agreeing that framework and the moment at which we leave the EU.

Stephen Kinnock: I have one final question. Which part of the Commission will be leading on the negotiation of the future relationship post 29 March 2019?

Mr Walker: Our focus should be to get progress on the future relationship before 29 March 2019. It is speculative to talk about what happens after that.

Stephen Kinnock: The assumption would be that we would be dealing with the Directorate-General for Trade, as any other third country.

Mr Walker: At the moment, our focus is to deal with the Commission we have in front of us, to deal with taskforce 50 and to make progress not only on the withdrawal agreement but on the future relationship. As the time passes, I believe there will be increasing pressure from European institutions and European electorates on both the Parliament and the Commission to make progress on these issues as well.

Suella Braverman: Interestingly, you had a witness before your Committee a few weeks ago from the Centre for European Reform. She made it clear from the European perspective that there is an immense amount of willingness and desire on the part of the EU to get on with this and to strike an agreement, not only by finalising the withdrawal agreement but on the future framework. She used the phrase “Brexit fatigue”, and said that they have turned a page and want to move on as well. There is really no desire for us to prolong this further than necessary.

Stephen Kinnock: No, it is really just a question of leverage, where the leverage is and when it starts to disappear.