Clearly, we do not want to make a bad situation worse, so we have been very restrained in what we have said about the financial settlement. From what I can see and hear on both sides, there is a complete mismatch in the understanding of what obligations there are. The UK Government seems to accept implicitly moral and political obligations but not legal obligations; the EU is saying that there are legal obligations that have to take precedence over everything else.
It is clear that both sides see the financial settlement as a lever. The UK Government sees it as leverage for getting a framework in place for the future relationship, while the EU 27 want to ensure that it is used to get maximum leverage for future negotiation. That is what happens in a negotiation. The issue will have to be resolved. I suspect that one of the problems in resolving it is the noises off. In particular—not wishing to make too political a point for Rachael Hamilton—the fact that the Tory party conference is looming and a number of people will be unhappy that any payments are made will clearly affect what takes place.
The key issue is what article 50 actually says. It deals with the exit and the framework. We could interpret that as saying that those are simultaneous, but it is important that we recognise that, at the start of the negotiations, an agreement was reached between the UK and the EU 27 that the exit negotiations would move forward and that the framework negotiations would kick in once progress had been made with the exit negotiations. That was not imposed; it was agreed, so it is perhaps churlish to complain about it now. It would be best just to try to conclude the financial negotiations as soon as possible. If the UK and the EU 27 are not able to do so, that will colour everything else.
You might have heard Van Rompuy on Radio 4 this morning; it is worth hearing the item if you did not. As a former president of the Commission, he is saying that he does not think that there is any chance of progress being made in October—he thinks that it will take longer than that. He is also talking about finance being the sticking point. I met him some months ago in Brussels. He is clearly a wise and experienced head on what is happening in Europe, and there is a view that progress has stalled.
Progress should be made. We do not want the UK to leave the EU and we do not want to leave the EU, but it is better for there to be clarity in the process than lack of clarity. Therefore, we have been urging both sides to come to a conclusion. We will know a bit more today about the EU position, not necessarily on finance but on the issues on which a set of papers is due to be published after the Barnier press conference. The committee will hear about that when it is in Brussels next week. Some of those papers might clarify matters, but even if, for example, the paper that the EU publishes today on Northern Ireland takes things forward, the financial position will require wise heads on both sides and a compromise.
I commend a paper that was published last week by Charles Grant, who, as you know, is a member of the First Minister’s standing council on Europe. He talked about the need to find a compromise. Of course, the compromise is single market membership. If we were to accept single market membership even as a transition—although I think that it should be steady state—it would change the nature of the negotiations, including the financial negotiations. Therefore, there is a way through the present situation that comes from an acceptance of single market membership and customs union membership.